Advertisement

COLUMN ONE : Soviet Aid: How Much, How Fast? : The West is preparing to send food and money. But with the economy a shambles, the Soviets may be in no position to make good use of it. Much is likely to be wasted.

TIMES STAFF WRITER

The Soviet Union and its republics surely need a helping hand. But whether help from the West will do much good is an open question.

The Soviet economy is in disarray, and getting aid to the people will be tough. Food has to be shipped efficiently; cash may well go to waste; technical advice doesn’t work quickly. And then there’s the question of who to deal with: the central government, the republics, private groups or entrepreneurs?

Still, the West’s heart--and a sense of its own self-interest--are sending a signal: Do something.

Ever since the Soviet army’s tanks rumbled off the streets of Moscow and back to their bases after the collapse of last week’s hard-line coup, the debate in the United States and in Europe over Western aid has intensified.

Advertisement

Germany, France and Italy have already called for a dramatic expansion of assistance. They are pushing hard for a thorough review of a joint policy on Soviet aid just forged by the major industrialized nations in July at their London economic summit, to reward the Soviets for their sudden rejection of 70 years of Communist rule.

Now President Bush is coming under new pressure domestically. Earlier this week, Rep. Les Aspin (D-Wis.), chairman of the House Armed Services Committee, proposed a provocative plan to slice $1 billion out of the Pentagon’s budget and give it to the Soviets in the form of humanitarian aid. Aspin called aid to the Soviets “defense by a different means.”

Other key lawmakers are also clamoring for more action. And experts at think tanks and college campuses across the country are rushing to tout plans for broadening aid to Moscow, partly as a reward.

At Harvard University, a group of professors drafted a plan for a “grand bargain,” in which Western countries would provide massive amounts of aid in return for a gradual Soviet shift to a free-market economy.

Advertisement

“Here we have a window of opportunity, for robust engagement,” said one of the plan’s authors, Prof. Graham Allison.

Yet, as each new day brings the making of fresh history in the Soviet Union and its republics, the Bush Administration continues to hold back, arguing strongly against any broad new Western assistance package until the Soviets embark on economic reform.

“I’d say let’s take a little time and sort this thing out intelligently,” Bush told reporters Thursday in Kennebunkport, Me. “Let’s get the facts, and then make decisions--not try to get out there and have an instant solution to a problem when you don’t know the major parameters of the problem.”

As a result, some analysts believe that the White House may be in danger of falling behind the political curve on Soviet aid, vulnerable to being swamped by the chaotic pace of events. “The Bush Administration is on the defensive on this issue,” said Michael Bernstam, an economist and Soviet emigre at the Hoover Institution at Stanford University.

Advertisement

Just the same, Bush and British Prime Minister John Major are continuing to respond cautiously. In London on Thursday, high-level officials from the seven leading Western industrial democracies met to map out a coordinated approach for future aid, but it seemed apparent that they were unlikely to change their strategy dramatically.

Despite public pressure from some European nations, most notably the Germans, the industrial West seems prepared only to provide food and other short-term humanitarian assistance to help the Soviets get through what many analysts expect to be a harsh winter.

American officials, in fact, seemed determined to hold back allied commitments at this week’s London meeting, prompting Horst Koehler, a German Finance Ministry official, to chide the United States. The Germans, still vexed by the presence of hundreds of thousands of Soviet troops in what used to be East Germany, so far have been responsible for more than half of all Western aid to the Soviets.

Now it is time, Koehler insisted, that the other industrial countries shoulder a larger share of the burden. Western aid, he said, “has been unbalanced up to now. We are frank with our partners that their reluctance--their tactical, political approach to this issue--should be overcome.”

Advertisement

But while the political momentum in Europe and the United States clearly has shifted in favor of more Western aid, the harsh realities of the Soviet economy have not changed. If anything, the collapse of central authority in the Soviet Union over the last week has dramatically worsened that nation’s short-term economic outlook.

In the view of many economists, the key problem with sending massive amounts of cash aid now is that, no matter how much money the West gives the Soviets--even as much as $200 billion, if that were possible--it probably would not be sufficient to overcome the country’s problems. Until Moscow and the Soviet republics move more forcefully toward a market-oriented economy--by recognizing private property, for example, and by overhauling the country’s marketing, distribution and pricing systems--analysts say that massive amounts of cash would simply dissipate.

Indeed, U.S. experts warn that the West should be prepared for the prospect that even much of the food assistance it gives the Soviets this winter will go to waste, largely because of the incredibly perverse economic structure now in place.

Experts point out that the distribution system is so inefficient that trains loaded with grain and other foodstuffs now sit for weeks on rail sidings around Moscow, while store shelves a few miles away remain barren.

