Yellow Light on Aid

IT'S understandable that President Bush, British Prime Minister John Major, and some other leaders of industrial democracies are cautious in offering financial aid to the Soviet Union. The political and economic situation there remains highly volatile.National output in the Soviet Union was dropping at an 8 to 10 percent annual rate in the first half of this year. Soviet officials are forecasting this year's grain harvest at around 190 million tons, far less than last year's 237 million tons. One estimate is that the Soviets will need to import 40 million tons of grain in the year ahead, compared with 26 million imported last year. The Soviet oil minister has said his country will produce an average of only 10 million barrels a day of oil this year, down 1.4 million barrels a day from 1990 output. Oil exports are the USSR's chief source of foreign exchange. Moreover, the government has been printing money in grand style as large budget deficits continue. One Soviet economist forecasts this will produce an inflation rate of 800 percent by the end of the year. Nor is it yet clear who is in charge of various aspects of the economy. Is it Soviet President Mikhail Gorbachev, Russian President Boris Yeltsin, or, as seems increasingly likely, leaders of the 15 Soviet republics? On Aug. 24 Gorbachev moved to bring some order to the system by setting up a four-man committee to run the economy. One member, Grigory Yavlinsky, the economist who earlier authored a 500-day plan for Soviet economic reform that got nowhere, was put in charge of crafting an overall economic reform strategy. In mid-June Mr. Yavlinsky and a small group of private Soviet and American economists and political scientists proposed a "Grand Bargain" which would transform the Soviet Union into a full-fledged market economy. That deal would commit the US and the other six members of the Group of Seven to helping this transformation take place with both technical help and unspecified billions in financing. So far Mr. Bush and Mr. Major have resisted such a bargain. They want to see a comprehensive reform plan, including a coherent structure of economic management, in place first. But they will help provide the Soviets with enough food for this winter, and perhaps next. The US has already offered $2.5 billion in agricultural credits this year. Right away, though, the Western powers should promise to aid the Soviets beyond short-term food and medical assistance, once real reform has been launched. Such a pledge should encourage the progressive forces in the Soviet Union that are now dominant.