Soviet Economy

MOSCOW -- By the convoluted standards of Soviet foreign trade, Boris I. Korobochkin's barter deal seemed simple enough.The Singapore company would get 50,000 tons of Soviet-manufactured mineral additives for livestock feed. In trade, it would supply the Soviet side with 1,200 personal computer systems, plus a number of photocopiers, telefax machines and other equipment in short supply.However, to Mr. Korobochkin, the would-be middleman, the deal brought not the intended profit but a score of KGB interrogations, nine volumes of evidence and a month in Moscow's infamous Lefortovo prison.

Abram Bergson, 89, a Baltimore-born Harvard University economist whose research on the Soviet economy had broad U.S. policy implications during the Cold War, died Wednesday in Youville Hospital in Cambridge, Mass. Mr. Bergson, a longtime director of the Russian Research Center at Harvard, was a scrupulous researcher who went to great lengths to make sure his assessments were not tainted by right- or left-wing ideology. "He was the first American economist to become an expert on the economy of the Soviet Union," economist Robert Solow, a Nobel laureate, said Thursday.

TokyoFor more than three decades, Soviet planners have visualized huge Japanese investments to unlock the coal, iron, oil and forest riches of Siberia. Japanese capitalists have longed for that difficult region's immense resources.For most of that time, visionaries on both sides have been thwarted by an intractable dispute over four islands the Red Army seized from Japan as the Imperial Army collapsed at the end of World War II.Now, with political relations thawing, President Mikhail S. Gorbachev is scheduled to come to Tokyo in April, which will make him the first top Soviet leader to visit Japan.

Today, a little over a decade after the fall of the Soviet Union in 1991, the gross domestic product of Russia, the major heir of the Soviet Union, is roughly that of Brazil or the Netherlands. What happened? Few topics have resulted in more controversy among international economists and scholars. Some claim that the decline was predictable because of the marked inefficiencies of the Soviet economy, and that blame can be laid entirely on the Russians themselves for "losing" their own economy.

WASHINGTON -- The United States has proposed a stage-by-stage economic reform plan to the Soviet Union that taps nascent market forces, encourages conversion of defense industries to civilian uses and could draw on tens of billions of dollars in available aid and credits from the West, according to a senior U.S. official.The plan, outlined in meetings last week between top Bush administration officials and a Soviet delegation led by Yevgeny M. Primakov, an adviser to President Mikhail S. Gorbachev, steers clear of a "grand bargain" linking economic reforms with promises of vast sums of Western aid.It would instead start with modest steps, including agricultural credits, special associate membership in the International Monetary Fund, conversion of the Soviets' defense industry, improvements in their food-distribution system and advice on how better to exploit their energy resources.

*TC PERESTROIKA, the slogan Soviet President Mikhail Gorbachev used to describe his economic program, means "to rebuild."Nonetheless, Gorbachev's economic policies mostly involved tearing down the country's centralized planning system -- and not replacing it.That's the major reason the Soviet economy has done so poorly in recent years. And that performance is one of the major causes of Gorbachev's removal from power Monday.The Soviet economy "is in a no man's land," says Edward P. Lazear, a senior fellow at the Hoover Institution and an economics professor at the University of Chicago Business School.

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.

If Soviet President Mikhail S. Gorbachev is invited to the Big Seven economic summit in London in July, his status will be only that of an observer and any pitch for economic aid will be a lot less than "100 billion" he pointedly noted was spent to defeat Iraq. His mission, if it ever takes place, probably would be alimited one -- to convince President Bush and his fellow %o summiteers that, in fact, he really intends to reform the Soviet economy into a working, market-forces operation.Precisely what Mr. Gorbachev has in mind is to be explained to U.S. government officials within the next few days by Yevgeny Primakov, a top Kremlin economist, and Deputy Prime Minister Vladimir Shcherbakov.

WASHINGTON -- American banks have not put up any money to finance Soviet purchases of American grain, despite the Bush administration's efforts to facilitate such loans.No American banks participated last month in a $600 million loan to the Soviet Union for grain purchases, even though the United States guaranteed repayment of almost all of the principal and half of the interest, banking and grain industry executives said.Despite the government loan guarantees, American bankers said that they were worried about the declining ability of the Soviet Union to pay its bills and that their own financial problems had limited their ability to make loans to anyone.

