Nyet on a blank check for the East bloc

WEST German Chancellor Helmut Kohl and other Western European leaders are rushing to Moscow these days with the message that they are ready and eager to finance perestroika. They are backed up by Western European and Japanese banks, which are already offering the Soviets about $9 billion in new credits. But Western policymakers should not be writing blank checks to anyone, even to reformer Mikhail Gorbachev. The West has issued blank checks before, with dismal results. In the 1970s, Poland, Hungary, Romania, and Yugoslavia borrowed heavily from the West, which hailed their eagerness for hard currency as proof of their determination for reform. Most of those funds either were squandered on now-bankrupt state industries, or disappeared into the pockets of corrupt officials.

The resulting heavy indebtedness acts like a dead weight on reform initiatives, which must inevitably be joined by severe austerity measures. Romania's Nicolae Ceausescu dismisses the notion of reform altogether; paying off his debts by exporting everything possible; producing widespread malnourishment in a country where even bread is rationed; keeping his compatriots shivering in barely heated apartments in the winter.

The United States Congress has called for urgent discussions among the Western allies with the goal of stopping ``untied loans,'' credits that can be used for anything that Moscow sees fit rather than for specific projects. That initiative was prompted by concern that those funds could be used to finance Soviet ventures harmful to Western interests. But beyond those legitimate security concerns, the West should examine the relationship between such credits and internal reform.

In seeking to encourage liberalization within the USSR and Eastern Europe, the West must steer clear of counterproductive initiatives. With the Polish government apparently backing away from its pledge to hold ``round table'' talks with the opposition, the extension of new Western credits at this moment would be disastrous. It would torpedo any chance that Polish officials would reconsider their increasingly confrontational tactics, which threaten to ignite another round of social unrest.

Similarly, Western eagerness to provide new credits to Moscow may bolster the position of conservatives within the Politburo. They can argue that the system's economic failures can be remedied with Western help - and that there is no need to pay a price, in the form of radical reforms, that the West is not demanding. If the West makes economic cooperation contingent on such reforms, reformers will have a stronger hand.

West Germany is an especially fervent proponent of the notion that economic concessions lead to political liberalization, but its experience with East Germany undercuts its case. The West Germans provide their neighbor with easy credits and pump more than $1 billion a year into the East German economy - via road use, transit, and postal fees. The East German regime has eased up on travel restrictions for its citizens, but in other respects its neo-Stalinist reputation remains deservedly intact. Dissidents are promptly arrested and ransomed off to West Germany, providing another source of hard currency, and all talk of economic reform remains taboo.

By uncritically supporting ``reformers'' in the USSR and Eastern Europe, Western governments may also find themselves at odds with rising popular aspirations in the region. For now, many grass-roots movements are claiming to be working in tandem with perestroika and glasnost, but activists realize that conflicts lie ahead. While Mr. Gorbachev is trying to revive and liberalize the communist system, they are seeking its transformation into pluralistic, increasingly independent societies.

Moscow's instincts on the fundamental issues in Eastern Europe remain basically unchanged. After the last round of Polish strikes, Pravda issued a denunciation of ``counterrevolutionary forces'' remarkably similar to attacks on Solidarity and its Western supporters during the Brezhnev era. Those forces, it warned, were trying to upset the Poles' ``socialist choice.''

In Eastern Europe and the Soviet Baltic republics, activists openly ridicule the notion of ``socialist choice.'' How will the West respond if those challenges lead to new instability and Kremlin-directed crackdowns? Western governments should devise policies that do not tie them to a somewhat liberalized status quo, whose existence may be increasingly hard to maintain.

This does not rule out all forms of economic cooperation. If Western governments are clear in their objectives, they can play a constructive role in reinforcing the grass-roots movements and their demands for greater freedoms. This can include projects to boost the fledgling private or ``cooperative'' sectors of these economies, which offer far more promise than the discredited state sector. But as a matter of both economic and political common sense, the West should demand that reforms precede rather than follow their financial commitments.

The mandate of Western governments is not to ``help'' Gorbachev or any other leader in the region, which suggests that there is an easy choice between good guys and bad guys; it is to help those who are seeking to take advantage of the current climate to attack those issues that have consigned the region to economic backwardness and political oppression. The stakes are too high to plunge blindly ahead, repeating the mistakes of the past.

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