US, Soviet Arms At Fire Sale Prices

THE main purpose of the arms agreements between the United States and the Soviet Union has been to reduce the combustible tensions between the two countries. But something is missing. If the two superpowers are going to use the agreements as an opportunity for unloading their surplus weapons on other countries, then they would have traded reductions of tensions between themselves for increasing tensions elsewhere.

Just a few years ago, both the US and the USSR contributed to Saddam Hussein's arsenal. The US supplied arms to Iraq during its war against Iran. The Soviets were an even heavier supplier throughout most of that war. Would Iraq have been in a position to attack Kuwait or to represent a major threat to Saudi Arabia if it hadn't been for the arms sales from the US and the USSR?

Now that the superpowers have improved relations, are we going to try to profit by dumping our weapons abroad?

The question becomes particularly pertinent today in view of the criticial need of the Soviet Union for hard currency in meeting its economic crisis. The buying power of the ruble has fallen off steadily. The attempt to obtain or borrow adequate hard currency from other nations has been unsuccessful. Under these circumstances, some Soviet officals have been urging President Mikhail Gorbachev to sell off military supplies. They point to arms agreements with the US as a heaven-sent opportunity to raise negotiable currency.

How much hard currency the USSR requires to meet even its short-term needs one can only guess. The hesitation of other nations to supply hard cash is understandable. The Soviet economy is weak. The value of the ruble is about one-tenth the official exchange rate. Moreover, converting rubles back into Western currency is largely theoretical at the moment.

Hence the magical lure of the world arms market to Soviet planners. Their arsenals are estimated to be worth some $50 billion - planes, missiles, tanks, anti-aircraft guns, explosives, rifles.

The USSR, let it be noted, has had to compete with Pentagon salesmen who have been out on the hustings with what they proclaim to be irresistable arms bargains. The US has been using its military stockpiles as an offset for its adverse trade balances.

It is clear that the dumping of arms on such a vast scale, especially among third world countries, exponentially increases the risk of regional conflicts. At least half a dozen tinderboxes around the world could blow sky high if local power balances are shattered by advantages in weaponry.

It becomes essential, therefore, for the US and the USSR to go beyond the present arms accord to agreements setting effective restraints on arms sales.

Assuming the ability to arrive at such accords, what is to be done about the basic economic problems that arms sales are supposed to help solve?

These problems are obviously more insistent for the Soviet Union than for the US. And, since the US has a large stake in the success of Gorbachev's reforms, how best can we help relieve the present Soviet economic crisis?

Direct cash loans or gifts might not be productive. A clear track has yet to be laid down on which the Soviet economy can move to a higher and more workable level. What the US can most usefully do, therefore, is to back American business in joint economic ventures with Soviet partners. At present, restrictions with respect to convertibility from rubles to dollars act as an effective barrier to American investments. The US, however, can buttress convertibility by accepting credits against the eventual recovery of the ruble, which increased productivity would make possible.

Shortages of food and goods define the Soviet situation today at its worst. All the features of a modern economy that Americans take for granted are critically needed today in the Soviet Union - new manufacturing plants and production techniques, refrigerated transportation and storage, modern techniques of distribution and marketing.

When will convertibility from rubles to dollars be possible? The probable answer is that it will happen not just when the government removes constraints, but when productivity reaches a level that gives the Soviet Union a functional economy. What the US can do, therefore, is to provide a time bridge for American business between start-up and revenue, accepting due bills from the Soviet government against future income.

As mentioned earlier, the stake of the United States in the success of Soviet reform - not just political but economic - is hardly less than that of the Soviet government itself. The US national debt, now perilously high because of massive military spending, would resume its rapid upward course if Gorbachev is supplanted by hard-liners. We have spent more than $5 trillion on military purposes because of Soviet totalitarian policies, coming close to mortgaging our future.

Today's creative opportunity to help Gorbachev build a floor over quicksand is one we dare not miss.