Reagan may block US firms from aiding on key Soviet pipeline project

If the Soviet Union thought it could count on US help in building a natural gas pipeline from Siberia to West Germany, it probably cannot now. As part of its appreciably sterner policy toward Moscow, the Reagan administration is expected to prevent two major US firms from participating in the massive engineering project, according to Dr. Miles Costick, president of the Institute on Strategic Trade here.

The two firms -- Caterpillar Tractor and International Harvester -- hope to sell millions of dollars worth of equipment to the Soviet Union for the Western-financed and -built pipeline, which would carry natural gas from the Yamal Penninsula in northwestern Siberia to West Germany. Here it would link up with a European pipeline network conveying gas to france, Italy, Belgium, and the Netherlands, among other countries.

Last December, US Commerce Secretary Philip Klutznick issued export licenses to Caterpillar Tractor for 200 pipe-laying bulldozers and to International Harvester for compressor station components. The licenses were issued against the objections of Defense Department officials, who contended that the sale could make Western Europe more vulnerable to Soviet diplomatic pressure as it comes to rely, to a small degree at least, on Soviet energy.

Dr. Costick, who strenuously opposes US participation in the pipeline project on the grounds that it would be needlessly assisting an implacable enemy, says that after conversations with Reagan transition officials, he is "strongly inclined to believe" that the export licenses will be revoked.

Asked to comment on such an eventuality, a Commerce Department transition source "close to the trade situation" declares: "It would be my recommendation to the secretary that he carefully review these licenses."

Observes a spokesman for Caterpillar Tractor at the company's Peoria, iII., headquarters: "We have had no indication from the Reagan people [that] they're going to revoke the license or if they're going to review it. We're proceeding on the assumption that we have permission to go ahead with the sale and we're proceeding to negotiate for it on that basis."

The firm hopes to earn $80 million with the sale of its pipelaying machines. Indeed, Caterpillar officials have said that, in all, the company could sell more than $1 billion worth of pipeline-related machinery to the Soviet Union that, they claim, would provide 2,000 jobs for five years.

A spokesman for International Harvester in Chicago explains that the firm has received no orders from the Soviet Union but has been "invited to get into negotiations."

In a report published by the Institute on Strategic Trade, entitled "The Soviet Gas Deal and its Threat to the West," Costick and Marc Dean Millot, an institute research associate, declare that the "rush" by the West and Japan to build the Soviet pipeline -- thereby boosting Soviet energy production and at the same time creating "a hazardous dependency" on the Soviet Union for their own energy requirements -- seems "an extraordinary folly." They point out that the late Soviet Premier Alexei Kosygin "put major Soviet trading partners on notice that [Moscow] intends to link economic relationships with conduct acceptable to the USSR on key international issues."

The two men claim that the pipeline project not only involves the transfer of equipment from the West, but also of "the sophisticated prospecting, drilling, and pumping technologies applicable to permafrost environments," the lack of which confronts the Soviet Union with a long-term energy shortage.

MoreoveR, they assert: "Western assistance in solving the fundamental strategic economic weaknesses of the Soviet Union via these transfers of technology in effect subsidizes an otherwise inefficient militaristic economy and policy bent on global domination."

Authors Costick and Millot express deep concern over Western Europe's present level of economic dependence on the Soviet Union. "Soviet imports of the most sophisticated Western technologies . . . have made the Soviet Union and the communist world important, even critical, markets to West European industrial concerns," they write.

The two mean suggests that this "web of economic interests" prevented Western Europe, with the exception of Great Britain, from supporting the US-sponsored embargo of grain and technolog y to the Soviet Union following its invasion of Afghanistan.