Crying in Our Beer as the World Rushes In : Trade: Entrepreneurial sloth and obsolete U.S. laws are blocking investment and profit in the former Soviet republics.

S. Frederick Starr, president of Oberlin College, was founding secretary of the Kennan Institute for Advanced Russian Studies. He is helping the Baltic governments develop a democratic systems and market economies

Just as both Democrats and Republicans were agreeing to shelve foreign policy in general and support for the erstwhile Soviet republics in particular, along came Richard Nixon, the Lazarus of American politics, to call their card. The U.S. response to the situation in the former Soviet Union was "pathetically inadequate," he said the other day. But before engraving Nixon's comments in stone, three revisions should be entered. They don't change the basic message, but they do render help to Russia and its neighbors far more attractive than it is now.

First, Nixon's remarks were long on impending doom, short on opportunity. Americans waited years for Mikhail Gorbachev to institute basic reforms at home, but he disappointed them. Now, in a mere six months, Boris Yeltsin has brought about more domestic change than Gorbachev did in six years.

By the time Yeltsin entered the scene, however, Americans had grown bored, jaded and pessimistic. Expecting only the worst, we invented a new potential catastrophe each week. First there was the military coup that was thought to be imminent. Then there were the mass strikes which, we were told, would follow Yeltsin's price reforms. Then we waited for communist die-hards and neo-fascists to make their move. And when they didn't, we announced that ethnic tensions would soon explode in a universal blood bath. Why do anything, Americans asked, since it is all going to end up in a mess anyway?

But this has not happened. Red Army officers want to make new lives, not a coup. The public has borne price reform heroically, knowing there is no turning back. Neo-communists and neo-fascists cannot be ignored, but so far they have shown themselves to be a pitiful band incapable of garnering any more votes than David Duke has in America. And for every incident of ethnic conflict detailed on our evening news, there are 10 examples of negotiated solutions to intergroup problems.

The fact is that the disintegration of the Soviet empire and establishment of 15 new countries has been accompanied by less violence so far than occurred during the American Revolution. There is urgent pressure for change, but its objective is to move forward, not to revert to the totalitarian past.

Second, Nixon emphasized aid but mentioned trade only in passing. Yet U .S. trade with these 15 new countries can do far more than handouts to speed their economic development. At this moment, U.S. trade with Russia, Ukraine, the Baltics and Central Asia lags behind that of nearly all other industrial countries and the gap is growing. Even cautious Japan has passed us.

Firms from Western Europe, Korea and Taiwan are rushing to Moscow and other national capitals to set up branch offices and joint ventures. They know the situation is chaotic, but they figure it will take at least two years to train their new Eastern European employees. By then, the economies will have revived and these firms will be poised to take advantage of a win-win situation.

Meanwhile, most American business leaders are sitting at home, crying in their beer over America's lost competitiveness, even as they refuse to compete in the world's third-largest market. American business is the loser, but so are the new republics. Because of our entrepreneurial sloth, Russians, Ukrainians and their neighbors are losing the benefits that trade and investment could bring.

Third, Nixon all but ignored many low-cost measures that could be instituted immediately to improve the climate for investment and development in countries of the former Soviet Union. The United States stands alone among industrial countries in having no comprehensive trade agreements with the Soviet Union's successor states. Tax and investment treaties are also needed, as are export credit and risk insurance.

The outdated Jackson-Vanik Amendment, which ties favored trade status to emigration, has yet to be repealed, and Russian businessmen are forced to wait three weeks for visas to this country, compared with three days for Germany or Japan.

If the United States had set out deliberately to handicap itself in its commercial dealings with these new countries, it could not have done better. Our legislative and bureaucratic breakdown is thwarting privatization and market development from the Baltic to the Pacific.

What is needed to correct this situation? Why not appoint a senior public figure to push along necessary legislation and remove bureaucratic roadblocks? Why not empower the Department of Commerce to do more to assist much-needed contacts with new private businesses in these republics? Why not staff our new embassies more adequately, so that they can foster trade and development? Such measures are no substitute for a ruble-stabilization fund and humanitarian aid, both of which are needed. But they cost little and would have a huge impact.

Above all, let us realize that aid to the democratic republics that have emerged from communism is not an act of philanthropy but an investment. Every dollar we invest in these countries will bring real dividends in the future. These societies possess the ingredients essential to attain prosperity in the modern world. By helping them to do so, we reduce the danger of instability and hence the need for our own huge military budget. By investing in their economic future, we also assure this country of a strong share of the dividends that will come from their success.

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