US to Give Moscow More Aid to Slow Its Economic Tailspin
Bush administration to extend limited food, economic, and technical help to the Soviets; gets significant concessions
DESPITE skepticism over the Soviet Union's economic and political reforms, the United States will send food, economic and technical assistance to Moscow, say senior Bush administration officials. While President Bush has reserved official judgment on Soviet aid, he has extracted important concessions from the Kremlin, including support for a long-awaited liberal emigration policy and cooperation on European security matters.
The Soviets seek $250 billion in international aid. Mr. Bush is expected to make a cautious contribution, pledging measured help to Soviet President Mikhail Gorbachev based on certain economic and political conditions, including a reduction in Soviet military spending (today roughly one fourth of the USSR's gross national product) and suspended Soviet aid to Cuba.
``We're looking at the big picture,'' says one senior administration official, echoing comments from others. ``Sure, we'd like to make all kinds of progress on arms control, we'd like to see harsh policies in the Baltics reversed, and we'd like to see substantial changes economically - an end to the command economy. But we can't afford to wait until all of this is achieved before we respond to desperate pleas for help.'' If the US turns its back, he says, ``the situation there will be just too explosiv e.''
Sol Sanders, author of ``Living off the West: Gorbachev's Secret Agenda and Why It Will Fail,'' says: ``Logically there are no grounds for American aid to the USSR. There's no evidence of a cutback in military spending, and every six months Gorbachev spins off another economist who has an unworkable plan.''
A report recently published by the Central Intelligence Agency estimates that the Soviet GNP will decline by as much as 20 percent this year, with nothing to arrest the free-fall. Gorbachev's chief economic advisers swing from soliciting foreign aid and investment to conspiratorial notions of Western financial interference in Soviet affairs.
Last week, outgoing CIA Director William Webster warned that Gorbachev's vacillation between reformers and conservatives leaves the Soviets with ``no clear game plan'' for the aid. Gorbachev's future, he says, is ``uncertain,'' as is the Kremlin's control over the country's nuclear arsenal.
Soviet special envoys, visiting Washington last week to lobby for Western help, raised the issue of nuclear danger during meetings with Bush: If the West fails to aid the Soviet Union, the central government may spin out of control, and nuclear weapons could fall into reactionary hands, they warned.
Perhaps concerned that their demands will be rejected as overwhelming and thus impossible to satisfy, Soviet leaders have refrained from citing exact figures in their country-by-country requests for aid.
But last Friday President Gorbachev's envoys to Washington gave International Monetary Fund officials a clear indication of what they're seeking from worldwide sources: as much as $50 billion a year over the next five years for a successful overhaul of the Soviet economy. Anxious to enlist US financial support, the Soviets have tried to remove obstacles. On Saturday, US Secretary of State James Baker III and Soviet Foreign Minister Alexander Bessmertnykh settled differences over reducing conventional ar ms in Europe and laid the foundation for a US-Soviet summit in Moscow within six weeks. Bush hailed the progress as ``an important step forward in US-Soviet relations.''
Today, Bush will decide whether to extend a six-month waiver of trade restrictions on the Soviet Union, a decision Gorbachev tried to make easier with a recent push for a liberalized emigration policy, endorsed by the Supreme Soviet.
Currently, outside of grain credits extended by the Agriculture Department's Commodity Credit Corporation (the Bush administration is considering Moscow's request for $1.5 billion more), the only vehicle for official US assistance to the Soviets is through the US Export-Import Bank.
Eximbank Chairman John Macomber, whose institution opened a $300 million line of credit to Moscow last winter, says that while debts to foreign suppliers by Soviet enterprises and cooperatives ``are mounting and could go higher,'' Moscow-center ``has not reneged on any public deal.''
The major potential detractor, says Mr. Macomber, is large-scale turmoil in the Soviet Union. US exporter interest far exceeds Eximbank's capacity; all told, US exporters have submitted over $1 billion in preliminary commitments. But the Soviets are reportedly disorganized and very slow in reviewing the transactions. In six months, not one has been finalized.
Eximbank Vice-Chairman Eugene Lawson points to the bank's recent operational shutdown in Yugoslavia, whose ethnically-torn federation is often referred to as a microcosm of the vast ethnic mosaic of the Soviet Union. He says the bank's ``greatest fear'' is an eruption in the Soviet Union on the scale of the civil unrest in Yugoslavia - with banks ceasing to function, foreign currency depleted and political chaos. Nonetheless, Soviet credit-worthiness is not the driving concern for US policymakers, say US officials, the broader, costly prospect of supporting Soviet reforms is.
Bush will likely take that outlook to the July economic summit of the world's leading industrial powers - the US, Britain, Canada, France, Germany, Italy and Japan.