THE COMING SOVIET CRASH: GORBACHEV'S DESPERATE PURSUIT OF CREDIT IN WESTERN FINANCIAL MARKETS
by Judy Shelton, New York: Free Press. 246 pp. $22.50
MIKHAIL GORBACHEV hasn't done any favors for Judy Shelton, a research fellow at the conservative Hoover Institution. His policy moves have been so swift that this book, though not officially published until Feb. 13, already has a dated feel.
Shelton's first chapter, for example, deals with the Soviet Union's domestic budget deficit. This deficit had been noted in somewhat obscure publications both in the Soviet Union and the West, but it was openly acknowledged in Moscow only in October and reported prominently in American newspapers at that time. So the ``Did you know that!'' tenor in Shelton's analysis of the deficit prompts a ``Yes, I did'' reaction.
Another problem is that Shelton, taking the tough line of some conservatives, emphasizes that any financial aid to the Soviet Union could help that nation continue or enlarge its military program. She, for instance, asserts that ``... arms control negotiations are aimed not at reducing military spending so much as they are at promoting a political atmosphere conducive to cooperative East-West relations, and `cooperative' here means the United States will do nothing to dissuade Western allies from proffering financial and economic assistance to the Soviet Union and perhaps will even go so far as to extend trade benefits itself.''
Well after the author sent her manuscript to the publishers, however, Gorbachev promised unilateral arms reductions, pushed the US to get on with arms talks, and apparently will continue taking Soviet its troops out of Afghanistan. Even the hard-liners - like Richard Perle (former US assistant secretary of defense) and Zbigniew Brzezinski (counselor to President Carter), who endorse this book on the back cover - are beginning to take Gorbachev seriously in his talk about mutual arms cuts.
The book's title and cover suggest the publishers want to hype sales as they do with ``crash'' books on the US economy.
Even so, this book is basically timely and worthwhile. It deals with a prime issue for President Bush - what to do about Gorbachev's moves to seek financial assistance from the West in order to give his various reforms a better chance of success?
Shelton's book appears largely derivative, giving credit for its quotes and anecdotes to many books, congressional studies or hearings, and newspaper and magazine articles. The cover says Shelton has visited the Soviet Union, but it doesn't show in the book.
Nonetheless, this volume provides a readable, clear, and well-organized account of basic Soviet economic problems and issues concerning economic relations with the West. It examines Soviet budget accounting, how Soviet deficits produce an inflation manifested as goods shortages and black markets, Gosbank (the giant Soviet financial institution), and the growth of Soviet external debts.
It also tells how the US and other Western nations currently deal with the issue of providing credits to the Soviet Union. It looks at Soviet Eurobonds, joint ventures with Western companies, and the history of czarist debt. The book also reviews the moves by the Soviet Union as it seeks membership in such institutions as the International Monetary Fund, the World Bank, and the General Agreement on Tariffs and Trade.
Knowing some of this background should help policymakers decide on what mix of firmness and generosity to apply to the Soviet Union's increased inclination to ``join the club'' through its greater domestic political openness, its market-oriented economic reforms, and its reduced efforts to convert the world to communism.