U.S.-Soviet relations took an ugly new turn the other day when Soviet leader Gorbachev warned that the cold war may return unless Washington grants Moscow $1.5 billion in guaranteed loans for grain purchases.
Though it's tempting to respond in kind to such bullying, Washington would be better advised to treat Gorbachev's intemperate remarks not so much as a threat as an act of desperation.The food shortages that prompted a previous U.S. loan guarantee of $1.5 billion have become so serious that the Soviet Union now faces the specter of widespread hunger and even localized famine.
Coming out of the worst winter since World War II in terms of food shortages, the Soviet Union has managed to scrape by so far with strict rationing, some food relief from the West, plus hefty purchases of grain and other foods on foreign markets. But now the Soviet Union is running out of the foreign currency needed to import food. Moreover, just about everything imaginable is going wrong with its notoriously inefficient farm economy.
Specifically, livestock production has fallen by as much as 17 percent, the price of chicken has risen 80 percent, while farmers are being charged 300 percent to 500 percent more for feed and fertilizer. Forced to sell below cost, farmers understandably have cut back the output of meat, milk and other products.
Though Soviet leader Gorbachev is trying to switch the Soviet Union from socialism to a free market economy, his transition program has been both too slow and too painful. Soviet workers have responded with a series of strikes that have impaired productivity, including the Soviet Union's ability to provide enough tractors for Soviet farms.
It won't be easy for President Bush to respond to the Soviets' plight, regardless of Gorbachev's warning of a revived cold war. By law, recipients of U.S. loan guarantees are supposed to be credit-worthy - and the Soviet Union seems notably unpromising on this score. Even some of its former satellite nations are refusing to do business with the Soviets.
Even so, its wealth of natural resources gives the Soviet Union a promising potential. Besides, Washington has found ways to come to the aid of Afghanistan, Bangladesh and a variety of other international basket cases that ordinarily would not qualify as sound credit risks.
But before extending further aid, Washington should insist on certain reforms. Foremost among them is an end to the mad policy by which more than 5,000 Soviet enterprises keep cranking out unneeded military hardware while nearly 300 million Soviet citizens lack life's basic necessities.
In any event, it would go against the grain of America's national character for Washington to just stand by and watch while millions of people elsewhere suffer serious hunger. Besides, by extending aid to Moscow, the U.S. could show just how badly communism has failed.