Introduction

Yesterday, President George Bush held his hastily arranged mini-summit with Soviet President Mikhail Gorbachev in Helsinki, Finland — a meeting whose intended purpose was to display U.S.-Soviet solidarity in the face of Iraqi aggression. In fact, what was most in evidence were the numerous ways in which Soviet policy sharply diverged from that of the United States — and the lengths to which President Bush was prepared to go to compromise long-standing American interests to paper over such differences.

In a pre-summit analysis, entitled Scorecard for Moscow’s ‘Double Game’ in Iraq (No. 90-87, 7 September 1990), the Center for Security Policy outlined five areas by which this meeting’s outcome would be judged:

1. The treatment of Soviet conduct to date in the Persian Gulf crisis (for example, would the continued presence of thousands of Soviet advisers in Iraq be tolerated?);

    

 

2. The future role accorded the USSR in this crisis (notably, would Soviet troops or naval units be invited to participate in the multinational forces arrayed against Saddam Hussein?);

    

 

3. The impetus, if any, given to mischievous Soviet- (and Iraqi-) backed diplomatic initiatives (importantly, that promoting an international peace conference that would address the Arab-Israeli conflict as well as the Iraq-Kuwait crisis);

    

 

4. The extent to which President Bush would attempt to construe Soviet behavior as justification for providing Gorbachev with the generous economic, financial and technological assistance seen by some as essential to the survival of the present Soviet regime; and

    

 

5. Of special concern in the latter category, the willingness of the Bush Administration to provide extremely ill-advised support for the strategic Soviet energy sector.

    

Regrettably, it appears that U.S. interests in each of these areas were very poorly served by the Helsinki summit.

The Soviet ‘Advisers’ in Iraq Scam

In recent weeks, it has become increasingly clear that the Soviet Union is playing a "double game" in Iraq. On the one hand, Moscow wishes to secure economic and other desperately needed assistance from the West; on the other hand, it does not want to jeopardize a valuable client relationship with a strategically important nation like Iraq.

One of the most egregious manifestations of this "double game" has been Moscow’s determination to continue to provide Iraq with the critical services of several thousand Soviet advisers. These include not only those described as uniformed military (originally said to number 193, Gorbachev announced at the press conference that there were now only 150 of them) but also civilian and KGB personnel.

Taken together, these advisers provide vital assistance to the Iraqi armed forces (e.g., helping to maintain and perhaps even to operate sophisticated Soviet-supplied weaponry), overseeing militarily relevant manufacturing and infrastructure projects (e.g., Iraqi production of Soviet-designed T-72 main battle tanks and steel mills) and supporting the Iraqi internal security service so essential to the perpetuation of Saddam Hussein’s police state and power.

Unfortunately, President Bush evidently did not press Gorbachev for the immediate and total withdrawal of these Soviet advisers from Iraq. To the contrary, he seemed reluctant even to state his unhappiness about their continued presence during the of their Helsinki press conference on Sunday. Instead, President Bush implicitly validated Gorbachev’s contention that there were only 150 of these advisers (contrary to State Department estimates that at least 1,000 are involved in military functions) and displayed a willingness to overlook the fact that the services being provided by the Soviet advisers are clearly contrary to the U.N. Security Council resolutions embargoing Iraq.

As a result, in the event of conflict with Iraq, Saddam Hussein’s forces will be better equipped, in possession of better intelligence and in more secure domestic control than would otherwise be the case. Consequently, more Americans could be killed or wounded and the ultimate job of toppling the Saddam Hussein regime made much more difficult.

Inviting the Soviet Union into the Middle East

In its Scorecard, the Center expressed concern that the effect of a Bush Administration invitation to Moscow to send troops to Saudi Arabia would be greatly to enhance Soviet influence in the region while reducing U.S. military options. The Helsinki press conference made clear, however, the Center’s warning grossly underestimated the Administration’s determination to do precisely that.

Mr. Gorbachev coyly disclosed President Bush’s explicit abandonment of standing U.S. policy against direct Soviet involvement in Middle East peace conference and peacekeeping efforts, emphasizing that henceforth the United States would be encouraging Moscow to play an important diplomatic and even military role in the Middle East. While the Bush Administration made it clear that it was up to the Saudis to invite the USSR to send ground troops to participate in the multinational force, it noted that the United States would have no objection if Saudi Arabia did so. National Security Advisor Brent Scowcroft even suggested that such a commitment of forces could even entitle the Soviet Union to seek cash contributions from the Saudis — just as Washington did the week before.

