US Arsenal Blows Communism Away In East Europe Without Firing a Shot

AMERICA no longer aims missiles at Russia, but its old arsenals still wage war against the Soviet system.

Economic war, that is. With US help, entrepreneurs in Ukraine are using surplus military equipment from closed American bases in Europe to build new businesses.

To these former communists, ''Kapital'' is no longer just a book. It is, among other things, a drill press once used for fixing weapons that now helps start up an agribusiness firm.

''This is 'farming,' '' says Norman Illsley, an American who has worked in the field of foreign aid and development for four decades. ''We're planting the seeds, and we're going to reap the crop.''

It is an unusual type of farming, to say the least. Mr. Illsley's mission is to turn several hundred thousand dollars worth of used United States military equipment into seed capital for entrepreneurs in western Ukraine.

He hopes that the harvest from his work will help western Ukraine break free from the Soviet-style economic system that Joseph Stalin imposed on it when he annexed the region during World War II.

''Most of the people ... are used to a command economy where the orders come from the top. If we can get them the start-up capital, they can begin to make decisions for themselves and things will change,'' he says.

The surplus equipment is slated to go to private business and farm associations in western Ukraine, which in turn will use it to develop private enterprises. Items sent to Ukraine so far include a drill press, work overalls, rotary phones, an industrial stapling machine, steel cable, tool-boxes, and kitchen appliances.

''The whole point of the program is to take the equipment and make people see it as capital you can use to start a business, not just another machine given to them by somebody else,'' says Kevin Scallan, an investor in Ukrainian small-scale agribusiness. Illsley drafted him to give on-the-spot business training to the aid recipients.

A mini lend-lease

Since early November, the surplus equipment has been arriving at a leaky warehouse in the western Ukrainian city of Ivano-Frankovsk, a staging area for what amounts to a mini lend-lease program. The US Agency for International Development is facilitating the small-scale program, which is administered by Counterpart and the Citizens Network for Foreign Affairs, both Washington-based nonprofit aid and development organizations.

To Illsley, who has worked in Egypt, Pakistan, Southeast Asia, and the Caribbean, no problem is intractable if taken at the person-to-person level.

''One thing I've run into everywhere is that the local government officials say they want development, but at the same time they want to avoid changing the system,'' Illsley says. ''But development by definition means change.... I found that the most important changes are the ones in people's culture, in the way they think.''

Heavy cultural baggage

Although western Ukraine now sits at the West's doorstep, an invisible divide of values and attitudes still separates it from the capitalist world. Under Soviet rule, the western Ukraine endured brutal campaigns of collectivization, property seizure, and political repression. A culture of dependence and passivity took hold in the region.

''I would not dismiss too lightly the emotional and psychological history [people of the former Soviet Union] have endured, and the impact of that,'' says Robert Walker, who advises Ukraine on agricultural policy on behalf of the US government.

But he says that the ardently nationalistic western Ukraine already has begun to look away from Russia and toward its neighbors in the West. ''You have some folks there who very much believe that Ukraine needs to be strong and independent, and one way to do that is to have closer ties to the West and to be more like we are in the West,'' Mr. Walker says.

Back at the warehouse, it seems that every aspiring entrepreneur within driving distance of Ivano-Frankovsk is trying to do his part to strengthen Ukraine's ties to the West. In the space of two days, Illsley is sought out by private farmers, a woman who wants to open her own restaurant, the local tea-trading baron, and a furnituremaker looking to expand his operation with the help of a US Army surplus radial-arm saw.