Germany To Help Soviets Obtain Aid

By STEPHEN KINZER, Special to The New York Times, June 25, 1991

DATELINE: BONN, June 24

Chancellor Helmut Kohl will meet with Mikhail S. Gorbachev of the Soviet Union in advance of the meeting of the seven leading industrial democracies in July to persuade the Soviet leader to accept free-market reforms bold enough to generate a major infusion of Western aid.

A Bonn spokesman said today that the two leaders would meet in Kiev on July 5, 10 days before the seven-nation meeting in London.

Mr. Gorbachev has been invited to London to meet with the seven leaders at the end of their annual conference. Although he has been vague on what he hopes to accomplish, Mr. Gorbachev has indicated that he might seek large amounts of economic help, and Mr. Kohl is likely to be his strongest advocate.

Earlier, some Soviet officials were talking of needing $100 billion over five years, but more recently, in the face of skepticism in the West, they have said they did not expect specific aid packages to emerge from London.

The question of aid to Moscow is being debated as Mr. Gorbachev faces a growing challenge from Soviet hard-liners, who charge that moves toward reform are not being reciprocated from abroad. [Page A16.]

Representatives of the seven nations agreed in principle in London on Sunday that the Soviet Union should be offered a limited role in the International Monetary Fund. Such a move would give the Soviet Union access to technical help on economic reform, but would not bring an immediate infusion of money from the fund,

Advisers to Mr. Kohl said they believe the seven industrialized nations will agree to a major aid program only if it is detailed and tied to drastic economic reforms. They are hoping that during his visit to Kiev, Mr. Kohl will be able to impress that point on the Soviet leader, and induce him to present a program of sweeping economic change at the summit in London.

Mr. Gorbachev needs to convince skeptical leaders like President Bush that he is truly prepared to reverse the course of Soviet economic history. Mr. Bush has been reluctant to support major Western aid to the Soviet Union, though he has indicated willingness to provide expert technical advice.

Chancellor Kohl’s Lobby

"At first, Gorbachev wasn’t going to be invited to the London summit, but various countries spoke up, and after awhile the Americans agreed," said an aide to Chancellor Kohl. "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.

"I can’t guess the size of the package," the aide said. "The public likes gigantic figures, but if the proposal is just to commit $100 billion over five years, no one will accept it. We’re looking for a continuing investment program, and as each step is successfully reached, we will help support the next one."

In public statements and conversations with leaders, Mr. Kohl has already begun lobbying on behalf of the Soviets.

"It is in our common interests to provide effective help — aid and self-help — to the Soviet Union and the young democracies of Eastern Europe in this critical transition phase," he said when he welcomed Prime Minister Brian Mulroney of Canada to Bonn recently.

Participants in the annual economic conference of the Group of Seven, besides Chancellor Kohl, Mr. Mulroney and President Bush, will be the leaders of France, Britain, Italy and Japan.

German officials acknowledge that, because of history and geography, Germany has special reasons for wanting to help the Soviets. But they said Germany would only support an aid package that was accompanied by profound economic reforms. Germany has committed itself to about $31 billion in loans, grants and credits to the Soviet Union, in part because of Moscow’s assent to the unification of Germany. Much of the money has gone to provide housing and other aid for Soviet soldiers returning home.

‘A Partnership of Governments’

The Germans have traditionally seen large-scale business interests in the East, but besides the profits to be won, they are concerned that a breakdown in the Soviet Union could lead to colossal dislocation, with millions of Soviet and East European refugees.

"We want to make suggestions, but we can’t behave as if we were the World Bank going into Uganda, designing a plan for them and then saying they have to accept or else there is no money," Economic Minister Jurgen Mollemann said in an interview. "It has to be a partnership of governments."

Mr. Mollemann and other officials said that the emergence of Boris N. Yeltsin had helped Mr. Gorbachev’s position by showing the Soviet Union’s progress toward democracy, and that overtures to the Baltic republics or an easing of emigration policies in the next few weeks would help even more.

A Soviet concession to Japan on the disputed Kurile Islands would be necessary before the Japanese Prime Minister could support an aid program, officials here said.

"The reluctance on the Japanese side is even greater than the reluctance on the American side," said Otto Lambsdorff, who heads the Free Democratic Party and is an important ally of Mr. Kohl."

A London Show-Stealer?

"Without Mr. Gorbachev, we would not have German unification," he said. "We also know that if there is a serious economic collapse in the Soviet Union, there could be mass migration from East to West that would cause great problems in Germany and other countries of the European community."

"Unfortunately, the Soviet Union and Mr. Gorbachev have lost six years, and the situation there has become very bad," he continued. "The list of Gorbachev’s economic advisers is longer than the list of Italian Prime Ministers over the last 10 years.

"No money will be given without reforms, but you cannot have reforms without money," Mr. Lambsdorff said. "What Mr. Gorbachev is going to put on the table, nobody knows. One thing for me is clear: he will steal the show at the G-7 summit, because no one is as brilliant at public relations as Mr. Gorbachev."