The Administration’s invitation to Moscow is all the more troublesome when taken together with the impression likely to arise from President Bush’s commitment to the prompt removal of U.S. forces from the region. While he tried to qualify this somewhat at the press conference with the caveat "when they are no longer needed," he conveyed an impression of U.S. transience and determination to disengage from the Middle East that can only encourage its allies to hedge their bets by giving new weight to relations with Moscow.

Soviet Diplomatic Gambits

One need not look too far to discover how such openings will be used by the Soviet Union to the detriment of vital American and allied interests in the Middle East.

The summit showcased the Soviet determination not to countenance the use of force to settle the Persian Gulf crisis. In fact, Gorbachev went to great lengths in the press conference to distance himself from the implication that the joint statement represented a priori Soviet acquiescence to any military options if the sanctions do not work. President Bush not only failed to secure Moscow’s approval for a U.S. use of force, he was put on notice that the USSR would take strong exception to such use.

For his part, the President seems to have pledged to "exhaust" all diplomatic possibilities before resorting to conflict. As a practical matter, therefore, the summit has added immensely to the inertia against the one course of action likely to produce the necessary change in the character and military potential of the Iraqi regime — combat operations.

The President also appears to have accepted the idea that the Soviet Union could be a helpful intermediary in resolving the crisis. He welcomed Soviet bilateral contacts with Saddam Hussein’s regime even though such dealings — particularly with their emphasis on securing the early removal of U.S. forces and an "Arab solution" — are the very antithesis of the approach the Bush Administration has sought to use to force Iraq to retreat, namely complete isolation.

The Administration yielded further ground to the Soviet Union in its handling of the issue of humanitarian exceptions to the embargo on Iraq. Over the past few weeks, Moscow has succeeded in portraying itself as the compassionate player in the Iraqi-Kuwait crisis, by pressing for and obtaining embargo exceptions for food and other humanitarian shipments to flow to Iraq. By failing at the onset of the crisis to indicate that certain limited exceptions would be made, the United States forfeited to the United Nations the task of defining the scope of this loophole, and weakened the weight of a long-standing U.S. policy to oppose the use of food as a weapon in settling disputes.

Perhaps most worrisome of all, however, is President Bush’s sympathetic reaction, in principle, to Moscow’s proposal (again echoing an early initiative by Baghdad) for an international peace conference on the Middle East. While the President did correctly state that the present crisis would be made more difficult to resolve — not less — if encumbered with the Arab-Israeli dispute, his willingness to participate in a forum intended to force Israel to accept otherwise unacceptable terms can only be viewed as deplorable. When combined with the notion of a larger Soviet role in regional affairs and the Bush Administration’s well-established indifference to Israeli security concerns about a Palestinian state on the West Bank and Gaza, the prospect of such a conference assumes nightmarish proportions.

The Quid Pro Quo

Despite Gorbachev’s obvious sensitivities on the point, the fact of the matter is that President Bush wishes to use perceived Soviet cooperation on the Middle East to justify far-reaching economic concessions to Moscow — event though Moscow stands to gain a $7-10 billion windfall from increased world oil prices. While the full magnitude of these concessions can at present only be surmised, President Bush’s statement at the press conference yesterday that he wished to do "everything possible" to help perestroika succeed at the very least suggests a breathtaking departure from his position of just three months ago.

In the course of the Houston Economic Summit, Mr. Bush expressed proper misgivings about providing the Soviet Union with direct economic assistance before fundamental, structural reforms have been implemented. On 29 June 1990, the President said:

There has got to be economic reform [in the Soviet Union], market reform and all kinds of changes that I believe Mr. Gorbachev wants to see take place. But they have to be in place for the United States to go forward….Why put X billions of dollars of money into the Soviet economy when it’s not reformed, when they’re spending 18 percent of their GNP on military, and when they’re spending an estimated $5 billion on Cuba. (Emphasis added.)

