How the eagle should help the bear Aid for Russia

Marshall Goldman

December 27, 1991|By Marshall Goldman

Cambridge, Mass.--- SLIGHTLY more than a decade ago, we were doing all we could to bring the Soviet Union to its knees. But now the Soviet Union has disappeared as an entity and we find ourselves caught up in a debate, not about applying embargoes, but whether we should send financial help. to that one-time " evil empire."

Certainly the former Soviet Union is in dire need of some form of help.The gross national product, as best we can tell, is down 20 percent to 25 percent, prices are up about 1,000 percent, the harvest is down 30 percent and an even larger percentage of shelves in state stores are empty. But just shipping over American goods won't replenish those shelves.

A good part of the problem is a consequence of distorted incentives and faulty distribution. For example, historically more than 30 percent of the agricultural crop rots in the field or on the way to the store (compared to less than 5 percent in the United States). Complicating the problem, in recent months much of the harvest that didn't rot has been held off the market by peasants waiting for prices to rise even more. In addition, a home-grown mafia has taken control of most private and cooperative retail and restaurant outlets and does everything it can to restrict supplies so that prices will not fall.

Although American aid could well be misappropriated, that should not become an excuse for doing nothing, or near nothing, as the Bush administration proposes. It does mean we have to be careful about how we deliver aid. We must first distinguish between short-term emergency relief and long-term structural help. Moreover, we should concern ourselves primarily with providing the goods and technical help. There should be no cash or blank checks. Such money would probably end up in Swiss or Londonbanks, as much of the former Soviet Union's currency and gold reserves has already done.

For our short-term help to be effective, we will have to insist on being able to distribute the needed food and medicine inside the former union through our personnel and with our own equipment. Admittedly this distribution infringes on the republics' sovereignty. But turning supplies over to the official distribution authorities would be the same as giving the supplies to the mafia.

Even so, using our own personnel to override indigenous supply channels does nothing to facilitate the development of a normal, mafia-free distribution network. One way to help develop such a network would be to seek out some of the new entrepreneurs that have emerged. They,in turn, would be required to turn over a share of the ruble proceeds from the sale of the supplies -- both donated and obtained on their own -- to indigenous groups that would use the proceeds for the poor and for other public purposes. In effect, this would be a variation of the food support that has been provided to Third World countries for several decades. The trick is to find enough of these entrepreneurs who are enterprising and bold enough to operate outside the tentacles of the mafia.

Providing technical support or commodities rather than blank checks should also make such programs more appealing to American donors and, if properly done, should make it possible to address the countries' major needs. For example, they desperately need help in creating efficient food storage, distribution and processing. They also lack useful accounting, credit and managerial experience.

There is a potential source available for funding and that is the almost $300 billion spent on our military budget. That does not mean eliminating the entire Army, nor all jobs in American factories producing planes and missiles. It does mean refusing to spend several billion dollars to produce spare parts for a B-2 bomber, or on a plant to produce more tritium for nuclear weapons, or to build a brand-new Air Force base in Italy -- all intended to defend us against a Soviet Union that no longer exists.

The threat today from the old Soviet Union is not war but anarchy and a consequent outpouring of refugees, which will provoke neo-fascism and jeopardize democracy in much of Europe. That is not to ignore our own domestic needs or our own neo-nationalists. Support for the new commonwealth will be a hard decision, but failure to help will have an impact on the United States as surely as will the failure to help our own dispossessed.

Marshall Goldman, professor of economics at Wellesley College, is associate director of Harvard's Russian Research Center.

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