Gorbachev ends long wait to speak at elite meeting


WASHINGTON -- The last two times leaders of the world's major economies assembled for one of their annual summits, President Bush made sure Soviet President Mikhail S. Gorbachev could only watch the proceedings from afar, like an intruder peering through a locked window.

But at the so-called G-7 summit of leading industrial democracies that begins in London tomorrow, Mr. Gorbachev will be treated as the guest of honor.

No matter that the Soviet president is still technically excluded from the summit; even U.S. officials acknowledge that all that precedes his appearance Wednesday will amount to little more than cocktail party chit-chat before the main event.

The summit's most important other business -- giving a political jump-start to stalled international trade talks -- is likely to be submerged. The final communique is expected to call for redoubled efforts to resolve disputes over agricultural subsidies but postpone real work on the issue until later this year or next.

The difference in attitude toward Mr. Gorbachev displayed this week by the United States and its summit partners is seen here as probably the single most important benefit Mr. Gorbachev will obtain from three years of trying to break through the barriers to this most exclusive club.

The Western leaders are finally willing to take the Soviet president seriously in his quest for economic reforms that could produce the most dramatic transformation his countrymen have experienced since the advent of communism.

A senior Bush administration official familiar with the plans Mr. Gorbachev had spelled out in advance of the summit said, "He conveys a strong sense of commitment, but whether he is in fact willing to take the serious, difficult implementation steps remains to be seen."

"We are now engaged with him in the effort, not just sitting back as bystanders," said a senior Bush administration official who helped to prepare the U.S. position. "This is the beginning of what might be called not a grand bargain, but a grand process."

The "grand bargain" notion of economic and political reforms promised by Mr. Gorbachev in return for what President Bush has derisively called "megabucks" of Western aid was quickly scotched.

Mr. Bush simply doesn't have the money to offer, and many in his administration don't believe that a large infusion of foreign cash into the Soviet economy would help the reform process anyway.

Some fear that the aid might even slow the pace of reform by propping up a state-run system that needs to collapse before it can be replaced with free markets.

"This is an extraordinarily rich country that's just not very well-managed," said the administration official, who scoffed even the idea of a Western-financed stabilization fund to help make the ruble an internationally respectable currency.

"We're talking about a country with a $25 billion gold stock," he said. "Why should it need money from the West? . . . We have to help the Soviets help themselves."

Mr. Bush has had little trouble from his summit partners in obtaining a consensus on this approach. The British and Canadians hold a similar view. The Japanese are even more conservative about how they invest their money, and in any event, they have a dispute on the side over continued Soviet occupation of the Kuril Islands.

German Chancellor Helmut Kohl has been the most enthusiastic of the summit partners in promoting financial help for the Soviets, but he made clear last week that he doesn't want to go it alone.

And while a radical reform plan developed in part by Soviet economist Grigory Yavlinsky calls for $30 billion or more a year in direct aid from the West, others in the Soviet Union have expressed concern about any arrangement through which they wind up effectively selling off their country's assets.

President Bush initially hesitated again this year when Mr. Gorbachev expressed an interest in attending the economic summit because he feared the prospect that the reformist Soviet leader would appear to be going home empty-handed.

To counter that impression, Washington signaled to Mr. Gorbachev that he should not come "hat in hand," as Mr. Bush put it, and set about developing a modest package of self-help starter measures so the Soviet leader would have something tangible to bring back to Moscow.

The centerpiece of that package is associate membership in the International Monetary Fund and the World Bank, which will provide the Soviet Union with the technical expertise and support to put Mr. Gorbachev's reform plans into effect.

Barry P. Bosworth, an economist at the Brookings Institution, accused Mr. Bush last week of being "chintzy" in refusing to grant the Soviets full membership in the international financial institutions, which would qualify them for direct financial aid but not automatically provide it.

But administration officials argue that it could take two or three years for the Soviets to unwind the red tape associated with full membership, while the associate status could provide them with practical assistance immediately. The United States has already begun efforts to help the Soviets with privatizing certain sectors of their economy, such as food processing and energy.

Associate IMF status for the Soviet Union is also seen by U.S. officials as a test of Mr. Gorbachev's commitment to reform. The IMF process can be very intrusive in terms of the information and access to policy-makers it requires, turning inside out the long-held secrecy of what President Ronald Reagan used to call the "evil empire."

While postponing work on agricultural subsides in connection with trade talks, President Bush will push at the summit, aides say, for a lowering of trade barriers between the nations of Eastern and Western Europe to stimulate growth in the newly emerging market economies of the now-defunct Warsaw Pact.

The White House announced Friday that the United States would raise import quotas on certain textiles and steel from Eastern and Central Europe and protect those countries from losing agriculture business to the Soviet Union because of U.S. grain subsidies.

But the United States is such a minor trading partner with the former Soviet bloc nations that those steps aren't expected to have nearly as dramatic effect as would similar efforts by members of the European Community, whom the president is urging to follow suit.

Copyright © 2019, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad