US curbs on Moscow jolt major allies
Ronald Reagan's latest economic sanctions against Moscow, if implemented despite squeals of protest from his allies, will seriously complicate plans for a mammoth gas pipeline from Siberia to Western Europe.Skip to next paragraph
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These United States restrictions, announced June 18, also stand to damage a joint Soviet-Japanese bid to develop oil and gas deposits off the eastern Soviet island of Sakhalin.
The West Europeans and Japanese, even under the best of circumstances, might be expected to grate at moves to spoil such projects.
Resentment is particularly strong, however, at a time when the Americans are all but begging for the chance to peddle huge amounts of grain to a Soviet leadership beset by a succession of disappointing domestic harvests.
The expectation among foreign experts here is that President Leonid Brezhnev and other Kremlin leaders will do all they can to encourage allied resentment over the new American sanctions, while its trade officials scurry to come up with substitute components for the affected energy projects.
(Probably, the Soviet propaganda machine will also chime in with assurances that all US sanctions are laughably ineffective, a chorus that will make nice headlines but won't change economic facts of life.)
There is another option open to the Soviets: a counterstrike in the plentiful world grain market. Moscow has long valued the quality and price of US shipments , but it moved to diversify its sources of imported grain in response to a Carter administration embargo. The Soviets could seek to accelerate that process , finding it politically useful to favor other suppliers.
The latest Reagan trade restrictions were a follow-up to those announced at the turn of the year in response to imposition of martial law in Poland. The earlier sanctions nixed the supply of US-made rotors earmarked for the roughly 40 compressor stations along the multibillion-dollar Siberian gas pipeline.
That move, in itself, seemed likely to delay completion of the Soviet-West European piping project by many months, the assumption being that French-based Alstholm-Atlantique would be asked to begin producing such rotors under an existing license.
The further restrictions, however, cover ''equipment produced by subsidiaries of US companies abroad as well as equipment produced abroad under licenses issued by US companies.'' This could undo the ''French option.'' Even more important, the new measures would affect production of the entire compressor turbine, which was to have been supplied by several West European concerns under license from General Electric.
The widened trade restrictions also seemed to dash Japanese hopes that the Reagan administration would approve use of American technology in a joint Soviet-Japanese offshore drilling project designed to tap large oil and gas deposits in the Sea of Okhotsk. Japan's vice-minister for trade and industry was quoted June 21 as having said the new US sanctions would seriously delay the project, which was to have funneled some of its yields to the energy-hungry Japanese.
Even before the announcement of the US measures, the Soviets had announced plans to meet with contracted suppliers for the Siberian pipeline in coming days. The Soviets will presumably tell the West Europeans that they signed on to deliver compressor turbines and had better do so.
Yet unless there is a ripple of irresistible allied pressure on Washington, Moscow will have to go about the business of finding a practical dodge for the US restrictions. Conceivably, all-Soviet compressor stations could be used, though at a large loss in gas throughput. Or, the Soviets could try a more expensive route they earlier rejected: Rolls-Royce airplane-style turbines from Britain.
Oddly enough, West European opponents of pipeline sanctions and US defenders of grain sales share at least one argument: that embargoes against the Soviets won't work. Moscow propagandists agree.
According to most experts here, the US move won't topple the Siberian project. Even with delays in completing it, the Soviets might meet all expected deliveries by relying on some surplus pipeline capacity to Europe.
Politically, too, sanctions could conceivably backfire, prompting the Soviets to turn demonstratively more troublesome abroad.
Yet in pure economic terms, all Western sanctions have an effect, experts are prompt to note.