US Grows Wary of Moscow's Debt

Soviets lag on loan payments, draw on gold reserves, analysts say

POISED to open export and investment credits to the Soviet Union, US policymakers are increasingly watchful of Moscow's foreign debt. The Kremlin's priority of seeking international help for perestroika, or economic restructuring, appears to have largely given way to simply maintaining credit lines to pay for crucial imports.

Economists and credit appraisers here say that tangible results from perestroika have eluded Soviet President Mikhail Gorbachev since he launched the effort five years ago.

In recent months Moscow has boosted its international borrowing to pay for imports and even to help finance its budget. Soviet cash-flow problems, which analysts say started in October 1989, went undetected in the West until February 1990, when it became clear that Moscow couldn't keep up with its payments. Six months behind

With a total hard-currency debt of $64 billion, Moscow is now six months in arrears to Western suppliers, owing between $2 billion and $5 billion.

During the past six months, Soviet creditworthiness ``has looked rather miserable,'' says Richard Ericson, an economist with Columbia University's Harriman Institute. Half of the more than $3 billion line of credit that West Germany recently extended to Moscow was spent repaying German suppliers. ``The British and Japanese leaned heavily on the Soviets, officially,'' notes Dr. Ericson, who says that part of the German loan also helped to repay debts to Japanese and British suppliers.

``Amidst these serious problems and the growing chaos, the Soviets seem to have gotten a reprieve,'' Ericson says, referring to the windfall from Soviet energy production since Iraq invaded Kuwait almost a month ago.

If oil prices hold steady, he says, the Soviets are ``now in the position of getting $5 to $6 billion extra per year from revenues.''

Nonetheless, the Soviets are actively drawing down their strategic gold reserves. Without a convertible currency, the country's gold stockpile - the amount of which is a state secret - is an essential asset. Without it, Soviet pledges of repayment would be worthless.

Igor Birman, a Soviet-born economist who serves as a consultant to the Pentagon's Office of Net Assessment, says the Central Intelligence Agency's $25 billion to $32 billion estimate of Soviet gold reserves is incorrect: ``The real gold reserves of the USSR are lower than $15 billion.''

The stepped up Soviet sales of gold and Moscow's late payments ``really call into question Soviet creditworthiness,'' says Roger Robinson, a former senior director of international affairs at the National Security Council during the Reagan administration and a former Chase Manhattan banker with Soviet and East European portfolios.

``Private Western creditors and investors are stampeding for the shelter of guarantees and insurance coverage'' from their governments, he says. ``Government credit guarantees represent subsidies, pure and simple. And such arrangements transfer sharply increased Soviet credit risks for the commercial banks onto the shoulders of taxpayers.''

Should the US government restore Export-Import Bank, Commodity Credit Corporation, and Overseas Private Investment Corporation financing to Moscow, ``US taxpayers will incur the liability for unpaid Soviet bills,'' Mr. Robinson warns.

Soviet internal politics, however, may forestall any opportunity for Moscow to establish commercial relations with the US anytime soon, Ericson says. The Supreme Soviet is likely to be preoccupied with internal matters - for example, independence-seeking republics that threaten the loosely threaded Soviet Union. Deal with republics?

``The Bush-Gorbachev summit of June is already obsolete, because it doesn't enable US companies and banks to deal directly with republics and localities of their choice, without Moscow's intervention,'' Robinson says. He wants Congress ensure that any bilateral trade agreement enables US companies and banks to ``go straight to the Central Bank of the Ukraine or the city of Leningrad, for example, eliminating the need to go through Moscow center. The Baltic states are vastly more hospitable to deals with Western interests.''

A Soviet delegation with observer status is expected to arrive in Washington for the annual meetings of the International Monetary Fund and the World Bank, which begin Sept. 21.

Soviet membership is at least 18 months away, says Ericson, and the convertibility of the ruble is even further out.