TIME: Almanac 1993/TIME Almanac 1993.iso/time/061791/0617000.000

Text File | 1992-08-28 | 9.4 KB | 196 lines

                                                                                WORLD, Page 34

SOVIET UNION

Did You Say $250 Billion?


Gorbachev insists he is entitled to aid from the West, but Bush
is wary. Reason: he doubts the Soviet leader's commitment to
total reform.

By BRUCE W. NELAN -- Reported by James Carney/Moscow, Dan
Goodgame/Washington and J.F.O. McAllister with Baker


    The Russians are threatening the West again. Their
increasingly strident pleas for billions of dollars in aid carry
a subtext: if the U.S. and its industrialized allies do not come
up with the money, a disintegrating Soviet Union may bleed all
over them. Officials in Moscow talk of instability, possible
civil war and a potential tidal wave of refugees clamoring to
enter Western Europe. Some of them suggest that chaos in the
U.S.S.R. could lead to nuclear war among the Soviet republics.

    In his speech accepting the Nobel Peace Prize in Oslo last
week, Mikhail Gorbachev joined the ominous chorus. If his reform
program succeeds, he said in a passage aimed squarely at George
Bush, a new world order is possible. But "if perestroika fails,
the prospect of entering a new, peaceful period in history will
vanish, at least for the foreseeable future." The West should
hasten to assist perestroika, Gorbachev insisted, and "it is
futile and dangerous to set conditions."

    The response from Washington and from the other members of
the Group of Seven leading industrial democracies has been to
set just the sort of conditions Gorbachev hopes to avoid. Bush
is sincere when he says, "I want perestroika to succeed," and
he intends to do what he can to make it happen. But the West
does not believe that even massive aid -- the figures being
bandied about total something like $250 billion over five years
-- will help unless the Soviet Union embarks on more fundamental
changes than it has been willing to consider so far.

    The most recent Soviet reform proposal envisages what some
American experts call the "grand bargain" and uses the language
of free-market economics. While it calls for privatization and
easing up on price controls in return for support from the West,
it is still a set of half measures. In fact, halfway seems to
be about where Gorbachev intends to stop. He said in Oslo that
his plan is to "establish a mixed market economy" -- that is,
something less than a free market. At the same time he
admonished Western capitals not to hold back assistance until
the Soviet Union's system comes to resemble theirs.

    Bush values his working relationship with the Soviet
President, at least partly because no one knows who or what
might follow him. Bush is grateful to Gorbachev for his decision
to liberate Eastern Europe from the Kremlin's grip, his
diplomatic support in the gulf war, his political reforms at
home. He wants Gorbachev to understand that their differences
over aid do not mean Bush is backing away from him. But Bush's
private doubts about sending hundreds of billions to the
U.S.S.R. are as strong as those his aides express publicly.

    Among the Group of Seven, says a sen ior White House
adviser, there is general agreement on two points. First, it is
in no one's interest to send Moscow huge amounts of aid that it
cannot use properly; and second, "the U.S. and its allies need
to do everything else they can to support Gorbachev and the
reformers."

    To do that, Bush has decided on several steps. He will
grant the Soviets the most-favored-nation trading status that
more than 100 other countries have been given, and he will ask
the Senate to ratify a U.S.-Soviet trade agreement. He has
already increased credits for grain purchases, and plans to
expand the program of technical assistance.

    Those are not hollow offers. A large part of the Soviet
Union's consumer crisis arises from mismanagement rather than
a lack of resources. The Soviet oil and gas industry, for
example, has enormous reserves but has suffered a crippling fall
in production. Similarly, farms could provide food for the
entire country if the primitive storage and distribution system
were improved. Western experts can show the Soviets how to
tackle these problems.

    Administration officials agree that Gorbachev faces
crucial decisions and believe what the U.S. should push for is
not increased efficiency alone but transformation of the entire
system. Says one: "We have to provide political and
psychological support to the Soviets and encourage them to
continue in the direction of reform." Until such a fundamental
program is actually being carried out, the official says, "all
the nations of the West are going to be very cautious."

