Moscow Wish-List Vague on Reforms : Economics: Leaders are trying to find something for Gorbachev take home, but they have little to work with.
The blueprint for rescuing the foundering Soviet economy that Mikhail S. Gorbachev will lay before Western leaders Wednesday contains a detailed wish-list of what he wants from the allies but few of the concrete promises of the free-market reforms they say must come first.
That is the assessment of allied officials who are familiar with what Gorbachev plans to say when he meets with leaders of the major industrialized democracies at the conclusion of their annual summit.
The proposal, submitted as a letter to the leaders of the so-called Group of Seven in advance of Wednesday’s meeting, is “very specific on what they want and very vague on how they would implement reforms,” one European official complained.
The seven leaders, while praising Gorbachev for ending the Cold War, are trying hard to find a package of assistance that the Soviet leader can take home with him, another official said. But the proposal offered in the confidential 23-page letter gives the Western leaders little to work with.
Soviet officials angrily denied suggestions that Gorbachev will be seeking a handout when he appears before the Group of Seven.
“It would be naive to say that we expect President Gorbachev to come away from the meeting with eight black limousines filled to the brim with money,” Gorbachev spokesman Vitaly Ignatenko said.
Ignatenko suggested that the West also stands to suffer if Gorbachev fails to rescue his country from an economic collapse. “If we do not achieve close cooperation, there could be turmoil, not only for the Soviet Union but elsewhere,” Ignatenko warned.
The summit leaders share that concern. At the same time, however, they believe that money spent before reforms are in place would be wasted--and might even serve to shore up the forces in the Soviet Union that are clinging most tenaciously to that country’s failing centrally planned system.
“There’s no one here who wants to send Mr. Gorbachev away discouraged,” British Foreign Secretary Douglas Hurd said, “and there’s no one here who wants to send him away with a big fat check.”
Officials of the summit nations privately expressed particular disappointment with Gorbachev’s uncertain movement toward replacing state ownership of enterprises with private ownership.
His current plan calls for privatizing small- and medium-sized enterprises but not large ones, according to one source. And it lacks incentives for Soviet entrepreneurs to set up new businesses.
While Gorbachev’s 23-page letter and lengthy appendix have not been made public, Soviet officials have begun to flesh out some of the details of their latest proposal, which is the 16th plan the Soviets have considered or adopted in the past three years.
Deputy Prime Minister Vladimir I. Shcherbakov told reporters that Moscow wants Western nations to set aside as much as $12 billion to be put into a fund dedicated to stabilizing the ruble, once Moscow makes it convertible into other currencies and exposes it to the rigors of world markets.
Making the ruble convertible is one of the reforms that has been urged by Western leaders, who last year created a similar $1-billion fund for Poland’s currency. However, Treasury Secretary Nicholas F. Brady pointed out that Poland did not receive such a commitment until after the Warsaw government and the International Monetary Fund had worked for more than two years on a comprehensive economic reform program.
“At some point in time, the Soviets obviously will need a stabilization fund,” Brady said, but not until “the reform program inside the Soviet Union is going to have to take place and take more form. The outlines have got to become more clear.”
U.S. officials also expect Gorbachev to lobby heavily for alleviating the Soviet debt burden and for increasing the amount the Soviet Union may borrow from the new European Bank for Reconstruction and Development.
“I don’t think this is likely to be resolved here,” a British spokesman said.
At the same time, the allies have already indicated that they will allow the Soviet Union to become an associate member of the World Bank and the International Monetary Fund. That would allow the Soviets access to the technical expertise of those two international institutions--but not their lending.
The Group of Seven members--the United States, Germany, Japan, Britain, France, Canada and Italy--remain somewhat divided on how generous they should be to Gorbachev.
Germany, geographically closest to the Soviet Union and most vulnerable to the effects of its turmoil, has been the most vocal advocate of moving ahead with aid.
While others criticized the Gorbachev letter, Germany’s chief spokesman, Dieter Vogel, said: “We believe the skepticism goes too far. . . . It needs to be taken seriously and supported.”
Even the nations most reluctant to fill Gorbachev’s tin cup expressed a desire that Gorbachev not go home empty-handed.
“It is our task to welcome the Soviet Union into the international society,” said a Japanese government spokesman.
Asked to compare the Japanese stance with the German, the Japanese official said, “We have so far not detected any fundamental difference of views.”
A senior official from Canada noted that Gorbachev has turned loose of the Soviet Union’s satellites in Eastern Europe, entered into substantial arms control agreements and cooperated with the U.S.-led war against Iraq. As such, he said, Gorbachev deserves the West’s rewards.
The difficulty facing the West, the Canadian official said, is to prepare an aid package that would actually help the Soviet economy make the transition to free markets.
Western and Soviet sources spelled out these elements of the assistance Gorbachev will seek:
* Technical assistance: The Soviet Union needs help with the basics of capitalism, such as how to establish financial markets. This is the form of help the West can most easily provide.
* Currency stabilization: When the Soviets take the plunge to a convertible ruble, the currency, at the outset, will almost inevitably lose value on international currency markets. To prevent a total collapse, the Soviets say they will need a vast pool of Western money with which to buy rubles.
Western officials say the currency stabilization fund will come only when the Soviet Union qualifies for IMF membership. For now, they are supporting only associate membership status for the Moscow government.
* Debt reduction: Gorbachev wants to alleviate the strain of making payments on about $70 billion in debt to Western countries, about one-fourth of which comes due this year. British officials said debt reduction agreements, such as the recent 50% reduction for Poland, should be preceded by economic reform plans approved by the IMF.
* Western goods: As the Soviet economy makes the difficult transition from central planning to free markets, Soviet officials believe they will need massive quantities of Western goods. Otherwise, they say, further shortages of Soviet-made goods will inevitably develop, and panic buying will send prices soaring.
The seven industrial nations have expressed little enthusiasm for such aid. Some, however, have proposed giving the Soviets cash grants that could be used only for buying goods from Eastern Europe, where newly emerging market economies are looking for buyers.
* Investment guarantees: Gorbachev is looking for guarantees by Western governments that foreign companies will not lose money if they build factories and otherwise invest in the Soviet Union.
The leaders of the seven summit nations say they will provide no such guarantees until the Soviets create a favorable investment climate.
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