 

Regrettably, such appropriate misgivings have evidently now been set aside. Like many other, earlier Bush preconditions,(1) those the President stipulated to ensure that U.S. taxpayers were not unduly exposed to Soviet-related losses seem no longer to apply. As a result, a number of ill-advised economic, financial and technological initiatives are likely to be announced shortly, if not as part of President Bush’s address to Congress tomorrow.(2)

The multi-billion dollar taxpayer exposure contemplated by such initiatives is all the more ironic — and regrettable — given the USSR’s yawning economic catastrophe. In pursuing, them despite the fact that the necessary structural reform remains unagreed upon, to say nothing of fully implemented, President Bush risks adding massively to America’s own financial difficulties while reducing the pressures for such reform.

The Strategic Breakthrough: Aid to the Soviet Energy Sector

Far and away the most ill-conceived and premature economic assistance measure now underway is the Administration’s effort to jump-start the Soviet Union’s crumbling energy sector. Secretary of Commerce Robert Mosbacher put it aptly last week when he said that, "Energy is their No. 1 source of hard currency. If they can get large amounts, they can accomplish their goals."

Neither President Bush nor any other Administration official (including Secretary Mosbacher), however, has answered a fundamental question: Why is it in the interest of the United States to increase Soviet hard currency earnings when that country continues to spend: some 25 percent of its GNP on its bloated military machine; roughly $15 billion annually funding its client-states (including Cuba, North Korea, and Libya) unremittingly hostile to the West; and billions more for technology theft operations and espionage activities which are on the rise around the globe?

From the taxpayer’s standpoint, a further concern should be noted: Bush Administration officials have strongly hinted that they may take a page from Germany’s playbook and permit Moscow eventually to pay for U.S. oil and gas equipment and technology sales through an oil barter arrangement. This kind of equipment-for-oil compensation deal — predicated on necessarily vague and speculative terms to spare Moscow the problem of immediate, hard currency payments — is altogether too easily translated into "debt forgiveness" in the future.

In addition to such obvious reasons for not aiding the Soviet economy’s energy sector at this time, there are a host of other considerations that make a mockery of the notion of the USSR as a "secure supplier" to the West in the face of possible disruptions of Middle Eastern oil supplies:

• The Soviet Union has a demonstrated track-record of using energy supplies as weapons of repression and coercion. For example, the Soviet Union utilized a draconian embargo of oil and natural gas supplies earlier this year as the principal lever in its effort to bring the Lithuanian independence movement to heel.

 

• Political motivations may be at work in other instances where the Soviet Union has also proven an unreliable energy supplier. Notably, the Soviet Union has severely undercut the chances for successful transitions from command economies to free market systems in Poland, Hungary and Czechoslovakia by reducing earlier this year urgently-needed oil and gas supplies by as much as 20-30 percent — notwithstanding Moscow’s contractual obligations and in sharp contrast to Gorbachev’s concern about "contract sanctity" in the case of his advisers in Iraq.

 

• It was precisely out of concern about such Soviet use of energy supplies for political purposes that the International Energy Agency agreed in May 1983 to limit allied energy dependence on the Soviet Union. This agreement would inevitably be breached by the Bush initiative.

 

• Concerns about the reliability of Soviet energy supplies are further exacerbated by the notoriously poor condition of the USSR’s oil and gas distribution network. For example, Soviet pipeline builders have routinely cut corners by using lower-grade steel and shallow burial of lines, making pipes particularly vulnerable to corrosion and repeated, catastrophic accidents. As a result of such shoddy workmanship and incompetence, at least 10 percent of all natural gas transported by Soviet gas lines is reported to leak out of the system. So extensive is this infrastructural problem that no reasonable amount of Western technology or investment can correct it fully.

 

• Given this record, it is hardly surprising that the increasingly influential environmental movement in the USSR is alarmed at the prospect of still greater energy exploitation in ecologically fragile areas like the Caspian Sea, the Bering Sea and the Siberian permafrost. In part as a result of these concerns, individual Soviet republics have begun to object to Moscow’s dictates concerning the rapid extraction, processing, and transmission and sale of Soviet energy resources.

 

• Last, but hardly least, the high-technology sought by the Soviet Union for its energy industry lends itself to sensitive military applications, such as underwater sensors for anti-submarine warfare and other purposes.

