Global View: No Conditions? Gorby Has to be kidding

By George Melloan
The Wall Street Journal, 06/10/91

Mikhail Gorbachev finally visited Oslo to collect his
Nobel Peace Prize last week. He did it his way. Surely it is
unprecedented for a peace-prize winner to landmine an
acceptance speech with threats against, among others, his
kindly hosts.

The Soviet Union wants to join the family of nations, he
said, but the West will have to pay. If it doesn’t, and
perestroika fails, “the prospect of entering a new, peaceful
period in history will vanish, at least for the foreseeable
future.”

Moreover, the money must have no strings. It would be
“futile and dangerous” for the lenders to set conditions.

This, of course, is not the language of peace, but the
language of extortion. The world hardly needs reminders that
the Soviet Union, despite its much weakened condition,
remains capable of making trouble. One only has to ponder the
apocalyptic destructive power of 11,000 strategic nuclear
warheads or the vast array of Soviet armor — more than 10
times the size of Saddam Hussein’s forces — to understand
that. The Gorbachev of last week’s Oslo “peace” address
retains some of the luster of the man who wowed the world in
his December 1988 United Nations address, but it is becoming
the luster of steel. He is the leader of a Communist Party
that could make the world happy by dropping dead but is not
yet ready to do so.

Gorbapologists in the West will say that he sounds this
way because he is desperate for money. There’s no doubt about
that. The latest analysis by Washington-based PlanEcon Inc.,
cites Soviet official reports that first-quarter gross
national product — the sum total of all the goods and
services Soviet citizens produce — fell 8% from a year
earlier. Strikes and crumbling factories are accelerating the
drop in industrial production. Exports in ruble value terms
plunged 18% from a year earlier in the first quarter, forcing
a 45% contraction in imports.

Estimates of how large the Soviet slump will be for the
full year 1991 usually start at 10% and range upward. If even
by some miracle it is no more than the first quarter’s 8%,
that would be an unprecedented Soviet economic decline, and
from a low base that can’t afford much more deterioration
without dangerous consequences. No one need doubt that Mr.
Gorbachev is desperate for financing — or that there will be
trouble of some sort if he doesn’t get it.

It now seems certain that he will be allowed to press his
credit demands in London on July 15 to 17 while the leaders
of the Group of Seven largest industrial nations are gathered
there for their annual economic summit. Jacques Attali, the
manipulative head of the new European Bank for Reconstruction
and Development (EBRD) helped engineer this rendezvous by
inviting Mr. Gorbachev to dinner during the summit. “Since
I’m going to be in town anyway, could you summiteers take an
hour or so off to talk about. . . ?”

About real money, it appears. Although the number keeps
bouncing up and down, Soviet planners at one point asked for
$250 billion over five years to save perestroika. “Shucks,
you guys can spare it, can’t you?”

Well, maybe so, but without conditions? You have to be
kidding, Gorby.

Even with conditions it would be a stretch. The U.S.
government’s deficit could hit $300 billion this year, or
$280 billion if we’re lucky. That doesn’t include all the
off-budget obligations that are piling up. Congress surely
has a limit somewhere, and Russians don’t vote in Cook
County.

Germany has itself been forced to import capital to
finance the reconstruction of Soviet-occupied Germany and
already has promised the Soviets more than $10 billion to
grease the Soviet military withdrawal. France’s Mitterrand
didn’t appoint Mr. Attali to the EBRD to lend French money —
if France had any — but someone else’s. As for Japan —
which does have money — forget it. How many Toyotas can you
sell to a bankrupt nation?

Even if all this were not true, Mr. Gorbachev is wandering
in never-never land when he calls on the West to finance
perestroika. Perestroika means restructuring. Mr. Gorbachev
has been in power six years and there is as yet no sign that
the Soviet economy is being restructured. Collapsing, yes;
getting reorganized, no.

As everyone surely knows by now, we are dealing here with
a political problem, not an economic problem. You can solve
economic problems with money, preferably by creating
conditions that induce people to invest their savings in
productive enterprises. You can solve political problems with
money, too, but that’s called bribery. By insisting that he
will not accept any conditions on Western aid, Mr. Gorbachev
— backed by his henchmen in the Red Army and KGB — is
saying, in effect, that he will not be bribed.

So where does that leave the West? Pretty much nowhere. No
matter how many Harvard economists Mr. Gorbachev puts to
work, he will not be able to restructure the Soviet economy
and still preserve the Communist Party. The two things are
antithetical. You can’t have a free-market economy and an
economy run by and for a Communist Party elite. The Soviet
informal sector — the black market and quasi-legal
cooperatives — has been growing outside of party control,
but a general economic reform can come about only after the
party’s collapse.

Mr. Gorbachev and his backers are saying that Western aid
must carry no conditions because they are afraid that
dismemberment of the party — or dismemberment of the Soviet
Union, which would be the beginning of the party’s end — is
the one condition the West will ask — assuming that it is
willing to offer any money at all. That would be
restructuring on a grand scale. The military-industrial
complex would have to surrender its control over the
one-third to one-half of the productive capacity it controls.
KGB secret policemen would have to turn in their gumshoes and
headphones. Party members would have to relinquish control
over billions of dollars of what is called party property but
is, for all practical purposes, theirs.

In the absence of that one condition — the
decommissioning of the Communist Party and the return of all
its property to a constitutionally based, democratic state —
there is very little point in the West funneling money into
the Soviet Union. It simply will prolong the party’s grip on
power.

Now, of course, it can be argued that Mr. Gorbachev’s
warnings in Oslo should be heeded. That the collapse of that
vast Moscow-based military and police apparatus will be a
terrible thing to watch and possibly dangerous to the West.
Certainly that risk exists, but there also is the question of
how much of its hard-earned resources the West wants to pump
into trying to prevent that from happening. What is the
lesser risk-letting it fail, or keeping it alive?

If the answer is the latter, at least it deserves to be
called by its right name. What the Soviet leader demanded in
Oslo was, in effect, a bribe.