Letter from Congressman Cox to the President

CHRISTOPHER COX
CALIFORNIA

Congress of the United States
House of Representatives

May 16, 1991

The Honorable George Bush
The White House
Washington, D.C. 20500

Dear Mr. President:

The Administration is to be commended for postponing a decision on the Soviet Union’s
recent
request for an additional $1.5 billion in U.S. taxpayer credit guarantees pending an on-site
assessment of such questions as: the near- and long-term food requirements of the Soviet
citizenry; the causes of Soviet food distribution difficulties; and Soviet repayment prospects. As
you know, many of us in Congress have expressed serious reservations about the wisdom of
adding to the already considerable exposure of the American people to liabilities incurred by an
unreformed and increasingly precarious Soviet economy — to say nothing of Moscow center’s
ever more brazen willingness to engage in repressive behavior.

Consequently, we attach great importance to the findings of the team the White House is
dispatching to the Soviet Union this week. We will want to examine with care its findings and
recommendations. In order to ensure that both the executive and legislative branches are properly
equipped to evaluate the work of this delegation, we believe it is imperative that we have an
agreed understanding of the data to be elicited from the Soviet side.

After all, the United States has been forced for far too long to rely on Western estimates of
key
Soviet economic indicators, assets, liabilities, and present and projected hard currency earnings
and expenditures. This has, of course, been due to the failure of Moscow’s central authorities to
disclose information that other nations routinely make freely available. Such excessive secrecy on
the part of the USSR has, among other things, prevented the United States from making an
accurate assessment of Soviet creditworthiness or the viability of prospective economic
adjustment programs.

In addition to specific information the team must obtain (examples of which are enumerated in
the
attachment covering such areas as Soviet sources and uses of hard currency, debt/financial
structure, economic and financial vulnerabilities, domestic economic situation), it should be asked
to develop and provide policy recommendations concerning how to advance genuine political and
economic reform in the USSR while protecting the American taxpayer. In the latter connection,
the following have to be addressed:

• Obtain Collateral for Loans: Given that the United States is now rapidly becoming one of the
  most exposed Western countries to the Soviet Union, it is essential that options be generated
  concerning the U.S. Government’s ability to secure adequate Soviet collateral to protect
  against future losses to the American taxpayer. Gold bullion from strategic Soviet gold
  reserves placed in the possession of the United States would, arguably, serve as the most
  efficient means of U.S. taxpayer protection. It would likewise be appropriate for the U.S.
  delegation to explore Soviet willingness to collateralize retroactively the earlier $1.3 billion in
  U.S. credit guarantees offered in December 1990. (Even private businesses without the
  bargaining power of the U.S. Government have succeeded in securing their loans to the
  Soviets. For example, De Beers, the large diamond conglomerate, provided a $1 billion loan
  to the Soviet Union last August only after obtaining a stockpile of uncut gem diamonds
  as
  collateral — the value of which significantly exceeded the loan amount. This collateral was
  placed in the physical possession of De Beers by means of a transfer from the Moscow State
  Treasury to London.)
• Assess the Soviet Government’s Commitment to Genuine Reform: At this juncture, the best
  barometer of the Gorbachev regime’s intentions with respect to effecting radical, structural
  economic change is the so-called “anti-crisis program” being advanced by Prime Minister
  Pavlov. The team should assess the extent to which this program is actually designed not to
  realize needed systemic reforms but merely to assure adequate supply arrangement for the
  Soviet military/industrial complex. If the Pavlov “anti-crisis program” is judged to be a
  blueprint for structural transformation, the delegation should be asked to so certify.
• Report on Immigration Law Reform: With the Administration’s temporary waiver of
  Jackson-Vanik about to expire in June, the delegation should make a recommendation whether a
  renewal of the waiver is warranted. Obviously, the case for such a renewal is seriously
  undercut by the Supreme Soviet’s recent decision to postpone yet again enactment of an
  emigration law and by statements by Prime Minister Pavlov and others to the effect that, even
  when passed, such a law would not take effect until July 1992 at the earliest.

Under no circumstances should a decision concerning the extension of further U.S.
taxpayer credit guarantees for commodity purchases be permitted effectively to
preempt a considered congressional as well as executive branch decision concerning
renewal of the Jackson-Vanik waiver.

In conclusion, I look forward to working with you to develop an approach to assistance
to
the those in the USSR striving for genuine political and economic change that safeguards the
equities of the American taxpayer. I look forward to your instructing the U.S. delegation to
address the aforementioned points and to the opportunity to consider their conclusions promptly
upon its return.

Sincerely,

/signed/

Christopher Cox
Member of Congress