NEWS ANALYSIS : U.S. Accepts Idea of Aid to Soviets With Stiff Terms

Prodded into action by an insistent Mikhail S. Gorbachev, the Bush Administration has accepted the idea that the West must help the Soviet Union reform its collapsing economy but is campaigning to ensure that no Western country offers significant financial aid to Moscow without demanding tough conditions in return, senior officials say.

Gorbachev, using the public-image knack that has long been his strongest foreign-policy suit, has succeeded in persuading many governments in the West that remaking the Soviet economy will require major foreign help.

President Bush and his aides have reluctantly accepted that point and are now working to shift the burden of proof back to Gorbachev to show that his promises of far-reaching reform are real--unlike earlier proposals that turned out to be, in one senior official’s words, “pale half-measures.”

“ Perestroika could be the most important revolution of this century,” Secretary of State James A. Baker III told the foreign ministers of the North Atlantic Treaty Organization last week at their annual meeting in Copenhagen. “All of us have a profound stake in its outcome.”

But before any wealthy countries offer more financial aid to Moscow, he added, “the Soviets must find the will to open the way to a new future; they must start with self-help.”

Bush and his aides have made a point of embracing Gorbachev’s promises of reform and declaring their fervent desire to help. Bush already has decided in principle to extend most-favored-nation trading status to the Soviet Union and probably also will offer Gorbachev $1.5 billion in agricultural credits at their planned summit meeting in Moscow, officials said. But these measures would fall short of the massive cash aid the Soviets have sought.

Behind the avowals of solicitous interest, U.S. officials display a tone of annoyance at the Soviet leader for forcing the issue to the top of the international agenda before his own reform proposals were even ready, for putting the United States and other Western countries on the spot and for warning bluntly that ignoring his pleas could turn the now-cooperative Soviet Union back into a resentful, antagonistic nuclear superpower.

“Gorbachev is like the schizophrenic who says if you aren’t nice to me, my other personality will do something terrible,” a Baker aide grumbled.

The worst part of it, another official acknowledged, is that Gorbachev is probably right. “We’re stuck with him,” the official said. “We have to recognize that if Gorbachev is ousted, his successor is almost certainly going to be worse.”

The Administration’s most immediate concern is not what happens in Moscow but what happens in London, where the annual economic summit of industrial democracies is scheduled to begin July 15.

Despite initial U.S. opposition, Gorbachev has succeeded in wangling himself an invitation to the meeting, not as a participant but as a supplicant who will make a separate presentation of his economic plans to the seven summit countries--the United States, Japan, Germany, France, Italy, Britain and Canada.

Soviet officials have said that Gorbachev plans to ask the wealthy countries for at least $15 billion a year--and perhaps as much as $50 billion--to help ease the transition to what they call “a mixed market economy.”

Bush, Baker and other U.S. officials have consistently rejected any direct U.S. financial aid to the Soviet economy, if only because they believe that it would be hugely unpopular at home. Both Democrats and Republicans on Capitol Hill already have denounced the idea of a “taxpayer bailout” of the Kremlin.

But Gorbachev intends to ask for much of his aid from international financial institutions such as the International Monetary Fund, the World Bank and the new European Bank for Reconstruction and Development. There, the United States could find itself in a minority, facing allies who want to help Gorbachev with funds that are partly U.S.-supplied.

Sen. Sam Nunn (D-Ga.), chairman of the Senate Armed Forces Committee, said Sunday that he would support that kind of aid. “Conditional economic aid . . . should come through the IMF and the World Bank, multinational organizations that are accustomed to putting conditions on aid,” he said on the NBC program “Meet the Press.”

A senior Bush Administration official acknowledged that sentiment is growing among the United States’ European allies for that kind of aid, as well.

As a result, Baker and others have begun trying to build a consensus among the allies for demanding stringent economic conditions of the Soviet Union before any major Western aid would flow.

U.S. officials argue that giving Gorbachev aid without demanding sweeping reforms first would make life too easy for the Soviet leader and allow him to postpone such politically painful moves as putting state-owned farms into private hands or abolishing government control of prices.

Baker made the U.S. case in detail last week in his speech to the NATO foreign ministers. If Soviet economic reform is to succeed, he said, “the Soviets must move to embrace a real market economy with private property, incentives”--meaning profits--”established and respected laws on exchange, competition, a sound currency and real prices.”

At the same time, he added, Gorbachev should continue political reforms, allow the Baltic republics to move peacefully to independence, end aid to Cuba and further cut military spending. But those political conditions, an aide said, merely created the “context” for aid; the economic conditions would determine whether aid was worth sending.

The United States’ major economic allies agree. Japan has been even more reluctant than the United States to send money to Moscow. Germany, indebted to Gorbachev for allowing its unification, has given more than $30 billion to the Soviet Union, but Chancellor Helmut Kohl has said that “self-help” will be the condition for continued aid.

Still, officials are only too conscious of Gorbachev’s success in getting his way so far. U.S. diplomats will be lobbying hard in the four weeks before the London summit to try to keep the other allies lined up behind tough conditions.

No matter what the outcome, the issue already has touched off a lively political debate. On Sunday’s television talk shows, four U.S. senators offered the Administration their conflicting advice on how to deal with the issue.

“It is not in our interest for a country that has 10,000 to 20,000 nuclear weapons to go into chaos,” Nunn said. In addition to aid from the IMF and World Bank, he suggested U.S. efforts to help the Soviet Union develop its oil and gas resources, convert military industries to consumer goods and clean up environmental damage.

Sen. Daniel Patrick Moynihan (D-N.Y.) called on Bush to grant most-favored-nation trading status immediately. “Why not try?” he asked. “What are we afraid of?”