Wheat Sales to Soviets a Political Ploy, GOP Senator Says : Lugar Joins Shultz in Opposing Subsidies

Republicans want the Administration to sell subsidized wheat to the Soviet Union to counter the Democrats’ well-financed drive to regain control of the Senate by targeting GOP incumbents in the beleaguered Farm Belt states, Sen. Richard G. Lugar (R-Ind.) said Tuesday.

Lugar, chairman of the Senate Foreign Relations Committee, told reporters that he agrees with Secretary of State George P. Shultz that President Reagan’s decision to sell the Soviets 4 million metric tons of subsidized wheat is “bad foreign policy.”

‘Politically Important’

“This grain business transparently has something to do with the election this fall,” said Lugar, who previously headed the GOP Senate campaign committee. “There is no fundamental foreign policy dicta there. It is politically important.”

Lugar noted that the idea originated with Senate Majority Leader Bob Dole (R-Kan.), who wrote legislation to subsidize unlimited wheat sales to the Soviet Union. The measure has been approved by the Senate as a rider on a House-passed bill and is being considered by a House-Senate conference committee.

Lugar indicated that the majority leader had decided to act after receiving reports that Democratic political action committees are targeting GOP senators in Farm Belt states in an effort to capitalize on economic problems there.

$10 Million to Spend

“Dole is looking at a situation in which it has been reported to us that the PACs from the AFL-CIO had $10 million to spend and decided to spend all of it in $2-million chunks in South Dakota, North Dakota, Idaho (and two other Farm Belt states--Wisconsin and Oklahoma),” he said.

He cited the AFL-CIO fund as an “illustration” of how the Democratic PACs have turned the Farm Belt into an election-year “battleground.” He added that big states such as New York and California have been “almost abandoned” by these groups.

“I think it’s indicative of what many see as a preoccupation with those particular states and the possibilities for turning them around to get a Senate majority,” he said. “They loom larger.”

Denies Fund Exists

AFL-CIO spokesman Rex Hardesty, contacted in Chicago, where the labor federation’s executive council is meeting, denied that the association has organized such a fund to spend in farm states. But he acknowledged that the PACs of the AFL-CIO and its affiliated unions are expected to spend nearly $30 million in this election cycle.

Although the export subsidies program may help Republicans in the farm states, it is causing the Administration serious problems abroad. Australia and Canada have protested the policy, contending that it will cut into their own grain sales.

“Our relationship with Australia has gone unbelievably sour in a course of a week of time,” Lugar said. The Australians believe that they have been betrayed by “their closest friend, literally, for a very small price,” he said.

Should Be Sensitive

Lugar added that the United States should be more sensitive to the wishes of Australia because of the role it plays in the Pacific.

“What has not surfaced as much as it ought to is that Australia has really been very, very helpful in thinking through with us all of the problems of various islands in the Pacific that are receiving overtures from the Soviets,” he said. “For a small amount of cash, the Soviets are buying up fishing rights but also buying up some foreign policy chits.”

Lugar defended Shultz’s unusual criticism of the President’s policy. On Monday, Shultz told USA Today in an interview that he opposed the subsidies not only for foreign policy reasons but because they are a form of protectionism.