Why Moscow's inner empire faces trouble over trade
IF the White House and Politburo agree to tango, can Moscow object to Eastern Europe resuming its polka with West Germany? There is no such thing as cold-war dance etiquette. But some specialists in East-West Europe relations say new superpower arms talks would unleash East Germany and Hungary (and other East-bloc states) to broaden their trade and political links to Bonn.
As a problem for the Kremlin, such a trade shift is less visible than political unrest in Poland. But it is potentially more important to the cohesion of Moscow's inner empire over the next decade.
The main aim of the Eastern nations would be to acquire West German mid-tech and high-tech equipment and expertise - and to lessen their dependence on Soviet trade. The main inducement to Moscow is indirect access to needed Western technology, and, perhaps, the hope that Bonn might become more Eurocentric (that is, less allied to the United States).
In a recent study of these often-unnoticed relations, Prof. William E. Griffith of the Massachusetts Institute of Technology documents a continuing trend of independence from Kremlin policy on the part of East Germany and Hungary. That independence was summarily checked when Moscow forced cancellation in early September of planned visits to Bonn by Communist Party leaders Erich Honecker of East Germany and Todor Zhivkov of Bulgaria. But Mr. Honecker and Janos Kadar of Hungary are believed to be just discreetly playing possum until the East-West climate improves. And Moscow strategists know it.
Before the canceled visits, Budapest and East Berlin had engaged in a subtle but bold game of ideological argument with Moscow over trade relations with the West. Beginning last January, the Hungarian party secretary for international affairs built a case for the improvement of relations between smaller communist and capitalist states even while the superpower relations corroded. In April, an ideological reply from Moscow criticized the Hungarian article indirectly. But the East German communist press reprinted and praised the Hungarian article.
Two factors drove this unusual Berlin-Budapest trade autonomy: (1) realization that Eastern Europe is receiving less aid and more economic burdens from the USSR; (2) growing awareness of Soviet technological backwardness and US-Japanese innovation.
More dramatic Polish events have overshadowed this sporadic but continuing trade shift. But the world balance of economic power could move even further away from the Soviet Union if its most economically advanced allies shift their trade further westward.
Several factors are driving this change:
* The short-lived Andropov government in Moscow made a tacit carrot-stick pact with the Soviet people. The regime would get tough on worker absenteeism and malingering in order to raise productivity; in return, the Kremlin would see to it that better-quality goods were made available to consumers.
Moscow planners turned to Comecon (East bloc) allies to supply the quality goods. This was a short-lived Moscow program - dwindling even before the Andropov government was six months old.
But the Andropov carrot was understandably popular. And two months ago a Pravda editorial assured readers that the Chernenko-led Politburo would not allow diversion of budget from the consumer economy to defense.
* Eastern European economic planners - particularly in industrially advanced East Germany and Hungary - were understandably not happy to divert their best export goods eastward. Those are the goods they want to trade to the West for: ( 1) hard currency; (2) improved credit ratings for buying Western exports; (3) acquiring Western mid-tech and high-tech equipment that will allow them to produce more goods more efficiently to sell to the world. That, in turn, would allow them (4) to improve their standards of living, and thus (5) improve domestic stability.
* Soviet economic planners also face a big problem as they seek to get the most from East-bloc trade. Their main export to both the East bloc and the rest of the world is petroleum. It accounts for three-quarters of all Soviet exports. Oil alone brings in some 63 percent of Soviet hard-currency earnings. So Moscow needs to export petroleum to the West for hard cash. But it also needs to export oil and gas to Eastern allies to pay for Moscow's principal imports - machinery and equipment - which mainly come from East-bloc allies.
However, last year Soviet buyers increased their technology imports from the West by more than 15 percent. So, to pay for more Western technology (and grain) , Moscow's traders must either find more petroleum or divert some from export to East-bloc partners. Gas production is up 10 percent so far this year. But oil production is not. And falling oil prices have only added to the problem.
Western intelligence analysts generally agree that Soviet oil production will decline in coming years unless new crude can be brought to market. That would require diversion of large amounts of capital to find, drill, and pipe crude from remote areas. Western drilling equipment, pipe, and site analysis by computer could help. But even if US negotiators agree to such technology exports, Soviet budget planners still face a tough decision.
They are seeking to get (1) more high-quality imports from Comecon allies, and (2) more technolgy from the West, while having (3) only a steady or shrinking flow of oil to trade for both. With the desire in Berlin and Budapest (and Prague, Bucharest, Sofia, and Warsaw) to buy more mid- and high-tech goods in the West, it's hard to see how the old Comecon trade patterns can survive.