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Bush's Not So Grand Plan For Soviet Aid


International Outlook

BUSH'S NOT-SO-GRAND PLAN FOR SOVIET AID

'Nonsense." "Preposterous." Senior Washington officials have been heaping scorn on a joint Soviet-Harvard University proposal for massive Western aid to support Soviet reforms. Actually, President Bush shares the basic thesis of the document, scheduled to be completed in mid-June: that helping the Soviets shift to a free market and democracy is in the West's strategic interest. But pooh-poohing an ambitious reform-for-aid bargain "makes it politically easier for the President to move on the modest aid package he has in mind," an Administration official confides. Despite a year of Soviet political and economic zigzags, Bush's desire to expand ties with Moscow hasn't abated. Although tortuous talks on nuclear-weapons cuts continue, the main focus from now on will be on economic links. On June 11, the White House announced the first plank in a Soviet aid package of technical assistance, trade benefits, and credits that Bush has been quietly shaping. It provides for $1.5 billion in U. S. guarantees for grain export credits over nine months.

TOO STINGY? When President Mikhail Gorbachev meets with Group of Seven leaders in London following their July 15-17 summit, Bush will try to enlist Western support for a bare-bones version of the "grand bargain" drawn up by Grigori A. Yavlinsky, a Gorbachev economic adviser, and Graham T. Allison, a professor at Harvard's John F. Kennedy School of Government. "We would entertain specific requests to help solve specific problems, but the onus would be on the Soviets to come to us with detailed programs," says an Administration official. Possibilities include G-7 backing for a stabilization fund to smooth convertibility of the ruble or a plan to modernize the Soviet energy industry.

For some Europeans, Bush's strategy is too cautious. Germany, which already has earmarked $10.7 billion in official aid for the Soviets, has been chiding allies for being too stingy. At home, though, even Bush's one-step-at-a-time approach may stir resistance. At a recent Cabinet meeting, Budget Director Richard G. Darman argued that the U. S. should do little for the Soviets. And David C. Mulford, the Treasury's Under Secretary for International Affairs, initially opposed Bush's plan to give Moscow associate membership in the International Monetary Fund. Such status, Mulford fears, would be a fast track to full membership and a pipeline into IMF funds, although IMF rules admit only countries with market economies. Bush's plan to grant the Soviets most-favored-nation trade status is also under fire from conservative Republicans and prominent Democrats alike. It would pave the way for action by Congress to authorize more Export-Import Bank credits to the Soviets and give them access to U. S. capital markets.

To smooth the way for the new era in U. S.-Soviet relations, both on Capitol Hill and in Moscow, Bush is counting on old friend Robert S. Strauss, his new appointee as ambassador to Moscow. Strauss, a high-powered lawyer/lobbyist and former trade negotiator, is well equipped to explain to the Soviets how to attract foreign investment. He is a director of Archer-Daniels-Midland Co., which has been negotiating agribusiness ventures in the Soviet Union, and his law firm lobbies for oil producers and other companies. He will have to sever such ties. But as the ultimate Washington insider, he should be able to interpret Capitol Hill politics for the Soviets with a fluency no career diplomat could muster.

Although still a military superpower, the Soviets are becoming a U. S. aid client as well as a trading partner. In doing so, they're starting to interact with the U. S., economically and politically, in ways unimaginable during the cold war.EDITED BY JOHN PEARSON; Amy Borrus in Washington, with bureau reports


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