    In a speech to NATO foreign ministers in Copenhagen last
week, Secretary of State James Baker listed several of the
conditions for assistance that Gorbachev had tried to head off.
The U.S.S.R. is potentially a prosperous country, said Baker,
but "to tap this potential, the Soviets must move to embrace a
real market economy." And to provide stable political
underpinning for it, Moscow should fully accept the rule of law,
stop repressing the independence-minded Baltic states, cut its
military spending and curtail or end its aid to "regimes that
pursue internal repression," presumably including Cuba.

    The Soviets, said Baker, will have to begin by helping
themselves. "If they do, we will support them." But, referring
to the starry-eyed talk of billions in aid, he added, "I don't
honestly think we can catalyze Soviet reform through a big-bang
approach."

    Like Baker, Bush believes Soviet economic reform will be
so agonizing that the West will have to dole out aid carefully,
both to avoid waste and to give the Soviets an incentive for
sticking to a hard road. "Bush knows Gorbachev is a communist
and has no visceral or intellectual commitment to market
reforms," says one of the Administration's top Soviet
specialists. "But Gorbachev knows his country is going down the
drain and that he has to do something extraordinary."

    Bush personified his current approach to the Soviet Union
last week when he appointed Robert Strauss, a veteran
Democratic Party leader and Washington lawyer, to be his next
ambassador in Moscow. The appointment was hailed almost
unanimously in Washington as a brilliant move. Strauss, 72,
knows all there is to know about how Washington politics and
American business work, though admittedly next to nothing about
the Soviet Union. If Gorbachev pursues real economic change and
there are deals to be made with him, Strauss can help close
them. Of course, if reform stalls again and bilateral relations
sour, Strauss could be out of business.

    The on-again, off-again course of reform in the U.S.S.R.
is no more certain in the future. Gorbachev said as much in
Oslo, advising the West that "it would be self-deluding" to
expect the Soviet Union to copy its system. One of his closest
advisers, Yevgeni Primakov, a member of the Soviet Union's
Security Council, said in an interview that Moscow frowns on aid
that is "tied to specific requirements."

    Primakov promises only that the Soviet Union would "cover
a certain part of the road toward a market economy" if the
Group of Seven provides assistance, and says it would then seek
more aid for further steps. As to political conditions of the
sort Baker mentioned, the Soviet planner dismissed them: "I
think there is no sense in making them." Washington knows that
Moscow cannot appear to be selling its foreign policy for
Western money, but wants to make sure the Soviets understand
where they must make concessions.

    In the next few weeks, Gorbachev will be able to make two
direct appeals to Western leaders. Following an agreement that
resolved apparent Soviet violations of the Conventional Forces
in Europe treaty, Moscow and Washington have now mounted what
they hope will be the final push on START, the treaty that would
reduce their strategic nuclear arsenals 25% to 30%. The two
sides have designated START as their "top priority task." The
summit Bush and Gorbachev were to hold in Moscow in February is
likely to take place as soon as the treaty is ready for signing.

    After months of trying to wangle an invitation and finally
demanding one, Gorbachev will be asked to address the summit of
the Group of Seven after its formal sessions wind up on July 17.
The U.S. and Britain, the host country this year, had been
reluctant to invite Gorbachev because they did not want to raise
his expectations for aid. As Gorbachev said in Oslo, he thinks
he is "entitled to expect large-scale support" to ensure
perestroika's success. But, said British Foreign Secretary
Douglas Hurd, "I am sure Mr. Gorbachev is not expecting to find
a check under the plate" at the London summit. Primakov and
other Soviet officials say Gorbachev will not be asking for any
specific amount of aid.

    If his Oslo speech was a dress rehearsal for the two
summits, Gorbachev might want to consider some fine tuning.
Senior officials at the White House gave poor reviews to his
approach -- "telling us we have to help save the system they've
got or they're going to lose control of their nukes." That was
something close to "rhetorical mugging," said one official, and
another called it "attempted extortion." Gorbachev is in no
position to threaten. He is more likely to get results from the
West if he switches to specific pledges and actual performance.