Arguably the most important new factor arguing against the Bush Administration’s Soviet energy bail-out scheme, however, is its likely adverse impact on the movement toward structural reform in the USSR. The Center has long believed that the de facto decentralization process underway in the Soviet Union offers the best hope for genuine systemic reform — and greatest insurance that the proceeds of energy sales to the West will not be diverted to purposes harmful to Western security interests. Unfortunately, Western oil executives appear to be dealing exclusively with central authorities, and only focusing secondarily, if at all, on the governments of the republics that are appropriately seeking to take ownership of their own energy resources and the hard currency proceeds of their sales abroad.

Conclusions and Recommendations

The Center for Security Policy strongly disagrees with the Bush Administration’s willingness to characterize Soviet behavior as constructive when it is not. It finds the policy of inviting the Soviets to play an even greater role in the Middle East — given the mischievous, if not destructive, nature of a number of Moscow’s recent initiatives — to be most worrisome. That the Administration should, moreover, contemplate compensating the USSR for such counterproductive "cooperation" boggles the mind.

The Center has described elsewhere an alternative approach more likely to produce the needed results in the Iraq crisis and beyond. They may be summarized as follows:

• The United States should restate that its objectives are to thwart Iraqi aggression against Kuwait and the threat Saddam Hussein poses to the region as a whole. It should, moreover, amplify that these goals will not be satisfied so long as the present Iraqi leadership and its arsenal of chemical, biological and incipient nuclear weapons remain intact.

 

• The Soviet Union should be told to stay basically on the sidelines of this dispute. Their personnel in Iraq should be removed at once, irrespective of ostensible "contractual obligations."

 

• Specifically, Gorbachev should be told that cosmetic Soviet contributions to the multinational force and unhelpful diplomatic initiatives are not welcome — particularly if they are certain to limit U.S. freedom of action, obscure the reason for such action if it must be taken or otherwise divide the opposition to Saddam Hussein’s aggression.

With respect to aiding the Soviet Union, the Center believes that the Bush Administration should not be engaged in retarding the devolution of political and particularly economic power to the individual republics of the USSR. This injunction applies especially to the notion of contributing to the resuscitation of the USSR’s energy sector.

Instead, the U.S. government should insist that Moscow use some of the billions in hard currency windfall profits it is accruing from the sharp increase in world oil prices to assist the fledgling democracies in Eastern Europe. It is commonly understood that the fragile East European economies have been dealt a debilitating blow by both the increase in oil prices and the cutbacks in contracted Soviet deliveries. Accordingly, Moscow should be required to share the burden of the Persian Gulf crisis just as others of the world community are now doing. Specifically, the U.S. government should insist that Moscow:

1. guarantee its oil and gas deliveries to Eastern Europe and the Baltics at the levels agreed to prior to the start of 1990;

    

 

2. make-up the shortfalls which have taken place in the first half of 1990; and

    

 

3. postpone its demand for hard currency payment from East European countries for a minimum of six months.

    

Finally, U.S. energy expertise and assistance would be better employed in Eastern Europe where systemic reform is well underway and where the prospects for efficient incorporation of such assistance are far higher than in the USSR.

1. In a paper entitled Read the President’s Lips: ‘No U.S. Taxpayer Aid to Gorbachev’(No.90-63, 3 July 1990), the Center enumerated five instances where the Bush Administration abandoned previously stipulated conditions on various forms of assistance to the USSR (i.e., those involving: granting Moscow observer status in GATT; Soviet membership and borrowing privileges in the European Bank for Reconstruction and Development; Soviet access to militarily relevant technology; encouraging untied, subsidized lending by Germany to the USSR; and signature of a U.S.-Soviet Trade Agreement.

2. See Scorecard for Moscow’s ‘Double Game’ in Iraq for a list of nine steps President Bush appears poised to take to assist the USSR economically.

Introduction

As President Bush prepares to meet Soviet President Mikhail Gorbachev in Helsinki on 9 September, the question of Moscow’s true intentions in the Persian Gulf crisis is moving to the forefront of the policy debate. For his part, Mr. Bush has repeatedly emphasized his satisfaction with what he has called the Soviets’ "superb cooperation" with the United States to date.

Senior Administration figures like National Security Advisor Brent Scowcroft, moreover, have described Moscow’s constructive role as the stuff of which a new Post-Cold War "world order" can be made, based fundamentally on U.S.-Soviet joint leadership of the international community in resisting aggression. The USSR’s support for five U.N. Security Council resolutions criticizing and punishing Iraq for the invasion of Kuwait are cited as proof positive of the emerging partnership said to be replacing the mutual hostility and competition of yesteryear.

