TIME: Almanac 1993/TIME Almanac 1993.iso/time/122490/1224108.000

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                                                                                NATION, Page 16

Rescue Mission


As Moscow faces its worst winter shortages since World War II,
Bush offers food, cash and counsel to bolster Gorbachev's
reforms

By NANCY GIBBS -- Reported by James Carney/Moscow, William
McWhirter/Chicago and Christopher Ogden/Washington


    An open hand, outstretched to a fallen adversary, may be the
surest sign that a battle is truly over. Last week brought just
such a sign as the Soviet government issued a dignified -- but
desperate -- request for help, and an American President
responded solicitously. George Bush's decision to help sustain
the Soviet Union through the hard winter ahead reflected as
much politics as pity, but what made it easy was that both
sides had so much to gain.

    For the first time in the postwar era, the Soviet government
now puts its needs -- and its fears -- ahead of its pride.
During three days of talks in Houston and Washington, Soviet
Foreign Minister Eduard Shevardnadze admitted that the Soviet
Union required food, medicine and loans to survive a winter of
shortages unparalleled since the end of World War II. In
response, President Bush overturned 16 years of trade policy
and agreed to back loans worth up to $1 billion. He also
offered emergency medical aid and proposed that the
International Monetary Fund and World Bank provide experts to
reinvent the Soviet economy before what is left of it
collapses entirely.

    The President's action occurred in a climate of
unprecedented warmth between the two countries. Gone are the
days when high-level U.S. and Soviet officials met twice a
year; last week's visit in Houston was the 23rd meeting between
Secretary of State James Baker and Shevardnadze, who managed
in their whirlwind consultations to cover everything from
Angola and Afghanistan to arms control and the Persian Gulf
crisis. During the final Rose Garden ceremony on an unseasonably
warm December afternoon, President Bush announced that he
would travel to Moscow in mid-February for a fourth summit with
Gorbachev, with the hope of signing a START treaty reducing the
superpowers' arsenals of long-range nuclear weapons.

    With so much progress on so many fronts, it was easy to see
the offer of aid as a reward for good behavior. Both Baker and
Bush were at pains to deny any quid pro quo, especially for
Soviet cooperation in the gulf crisis. "None of the measures
today are in any sense a payback," Baker insisted, thereby
fueling suspicion in the act of disputing it. There was no
denying that Soviet cooperation has been essential in keeping
the pressure on Iraq -- by voting for sanctions, supporting the
United Nations resolution permitting the use of force, and last
week delaying a U.N. vote endorsing a Middle East peace
conference, which the U.S. opposes.

    To be sure, the Soviet-American rapprochement began long
before the invasion of Kuwait. "Obviously, our ability to
cooperate in the gulf is part of an overall understanding with
the Soviets," says a top U.S. official. "If we weren't getting
cooperation, it would have a bearing on a whole range of
issues." By drawing back the Iron Curtain without bloodshed,
undertaking democratic reform at home and supporting a number
of U.S. policies abroad, Gorbachev has created a sort of
personality cult in Western diplomatic circles. American
officials claim to support policies, not politicians, but in
private there is widespread fear that current Soviet policies
may be inextricably linked to the current embattled Soviet
leader.

    The Administration is in a delicate position as it tries to
bolster Gorbachev's standing at the very moment when the Soviet
President seems to be retreating from democratic reform. "I
want perestroika to succeed," Bush declared flatly. But
Shevardnadze acknowledged a "certain instability" in Soviet
society, igniting fears that a bad winter could prompt a
retreat to more authoritarian tactics. Gorbachev recently
appointed hard-liner Boris Pugo as Interior Minister and
enlisted the KGB to crack down on black marketeers, whom some
in the West view as the Soviet Union's fledgling
entrepreneurs.

    In Houston, Baker warned Shevardnadze that resorting to
repression could damage superpower relations. At the same time
critics charge that propping up Gorbachev's failing economy
could retard rather than promote reform, especially since the
aid is being delivered to central authorities instead of the
individual republics. Gorbachev has come under fire for balking
at truly radical market solutions, settling for half measures.
Critics say he is undermining his commitment to private
enterprise by trying to root out the thug-infested black market
when he should be encouraging its entrepreneurial spirit.

    Bush also had his own domestic economic agenda. Other major
grain producers, from Canada to Australia, have already eased
the Soviets' access to credit; failure to follow suit, U.S.
farmers argued, could shut them out of the huge Soviet market.
But farm-belt lawmakers complained that the credit guarantees
did not go far enough: Senate minority leader Robert Dole of
Kansas had hoped for at least $3 billion. Trade experts note
that because of Moscow's shortage of hard currency reserves,
the U.S.S.R. needed the credits simply to match its normal
level of U.S. imports.

