Soviets OK More Imports for Consumer : Will Add $8 Billion in Debt in Attempt to Ease Shortages

Alarmed by rising discontent over severe shortages of consumer goods, the Soviet government will spend $8 billion more this year on imports from the West, ranging from soap to cheese to shoes, according to an official report published Sunday.

In a have-not society, the issue is of the utmost political as well as economic importance for the Soviet leadership under President Mikhail S. Gorbachev, and the decision to go further into debt reflects Gorbachev’s deep resolve to seek a middle road between communism’s statist approach to social problems and the entrepreneurship of market economics.

Suren Y. Sarukhanov, a deputy trade minister, told the influential weekly newspaper Arguments and Facts over the weekend that the $8 billion was added to $51 billion previously allocated under the state budget--that latter sum financed by exports--for the import of consumer goods in an effort to satisfy growing demand.

From Knits to Soap

Most of the additional money has already been spent, Sarukhanov said, to buy 30 million pairs of wool-and-nylon tights, 15 million items of knitwear, 180,000 tons of detergent and 300 million razor blades among other items.

And imports of coffee, long a rare commodity, will be doubled from 8,500 tons last year with increased purchases from Africa, Latin America and India in an attempt to make an immediate impact on the Soviet market.

Reformers have urged the government for more than two years to increase its imports--both as a means of proving that Gorbachev’s economic reforms can bring economic growth and also as a way of reducing inflation by taking more money out of circulation--but they have received limited support because of the fear of indebtedness.

Opponents have already offered a strong counter-argument: unlimited foreign borrowing would mortgage the country’s future economic development, far more than the reformers believe, by allocating any gains to paying off the old debts.

The way through this thicket of competing trade interests would be centrally planned, centrally agreed contracts on deliveries of raw materials in exchange for consumer products.

Sarukhanov said that hundreds of millions of dollars of orders have already been placed with Soviet firms in Britain, Cyprus, France, Italy, Finland, Japan, Malta, Turkey, West Germany and Yugoslavia.

Gorbachev, assessing the Communist Party’s setbacks in last month’s parliamentary elections, warned that the party’s political credibility depends on its ability, now more in question than ever before, to improve living standards.

The acute food shortages, Gorbachev said, had contributed directly to the party’s poor showing in the election, where senior party officials were defeated, including some who had run unopposed.

The government’s new decision also appears to reflect a compromise, crucial and probably temporary, on a fundamental economic question: To what extent will the Soviet Union use vast credits available to it from the West to finance immediate imports, particularly consumer goods, in order to underwrite the country’s overall reform effort.

Couched in terms of millions of pairs of Italian boots, millions more Swedish razor blades, 10 million West German and Japanese cassette tapes and 10,000 tons of foreign toothpaste, the decision seems almost comic, a caricature of a superpower that cannot feed, clothe or house itself.

But translated into goods in the shops, it could prove to be far more important than those decisions characterized as “strategic,” because the imported goods should start appearing in main-street shops within weeks.

Shoppers Will Be Delighted

While the decision “will undoubtedly delight our shoppers,” Sarukhanov said, the underlying economic debate will undoubtedly continue.

Some radical economists have argued strongly that popular confidence in Gorbachev’s overall reform program depends on the party’s ability to deliver quickly massive amounts of consumer products, whether through increased production or through imports.

To their minds, the country could go deeply into debt in the expectation that workers, convinced by the imported goods that their labor would bring improved living standards, would increase their output and productivity.

Others have suggested that Moscow sell part of its large gold hoard to finance the imports, again arguing that nothing is more crucial than increasing popular confidence in the government’s current reforms.

Up-Front Payment Justified

To these economists, the future of perestroika , or economic restructuring, is so important that such an up-front payment to bolster confidence is justified by whatever price must be subsequently paid.

Other, more conservative strategists fear, however, that the accumulation of large debts will prevent a future economic takeoff, and they cite the examples of Poland and Hungary as well as developing countries in the Third World as a cautionary lesson for the Soviet Union.

Until now, the Soviet leadership has consciously followed the more conservative line despite the suggestions that it should cut itself free to encourage fast growth.

Sarukhanov gave no indication of the considerations that went into the government’s decision, nor did he say how far Moscow would go beyond the initial $8 billion in implementing it.

Large Trade Deficit

Only three weeks ago, official Soviet trade figures showed that the Soviet Union had run up a trade deficit of $2.6 billion with the West and Japan in 1988 due to a large surge of imports late in the year.

Sarukhanov indicated that the decision to release more funds for imports was made in December, long before the elections, but there was no explanation about why it was only made public now.

Nor did he say how the increased purchases would be financed--whether by more exports, by borrowing or by changes in Soviet purchasing patterns.

Over the past two years, rationing of consumer goods, particularly foodstuffs, has increased. Next month, for example, sugar will be rationed in Moscow for the first time in decades to alleviate an acute shortage. In many cities, meat, cheese and other dairy products have been rationed to ensure an equitable distribution.