Further proof was offered in the aftermath of Secretary of State James Baker’s testimony to the Senate Foreign Relations Committee on 5 September 1990. On that occasion, several senators — notably Sen. William Cohen (R-ME) — took strong exception to duplicitous Soviet activities in the Persian Gulf crisis. Seemingly in response, a unnamed "senior Administration official" backgrounded the Chicago Tribune to the effect that Moscow was providing U.S. intelligence officials with "reams of useful intelligence information about Iraqi capabilities." (Emphasis added.)

What is more, White House press spokesman Marlin Fitzwater has intimated that the Bush Administration is far more favorably disposed than previously toward assisting the Soviet Union with its pressing economic and financial needs in light of the USSR’s new constructiveness. On 5 September, Fitzwater opined that Soviet cooperation on U.S. policies "has impressed us to the point that we are even more interested in being supportive economically if we can."

Such statements by senior figures in the Bush Administration seem to designed to telegraph the bottom-line of the Helsinki summit: Gorbachev expects to be paid — and paid handsomely — for his country’s "cooperation" in the Gulf crisis. The threshold question now must be: Is Soviet "cooperation," such as it is, really worth paying anything for?

The True Character of Soviet Activities in the Gulf Crisis

Even as it seeks to extract significant new economic, financial and technological, and particularly energy-related assistance from the United States, the Soviet Union is pressing a four-part agenda quite inconsistent both with its own public rhetoric and with U.S. interests. This agenda involves determined efforts:

1. to maintain strong ties to one of its most strategically and economically important clients, namely the Saddam Hussein regime;

    

 

2. to undercut U.S. leadership in the crisis while constraining American options for dealing with Iraq militarily;

    

 

3. to help generate and exploit rising Arab animosity to the United States’s role in the Middle East to the Kremlin’s long-term advantage in the region; and

    

 

4. to advance the strategy of dividing the United States from its European allies, notably Germany.

    

Consider the following Soviet activities that promote one or more of these purposes:

Military Support

At least 7,000 Soviet advisers (civilian as well as military) remain in Iraq. Many of such advisors provide vital support to the armed forces, intelligence and security apparatuses of the Saddam Hussein regime. While Moscow has tried to minimize the significance of this support — maintaining that there are only 193 military advisers in Iraq and describing their continuing presence as a function of merely fulfilling the USSR’s contractual obligations — the facts indicate otherwise:

• Soviet personnel in Iraq are enabling Saddam Hussein’s forces to field Soviet-supplied military hardware that might otherwise be unusable or less effective against American troops in the event of armed conflict. For example, U.S. intelligence is reported to have determined that Soviet advisers are still working at a plant near Baghdad that produces advanced T-72 tanks. In other words, should war break out, more U.S. and allied personnel could perish as a result of the USSR’s so-called "supportive" role in the Gulf crisis.

 

• Even if they are pulled out this weekend with great fanfare — perhaps as part of a deal struck at the summit — it is reasonable to assume that Iraqi forces and equipment will be better prepared for action than they would have been had the Soviets departed five weeks before.

   

• Worse still, Western intelligence sources believe the Soviets themselves may be operating some of the more sophisticated equipment Moscow has exported to Iraq, like jammers being employed to try to deny U.S. and Saudi Airborne Early Warning and Control System (AWACS) aircraft vital information concerning Iraqi military movements.

 

• It is worth noting that the contracts Moscow insists on honoring by definition violate the U.N. sanctions on goods and services to Iraq for which Moscow has voted. In fact, "contract sanctity" is an excuse that has all too often in the past been used by the Soviets (and those who have collaborated with them) to persist in activities that — once revealed — cannot otherwise be justified.

 

• There are reports that the Soviet Union has continued, also in violation of the U.N. embargo, to provide Iraq both directly and indirectly with military equipment and spare parts needed to maintain its war machine. For example, Moscow continued in the post-embargo period to send parts for Iraq’s Mi-17 transport helicopters. Cuban, Libyan and North Korean stocks of Soviet weaponry have evidently been transported by air — again with the effect of helping Saddam Hussein field a more lethal array of capabilities against U.S. forces than could otherwise be the case.

