Excerpts From Jackson-Vanik: Will Bush Reward Soviet Repression Or Preserve Key Incentive For Reform?

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(No. 90-116, 5 December 1990)

Introduction

On 27 September 1972, the late Senator Henry M. Jackson (D-WA) introduced an amendment to the East-West Trade Relations Act linking the granting of Most Favored Nation status and official credits to the Soviet Union and other nations with non-market economies to clear evidence of their institutionalized respect for the right to emigrate. This amendment (which ultimately was enacted as part of the Trade Reform Act of 1974) reflected Sen. Jackson’s conviction that of all the individual liberties for which the United States stood and which were guaranteed by the U.N. Universal Declaration of Human Rights, none was more fundamental than the right to emigrate.

Senator Jackson recognized that this right was, as he called it, the "touchstone of human rights" because it assures that as a last resort individuals may flee their native land. If respected fully, moreover, this right also forces governments to honor other individual liberties and to strive to create an environment in which their citizens wish to live. Put differently, the right to emigrate compels fundamental reform in oppressive societies lest too many — especially the brightest and best educated — in the society elect to leave rather than tolerate such oppression.

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The Incredible, Disappearing Soviet Emigration Legislation

The Gorbachev regime has for several years been promising enactment of legislation guaranteeing Soviet citizens the right to emigrate. Even though it has permitted substantial numbers of its citizens — notably Soviet Jews — to leave the USSR over the past two years, Moscow seemed to accept that codification of this practice was an essential step on the road to becoming a member of the family of civilized nations.

In part in the expectation that such legislation would shortly be forthcoming, President Bush announced [last] year that he would be willing to enter into a new, far-reaching Trade Agreement with the USSR and to waive the Jackson-Vanik amendment once Moscow enacted this legislation. Subsequently, at the June summit meeting in Washington — and in the face of relentless pressure from Gorbachev — Mr. Bush decided to sign the U.S.-Soviet Trade Agreement and nine accompanying side letters even though the Soviet Parliament had yet to schedule final action on the emigration legislation.

In so doing, however, Mr. Bush made it clear that he would not waive Jackson-Vanik nor seek congressional approval and consent on the Trade Agreement unless and until such Soviet legislation was in place. He also subsequently emphasized at the London NATO and Houston Economic Summits in June and July 1990 that the sorts of taxpayer exposure — direct credits, government guaranteed loans and other subsidies — likely to arise from a waiver of Jackson-Vanik should not be made in the absence of fundamental economic reforms.1

The Administration Flip-Flops Again

It was rather astonishing, therefore, when President Bush revealed at a press conference on 30 November that his administration was reviewing "the whole policy" concerning Jackson-Vanik. He suggested that members of his Administration believed that a case could be made for what might be called a broad interpretation of his authority to make a waiver pursuant to this amendment, even in the absence of Soviet codification of the right to emigration. He also indulged in a bit of Hamletesque musing about whether he would act to waive Jackson-Vanik.

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…The Bush Administration is hardly the first to consider the tactic of using farmers as a "flying wedge" for unsound government-guaranteed support of dubious commercial transactions with the USSR. One of the earliest manifestations of the 1970s-era detente was the multi-billion dollar subsidized grain purchase that came to be known as "The Great Grain Robbery."

Subsequently, large agribusiness concerns like Archer Daniels Midland have consistently served as prime-movers in campaigns to sell high technology to the Soviet Union, to eliminate impediments like the Jackson-Vanik and Stevenson amendments and to oblige the U.S. taxpayer to assume the substantial risks associated with trade and investment in the USSR — risks that commercial enterprises and banks find unacceptable. Such concerns, far more than individual single-family farmers, stand to benefit from new government commodity loans and guarantees; it is their political power, rather than that of the average independent farmer that the Bush Administration particularly hopes to tap in support of new concessions to Moscow.

It is in this connection that interest groups, Administration officials and congressional figures are contending that, unless the United States offers Moscow some $2 billion in subsidized Commodity Credit Corporation (CCC) loan guarantees, it will be effectively imposing a "grain embargo" against the USSR. They contend that it is not enough that American concerns are willing to sell Moscow any foodstuffs it wishes to buy; in order not to be "discriminatory," the U.S. taxpayer must be lined up to take as big a fall as his counterparts in EC nations, Canada, etc.

This argument is particularly ludicrous in light of the recent fiasco with CCC credit guarantees provided to Iraq as part of the U.S. program of wooing Saddam Hussein. Taxpayer losses in that instance are likely to total as much as $2 billion — on a similar scale to write-offs associated with CCC credits granted to Poland in the late 1970s prior to systemic economic reform being put into place there.

The truth of the matter is that, if the Soviets genuinely need and want American agricultural products grain, they have the hard currency on hand to pay cash-on-the-barrel for it. Having collected since June cash and pledges for financial assistance from Europe and the Middle East totaling roughly $25 billion — along with the estimated $4 billion in windfall profits from higher oil prices associated with the Gulf crisis — Moscow actually has considerable capacity to meet its agricultural import requirements. What is more, this calculation does not take into account the $10-14 billion in hard currency which the Kremlin reportedly has on deposit with Western commercial banks which could also be applied to this purpose.

Conclusions and Recommendations

In the final analysis, as Sen. Jackson said on 11 October 1973, "The most abundant and positive source of much needed help for the Soviet economy should come, not from the United States, but through a reordering of Soviet priorities away from the military into the civilian sector." Unfortunately, as recent events in the Soviet Union have confirmed, such a reordering will never happen so long as the self-correcting mechanism of free emigration is not in place and the West nonetheless provides Moscow center with liberal access to its taxpayers’ resources.

The Center for Security Policy strongly believes that the Bush Administration would do a grave disservice to the cause of freedom, the prospects for genuine democratic and free-market economic reform in the Soviet Union and domestic fiscal responsibility if it were to waive Jackson-Vanik under present circumstances. Moreover, the circumstances in the Soviet Union will, In all likelihood, shortly become even more incompatible with such an action.

The Center calls upon President Bush to reaffirm the nation’s commitment to the principle of free emigration and to convey to Mikhail Gorbachev the facts of life: Any program the Soviet Union expects to implement with American assistance, aimed at staving off further economic hardship and political stagnation in the USSR, must involve formal codification of the Soviet people’s right to emigrate.

1. Two other preconditions specifically noted by the President were the need for a halt to Soviet aid to Cuba and substantial reductions in Soviet defense spending from 18 percent of GNP. Concerning Soviet willingness to cut aid to Cuba, two senior aides to Gorbachev told a news conference in Moscow as recently as 3 December that the Soviet Union "with all of its problems, is ready to continue economic cooperation with Cuba….Our position is firm in continuing our friendship with the revolutionary government of Cuba. Following the July summit, Foreign Minister Eduard Shevardnadze revealed that Soviet military spending was closer to the order of 25 percent of GNP. If true, recent Soviet announcements of five percent defense cuts fall well short of the President’s mark.

 

Center for Security Policy

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