THE SOVIET FINANCIAL CRISIS: ROBINSON CHALLENGES YAVLINSKY/G-7 DEBT RELIEF STRATEGY

(Washington, D.C.): In testimony this
morning before the Senate Finance
Subcommittee on International Debt,
chaired by Senator Bill Bradley, on the
Soviet financial crisis, Center Board
member Roger W. Robinson, Jr. warned that
the United States and its other G-7
partners should desist in pressuring the
republics of the former Soviet Union to
accede to the terms of the economic and
political union treaties advocated by a
newly-configured Moscow center.

Robinson, who served as Senior
Director for International Economic
Affairs at the National Security Council
and before that as an East-West banker
with Chase Manhattan Bank, stated that,
“The G-7 should immediately cease
being used by Moscow center as
‘enforcers’ in the latter’s effort to
pressure the republics into signing and
implementing All-Union economic and
political treaties which are not
necessarily in their national
interests.” He added, “Instead,
the G-7 should help ensure that new
economic and financial authority ceded by
the republics to a reconfigured Moscow
center be kept to an absolute minimum —
unlike the somewhat heavy-handed
proposals of Grigory Yavlinsky and other
All-Union officials.”

Robinson also testified that the
United States and other G-7 nations were
seriously underestimating the scope,
duration and impact of the Soviet debt
crisis. Robinson estimates that the
former Soviet Union has accumulated total
hard currency indebtedness of between
$70-75 billion and is now faced with a
declining capacity to service that debt
— over and above the understandable
reluctance of republics to remit hard
currency to Moscow.

Administration efforts to characterize
the current situation as a
“temporary liquidity problem”
appear strikingly similar to the
miscalculations of the Latin American
debt crisis in the early 1980s. Robinson
argued that new money flows — such as
the “bridge loan” being
contemplated by the G-7 through the
multilateral Bank for International
Settlements — under current
circumstances would represent “a
bridge to nowhere” and end up
costing Western taxpayers dearly.
Robinson argued the necessity of clearly
differentiating between pre-coup
communist debt and new money flows to
republics which qualify for such
assistance. “The G-7 strategy to
stave off artificially a formal Soviet
debt rescheduling will only increase U.S.
taxpayer losses and postpone the economic
transformation of the former USSR.”

Excerpts of
Mr. Robinson’s testimony are attached.
Copies of his entire testimony may be
obtained by contacting the Center.