Sorting out Soviet Disunion

August 25, 1991

As Western nations squabble publicly about speeding up financial aid for the post-coup Soviet Union, the signing of a new union treaty that will determine relations between the central government in Moscow and the 15 restive republics has been quietly postponed.

This may seem a curiosity in that the scheduled signing of the treaty last Tuesday reputedly was the trigger that prompted the plotters to act. What may be happening is that Russian President Boris N. Yeltsin, who has replaced Soviet President Mikhail S. Gorbachev as the nation's most powerful politician, is going through what his own top banker has described as a needed learning process.

Under the vaguely worded treaty (whose text has never been fully revealed) taxation, currency and central banking powers reportedly would be so thoroughly distributed to the republics that the free world economy would find it difficult to do business with the splintering Soviet empire or any of its parts. Separate currencies, separate foreign reserves, separate revenue sources, separate debt pools -- this is the stuff of financial nightmare.

Yet the sheer momentum of the Russian Republic's ascendancy may dictate an arrangement in which the Russian central bank -- not the Soviet central bank -- becomes the main player, one with which other republics may have to affiliate. The upshot is that Mr. Yeltsin's Russia could be associating with the International Monetary Fund faster than Mr. Gorbachev's Soviet Union.

Given these uncharted uncertainties, Western nations may find it difficult to respond quickly to Soviet needs despite the triumph of reformers intent on a radical shift toward a free-market economic system. Germany and France, the chief advocates of fast action, may have to settle for symbolic gestures. The United States and Japan, both more cautious, may find themselves justified in insisting that the various Soviet entities have to sort out their substantive problems first.

In revolutionary times, however, politics often triumphs over economics. President Bush should keep his options open if the final union treaty turns out to be workable and genuinely reformist. The imperatives of empty store shelves, cold dwellings, suffering people and the other products of a failed Communist system may require large infusions of outside assistance this winter to avoid chaos and even more upheaval.

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