 

• There is, moreover, no evidence that the close collaboration between the Soviet KGB and Iraq’s intelligence and internal security organizations has ended. In fact, it is only reasonable to presume that this cooperation now involves the provision to Baghdad of vital strategic warning and tactical information about the multinational force arrayed against Iraq — potentially decisive capabilities which Iraq sorely lacks.

Diplomatic/Political Support

The Soviet Union has provided Iraq with tangible, perhaps invaluable, diplomatic support even as Moscow has publicly condemned Saddam Hussein’s aggression and voted for U.N. Security Council resolution toward that end. It is noteworthy, for example, that the Soviets have expressed no interest in seeking a fundamental change in the character of the Iraqi regime, let alone the destruction of its stockpiles of weapons of mass destruction — two goals increasingly viewed by Washington as essential direct or indirect consequences of any satisfactory resolution of this crisis.

Instead, the USSR has pursued the following sorts of initiatives which appear to have as their common purpose keeping Saddam Hussein in power and preserving his military capabilities:

• The USSR has embraced the centerpiece of the destructive "peace" proposal currently being promoted by Jordan, Libya and the PLO on Saddam Hussein’s behalf. This involves the creation of an international conference designed to obfuscate the Arab-Arab character of the present crisis and shift the focus of world attention back to the Arab-Israeli confrontation.

 

• This is, simply put, a proposal that would greatly expand and infinitely complicate the terms of reference for any diplomatic solution to the Gulf crisis; as such it is an example of vintage Soviet obstructionism, not evidence of its vaunted "team player" orientation.

   

• Similarly, the Soviets have endorsed the demand of Saddam Hussein and his sympathizers for "an Arab solution" to the crisis, perhaps under U.N. auspices. Inevitably, such a solution boils down to insistence that multinational forces be withdrawn from the region in exchange for Iraqi forces being moved a relatively short distance up the road.

 

• Further, tangible evidence of where the Gorbachev regime truly sits vis a vis Iraq is to be found in the recent visit of Iraqi Foreign Minister Aziz to Moscow. Gorbachev’s willingness to provide such a dignified platform for a top representative of Saddam Hussein — at a time when the Bush Administration and others have specifically rejected the idea of opening discussions with Iraq so long as its troops remain in Kuwait — amounts to breaking solidarity with the West. (That platform, predictably, was used by Aziz to launch a blistering personal attack on President Bush and Prime Minister Margaret Thatcher.)

 

• Perhaps most portentous of all is Moscow’s drumbeat that only a political or diplomatic solution is acceptable. This implicitly raises the prospect of renewed superpower friction if the United States contemplates acting militarily against Saddam Hussein — without the Soviets having to utter an express threat that would jeopardize their standing as "cooperative" partners in the Gulf crisis.

 

• Promoting European fears about that prospect was the obvious intention of the Commander of Warsaw Pact forces, General Vladimir N. Lobov, who recently averred that the U.S. military buildup could "wreck" the Conventional Forces in Europe (CFE) talks underway in Vienna.

Clearly, Moscow’s diplomatic initiatives are aimed at promoting Moscow’s role as an intermediary or broker in the crisis — a role explicitly sought by Aziz yesterday. Needless to say, such a Soviet position would be the very antithesis of the international isolation the Bush Administration hopes will force Iraq to retreat.

The Piece de Resistance: Soviet Forces in the Multinational Military Operation

Moscow’s efforts to have it both ways are likely to reach dazzling new heights this weekend when, (de facto if not explicitly) in exchange for far-reaching U.S. economic concessions, the Soviet Union agrees to dispatch modest numbers of ground and/or naval forces to join those multinational elements already in Saudi Arabia.

By so doing, the Kremlin could simultaneously accomplish several important objectives:

• It could obtain the guarantee thus far not provided by the United States or Britain — namely that the use of elements of the multinational force would not occur without the express approval of the Soviet Union, either through bilateral contacts or through the U.N. Security Council.

 

• It provides an unparalleled opportunity for Soviet military and intelligence personnel to obtain information about American military technology, equipment and operational practices. Not only would integration of Soviet forces into Operation Desert Shield threaten to compromise day-to-day operational security; it also risks the compromise of long-term U.S. capabilities through unauthorized but inevitable disclosure of the specifications or performance of key weapon, communications and intelligence systems.

