BUSH YIELDS TO MOSCOW’S ‘NUCLEAR BLACKMAIL’: FIRST DIVIDEND FOR GORBACHEV’S PROTECTION RACKET

(Washington, D.C.): Yesterday’s
announcement by the White House that the
U.S. government would accede to Mikhail
Gorbachev’s urgent request for a further
$1.5 billion in agricultural credits was
appalling on several grounds:

• Coming on the eve of the
  presidential election in the
  Russian Republic, this aid to the
  central authorities was
  tantamount to a vote for
  Gorbachev’s candidate, former
  Prime Minister Nikolai Ryzhkov,
  and yet another Administration
  affront to reformer Boris
  Yeltsin;
• In announcing the President’s
  decision, White House Press
  Spokesman Marlin Fitzwater was
  obliged to acknowledge that the
  reason for this agricultural
  assistance was not to prevent
  people in the USSR from starving
  but to supply extra feed
  grain for pigs and cattle —
  in other words, a step that will
  only serve to fatten up those who
  are able to obtain meat from the
  central authorities,
  the nomenklatura, not
  put food in the mouths of
  ordinary citizens;
• This further U.S. food aid comes
  at a moment when the agricultural
  products normally exported to the
  USSR by the struggling
  democracies of Eastern Europe are
  being supplanted by American
  subsidized sales — with a
  devastating effect on their
  emerging, but still fragile, free
  market economies. Istvan Major,
  Deputy State Secretary in the
  Hungarian Ministry of
  International Economic Relations
  reportedly said yesterday in
  London that Western food aid to
  the Soviet Union had
  “eliminated” Hungarian
  agricultural exports to the USSR;
• This initiative was also
  announced on the same day as the
  Congress was advised by the
  General Accounting Office that
  the Bush Administration’s
  estimates on another
  government-guaranteed taxpayer
  liability — the savings and loan
  crisis — are understated by
  a factor of two or three; and
• Perhaps most troubling of all,
  President Bush is with this
  action sending an unmistakable
  message to Moscow and to
  his G-7 counterparts: Washington
  is prepared to provide large
  quantities of financial aid unconditionally
  if that is what the Soviet
  central authorities demand — a
  portentous message, indeed, in
  the run-up to the London Economic
  Summit.

The Center for Security Policy finds
that the troubling implications of
yesterday’s presidential decision on the
agricultural credit guarantees are
greatly exacerbated by what the Bush
Administration has not done.
Consider the following, partial listing:

• The Bush Administration has
  failed to stipulate any
  arrangements for distribution of
  the affected agricultural
  products. It has chosen instead
  apparently to put its faith in an
  oral pledge conveyed in a
  telephone conversation between
  Presidents Bush and Gorbachev to
  the effect that the aid would be
  equitably distributed, i.e., not
  used to coerce the Baltic States
  and independence-bound republics
  of the USSR.
• It strains credulity that much
  stock could be placed in such a
  commitment in light of
  Gorbachev’s acquiescence — if
  not authorization — of past
  coercion and his unwillingness to
  repudiate the patent whitewash of
  last January’s crackdown in
  Lithuania performed by the Soviet
  prosecutor general at his
  request.

