Marshall Plan for Soviets

AS Congress and the president debate aid to the Soviet Union, it may surprise some that we have extended it before at critical junctures. In the Soviet famine of 1921-22 and the 1942-45 alliance against Hitler, the United States sent a total of $11 billion in support to the Soviet Union. After the war, the US offered but Stalin rejected Marshall Plan aid to the Soviet Union. In comparison, the current hand-wringing over whether to extend $1.5 billion in credits to the Soviet Union is shortsighted. Until recently, there were four good reasons for rejecting aid to the Soviet Union: it was totalitarian, it was expansionist, it had a centrally planned economy, and it was such a closed society that we couldn't tell if aid would accelerate reform or merely allow Soviet leaders to put off hard choices. Since 1985, however, the Gorbachev revolution has removed each of these objections.

First, the Soviet Union moved dramatically toward democracy with its first real elections since 1917, the creation of a working parliament, and the transfer of power from the Communist Party to the state and from the center to the republics. This has led to a domestic order more worthy of our support, helping transform an expansionist state into a country no longer ideologically driven toward global hegemony.

Soviet economic reforms, while halting, have undercut another barrier to aid. The Soviets in 1947 rejected Marshall Plan aid because they feared the implicit requirement of integration with Western economies. Now, the Soviet Union actively seeks such integration. Moreover, if the Soviets put market reforms in place, Western aid will not disappear into the black hole of centralized socialism.

A final objection has been that we know too little about internal Soviet politics to discern whether aid would help reformers or hard-liners. Glasnost has erased this obstacle. The reformers are obvious: Russian Republic President Boris Yeltsin, reform economists like Grigory Yavlinsky and Stanislav Shatalin, former foreign minister Eduard Shevardnadze, the Democratic Russia movement, the intelligentsia, the breakaway republics.

The hard-liners are equally clear: former prime minister Nikolai Ryzhkov and other central planners, the remnants of the Communist Party, the Soyuz (Union) party, Interior Ministry leaders Boris Pugo and Boris Gromov, and elements of the KGB and military, including many of the older top officers. Mr. Gorbachev has labored to hold the middle ground, and Western aid would strengthen his most recent shift toward reform.

These developments have removed the obstacles to aid at the very time that Soviet needs are greatest. The Soviet Union faces three intertwined crises: a nationalities crisis, an economic crisis, and a political crisis over how to deal with the first two. The political compromise in late April between Gorbachev and the leaders of nine republics, including Yeltsin, has given the Soviet Union three to six months of relative stability in which to form a new constitution, create new federative arrangements f o

r the republics, and establish the prerequisites of a market economy. If Soviet leaders fail at any of these tasks, the most likely outcomes are a renewed shift to the right, with or without Gorbachev, or a civil war between various republics and between factions in the military and other institutions.

The success of Gorbachev's latest effort at reform hinges on whether it can promise a stronger economy after the inevitable pain of transition. A recent CIA report, however, estimates that in the most optimistic scenario, Soviet GNP will decline 10 percent this year. The pessimistic scenario is a 30 percent drop in GNP with 25 percent unemployment, analogous to the US Great Depression.

Western aid can create a breathing space not for a return to communism but for the irreversible establishment of a market democracy. In the context of the crisis in the world's third largest economy, the $1.5 billion in US credits that is the source of so much dithering is wholly insufficient. As German Chancellor Helmut Kohl urged at last summer's economic summit, the West should consider a program of multilateral, conditional aid to the Soviet Union on the scale of the Marshall Plan.

Like its predecessor, a new aid program would have to be massive. The Marshall Plan constituted about 6 percent of one year's US GNP in the 1950s, or the equivalent in current dollars of about $300 billion. This would be more than enough; Harvard economist Jeffrey Sachs, who advised Polish leaders on their economic reforms, recently estimated Soviet needs to be about 5 percent of Soviet GNP, or $30 billion per year, for several years.

Unlike the Marshall Plan, current aid would come not just from the US, but from Japan, Germany, France, Britain, Canada, Italy, and others, with the US contribution at $3 to $10 billion per year. In addition, any new aid program must be conditioned on continuing: (1) market reforms; (2) democratization; (3) peaceful resolution of nationalities problems; and (4), Soviet cooperation on security and arms control.

Those skeptical of putting resources in the hands of a recent adversary should recall the analogous conditions in Europe and Asia after World War II and the dramatic success for all concerned. The alternative involves the incalculable political, economic, and security costs of idly watching a nuclear-armed empire crumble into chaos.