U.S. will reap benefits if it gives Soviets aid

PHILIP MOELLER

July 17, 1991|By PHILIP MOELLER

I've railed against deficit spending so long that my body has developed a reflex action whenever the "D" word is mentioned in our house. And I've long lamented the parade of presidents who have paid lip service to domestic policies before moving on to spend 93 percent of their time on foreign affairs.

Still, difficult as it is to form the words, a $20 billion or so commitment to the economic revitalization of the Soviet Union (or Russia and whatever is left of the Soviet Union) would be the best investment in future U.S. business prosperity I can think of.

We've seen Soviet leader Mikhail S. Gorbachev hunting for huge amounts of Western aid at this week's meeting of world leaders in London to discuss economic issues. Figures up to $150 billion are tossed about.

That seems a lot until you think of the bailout costs for U.S. savings and loans, or that even an "austere" Pentagon budget pumps out roughly twice as much money in one year as the external aid bill for helping to restructure the world's third-most populous country.

In the interests of national defense, geopolitical order and other rhetorical excesses of diplomacy, there are many reasons why the United States should want to keep the Soviet Union from imploding. On these grounds alone a persuasive argument could be developed to justify strong U.S. financial support.

I'm willing to let those arguments be icing on the cake, however, and look only at the commercial benefits of cultivating a market of 290 million persons -- persons who are primed to be wonderful and faithful consumers of U.S. goods.

The Soviet market may be willing to buy Japanese technology and it may be willing to do business with Germany and a unified Europe. But it would like to do business with Uncle Sam.

We are the closest thing to ideological allies the Russians have. Our system of democratic capitalism is constantly held out as a model for Soviet reform. Most of their economic advisers are our economists.

Beyond ideology, our cultural pull is very powerful inside the U.S.S.R. American consumer goods are one measure of this attractiveness, but our appeal is broader, embracing Western (and largely U.S.) music, entertainment and political values (or at least a textbook view of democracy that is more flattering than the real thing).

On one level, failure to exploit our advantaged position might not cost us anything soon. The Soviet Union is not going anyplace and, economically, might need to slide backward further before its leaders can command the internal support needed to go forward.

But the danger, of course, is that the Soviet Union might not be able to withstand further erosion in the already hardscrabble quality of life that nearly all of its citizens experience. Our support could have a lot to do with protecting the Soviets from such a descent into political instability and possible anarchy.

Strong U.S. support need not take the form of an immediate outflow of precious dollars.

The official U.S. position is that Soviet reforms must move further before substantial Western help is warranted. This position is strangely at odds with President Bush's decision last week to lift sanctions against South Africa.

In that case, we were told, early action was justified as a form of award for South Africa's movement toward racial parity and as an inducement to both encourage continuation of the process and to make it economically easier to do so. It's tough to see how this differs, in theory, from the Soviets. If anything, the Soviet system has changed much more to date than has South Africa's.

But even if we're not ready yet to let Uncle Ivan off the mat, we could at least use our agricultural riches (and our expertise in efficient food distribution) to cushion the Soviet Union against a food disaster. Such a guarantee need not cost very much and, possibly, could be linked with non-cash payments of Soviet energy resources.

Providing such a safety net could ease the Soviet transition and give a privatization effort some time to take hold. Here, we're also missing the boat.

It's fine to urge that private U.S. companies forge joint ventures with Russian counterparts, but the federal government is the only feasible lead dog on this sled. For a pittance, Washington could be organizing flocks of business delegations to pore over the Soviet Union's industrial system and its infrastructure.

This process would encourage the kind of ties that can produce meaningful private sector relationships when there really is a private sector in the U.S.S.R. It also could help clarify the best bets for U.S. financial assistance to make sure we back the right horses.

If you want something more specific, Johns Hopkins economist Steven H. Hanke is confident that backing rubles with U.S. dollars could quickly produce a reliable domestic currency for the Soviets that could be a foundation for their efforts to develop a new economy. Cost to the United States: probably zero.

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