• The Bush Administration declined
  to follow the Senate’s advice as
  expressed in a resolution adopted
  on 15 May 1991, and break the
  credit package into tranches tied
  to repayment and reform. Instead,
  it has pledged to get the credits
  out the door as quickly as
  possible ($600 million
  immediately, virtually exhausting
  the Commodity Credit
  Corporation’s allotment for
  FY1991; $500 million at the start
  of the new fiscal year and the
  last $400 million by February
  1992). Needless to say, this is
  far too quick a disbursement
  scheme to permit a full
  evaluation of how well the
  commitments to equitable
  distribution or Soviet repayment
  promises are being honored, let
  alone the degree to which other,
  necessary reforms are proceeding.
• The Bush Administration chose not
  to abide by the law insofar as it
  elected to extend in direct
  contravention of four separate
  provisions of the Farm Act of
  1990. For one thing, the
  Administration’s claim that it is
  satisfied the Soviet Union is
  creditworthy, as that statute
  requires, is laughable; just last
  week the Soviet Union announced
  that it would shortly begin
  rescheduling some of its debt to
  Western government credit
  agencies (presumably including
  the Commodity Credit
  Corporation). Sen. Bill Bradley
  (D-NJ) has noted, moreover, that
  foreign policy, foreign aid and
  debt rescheduling considerations
  are clearly at work in the
  President’s decision as well.
  None of these is permitted to be
  a justification for such an
  extension of agricultural export
  credit guarantees.
• The Bush Administration declined
  to describe accurately the true
  record of Soviet performance on
  obligations to the U.S.
  government. For example,
  Fitzwater stated yesterday that
  one of the considerations that
  prompted the President to approve
  the Soviet Union’s latest request
  was the fact that “[The
  Soviets] have never defaulted on
  an official loan involving this
  country.”
• In fact, the Soviets have failed
  for decades to repay $674 million
  in debt obligations to the United
  States incurred under the
  Lend-Lease Agreements. Such a
  selective characterization of the
  Soviet credit record is also
  misleading with respect to
  Moscow’s large and growing
  arrearages to private Western
  creditors — estimated to be on
  the order of $6 billion as of May
  1991.

• Perhaps most striking of all, the
  Bush Administration does not seem
  to comprehend the real problem —
  Gorbachev’s unwillingness to
  engage in a radical
  transformation of the Soviet
  Union. Instead, in explaining
  that a more efficient
  distribution system was what the
  Soviets needed — not more food
  production, Marlin Fitzwater
  seemed to reflect Administration
  tolerance of Gorbachev’s
  determination to improve, rather
  than replace, his command
  economic structure:

“The main problem
[identified by the
Agriculture Department
delegation recently
dispatched to assess
Soviet needs] simply was
just that there was not a
distribution system that
allowed [the Soviets] to
identify needs in various
cities and locations and
then make sure the goods
got delivered there.
There weren’t the kinds
of regional supply
centers that we tend to
think about, the kind of
collective transportation
points where you can
identify needs in a city
a thousand miles away and
make sure the orders are
placed in the right
areas, the right states
wherever the wheat’s
coming from — Georgia,
for example….It was
mostly that kind of a
problem.”

• It shored up the inefficient centralized
  planning system. This is
  precisely the point behind
  demanding that reform precede
  aid, not the other way around.

• Interestingly, the Soviets make
  no bones about the fact that they
  do not see the lack of a genuine
  free market as the factor
  stultifying their economy.
  Instead, according to today’s Journal
  of Commerce, Soviet Deputy
  Prime Minister Fyedor Senko, the
  official responsible for
  agriculture in the Soviet
  government, “blamed the
  economic crisis on political
  turmoil.” According to
  Senko, “Collapse of state
  structures, the weakening of
  executive power….confrontation
  of different political
  organizations, inter-ethnic
  conflicts and strikes have led to
  a wide-scale crisis.”

The Center for Security Policy believes
that the Bush Administration has shown,
both by what it has done and by what it
has not done, a dangerous willingness to
yield to Soviet coercion for
unconditioned aid. In so doing, it is
setting the stage for multi-billion
dollar taxpayer losses — losses that are
as unnecessary as they are likely to be
counterproductive to the goal of
transforming the USSR.

Congress, the
press and the American people should
recognize that this installment
of taxpayer aid to Moscow is likely to be
neither the last nor the most expensive
contribution the Bush Administration is
asked to make, in Gorbachev’s words, to
keep the peace from vanishing, to prevent
a retum to the Cold War and to avoid a
dangerous instability with which Mr. Bush
is so clearly preoccupied. Worse yet, it
is likely — if the Administration has
its way — that the coming installments
will be no more conditioned on a
cessation of Soviet activities contrary
to domestic economic revitalization and
incompatible with U.S. and Western
security interests. In considering this
prospect, the Center urges members of
Congress and others with a vital stake in
any such development to consider the href=”index.jsp?section=papers&code=91-P_50at”>attached quotes
made previously by senior American
officials — President Bush, Senate
Minority Leader Robert Dole (R-KA) and
House Majority Leader Richard Gephardt
(D-MO) expressing their past, strong
opposition to unconditioned aid to the
USSR.