West rethinking large-scale aid to Soviet Union Some suspect denial contributed to coup

August 23, 1991|By Richard O'Mara | Richard O'Mara,London Bureau of The Sun

LONDON -- The restoration of Soviet President Mikhail S. Gorbachev has brought to prominence once again the question of whether the West should grant large-scale economic assistance to the Soviet Union.

Yesterday, the European Community revoked its decision of Tuesday to suspend $1 billion in food aid and credits. Japan announced it was resuming the flow to Moscow of more than $1 billion in money for food loans and managerial training. Britain reinstated a $90 million technical assistance program.

More importantly, British Prime Minister John Major, as this year's chairman of the Group of Seven leading industrialized nations, said he planned to confer with the other G-7 nations with the aim of re-examining their policies with regard to increased aid for Moscow.

"I think we will have to look at circumstances as they exist," Mr. Major said. "They have changed."

It was agreed at the G-7 summit last month that Mr. Major was to go to Moscow this year to assess the Soviet Union's requirements in technical assistance, loans and grants to put its economy to rights.

Monday's coup put those plans off. Yesterday they were back on.

German Foreign Minister Hans-Dietrich Genscher said in Bonn that "everyone will draw the conclusion from these developments that the West is now called upon to support reform more effectively than has been the case in the past."

Mr. Gorbachev telephoned French President Francois Mitterrand to say he was counting on Western aid. Mr. Mitterrand told him he thought the G-7 countries should increase their assistance.

Mr. Major is expected to discuss aid with President Bush when he visits the United States next week. The United States remains opposed to transfers of massive amounts of aid to the Soviet Union.

The issue of aid of Marshall Plan proportions was thought to have been settled during the July summit when Mr. Gorbachev presented the seven leaders with his plan for the economic restructuring of the Soviet economy.

Most of the leaders felt it did not move the Soviet economy far enough toward a market system. He went away with some technical assistance, a promise of associate membership in the International Monetary Fund and World Bank, lots of good will and moral support.

The principal opponents of the transfer of billions of dollars to shore up the Soviet economy in July were Japan, the United States, Britain and Canada, in that order of intensity. Germany, France and Italy were more sympathetic to the idea.

In fact, during the period when the junta held power in Moscow, the huge German bilateral programs -- billions of dollars, mainly to finance the withdrawal of Soviet troops from Germany -- were sustained.

Immediately after the coup on Monday and through the week, the idea began to gain more adherents that the denial of the aid to Mr. Gorbachev at the July summit may have contributed to his overthrow.

Britain's Labor Party argued that the G-7 rebuff had been a missed opportunity. A spokesman for Gerald Kauffman, Labor's shadow foreign secretary, said yesterday: "Had we started with an aid program several years ago . . . then there would have been greater success for Gorbachev's reforms and there may not have been a coup."

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