Tying East-West trade to arms
Reaching ''substantial agreement on a plan of action'' on East-West trade represents a positive achievement for Reagan foreign policy and Shultz diplomacy. It removes a divergence of policy between the United States and its West European allies that could easily have eroded the foundations of our major security alliance. It gets us to bat, so to speak, on the key issues involved. But, if we are to wind up with a base hit instead of striking out again, we are likely to need a clearer overall political purpose for East-West trade policy.
The achievements relate to all three parties involved: the Soviet Union, the allies, and the US. To the Soviet Union the pipeline sanctions, together with the decision to emplace the Pershing II missiles and the cruise missiles in the NATO defense area, demonstrated a political capacity to act, if the Soviets try to pursue their European objectives heedlessly. This is a reminder that is periodically needed, as the Soviets test our political will more often than they try our military response. And it is still a pertinent reminder, even if it is diluted by the lifting of the grain embargo without any visible Soviet concession.
For our West European allies it was also a useful reminder that we are not prepared to proceed with business as usual, regardless of what the Soviets may do. But, more important, it has raised the question of East-West trade policy to the highest levels of government. It must be addressed there, if it is not to be nickeled and dimed to death by bureaucratic technicians and the force of inertia.
For ourselves, it forcefully reminded us of what we should not have forgotten. The US simply cannot have a viable trade policy toward the Soviet Union without the concurrence and cooperation of Western Europe. It also began the process of backing away from some rather puerile ideas about the feasible objectives of that trade policy: to weaken the Soviet Union militarily by slowing its economic growth or restricting its hard-currency earnings.
If we are to build constructively on these hopeful beginnings, we will need to do some hard thinking. We and our allies emphasize different things in our approaches to the Soviet threat to Europe. We are inclined to give overriding emphasis to the persisent Soviet military buildup and the accompanying Soviet quick-strike capability in the European theater, and we relate Soviet oppression of East European countries to the threat. Europeans tend to see their security directly served by the strengthening of the political settlements already reached, by the constant cultivation of broader ties with Eastern Europe, and, especially, by the disincentives the Soviets are given for any military moves when important Soviet objectives are being served by the expanding economic relations with Western Europe.
Progress in narrowing the differences with our allies seems to have been made in two areas. The agreement ''not to engage in trade agreements which contribute to the military or strategic advantage of the USSR'' should lead without major difficulty to a more restrictive COCOM list of technological products with direct military uses. And the agreement not ''to preferentially aid the heavily militarized Soviet economy'' may yield positive results in regularizing the terms of credit. There has never been any convincing logic for according the Soviet Union preferential credit terms, and it seems sensible to get the Western act together on this score. Some realists do observe that this is more a perceived than a real problem. They note that Western companies have long since learned how to accommodate the Soviet penchant for low visible interest rates by padding the higher credit costs into price quotations. Nonetheless, Western coordination on credit terms will be a positive development.
Yet the most important question still remains, ''Toward what end should the Western allies control their trade with the USSR?'' To close the circle of difference over the political purposes of East-West trade policy, our own approach will probably have to satisfy two requirements. It will need to have a strong appeal to the West Europeans as serving their perceived security and economic interests, for Europeans have a deep-seated and built-in aversion to the use of trade for political purposes. It will also need to have some prospect of succeeding within a reasonable time frame; otherwise, Europeans are likely to reject it as a device for punishing the Soviets without achievable purpose.
One idea possibly worth considering is to tie the volume of Western credit (not the terms of credit) to progress on arms limitation in the European theater. A NATO-Warsaw Pact military balance at lower levels of armament should have political appeal in Western Europe. It not only offers the prospect of economic benefit but also provides the missing military element to underpin the detente Europeans prize so highly.
The trade-military balance linkage is a legitimate and logical one, testing the Soviets' readiness to work for greater mutual security in Europe and holding out incentive if they move in that direction. As such, it would seem to serve admirably our own priority interest in reducing the Soviet military threat to Europe and achieving greater stability there. It will not be easy to sell such a policy to Western Europe, but to relate trade policy to lesser political objectives will be still more difficult.