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Should US, allies use Poland to destabilize Soviet bloc?

By Harry B. EllisSenior economics correspondent of The Christian Science Monitor / February 16, 1982



Washington

Top US and European officials have just given each other an earful of their mutual concerns, and neither side liked what it heard.

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Trade in steel and farm goods were high on the agenda of the US-European exchange held in Washington, but underlying these specific issues was a more fundamental problem:

Should the West, because of the brutal Communist repression in Poland, try to destabilize the Soviet bloc?

Moscow is finding it hard to scrape together enough hard currency to make its own debt payments to the West and at the same time help Poland stave off default on Warsaw's $26 billion worth of debts to Western banks and governments.

The Kremlin is selling large amounts of gold to raise cash and is asking some creditors in Japan and Western Europe to stretch out Moscow's payment for goods received.

A few hard-liners in the United States, notably Defense Secretary Caspar W. Weinberger, argue for forcing Poland into default, as a way of denying the Soviet Union itself access to Western credits and cash.

These hard-liners argue that Polish default would dry up the flow of Western credits to the Communist bloc, cause the collapse of the East European banking system, and force Moscow to spend less money on arms.

The implications of this approach alarm European leaders, who - during a two-day visit to Washington by senior Common Market officials - made an opposing pitch to top Reagan administration people.

''Destabilizing the Soviet bloc,'' said a major European figure, ''would lead to outright East-West confrontation. It would arouse a nationalistic rallying in the Soviet Union and shove Romania, Hungary, and the others closer to the Soviets.

''Also,'' he said, ''if you push the Soviets into a corner, you had better know what you are going to do if they lash out.''

The Europeans have other arguments, including the damage that Polish default would do to the Western banking system - more to European banks than to American.

The more cautious approach, supported by Secretary of State Alexander M. Haig Jr. among others, so far prevails within the Reagan team. The US government recently paid US banks $71 million owed by Warsaw rather than see Poland default.

The whole issue spills over into another contentious area - European help to the Soviets in building a vast natural-gas pipeline designed to pipe fuel to West Germany, France, and other West European lands.

Top Reagan officials are united in opposing Western participation in the pipeline deal. The President has slammed the door on US participation, causing the Caterpillar Tractor Company to lose a substantial Soviet order for pipelaying machines.

Dependence on Soviet gas, in Washington's view, could subject European governments to political pressure from the USSR down the road. Weinberger has a more particular concern - that money earned from gas sales would be used by Moscow to boost its military arsenal.

The US, in the Common Market view, is insensitive to the energy problems of Europe. Even more than the United States, European nations are dependent on potentially unstable Arab sources of oil. Soviet gas offers a way to lessen that dependence.

''We cannot set our economies right,'' says Viscount Etienne Davignon, vice-president of the European Commission, ''until we solve our energy problems.''

Moscow dangles before European leaders the prospect of many thousands of jobs over several years, through contracts to sell pipe, turbines, and a wealth of other equipment to the pipeline project.

These jobs are important, at a time when unemployment in some European lands is higher than it is in the United States, especially among young people. But European leaders deny that they are soft toward the Soviets and point toward the tighter restrictions the Common Market countries have placed on trade in response to the crackdown in Poland.

''We (in the West) have to decide,'' says Mr. Davignon. ''Have we given up on Poland? If not, then the question arises: How do we best send a clear signal to Moscow?''

So far President Reagan appears to side with his European allies that the West should not try to propel the Soviet bloc over the cliff of economic disaster. Short of that extremity, however, there is sharp transatlantic disagreement over how much pressure to apply.

In Washington, meanwhile, Mr. Weinberger - the quiet but very determined man at the Pentagon - pledges to toughen the Western response, to the extent he can.