    Amid all the grousing, hope was rising that a new, historic
era of trade had begun -- with vast opportunities for U.S.
exporters. To open that door, however, Bush had to waive the
1974 Jackson-Vanik amendment, which prohibited normal trade
relations until Moscow allowed free emigration for its
citizens. The Soviet parliament still has not passed a
free-emigration law. But in the past year alone, authorities
have permitted the departure of more than 150,000 citizens,
mostly Jews headed for Israel, and it is likely that a
satisfactory emigration law will be enacted next year. Once the
law passes, the Bush Administration is expected to grant the
Soviets most-favored-nation status, which would vastly reduce
tariffs on goods exported to the U.S. "The Soviet Union has
tremendous potential resources and capabilities," Baker said.
"The right market reform can tap this in a manner to give that
country a vibrant economy."

    Such visions, however, depend both on political stability
and a complete overhaul of the Soviet system. With that in
mind, Bush proposed that the Soviet Union be granted "special
association" status in the IMF and the World Bank. Those
organizations would help integrate the U.S.S.R. into the world
economy by dispatching experts on the banking system, stock
markets, currency exchange, transportation and energy.
Eventually the Soviets could be eligible for full membership in
the international bodies.

    The U.S. initiative was applauded overseas, where nearly two
dozen other countries and relief organizations have already
promised help, including $1 billion in credits and outright
gifts and $1.4 billion in technical assistance from the
European Community. So far, the Soviet Union has received more
than 2,500 tons of goods, mostly food, which are being
distributed to children's homes, pensioners, invalids and
low-income families; all aid is under close guard to prevent
pilfering.

    Among the most generous rescue efforts are those from
Germany. Chancellor Helmut Kohl is eager both to reward
Gorbachev's support for unification and to promote stability
as a way of keeping hordes of hungry Russians from heading
west. The Germans have promised nearly $10 billion in aid, as
well as enough meat, milk and medicine for 10 million people
for a month. With a sense of irony and shame, war veterans in
Leningrad find themselves awaiting CARE packages from Germany
nearly 50 years after the city's population was virtually
starved in the siege. Many believe Leningrad is suffering
severe shortages these days at least partly because hard-line
Communists are trying to undermine the democratically elected,
reform-minded city council.

    For outsiders seeking to help, the greatest challenge is not
supply but distribution. The old centrally controlled system
has crumbled, but no private market system has yet grown up in
its place. An economic civil war rages between the republics
and central state purchasing agents. The decrepit rail and road
transportation system is grossly inefficient. In light of such
fundamental weaknesses, critics of U.S. aid -- and some cynical
Soviet citizens -- wonder if the relief will ever reach those
who need it most.

    Wary of pouring money down a sinkhole, Bush promised to send
over experts in food distribution to prevent the Western
supplies from rotting in warehouses alongside this year's
Soviet harvest. The goal is to ease the panic of Soviet
shoppers, who daily confront empty shelves in government
stores. Experts believe hoarding, born of fear, is exacerbating
the shortages -- and that cannot be solved by credits alone.
"If the problem isn't with how much they can grow, the solution
isn't going to be in how much more they can buy abroad," notes
Richard Feltes, vice president of Chicago-based Refco, one of
the world's largest commodities brokers.

    Though there is talk of famine and reports of ever longer
lines, most experts agree that while Soviets may suffer, they
will not starve this winter. State stores in Moscow and
Leningrad are empty of bread, soap, matches, meat. Yet private
shops are abundantly stocked and now account for as much as
one-half the Soviet food supply, though they charge up to ten
times state prices. With the exception of desperately poor
areas like Uzbekistan, most regions are managing to feed their
people. But the cost is high: nearly everyone is reduced to
scavenging and hoarding, rather than working and rebuilding.

    Though the aid package made the biggest headlines last week,
a whole menu of regional issues was on the table in Washington.
In an effort to end Angola's 15-year civil war, Shevardnadze
met for the first time with Jonas Savimbi, leader of the
U.S.-backed guerrilla forces, while Baker sat down with the
Soviet-backed government's Foreign Minister, Pedro de Castro
Van-Dunem. Shevardnadze also consulted with Israeli Prime
Minister Yitzhak Shamir on the emigration of Soviet Jews and
resumption of diplomatic relations, which Moscow severed after
the 1967 Arab-Israeli war.

    There were still some sticking points reminiscent of the old
days of superpower stalemate. As Richard Burt, chief U.S. START
negotiator, put it, "Arms control will not take care of
itself." Both sides are eager to sign a START treaty, which
would cut strategic nuclear arsenals one-third. But still
outstanding were a number of technical issues, most involving
inspection and verification. More seriously, there have been
reports that the Soviets have simply removed weapons from
Europe rather than destroying them, which violates the spirit
if not the letter of the just signed Conventional Forces in
Europe (CFE) treaty. Such fiddling with the treaty terms might
delay ratification by the Senate and make lawmakers more
suspicious of the terms of the START treaty.

    But it was hard to imagine that the remaining conflicts
could not be resolved. Diplomats savored the chance to
construct a new international order, piece by piece, that would
take crises in stride. There are risks, to be sure, in
euphoria, but there is real cause for hope in the results of
these meetings. Shevardnadze put it simply: "We are indeed in
a very new phase of our relations." Underscoring the growing
cordiality between the once hostile superpowers, President Bush
offered the Soviet Foreign Minister a personal tour of his home
to show off his Christmas decorations.