International Fallout: What the West Can Do

By JAMES WALSH

Though it was mercifully short-lived, the specter of a totalitarian regime in Moscow and a revival of the cold war badly frightened the world's major industrial powers. The nightmare evaporated quickly, but it left the wealthy democracies facing an urgent question: What were the best ways to help ensure that the Soviet Union was never again hijacked by hard-liners?

% Shoring up Moscow's economy was clearly the first priority, but there was no unanimity on how to do that. The fault line of debate ran just north of the Bonn-Paris axis. Leaders of Germany and France, with Italy chiming in, rebuked what they called the stinginess toward perestroika evinced in last month's London summit of the Group of Seven leading industrial powers. The Germans, whose $35 billion in commitments to Moscow surpasses all other sources of Soviet aid put together, were horrified by the crisis that had threatened to blow up in their faces. An unusually blunt Chancellor Helmut Kohl told his allies, "The dumbest possible policy now would be for us to sit back as international onlookers and say, 'So, what are they doing in Moscow?' "

On the other side, policymakers in the U.S., Britain, Canada and the Netherlands remained convinced that throwing money at Gorbachev was no cure for his country's crippling economic ills. Without major structural changes, said Dutch Foreign Minister Hans van den Broek, even generous cash and credits were destined to end up "like a drop of water on a hot stove."

But the debate in its wider dimensions was not so clear-cut. Other key issues gripping the West and Japan included Soviet compliance with arms reductions, the security of Eastern Europe's newborn democracies, and the plight of the Baltic republics. Overarching those quandaries was the question of who in the U.S.S.R. was now the worthier negotiating partner: a diminished Gorbachev or leaders of the newly muscular, more reform-driven republics -- especially the Russian president and hero of the hour, Boris Yeltsin.

Though George Bush praised Yeltsin's "tremendous courage" and "superb" defiance, the U.S. President and other allied leaders shied away from the legal minefield they would face in bypassing the Kremlin's sovereign authority. Said Stephen Meyer, an M.I.T. political science professor who is a sometime Bush adviser: "I would not allow bilateral relations with the republics any more than I would allow the Japanese to set up independent diplomatic relations with Massachusetts, New York and Connecticut."

As a morale booster, the White House was inclined to give reformers at least some economic reward. But if Gorbachev is to preserve his role as the leader of perestroika, a Bush Administration official warned, "he's going to have to move and move pretty quickly." Would greater trade, aid and investment -- pegged to concrete Soviet reforms -- make a difference? Most analysts remained profoundly skeptical. Meyer stressed that "there are no financial institutions in the Soviet Union capable of absorbing in a useful way large amounts of aid, at either the Union level or the republic level." Outside of German loans, Western and Japanese pledges of help to date, far from being enough to finance restructuring, fall short of making up for Moscow's foreign- exchange deficit.

Addressing arms cuts, an emergency NATO meeting in Brussels last week demanded that the Soviet military honor all treaties and cease violations and evasions of last year's Europe-wide agreement on troop and conventional-arms rollbacks. Japanese opinion makers, meanwhile, were hoping to extend the arms- reduction process to Asia by sweetening Tokyo's aid offers to Moscow. Said University of Tokyo professor Haruki Wada: "I think there is a feeling among our people now that perestroika is of the first importance."

The new front-line Central European democracies, meanwhile, argued with some trepidation that bringing them under the Western wing was of the highest importance. The European Community seemed to agree, offering to step up negotiations toward admitting Poland, Czechoslovakia and Hungary as associate members.

But the big question was whether Soviet reformers would wind up feeling defeated and demoralized by hard economic realities. Italy proposed admitting the U.S.S.R. immediately as a full member of the International Monetary Fund. But Washington, which had been poised to award Moscow most-favored-nation trade status, was debating whether it might make that move contingent upon the Kremlin's prompt fulfillment of power sharing and other reforms. The issue, as experts saw it, was academic since the Soviets produce virtually no exports they could sell in the U.S. now.

Whatever is done to help the Soviets, no one was expecting a rapid cure for the nation's profound malaise. Predicted a top Bush Administration analyst: "In the short run, things will probably get worse." A senior White House official wondered if devolution of power would result in real market freedoms or just "central control by ((each of)) the 15 republics." He added: "I'm not sure even the reformers understand the difference."

With technical advice and encouragement from the West, the republics may yet harness their new spirit of nationalism and develop a true market system. In that event, Bush's judgment on the prospects for Baltic independence may turn out to have a broader application. Asked if the Kremlin had seen the light on the Baltics, the President replied, "Well, I think some of the people who saw the darkness are no longer around."

With reporting by Dan Goodgame/Kennebunkport and Priscilla Painton/New York, with other bureaus