Bush Administration Wary Of Funding Soviet Reforms

IN the run-up to next week's Western economic summit in London, the Bush administration is trying to play down expectations over what will emerge in the post-summit gathering with Soviet President Mikhail Gorbachev.Mr. Gorbachev can expect only an offer of Western technical assistance, which would include a new type of "associate status" in the International Monetary Fund (IMF) and the World Bank - not a pledge of big financial assistance, administration officials say. German Chancellor Helmut Kohl told the Soviet leader as much in Kiev last Friday, when Mr. Kohl stressed to Gorbachev that he needs to draft a specific plan for market-oriented reform of the Soviet economy and then stick to it, if he is ever to get major Western financial backing. Kohl also promised to plead Gorbachev's case in London. Some Gorbachev aides say the Soviet leader will not bring a specific reform plan to London but rather will come just to "discuss ideas." The Bush administration, for its part, has made clear that it feels Moscow must spell out what it has in mind, and will not bring a specific offer to Gorbachev at this point. Of the seven Western industrialized nations that hold an annual economic summit, the US, Britain, and Japan are most skeptical of putting up big money for Soviet reform. The other G-7 nations are Italy, France, Germany, and Canada.

Access to Western assistance A senior administration official, who spoke on condition of anonymity, says gaining associate status in the world's top financial institutions "is the best thing that could happen right now in the Soviet Union." Since this is a new form of status in the IMF and World Bank, the terms are still under discussion. But, the official says, "the way we're thinking about it is that it would basically give the Soviets everything but money. That is, it gives them access to technical assistance; it gives them the ability to have, say, their specialists come to IMF educational institutions, World Bank educational institutions. It gives them access to some of the best specialists in the world for putting together the sort of program they're trying to put together." The kind of experience these specialists have is in putting together economic restructuring programs in which a nation relies on its own resources, the official explains. This would be particularly pertinent to the Soviet Union, which is a resource-rich country. The Soviets are the largest producer of oil in the world, and hold 40 percent of the world's gas and coal reserves. The estimated value of their gold reserves is $25 billion. "This is not a poor country - this is a rich country that's poorly managed," says the official. "And if you could figure out ways to liberate their resources, that's a good start. How far down the road it takes them, I don't know. But that's what the IMF and World Bank could do." Because of the larger international political context of such a Soviet-IMF-World Bank collaboration, the G-7 nations are considering a more structured mechanism for dealing with what is becoming an annual phenomenon: the Soviet dimension of G-7 dealings. Though each G-7 nation brings its own concerns to its financial dealings with the Soviet Union - such as, for the Germans, unification and Soviet troop withdrawals - the seven try to coordinate as much as possible.

Reaction to Soviet reform And as Soviet reform policy unfolds, says the administration official, "the amount of Western support and enthusiasm for Western support clearly [are] somehow linked to what happens to Soviet defense expenditures, what happens to the fate of the Baltic nations, to Soviet [foreign] aid flows. They're not conditions, they're not ultimatums, it's just part of the context of what we're doing." The official plays down unspecified requests by Gorbachev in recent months for massive Western financial aid, dismissing them as the public utterances of a politician under tremendous strain. When Gorbachev aide Yevgeny Primakov and pro-market-reform economist Grigory Yavlinsky were in Washington in late May, they never conveyed a specific request for money from the US, he says. Gorbachev has spoken of mixing two economic plans that are "oil and water the so-called Yavlinsky plan, which uses market-type mechanisms to introduce a market economy, and the "anti-crisis" plan of Prime Minister Valentin Pavlov, which prescribes old-style command-economy methods to produce reform. "We've got this odd schizophrenia about politicians," the official elaborates. "When Western politicians say something, immediately we start wondering what they really mean. When Soviet politicians say something, we say they must have meant that. Just because he says he's going to mix the two plans doesn't mean he will. Or he may mix them, and it may be 99 percent Yavlinsky." "At this point, [Gorbachev] is in a very complicated political situation," the official continues, "and the most important thing to focus on is that he hasn't dismissed the Yavlinsky plan."