SOVIET President Mikhail S. Gorbachev's reforms broke up the old Soviet economic machinery before anything was ready to replace it. Now the ultimate test is upon him and his fractious people. The odds against saving his economy seem formidable.Turmoil in the Soviet Union is emphatically not in the world's interest. That being the case, Washington must examine closely a gloomy assessment by the World Bank that the Soviet economy is in free fall. The Soviets will need U.S. and others' help, not to revive their economy but to soften unemployment and feed millions who might otherwise go hungry while they build a new economy.

MOSCOW -- It was bad enough when retiree Natalya Victorovna heard a mother scolding her child the other day for picking up a "worthless" 50-ruble coin -- the equivalent of a quarter of her salary as an engineer just five years ago.But what really makes her head spin is the nation's new 500,000-ruble note -- once equal to the whole payroll of her engineering department.The new ruble denomination, to start circulating today, is about equal to $89. It is a sort of benchmark of the post-Soviet economy.

In what is now Paraguay, in the 17th and 18th centuries, the Jesuits established a socialist society with a peak population of about 200,000 inhabitants. They showed military prowess, and there were persistent rumors of great wealth. But when the community finally collapsed, the storehouses were empty. Their economy had been completely unprofitable.Now we have seen the collapse of a much larger socialist economy, that of the Soviet Union. Once again, estimates of its supposed prosperity have proved misleading.

KENNEBUNKPORT, Maine -- President Bush declined yesterday to join the rush of European countries and Canada in recognizing the independence of the Baltic states, choosing instead to wait until the Soviet government ratifies their departure."

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.

The quick death of the Soviet coup gives President Bush an opportunity to be more forthcoming with immediate financial aid to what might be called the Gorbachev-Yeltsin regime.Always fearful of the Republican right wing, which questioned the wisdom of helping Soviet reformers who might be overthrown by hard-line Communists, Mr. Bush was long on moral support but cautious on material commitments during his twin summits in London and Moscow this summer. Now the question is whether his policy on this issue will change as radically as his attitude toward Russian President Boris Yeltsin, the hero of the triumphant democratic counter-coup.

*TC PERESTROIKA, the slogan Soviet President Mikhail Gorbachev used to describe his economic program, means "to rebuild."Nonetheless, Gorbachev's economic policies mostly involved tearing down the country's centralized planning system -- and not replacing it.That's the major reason the Soviet economy has done so poorly in recent years. And that performance is one of the major causes of Gorbachev's removal from power Monday.The Soviet economy "is in a no man's land," says Edward P. Lazear, a senior fellow at the Hoover Institution and an economics professor at the University of Chicago Business School.

Mikhail Gorbachev may be the most misunderstood European authoritarian since General Franco.In the late 1930s, Franco was widely thought to be an Iberian Hitler, a dynamic force for a radical New Order. In fact Franco just wanted to shove modernity back north of the Pyrenees.Mr. Gorbachev, like Franco, is partly responsible for being misunderstood. Mr. Gorbachev's rhetoric has often been, as Franco's was, bolder than his aims. But Mr. Gorbachev has made clear that his aim is preservation of the ''socialist choice'' -- his phrase -- the Soviet Union made in 1917.

Soviet President Mikhail S. Gorbachev has called on the leading industrial democracies and major international lenders to subsidize his reform program. Although Mr. Gorbachev has not indicated how much aid would be required, prominent Soviet economists have cited figures of up to $250 billion over the next five years.The notion of providing generous assistance is gaining support, despite the West's own problems, because of the threat of violent instability if the Soviet economy continues to decline.

WASHINGTON -- American banks have not put up any money to finance Soviet purchases of American grain, despite the Bush administration's efforts to facilitate such loans.No American banks participated last month in a $600 million loan to the Soviet Union for grain purchases, even though the United States guaranteed repayment of almost all of the principal and half of the interest, banking and grain industry executives said.Despite the government loan guarantees, American bankers said that they were worried about the declining ability of the Soviet Union to pay its bills and that their own financial problems had limited their ability to make loans to anyone.

Watching the two men sign the START treaty was a bit like witnessing Elizabeth Taylor's eighth wedding. God knows, you wish everybody well. But it's a little hard to get excited.This U-turn in superpower relations pass the pens, uncork the champagne got us right back to where we started. Nine years of negotiations, and nuclear weapons were reduced by the amount they had been increased during the negotiations.At the risk of being the cynic at the celebration, there was enough material to label this the Summit of the Absurd.