Top US Officials In USSR to Help Bolster Economy
Treasury Secretary Brady, Federal Reserve Chairman Greenspan assess range of needs
THE Bush administration is softening its tough stand on financial assistance to the Soviet Union.US Treasury Secretary Nicholas Brady and Federal Reserve Board Chairman Alan Greenspan are in Moscow this week to assess economic needs of the rapidly deteriorating Soviet Union. They are offering new ways to assist in Soviet economic reforms and to accelerate Soviet membership in the International Monetary Fund and the World Bank. Soviet President Mikhail Gorbachev, Russian President Boris Yeltsin, Soviet economic officials, and representatives from the republics - all meeting with Mr. Brady and Mr. Greenspan - want United States assistance in the tedious economic and legal negotiations between Moscow center and the republics. But though relatively forthcoming with humanitarian aid, Washington has steadfastly refused greater commitments until stalled Soviet economic reforms are actually under way. Top US officials recognize that, aside from short-term Western supplies of food and medicine to carry the Soviets through the winter, immediate financial support is needed to help ensure the long-term survival of the Soviet economy. The Overseas Private Investment Corporation (OPIC), a US government agency that facilitates American investment abroad by providing insurance and financing, will soon open for business with the Soviets. OPIC will target US investments on food production, transportation, communications and energy - all crucial to improving shoring up the Soviet economy. James Berg, executive vice president of OPIC, says his agency won't wait until Moscow center and interested republics pound out legal and commercial agreements. "We don't need an entire constitution," says Mr. Berg. "Our needs [legal and commercial] can be worked out within a bilateral agreement that is very operational in nature." OPIC plans to offer up to $1 billion - roughly one-tenth of OPIC's global $10 billion portfolio - in US loans and guarantees for American investors in Soviet projects. "The figure understates dramatically what kind of investment it generates," says Berg. Many American investors have already requested OPIC insurance for Soviet deals, he says. "We assume the risk, so we make it as safe for Americans to invest in Moscow as it is to invest in Iowa," he says, "but not enough people know about us." Next month in the Soviet Union, OPIC will begin the process of negotiating and signing operating agreements with the Baltics, with the center and the remaining 12 republics. "We want to move quickly," says Berg. US support is also stronger on the international level. As the largest shareholder in the World Bank and the International Monetary Fund (IMF), Washington has dominated with its go-slow approach to Soviet requests for help. President Bush has consistently conditioned aid on Soviet reforms. Revolution, rather than reform in the Soviet Union, seems to have forced Washington's hand. Both Brady and Greenspan, in Moscow discussing the planned acceleration, are mindful of breakaway republics' interest in becoming members on their own. Estonia and Lithuania have already applied for separate membership in the global institutions. Concerned that Russia and other republics with larger economies will follow suit, the US is expected to push for Soviet membership by the end of 1991. An IMF economic reform program for the Soviet Union - including financial aid and expert guidance - would help bind the country, say US officials. A new development bank, the London-based European Bank for Reconstruction and Development (EBRD) is fighting for more spending power in the Soviet Union. Washington, the EBRD's largest single shareholder, has strongly opposed lifting the regional institution's $70 million annual cap on Soviet financing. That, too, may change says Ronald Freeman, EBRD's first vice president, once the US "sees how quickly the $70 million pipeline is filled." Mr. Freeman, who oversees 60 percent of the bank's lending, says the Soviet fund is practically exhausted. The EBRD promotes systemic change by matching basic Soviet needs with Western investors. Its programs function without a Soviet federal constitution in place or any comprehensive agreements between Moscow center and the republics. Freeman told the Monitor recently that EBRD priorities are simple: Negotiate fair deals to win the trust of suspicious Soviets and money from often reluctant foreign investors, principally commercial banks. Freeman discovers on a deal-by-deal basis who on the Soviet side is authorized to sign contracts and assume risks. "On every level there's a vested interest - from the factories to the ministries to the local municipalities," he says. "It's more like a political campaign where you're trying to get votes from everybody at each level." Freeman says the EBRD is increasingly looked upon by wary Soviets as a seal of approval. He points to EBRD mandates from Moscow and St. Petersburg to privatize industries an d help establish city cultural centers - all large projects. He says investing in Soviet energy production, and enhancing Soviet export earnings as a result, is the "most exciting prospect in the world."