East-West trade: too much quibbling over what is strategic
For many years, it was a common complaint that United States foreign policy was a tool of American business and financial interests.
For some time now, however, the situation seems to have been reversed, as a succession of administrations have tried to use trade and loans as a tool of foreign policy.
The issue comes to the fore once again as the Reagan administration considers new economic sanctions against the Soviet Union and Poland and urges our European and Japanese allies to do the same. It is a matter on which Americans have not been able to make up their minds and stick with a consistent approach for very long.
As often as not, it has been a source of friction with our friends. Most of them merrily go right along trading with the Soviet Union or anybody else without regard to the state of their political relations. They seem to look on American agonizing over this problem as another Yankee aberration in the same class with the antitrust laws and prohibition.
The problem is, in addition, the subject of some rare political alignments in the US. The AFL-CIO, which supports the Reagan administration in practically nothing else, is urging stronger economic action. The International Longshoremen's Association has long been notorious for taking foreign policy into its own hands and refusing to load cargoes for countries which have incurred its displeasure. The Chamber of Commerce, which supports the Reagan administration in practically everything else, is urging more trade, not less. And farmers apparently don't care what the administration does so long as it keeps the grain sales moving.
All of the arguments may have had the effect of making the issue more complicated than it needs to be. There has been perhaps too much emphasis on fine tuning carrots and sticks, punishments and rewards, and too much quibbling over what is strategic. (Bernard Baruch is reported to have said once that bubble gum is the only truly nonstrategic item.)
It would be more to the point to ask ourselves what it is we are trying to accomplish in our relations with the Soviet Union and indeed with Eastern Europe generally. And we can then ask ourselves how, if at all, trade -- free, controlled, or forbidden -- might contribute to that end.
There would probably be general agreement that what the US is trying to accomplish is more acceptable international behavior plus a trend toward liberalizing domestic societies, a trend such as was seen in Poland before the imposition of martial law. This is more likely to be accomplished by making the Soviet Union and its satellites a part of the international order than by ostracizing them from it. (Contrariwise, one could argue that their behavior has already been so unacceptable that they have to be ostracized until such time as they show they can behave. There is an analogy here to sending an unruly child to his room, a disciplinary tactic which sometimes works and sometimes does not.)
The implication is for trade. But then the question arises of whether trade will strengthen the Soviet bloc so that it can better do things that will be to our detriment. Lenin remarked that capitalists will sell the rope with which you can hang them.
Clearly one would not want to sell the Soviets nuclear materials or military equipment. It might also be desirable to rule out certain very advanced technology, and where to draw the line can be the subject of interminable interagency committee meetings in Washington. But this is different from scrutinizing export license applications as rigorously as in the depths of the cold war.
There is a distinction to be drawn between trading with the Soviet bloc and assisting it. This is the same distinction embodied in the slogan ''trade, not aid,'' a policy which has been urged upon us in the third world for 30 years. Fair trade does not leave either side better off than the other. Aid does, and a big part of the problem in Eastern Europe is precisely that there has been too much aid in the form of credit.
This complicates matters enormously. The indebtedness of Eastern Europe to noncommunist governments and banks is estimated at a staggering $80 billion. This is so big that it is more troublesome for the creditors than for the debtors. One certainly does not want it to get bigger. On the other hand, new credits may be necessary for repayment of old ones. And surely some trade is necessary if the debtors are to earn the foreign exchange they need for repayment.
Further, most of the debt is owed to private banks; so anything that governments do inevitably has the effect either of bailing them out or putting the screws on them. The question recurs. Is foreign policy a tool of business, or is business a tool of policy? It is sometimes hard to tell whether it is the dog or the tail that is being wagged.