‘Dear Helmut…I Press Your Hand’: Gorbachev Letter Reveals Shakedown Scheme; G-7 Forewarned, Forearmed?

(Washington, D.C.): In a breathtaking
breach of diplomatic confidentiality, the
German weekly Der Spiegel last
week published the text of a letter dated
11 March 1991 from Soviet President
Mikhail Gorbachev to Chancellor Helmut
Kohl. This missive (see href=”index.jsp?section=papers&code=91-P_54at”>the attached,
as translated by the Federal
Broadcast Information Service) provides an extraordinary
insight into the present state of
Soviet-German relations — and evidence
of Gorbachev’s determination to extort
massive taxpayer assistance from Bonn and
other Western capitals.

Gorbachev wrote to inform Kohl that,
instead of the 8 billion dollars
previously agreed upon as the price Bonn
must pay the USSR for Soviet troops to
leave bases on German territory, the
actual cost would be in excess of $22
billion (DM 40 billion). The
Soviet leader makes no effort to justify
or explain this immense cost-overrun,
primarily because there is no financially
sound explanation. He simply asserts it,
evidently confident that the Germans will
do what they are told in the face of
Kremlin fearmongering. Toward this end,
Gorbachev alludes menacingly to
unidentified “forces…trying to
shake the existence of the state”
and uncertainty over the Soviets’ ability
“to retain control of the financial
situation in the next three-to-five
months.”

The letter reveals two specific facets
to Gorbachev’s Western shakedown
campaign: First, he suggests that
Kohl’s “influence and
authority” should be brought
to bear on German banks so as to
secure a further DM 15 billion line of
credit for Moscow.
He points out that only DM 5
billion has been obtained thus far under
a so-called “five plus 15
scheme,” and that — as reported by
the Center for Security Policy at the
time — these loans were “Primarily
used for repaying the debts [the USSR]
owed to German companies.”

As a practical matter, given the lack
of Soviet creditworthiness, the
only way such an additional credit line
could be arranged with the German private
sector would be if it is
wholly guaranteed by the
government. For example, when
Bonn tried last fall to get the largest
and most sympathetic German commercial
lender, Deutschebank, to extend credit to
the USSR, the bank declined to do so as
long as just 95 % of the
loan was taxpayer guaranteed. In the
end, the German taxpayers were
made liable for 100% of the
credit extended to Moscow by
Deutschebank. Unfortunately for
the Germans, this is only the beginning; the
Center has learned that Bonn has
earmarked fully DM 100 billion in
aid to the Soviet Union over the next few
years — 50% in direct grants, 50% in
export credits and other government
guarantees.

Second, Gorbachev proposes that Germany
buy back “the real estate of the
Soviet troops.” In
other words, in addition to paying
handsomely for the privilege of having
the USSR end its occupation of former
East German territory, Moscow wants Bonn
to pay as much as an additional “DM
20-23 billion” for the bases and
facilities the occupiers have occupied!
Gorbachev suggests, with remarkable
understatement, that such a step
“would be very useful.” He asks
euphemistically whether a “global
political decision” might
not be made very quickly allowing
“larger down-payments that would be
covered by the real estate.”

The Gorbachev letter is simply the
latest evidence of the Soviet central
authorities’ desperation for immediate
infusions of additional hard
currency. What it reveals, moreover, is
that they will stop at nothing to
obtain such assistance — and that they
view Germany as
especially susceptible to their
heavy-handed demands.

The Germans, however, claim their
resources are sorely overtaxed between
the costs already agreed to as the price
for reunification and for extricating
Soviet forces from German soil by 1994
and those associated with rehabilitating
the communist-despoiled eastern landes.
Bonn has, instead, become a
shameless surrogate for Moscow in allied
councils.

“The only lock-step
coordination underway concerning the
Soviet aid issue for the London
Summit is occurring between the new ‘G-2’
— Germany and the Soviet Union,”
said Roger W. Robinson, Jr., former chief
economist at the National Security
Council and member of the Center’s Board
of Advisors. “Their common agenda
seems to be to promote German markets and
employment while strengthening
Gorbachev’s grip on power — all at the
expense of U.S. and allied
taxpayers.”

The extent to which this is the case
is further demonstrated by a front page
story in today’s New York Times (see
the attached article entitled
“Germans
to Coach Soviets For
Talks: Kohl Tries to Help Gorbachev Win
Aid at July Meetings.”) In
a comment that suggests the ease with
which the Germans contemptuously expect
to “roll” President Bush on the
issue of assistance to a fundamentally
unreformed Soviet Union, an aide to
Chancellor Kohl told the Times: “At
first, Gorbachev wasn’t going to be
invited to the London summit, but various
countries spoke up, and after awhile the
Americans agreed. You are going to
see the same process at the summit
itself. If the right program is
presented in the right way, a consensus
will develop.”

In addition to playing a leading role
in securing an invitation for Gorbachev
to address the London Economic Summit,
the Germans have been prime movers
behind: obtaining “associate
membership” status in key
Western international financial
organizations like the International
Monetary Fund and the World Bank;
promoting the redirection of the
resources of the European Bank
for Reconstruction and Development from
the struggling democracies of Central and
Eastern Europe to Moscow center; and
insisting that the other Western nations’
taxpayers become as massively
overexposed as are Germany’s in
government-guaranteed aid to the USSR.

The Center for Security Policy is
confident that the tone and demanding
character of href=”index.jsp?section=papers&code=91-P_54at”>Gorbachev’s 11 March
letter
to Kohl have probably been replicated in
correspondence with heads of government
in every G-7 capital. In any event, it is
clear that the USSR intends to
make widespread use of the blend
of fearmongering, appeal to
self-interest (e.g.,
clearing up of the some
$6 billion in Soviet arrearages to
Western companies) and financial scams
it embodies to generate
additional hard-currency cash flow.

The Center believes that Western
strategic and taxpayer interests
will be very badly served if such a
Soviet agenda is allowed to dominate the
London Economic Summit. Instead,
Gorbachev should be put firmly on notice
that — unless and until the Soviets
put into place the sort of
structural political and economic reforms
statutorily demanded by the U.S. House
of Representatives in a 374-41 vote last
week endorsing an amendment
offered by Rep. Jon Kyl
(R-AZ) — the West will not succumb
to his extortion.