Speed Up `Democratization' Transfers

A CHASM separates the financial requirements of Eastern Europe and the West's financial resources. To enable the economic transition in Eastern Europe, the United States government estimates that it will require between $10 billion and $15 billion annually over the next decade. Given the Gramm-Rudman financial straitjacket, US government assistance is inadequate to bridge this chasm, and Washington's $900 million Support for Eastern European Democracy program appears paltry. Support from multilateral sources like the European Bank for Development and Reconstruction, bilateral donors, and private corporations and foundations, is important, but is also insufficient.

Since our financial constraints preclude significant economic assistance, we must find other ways to strengthen democratic institutions in Eastern Europe. One way is to overhaul the US export-control program, releasing ``democratization'' technology and equipment such as computers and telecommunications equipment.

The US maintains the most rigorous export-control system of any of the major industrialized countries, a vestige of the cold war. This labyrinthine system involves over 80,000 annual licenses, affects nearly one-third of all US exports, and imposes direct costs on the US economy of approximately $10 billion annually.

The Bush administration's reticence about restructuring export-control policy to respond to the dramatic events in the Soviet bloc has left the US stranded. This resistance to change is straining tensions in COCOM, the West's informal organization that restricts exports of military-related technology. Until last week, the administration was relying on limited proposals made in February (after pressure from allies) to liberalize certain COCOM controls. These proposals, which included decontrolling machine-tool items that hadn't been manufactured in West Germany in 16 years, were met with derision.

Other White House proposals were too little, too late. Proposals that democratizing Poland and Hungary - where free elections have been held and links with the Soviet military are being severed - be treated comparably to a repressive post-Tiananmen China seem inappropriate.

Last week President Bush proposed to relax restrictions on 30 of the 120 controlled products. The ban would be lifted on numerous types of computers, including personal, office, banking computers. It appears that outdated perspectives are still driving this review, however. Given cold-warriors' concerns that even outmoded telecommunications or computer equipment would enhance the Soviet's command-and-control capability, prospects for meaningful decontrol and maintaining a COCOM consensus are problematic.

Under the current system, most telecommunications and computer equipment are controlled because of possible military applications. Thus far, US West is precluded from selling outdated telecommunications equipment to Poland so that some Poles don't have to wait 20 years for a phone. While the new proposals will liberalize some telecommunications and computer equipment, they don't go far enough, nor is it sure they will be adopted.

In centrally-planned regimes, a free exchange of information is subversive, but it is the fuel on which free markets and democracy operate. The free flow of information ineluctably moves to undermine authoritarian regimes. That is why the Soviets expelled journalists from Lithuania and the Chinese leaders unplugged the faxes of the democracy dissidents.

It is in the United States' interest to move aggressively to promote the free exchange of information in Eastern Europe by decontrolling information technology.

There is also an economic argument for export decontrol. The telecommunications market in Eastern Europe is projected to grow to $30 billion by 2000, which will approximate the size of the entire US market. Unless the US is in this market now it will probably be excluded later.

The US must drastically cut its export-control list, narrowing the scope of controls from the hundreds of thousands of items currently restricted. We must also ensure that our export-control program mirrors the multilateral program. This would have the added benefit of stabilizing the COCOM consensus, while minimizing costs to US competitiveness.

Given that the US will not provide the fledgling democracies with access to adequate financial resources, it should move to see that they have access to critical Western computer and telecommunication technology that may help insure the permanence of reforms there.

Liberalizing exports is a cost-effective way to open new markets for US businesses, while strengthening the economic and political infrastructure that will help move Eastern Europe toward freedom.