 

• It also would enable the USSR to attain unprecedented entree into nations like Saudi Arabia, the Emirates and Oman — nations that have traditionally taken a dim view of Soviet activities in the Gulf. The United States went to great lengths in the course of the Kuwaiti reflagging exercise a few years ago to prevent the Soviets from obtaining precisely such access to friendly strategic nations in the region.

 

• Of greatest concern, however, are the misapprehensions the apparent reuniting as allies of American and Soviet forces would create among Western publics and governments. Inevitably, this step will be perceived as irrefutable evidence that East-West military confrontation can never return. It must be expected that such a perception will translate, in turn, into sharply eroding support for the maintenance of U.S. and allied defenses sufficiently robust and ready to contend with the USSR’s abiding capacity for armed aggression.

In short, even as the Soviet Union seeks to retain its privileged position in Iraq, it is striving to establish an impressive new beachhead in the West. With feet firmly planted in both camps, it will have unprecedented opportunities to promote Soviet interests in the region and internationally — regrettably, at the expense of those of the United States.

The Quid Pro Quo

Incredible though it may seem given the aforementioned dangers, the Bush Administration is prepared to pay handsomely to enable the Soviet Union to secure such a strategically advantaged posture. The following are a few of the significant economic concessions President Bush appears prepared to make to Gorbachev in Helsinki (or shortly thereafter) as a reward for Soviet participation in the new ‘world order:’

Equipment and Technology Infusions into Soviet Energy Sector

The Bush Administration is nearly as intent as Moscow on adding the Soviet Union to the list of U.S.-approved, "secure" foreign suppliers of oil and natural gas. Secretary of Commerce Robert Mosbacher announced yesterday that he will lead a delegation of 15 business executives to Moscow this Saturday to bolster Moscow’s energy sector. As he observed: "Energy is their No. 1 source of hard currency. If they can get large amounts, they can accomplish their goals. We hope to help them turn around their dropping production rate if they so desire." (Emphasis added.)

If, as now seems likely, President Bush at Helsinki conveys an unprecedented willingness to transfer sensitive technologies and to encourage American capital investment in the Soviet energy sector he will be facilitating:

• the resuscitation of the very centerpiece of the Moscow’s hard currency earning structure, the proceeds of which have traditionally gone, in part, to support Soviet adventurism overseas. Today, oil and gas exports produce 60-65% of Moscow’s roughly $38 billion in total annual hard currency earnings; expanding the earning potential of this sector could potentially constitute a powerful windfall for the Gorbachev regime;

 

• further expansion of the political leverage that accrues to the Kremlin from others’ dependence on Soviet oil and gas. This leverage was brazenly utilized to break the Lithuanian independence drive. In addition, the Soviet Union’s highly disruptive reductions in energy supplies to the struggling democracies of Eastern Europe — notwithstanding contractual obligations — may also have political motivations;

 

• the undermining of the hard-fought International Energy Agency Agreement of May 1983, designed to limit undue West European dependency on Soviet natural gas supplies; and

 

• the ill-advised technology transfer efforts of those in the energy industries of the United States and other allied countries who are among the most powerful constituents for expanding Soviet trade and economic relations. As it happens, this constituency is well represented within the senior reaches of the Bush Administration.

In short, this aspect of the Bush Administration’s quid pro quo for Soviet "cooperation" in the Middle East does not represent mere tinkering with "technical assistance" to Moscow. Rather, it amounts to a strategic breakthrough in arguably the single most important element of the USSR’s economic power — its energy sector.

It also represents a further, unmistakable alignment of the United States with the central authorities in Moscow over the reform-minded governments coming to power at the republic and local levels. In effect, the U.S. government is taking sides, potentially significantly impeding the crucial devolution of communist economic and political authority away from Moscow center. Ironically, as a consequence, the United States will be party to postponing the realization in the Soviet Union of a system that promotes individual freedoms and opportunity and that reduces the threat to the West still posed by Soviet armed forces.

