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West grows wary of bailing out economically troubled East bloc

By Elizabeth PondStaff correspondent of The Christian Science Monitor / February 23, 1982


American policy toward the $10 billion Soviet-West European gas pipeline deal is the key issue just now for both American-Soviet relations and American-European relations. It pits conservatives against conservatives.

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On the one side, are the hardline conservatives who want to destroy this biggest-ever East-West deal as punishment of the Russians for repression in Poland -- and don't mind risking an irreparable US-European split in the process.

On the other side, are the conservatives who are worried about consequences for the international economic system - and don't want to destroy the NATO alliance.

Their proposed alternative is an impeccably conservative policy that is simple, nonpolitical, and doesn't roil US-European relations.

It consists of relying on the common sense of overextended private Western banks to shrink Western financing for Soviet bloc economies in the 1980s. In this scheme the role of Western governments would be only the peripheral (if important) one of not rushing in where the free market feared to tread.

It is not yet clear if the Reagan administration will in fact adopt this policy. Continued tussling over the issue was apparently responsible for the delay in the European visit by US Undersecretary of State James Buckley scheduled for the week of Feb. 22.

Certainly powerful voices within the administration have been calling for tougher Poland sanctions -- and particularly for blocking the Soviet pipeline by extending Washington's embargo on American companies' participation to also cover participation by European companies holding American licenses. The strongest public advocate of such a course, at least implicitly, has been Defense Secretary Caspar Weinberger.

No such decision has been reached in more than six weeks of internal Reagan administration debate, however, and what might have been the first hardline step -- a formal declaration of Polish bankruptcy -- was deliberately averted by the Reagan administration.

A prime reason for such hesitancy, is Washington's search for a way to have its cake and eat it too. The White House would like to find a policy alternative that would preclude any Western bailing out of the Soviet bloc from its economic troubles -- but would also avoid splitting the Western alliance. The strongest public advocate of what might be called the bankers' option has been Secretary of State Alexander M. Haig Jr.

Highly interested Europeans viewing the contest between the rival policies within the Reagan administration tend to define it as the lingering schizophrenia in the Reagan administration between traditional internationalist conservatives and California unilateralist conservatives.

The latter, they think, would be ready to sacrifice the European alliance if the Europeans don't jump up and salute whatever Washington's ideas are. The former, they think, value the European alliance as a bastion against the expansion of Soviet influence -- and eschew a feud over the pipeline that could end in US-European divorce.

In this analysis the internationalist conservatives have therefore come up with the bankers' option. They asked three crucial questions -- and answered them rather differently than the hardline school that favors what might be called industrial warfare against the Soviet Union.

The first question is: What Western course of action would most help the Polish people in the present situation?

The bankers' option answers agnostically: we simply do not know if aiding the Polish government economically or refusing to aid it would be more beneficial to the hard-pressed Polish people.

Assisting the Polish economy might ease the plight of the Polish man in the line -- but it might also prolong the repression. Refusing to assist the economy could prolong food and other shortages - but it could also speed the day when the Polish government would have to resume a dialogue with the Roman Catholic Church and the workers to get the economy functioning again.