Boycott Bust

The embargoes fail to bite

After the Soviet invasion of Afghanistan, Jimmy Carter rolled out the big battalions of economic warfare by cutting off U.S. shipments of grain and high technology to Moscow. But three months later, the U.S. trade offensive is stuck in a quagmire. Soviet troops are still in Kabul, and the "punitive" measures designed to get them out show few signs of biting. The Soviet Union will still be able to buy in the West this year nearly as much grain as it bought before the embargo, and replacement technology purchases are being readily arranged.

In announcing the export ban on 17 million tons of U.S. grain to the U.S.S.R., the White House estimated that perhaps 3 million tons of that might be bought elsewhere. Now Administration officials admit that Moscow will buy at least 6 million tons from other grain exporters, and Peter Rankin, director of food policy studies at Georgetown University's Center for Strategic and International Studies, estimates that the Soviets will be able to buy up to 11 million tons. Says Clayton Yeutter, president of Chicago's Mercantile Exchange: "In the end, the Soviets will get all they want. The effectiveness of the grain embargo will be zero."

Moscow has found other countries eager to replace the forbidden U.S. exports. The largest single new supplier is Argentina, which this year will deliver to the Soviets possibly 6 million tons of grain, vs. about 2 million normally. Canada and Brazil will likewise supply grain. Some international grain traders have also discovered means of circumventing the U.S. restrictions. American exports have mysteriously changed destination in mid-ocean and been diverted to Rumania and Poland. Countries like Spain and Italy have also been selling their supplies to the Soviet Union and replacing them with food bought at low prices in depressed, postembargo U.S. markets. American prices are now about 12% below their January levels. These ploys are driving up the cost of grain for the Soviets, but they are not stopping the flow of food. Says Richard Goldberg, owner of a grain and feed elevator in Fargo, N. Dak.: "All you can say about the grain embargo is that it is forcing the Soviets to pay one hell of a price."

The high technology ban is also ineffective. Many U.S. trade competitors are quickly jumping in to take over American deals. Armco steel has been forced out of a joint agreement with Japan's Nippon Steel to build a $350 million plant in the Soviet Union. The company now expects the French to pick up the contract. Says Armco Chairman William Verity: "The fact is, we have no economic leverage. Our allies are unwilling to deny the Soviet Union the technology we withhold, and we only hurt ourselves by our attitudes of moral imperialism."

Despite U.S. pressure on NATO allies to support the high technology embargo, the Soviets are still managing to get most of what they want. Two weeks ago Moscow television proudly announced that American oil drilling equipment, which Dresser Industries of Dallas had twice been stopped from exporting, was now being obtained in Italy and France. There is also little evidence that the trade bans are hurting the Soviet economy. The outlook is for a good-to-excellent Soviet grain harvest and the Kremlin insists that there will be no food shortages.

The ineffectiveness of the American grain and high technology embargoes is no surprise. Economic warfare during peacetime has a long record of failure dating back at least to the League of Nations' trade sanctions against Italy after Mussolini's invasion of Ethiopia in 1935. Other current U.S. embargoes are notably unsuccessful in either bringing down hostile regimes, muting their policies or stopping U.S. goods from getting through. Viet Nam has been subject to a trade ban since the 1975 fall of Saigon. Yet that country easily imports American products, ranging from drilling equipment and spare tractor parts to cigarettes and beer, by shipping them through Hong Kong or Singapore. Indeed, the ban is taken so lightly that Hong Kong exporters last year openly declared that $2 million worth of exports to Viet Nam were of U.S. origin. While the embargoes make the symbolic point that the U.S. will not tolerate Soviet aggression, the price of this stand has been high for farmers, grain traders and industrial exporters; and the bans have not achieved their goals.

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