No Real Reform, No Bailout

June 12, 1991

At last the Bush administration has the priorities and sequences right in its summer diplomacy with the Soviet Union. President Mikhail S. Gorbachev will indeed be invited to address the London economic summit in mid-July on the understanding that he is to get no big infusions of cash to bail out the failing Soviet economy. And there is to be no rush to a bilateral meeting between President Bush and Gorbachev until the Strategic Arms Reduction Treaty is ready for signing.

On May 14 we ran an editorial entitled "No Treaty, No Summit," a position that is oriented more to the nation's security needs than to Mr. Bush's political agenda. Then, on May 22, we urged the White House to drop its resistance to a Gorbachev appearance at the London meeting of the Group of Seven leading industrial democracies so that he could lay out his plans for economic reform.

That the administration adopted these arrangements with reluctance does not detract from their essential good sense. The superpowers are in fundamental transition. For 40 years the United States and the Soviet Union were Cold War adversaries. Now they find themselves awkward allies of a sort, the U.S. at the vanguard of triumphant world capitalism and the Kremlin reduced to exploiting the implicit danger's of Communism's collapse.

If Mr. Gorbachev's Nobel Peace Prize speech in Oslo last week is a prelude to the G-7 summit, then Western leaders should be on guard. The Soviet president's line is that the West either can underwrite a "grand bargain" involving hundreds of billions of dollars of assistance or risk chaos on a grand scale -- mass migration, ethnic conflict and even nuclear weapons in irresponsible hands.

There is a word for this: It is blackmail. And the West should no more succumb to blackmail-through-weakness than it did to blackmail-through-strength. In London, Mr. Gorbachev should surely be given the opportunity to lay out precisely how he intends to introduce a market forces into an economy that has been run into the ground by rigid bureaucratic command. But just as surely, Western leaders should seize the opportunity to tell Mr. Gorbachev that his zig-zagging and half-measures will no longer suffice. The formula should be: No real reform, no bailout.

The West should offer the Soviet Union expert advice and technical help. It should give Moscow the opportunity to affiliate with the International Monetary Fund, the World Bank and other Western-oriented development institutions -- provided it accepts their rules of conduct. New U.S. farm credits totaling $1.5 billion are mainly symbolic. But large-scale investment and aid must await proof of a dramatic transformation.

Meanwhile, Washington and Moscow should press ahead in reconciling disputes still blocking a START treaty. Both governments should realize that until they finally put their nuclear rivalry in order, their efforts to cooperate economically will always be compromised.

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