Advertisement

The nation’s pricing mechanisms are so out of whack that farmers feed bread to their pigs because the government has kept bread prices below those charged for raw feed grains. Farm collectives in the Ukraine, which have not been paid by urban food distributors in at least a year, refuse to send their harvests to the cities.

But the Soviet economic woes go far beyond mere food shortages. The Soviet Union’s infrastructure--its roads, telecommunications, rail and air systems--is in a state of near-collapse.

Now the nation is stuck in an economic netherworld, caught somewhere between a centrally controlled command economy and the free market. Neither communism nor capitalism is in place, and the result is that almost nothing works.

What is worse, the political splintering into independent republics has made it almost impossible to determine how to channel Western economic assistance. The grip of the Soviet central government is now waning, yet the power of the republics remains unclear. Even the three Baltic states, which seem to have the greatest chance for true independence from the Soviet Union, have not yet sorted through their future ties with Moscow.

Advertisement

As a result, a growing number of economists and Soviet analysts now side with the Bush Administration in counseling caution. “I don’t think it is the time,” said Richard Judy, a Soviet expert at the Hudson Institute, a conservative think tank. “The Soviet Union is in no shape to receive aid.”

Analysts also now reel over the new political dynamics inside the rapidly splintering country, where it is much less clear than it was even two weeks ago who should be given Western assistance.

“I think we should begin to crank up the machinery but not necessarily give them any aid yet,” said Gabriel Schoenfeld, a Soviet specialist at the Center for Strategic and International Studies in Washington, D.C. With the nation in the midst of political upheaval, Schoenfeld asserted, “we should engage the Soviets, to better understand what they hope to do on economic reform. But we have no choice now but to wait and see what they eventually do before giving assistance.”

In fact, as the West slowly sifts through its options in responding to the Soviet Union over the coming weeks, many analysts believe that authorities will decide that they ought to defer massive aid and concentrate instead on a few specific proposals that are likely to prove the most successful--and the least costly to provide.

Advertisement

Indeed, a consensus already seems to be emerging. Among its major elements:

* A big dose of food and humanitarian assistance should be provided to help stave off hunger and thus provide some measure of badly needed political and social stability. The United States already has accelerated some $315 million in food credits and loan guarantees to the Soviets since the coup’s collapse, and Bush and the Western allies have indicated that they are willing to do more soon.

* As soon as the Soviet revolutionary climate settles down, the West should jointly agree to pour in a wide range of technical assistance and advisers. Economists said that the Soviets need to change virtually every aspect of their economy and culture and could use advice on how to move toward a Western-style industrial system. Analysts believe that the West could help most not by providing grand economic schemes but by offering help in specific fields such as banking and agriculture. Britain’s Major stressed Thursday that any additional Western aid should be in the form of food and technical assistance.

* Food and technical advice should be aimed primarily at the republics, which now seem likely to end up controlling the vast majority of the Soviet economy. The Soviet central government already has agreed in principle to turn over most of the nation’s vast natural resources to Russia and the other republics and those local governments seem destined to hold the nation’s purse strings.

Advertisement

* The Baltics, in particular, seem best positioned now to receive Western help. “The Baltics are different,” says Condoleezza Rice, former National Security Council Soviet policy chief who is now at Stanford University. Because they are already moving much more rapidly toward a free-market system than is the rest of the Soviet Union, “a few billion dollars might help them,” Rice contended.

* In addition, Western international economic organizations should accelerate the current timetables for accepting the Soviet Union--and its independent republics--as new members. Before the coup, the Bush Administration fiercely opposed Soviet membership in the World Bank and the International Monetary Fund, arguing that the Soviets would only use those lending agencies to grab more Western aid.

But membership in those organizations would immediately give the Soviets and the new republics broad access to technical advice in critical areas of finance and economic policy-making. Those organizations, along with the major industrialized nations, could also help provide new financing to attract more private investment in the Soviet Union by Western businesses.

For the moment, at least, the question of increased Western aid is still up in the air. Although Germany wants to increase the amount of assistance to the Soviets, other European countries aren’t likely to be able to afford much more. And Japan is reluctant to move any further until Moscow agrees to return the Pacific islands that the Soviet Union seized at the end World War II.

Advertisement

But that equation could change quickly, particularly if the European Community brings more pressure to bear and if Moscow agrees to cede to Japan the territories it wants. Prime Minister Major is slated to visit Moscow this weekend to confer with Soviet President Mikhail S. Gorbachev and Russian Federation President Boris N. Yeltsin. U.S. officials say he may win authorization from the other Western powers to provide them with assurances of at least some new aid.

“I understand the wish that there is in some people’s mind to do something fresh, entirely different and entirely dramatic,” Major said Thursday, “but we have to consider what will be practical, what is deliverable and what would actually help.”

Times staff writers Joel Havemann in London and David Lauter in Washington contributed to this story.


Advertisement
Advertisement