Better Safe Than Sorry : No aid to Moscow without a coherent economic reform plan first

The finance ministers of the Group of Seven, representing the major industrial democracies, have politely warned the Soviet Union not to expect any quick-fix aid to rescue it from economic crisis. The ministers instead propose that the G-7 leaders, at their meeting in London next month, offer Moscow a first-ever associate membership in the International Monetary Fund, an organization dominated by the G-7. This step, certain to be approved, would give the Soviets access to the IMF’s expertise but not to its cash box. For now this is the most prudent and effective approach the West can take to aid the Soviet economy.

Soviet President Mikhail S. Gorbachev may well see things differently when he meets with the G-7 leaders. Gorbachev’s steady refrain has been that unless the Soviet Union gets a lot of Western cash and credits it could collapse into chaos, sending out shock waves that would endanger world stability. The G-7 finance ministers, unimpressed by this threat, insist that Moscow must have a coherent economic reform plan in place before it can expect significant foreign aid.

There’s been no shortage of ideas about how to begin reconstructing the failed Soviet economy. Most agree on the need to shift rapidly to a free market, ending the grotesquely inefficient artificial pricing system and subsidies to industry and permitting private ownership. What’s still lacking, six years into the Gorbachev era, is the political will to adopt and push ahead with these reforms.

The G-7 ministers are unquestionably right in concluding that aid in the absence of fundamental systemic change would only be wasted. By offering Moscow affiliation with the IMF they are opening a conduit to valuable technical and consultative assistance that could speed and smooth the transition to a demand economy. Gorbachev of course would like to get much more. But the hard-nosed approach being proffered is sound: Aid will be forthcoming, but first the Soviets have to show that they are ready to use it wisely.