EC Warns Soviets on Aid Conditions

EUROPE'S top diplomat in Moscow, speaking for the 12-nation European Community, has issued a stern warning to the Soviet Union.Unless the Soviet center and republics resolve differences that now prevent them from embarking on reforms in even a loosely affiliated economy, major financial help from the Community is out of the question. "Our message is clear," European Community (EC) Ambassador Michael Emerson says. "We're saying to them, 'Don't think that if you all go off in a fanciful [separatist] way and inflict great economic damage upon yourselves that you can come back and pass the tab to us.' " Beyond stopgap food assistance, the Soviets have requested huge sums of financial aid from the EC, assumed by Soviet leaders to be more forthcoming than reluctant American and Japanese sources. In addition to humanitarian help, the EC has also financed 80 percent of all the globally supplied technical assistance to the Soviets. EC programs range from food distribution and energy projects to financial services and management training. But feuding among the republics threatens to cut off the crumbling Soviet economy from more substantial help. "They are inextricably linked in terms of production, trade, and finance," says Ambassador Emerson. "Of course we think economic coordination can work. However, we aren't telling them what to do; but simply to choose to do something. They have to be serious if they expect large-scale credits." Last week in Alma-Ata, capital of the Central Asian republic of Kazakhstan, the 12 remaining republics initialed an agreement loosely linking their economies. Ivan Silayev, interim Soviet prime minister and chairman of the Inter-Republican Economic Committee, hailed the results as "very impressive. And I believe for many people, the results have exceeded all initial expectations." But for Emerson and his European partners, the Alma-Ata agreement fell far short. "It's a very weak document. It's a very soft use of the word 'coordination, says Emerson. "We've had some experience with this in the EC. When you can't do anything together, you say you'll coordinate. What was signed in Alma-Ata clearly shows a failure to agree on the fundamentals." With or without an economic agreement, the Soviets face a tough winter. Addressing immediate needs, the EC is forging ahead on food aid to the Soviets. Meeting in London last week, EC Commission President Jacques Delors, EC President and Dutch Prime Minister Ruud Lubbers, and British Prime Minister John Major agreed on a food and humanitarian aid package worth billions of dollars. Mr. Major, chairman of the powerful Group of Seven - Britain, Canada, France, Germany, Italy, Japan, and the United States - will likely double the amount committed by EC members when he secures expected additional contributions from non-European G-7 partners later this week. US and European officials rebuffed an earlier Soviet request for almost $15 billion in aid to carry the country through the harsh winter months. They calculate Soviet needs for the next six months between $2 billion and $5 billion, enough to finance up to 40 million tons of food. The assistance may also help the Soviet Union pay off part of its trade-related debt. If the Soviet Union is forced to default on debt payments, its prospects for borrowing more money to pay for necessary imports will be greatly reduced. "After we started sniffing around, we realized what happened," says Emerson. "It wasn't too clear that the republics were consulted in all of this." After the initial $14.7 billion Soviet request was rejected, Soviet leaders returned with a lower, $10.2 billion request. Roughly half, or $5 billion, was expected from the European Community. "The Soviet style, a product of their history, is to say 'OK, we want $5 billion please, says Emerson. "They supply no paper, no documentation. Their approach is 'Let's not waste time on technical details. Let's get down to business. Are you our friends or not?' They're accustomed to arbitrary dealings, with sledgehammer dictates, and it shows." European officials told the Soviets to work with the republics and to structure the request "more seriously," Emerson says. EC officials also went to various republics inquiring about local needs and assessing the distribution network. Emerson says the picture is bleak. While the Soviets "cried wolf over food shortages last year, and have exaggerated their needs this year," international help is now essential to avert a crisis during the coming winter, he says. "Even during this last year, the dietary level of large chunks of the population was appalling. Forty percent of the population has a dietary deficiency." Echoing the comments of other donors, Emerson says "the difficult trick now is to get the stuff to the right consumers." The world community has been wary of doling out credits, food, and humanitarian aid, given reports of rampant corruption among the recipients. Last year, Soviet critics charged their local leaders with politically manipulating donations and allowing food to be sold on the black market. US Agriculture Secretary Edward Madigan, on a nine-day tour of the Soviet Union to assess the country's food import needs, says most of the country will have adequate food supplies this winter. Some areas will need humanitarian aid over the coming months, he says. Last Friday, the US Department of Agriculture gave Moscow $400 million in food credits for livestock feed and wheat purchases.