Firms defy US, rush for Soviet deal
Contract-hungry West European firms are lining up for a piece of an enormous natural gas deal that the Reagan administration would dearly like to prevent. The scramble to sign on for the multibillion dollar East-West pipeline project would seem to jibe nicely with the official Soviet view of economic detente.
Such commercial cooperation, Soviet theorists argue, is in the practical interest of both sides and will ultimately prove impervious to political pressures from Ronald Reagan or anyone else.
Thus, Soviet officials note, Mr. Reagan himself bowed to US farm pressure earlier this year and canceled Jimmy Carter's grain embargo. In a letter made public Sept. 15, Mr. Reagan said he planned to offer the Soviets a lot more grain in light of this year's expected bumper crop in the United States.
And thus, the Soviets imply further, the pipeline project dubbed here "the East-West deal of the century" will also go through -- despite the US contention that it would make Western Europe dangerously dependent on Soviet gas.
Indeed, most Western diplomats here maintain that only a diplomatic miracle would allow Washington to head off the pipeline deal at this stage.
West German Chancellor Helmut Schmidt, whose country is slated to be the main Western partner in the project, was quoted Sept. 14 as renewing his commitment to the deal even as US Secretary of State Alexander M. Haig Jr. was on an official visit there.
Meanwhile, Western companies hoping for a part in the project -- which would, in effect, trade West European financing, equipment, and expertise for the Soviet gas -- are acting as though all systems are go.
Beyond equipment supply, there are two major issues in the gas deal: Western financing, and the price tag for eventual Soviet gas deliveries through the estimated 3,000-mile pipeline.
After long negotiations, the Soviets finally sealed a compromise accord in July for some $4 billion in financing from West German banks. And Moscow softened its original position and came to terms on further financing from France.
But the accord with the French formally expires at the end of September and would have to be renewed, should talks with potential French equipment suppliers drag on beyond then.
On the gas price issue, commercial sources here say there is no sign of an approaching compromise.
So some Western experts Moscow to push ahead with the signing of major supply contracts, in effect putting pressure on the West Europeans to meet Soviet demands on gas prices.
Some analysts are suggesting further that his could happen before the expiration of the French financing terms, although that agreement could well be renewed.
Against this background, attention is focusing on what is described as fierce competition among at least four major West European firms for the post of "general contractor," the winner of which would get a substantial chunk of the supply pie while subcontracting the rest to other companies.
The four major competitors, sources here say, are the AEG Telefunken engineering firm and the Mannesman pipe concern, both of West Germany; Italy's Nuovo Pignone; and Creusot Loire of France.
AEG, participating in a recent telecommunications fair here, sent a senior company official along to meet Soviet and foreign reporters. He talked less of telecommunications than of pipelines.
He argued that his firm, financially troubled according to recent published reports, was eminently qualified to sign on as general contractor -- and to provide half of the 41 compressor stations for the pipeline, to an estimated tune of $2 billion.
That, he said evidently without fear of contradiction, would be "a very big prize for us."
And although Soviet officials were not available for comment on details of the deal, he said he had reason to believe that Moscow would name a general contractor by the end of September.