Whom to Aid?

October 18, 1991

THE leaders of the industrialized world face a major conceptual hurdle in trying to arrange an aid agreement with what's left of the Soviet government: Not much is left. And daily what is left of the Kremlin's central control crumbles further into dust.The Group of Seven - the United States, Japan, Germany, France, Britain, Italy, and Canada - want to see a new economic union emerge from the old Soviet Union before they do business with Moscow. Their concerns are understandable. What assurance is there, in the absence of some stable central authority, that the contracts signed with Mikhail Gorbachev's government will mean anything a month or a year from now? What about the Soviets' $68 billion foreign debt? A central government ran it up; who will pay it? The last question particularly vexes Western governments. Estimates within Moscow vary, but it's clear that reserves of foreign currency to pay the debt have been drastically depleted as production and trade have slumped. The various republics, meanwhile, are scurrying to lay claim to their share of the reserves of wealth - gold, diamonds - that have been held by the center. The US has suggested that Moscow's debt payments be postponed, but Germany and France objected to that, saying it could ruin the Soviets' already tattered creditworthiness. Such concerns make little difference if the republics can't bridge their differences and form a workable union. Though they agreed to make the effort last Friday, the obstacles are many. Boris Yeltsin saved the current union plan by giving it his renewed endorsement. But many of his colleagues in the Russian leadership have doubts about getting too entangled with their smaller and poorer neighbors. Russians fear having to carry the water for all the republics. The Ukrainians and others worry about getting smothered by Russia's economic might. The leaders in Kiev have grave doubts about relying on a central currency or central bank. These conflicts may not be ironed out quickly. It would be a mistake for the industrialized world to withhold substantial aid until a new union takes shape. It may never, though the long intertwinement of the republics argue in favor of some kind of continued relationship. Political realities argue for aid directly to the republics. These newly independent entities may well solidify their own economic and political identities rather than slide back into union with Russia. Their evolution toward freedom and greater prosperity needs aid and guidance now.