Other Economic Initiatives

In addition to the effort to help jump-start the Soviet energy sector, President Bush will likely offer some or all of the following in the course of the Helsinki meeting:

• generous settlement of defaulted czarist debts opening Soviet access to U.S. security markets (e.g., bond offerings);

 

• an accelerated program for securing Senate approval of the new U.S.-Soviet Trade Agreement (possibly shelving the Administration’s commitment to withhold action on a trade agreement pending enactment of a new Soviet emigration law, certainly without waiting for a genuine resolution of the Baltic problem);

 

• restored access to Eximbank credits and loan guarantees, and OPIC official insurance coverage;

 

• access to Commodity Credit Corporation three-year loan guarantees for purchase of grain;

 

• eligibility for all benefits offered under the pending "SEED II" legislation intended to help emerging Central and Eastern European democracies;

 

• other "in-kind subsidies" (e.g., giveaways of surplus U.S. foodstuffs);

 

• relaxation of the terms constraining Soviet access to the resources of the European Bank for Reconstruction and Development (i.e., abandoning the current limit on Soviet borrowing to the amount corresponding to Moscow’s capital contribution to the EBRD);

 

• a commitment to lend U.S. weight to an early and favorable conclusion of the Group of Seven (G-7) and EC studies considering the question of direct aid to the USSR — and virtually assuring Soviet membership in the IMF and World Bank;

 

• assistance to the Soviet effort to gain a formidable share of the nascent commercial space-launch market (the practical effect of the decision announced yesterday by the National Space Council concerning Soviet launches of Western payloads from a new site to be built at Cape York, Australia);

Naturally, the foregoing are of considerable value to the Soviet Union in their own right. They are considerably more important, however, when one takes into account the effect they will have in adding to the already withering pressure on Japan to dip into its deep pockets to assist Moscow.

As it happens, the joint communique issued yesterday in Tokyo by Soviet Foreign Minister Eduard Shevardnadze and his Japanese counterpart suggests that the Kremlin’s determined efforts to break into the Japanese vault is now beginning to bear fruit. For example, the two sides agreed to prepare documents concerning the transfer of Japanese technical assistance for the ailing Soviet economy.

In short, the Bush Administration’s economic game-plan for the summit seems to envision sizeable new credit exposure for the U.S. taxpayer arising from Soviet commercial risk. Through the device of a multi-billion dollar end-run using less known government lending and trade agencies, multi-prong commitments are going to be made that will make a Soviet replay of the recent decision to write off Egypt’s debt likely, if not inevitable.

The Bottom Line — A Summit Agenda in the U.S. Interest

In sharp contrast to the script for the Helsinki summit seemingly envisioned by the Administration, the Center for Security Policy recommends a different — and far more prudent — course. It includes the following elements:

• The United States should restate that its objectives are to thwart Iraqi aggression against Kuwait and the threat Saddam Hussein poses to the region as a whole. It should, moreover, amplify that these goals will not be satisfied so long as the present Iraqi leadership and its arsenal of chemical, biological and incipient nuclear weapons remain intact.

 

• The Soviet Union should be told to stay basically on the sidelines of this dispute. Their personnel in Iraq should be removed at once, irrespective of ostensible "contractual obligations."

 

• Specifically, Gorbachev should be told that cosmetic Soviet contributions to the multinational force and unhelpful diplomatic initiatives are not welcome — particularly if they are certain to limit U.S. freedom of action, obscure the reason for such action if it must be taken or otherwise divide the opposition to Saddam Hussein’s aggression.

 

• The United States should also insist that the Soviet Union demand an immediate halt to the efforts of other Soviet clients — such as North Korea, Cuba and Libya — to serve as "surrogate suppliers" of weaponry and spare parts to Iraq.

 

• The U.S. should strongly request — if not demand — that the Soviet Union share the debilitating burden of increased oil prices on beleaguered East European economies. One way of doing this would be to postpone for at least six months Moscow’s demand that, starting on 1 January 1991, payments for Soviet oil and gas supplies be made in hard currency.

 

• President Bush should reiterate his commitment made in connection with the Houston Economic Summit that three conditions must be satisfied before there can be any U.S. taxpayer guarantees or aid offered to the USSR (i.e., that systemic economic reforms — including price reforms — be fully in place, that the percentage of Soviet GNP spending dedicated to the military be sharply reduced and that the estimated $15 billion dollars annually flowing to Cuba and other Soviet client states around the globe be drastically curtailed). None of these has been satisfied to date.