IT would have been unthinkable a year ago: a top economic adviser to President Mikhail Gorbachev saying the Soviet Union must turn to the West for massive financial and technical assistance! Prof. Stanislav Shatalin, a member of Gorbachev's presidential council, spoke of this need for help in transforming the Soviet economy into a market-based system in an interview with the Financial Times of London on the eve of his departure with the Soviet leader to the summit with George Bush in Washington.
Commenting, former Secretary of State Henry Kissinger said the West doesn't have the massive resources to fix the problems of the Soviet Union, which are to do with ``internal arrangements.'' But he did think the West might help in certain selected areas, such as consumer goods and technical training for management.
The talk of United States aid to its old political and military opponent reflects the dramatic changes in the world resulting from the collapse of communism.
Dr. Kissinger was in Boston for an investors conference, and some speakers at that gathering were speculating on the potential impact of the winding down of the cold war on investments.
For example, David Williamson, of David Williamson Associates Ltd., London, held that a revival of the Eastern economies should lead to ``a takeoff'' of base metal prices - such as copper, aluminum, lead, zinc, and nickel. He reasoned that the West will provide Eastern Europe, including the USSR, with an infusion of capital to modernize antiquated industry and run-down infrastructure. This will mean a huge increase in metal demand as factories, machinery, highways, and so on are rebuilt.
Western industrial democracies use 2.4 times on average as much aluminum per capita as those living in the Soviet Union, Bulgaria, Poland, Hungary, East Germany, and Romania, Williamson notes. This ratio for copper is 2.02, lead 1.6, zinc 1.31, and nickel 1.62.
During the next five years these Eastern countries might increase their metal demand by an average 5 percent a year as they attempt to catch up, Williamson suggests. That compares with growth in the Western world of 2 percent per annum for these base metals. Since metal inventories are low and since it takes time to open new mines, this analyst sees prices going up, perhaps doubling or tripling in the case of zinc. The price of nickel has already risen 68 percent in the past four weeks.
Another speaker, David Edwards of United Services Advisors Inc., San Antonio, Texas, maintained that a dramatic $10 drop in gold prices last week resulted from bullion sales by the Soviet Union, sales intended to raise money to pay import bills. Some reports blamed Saudi Arabians for the slump. Mr. Edwards, who manages the largest no-load South African gold fund, said the Saudis are too sophisticated to dump gold in that fashion.
If Edwards is right, the changes in the East have taken shareholders in his mutual fund, US Gold Shares, for a roller coaster ride - up a record 64.7 percent in net asset value last year, up another 20 percent by the end of February, back down around 40 percent since then.
At the geopolitical level, Kissinger called the Gorbachev-Bush get-together ``the last of the traditional summits.'' This type of summit produces formal, signed agreements, particularly in arms control, designed to ease Soviet-American tensions.
The new summits, says Kissinger, will be aimed at creating a new world order out of the old order. Thus he regards the informal conversations between Gorbachev and Bush at Camp David tomorrow as likely to be more important than the signed agreements arising from this summit.
Should Gorbachev be replaced at home, a new leader will face the same problems of the Soviet economy and the shape of Europe, says the former adviser to presidents Richard Nixon and Gerald Ford.
Kissinger predicts that a deal on Europe will allow a unified Germany to be de facto a member of NATO - ``but no statement to that effect.'' Further, NATO troops will not be based in what is now East Germany. An agreement, he says, must be structured not to look like the total collapse of the Soviet Union. ``It is more of a question of presentation than reality,'' he says.