East-West A Toast -- or Roast -- for Reform?

By Scott MacLeod

The ice has been broken." So allowed an impassive Mikhail Gorbachev as he stood beside a wooden-faced Helmut Kohl amid the czarist splendor of the Kremlin's St. George Hall. The Soviet leader's chilly assessment of his first private meeting with the West German Chancellor brought little warmth to the thaw in relations between the Soviet Union and West Germany. But that hardly mattered in the cold calculation of national interests that dominated four days of careful, even curt talks between Europe's two pre-eminent powers. Gorbachev's impoverished military superpower is keen to profit from Western investment and trade. And West Germany has joined the stampede to turn perestroika to its own economic and political advantage. By the time Kohl departed, both leaders hoped they had laid the basis for a new model of relations between Western Europe and the Soviet Union.

Bonn and Moscow have been at arm's length for five years, ever since West Germany agreed to deploy intermediate-range nuclear missiles aimed at the U.S.S.R. The gulf widened in 1986 when Kohl compared Gorbachev with the infamous Nazi propagandist Joseph Goebbels. Now the missiles are going, and Gorbachev has evidently swallowed his personal grievance in hopes of cashing in on Europe's newfound enthusiasm for his grand plan for reform. And cash in he did. The 70 top-ranking West German businessmen who accompanied Kohl offered the Soviets a $1.7 billion line of credit and some 30 trade agreements worth about $1.5 billion. Only two weeks before the Germans arrived, Italy's Prime Minister Ciriaco De Mita cemented deals worth billions of dollars during his own three-day visit to Moscow.

The Western credits come none too soon for Gorbachev's rickety economy. The day after Kohl's departure, Soviet leaders admitted for the first time that their government has been running a hefty budget deficit. Finance Minister Boris Gostev told members of the Soviet parliament that this year's red ink would total $58.8 billion.

The unprecedented confession that a deficit exists signaled that the Soviet Union may have to rely even more heavily on foreign trade and investment to feed and clothe its population. To help attract funds from abroad, Gostev offered to let foreign businessmen buy controlling interests in joint ventures with the Soviets. The concession was shocking in terms of Communist ideology, but fresh evidence of Gorbachev's willingness to cross Marxist boundaries in pursuit of economic improvement.

To a degree, most of Europe embraces the notion that perestroika represents a golden opportunity to increase trade. But some Europeans hope to collect a bonus by inducing Western-style change in the Soviet political system. "If Gorbachev's reforms are to succeed," says a British diplomat, "they can only do so by making the Soviet Union a very different place." West German Foreign Minister Hans Dietrich Genscher, among the first to welcome Gorbachev's promised reforms, argues that the West would be negligent if it ignored the "historic opportunity" offered by the Soviet leader to turn his country into a more agreeable neighbor.

But Bonn's rosy vision is not shared by everybody. In Washington and London and at NATO headquarters in Brussels, critics fret that even if the West scrambled to prop up perestroika, Gorbachev could change direction or lose control of the sweeping process he has started. More ominously, the Kremlin could turn newly acquired economic strength against the West. Countries like West Germany are already clamoring to ease NATO restrictions on high- technology exports. And even as West European bankers are arranging $7 billion in credits for Moscow, the Soviet government continues to pour enormous sums into its mighty military machine. The London-based International Institute of Strategic Studies reports there has been no slowdown in Moscow's arms- modernization program.

Diplomats are concerned that the debate over how the West should respond to Gorbachev could split the alliance. While the Italians, and now the West Germans, seem bent on moving full speed ahead to support Gorbachev's "new thinking," the U.S. and Britain, more distrusting of Moscow, refuse to be swept off their feet. The skeptics warn that the West's ability to alter events inside the Soviet Union is minimal. In the competition to become Moscow's "most favored nation," they add, reckless policymakers might open their purses in return for very little in the way of Soviet internal political reforms or external concessions on arms. One NATO diplomat fears a "battle is looming between those who believe we should use our economic instruments to help Gorbachev and perestroika, and those who believe the Soviets have yet to earn Western assistance."

Britain's Margaret Thatcher speaks for the American attitude as well with her calls for a wait-and-see approach. Yet she has permitted London bankers to extend $1.7 billion in government-backed credits to Moscow. Thatcher and her European counterparts want each economic deal to pay dividends in such Western interests as reduced conventional arms and nuclear limits. "I had to decide whether I thought it was in the Western interest that Gorbachev succeed," Thatcher told the New York Times, "and I think it is."

To deal wisely with Gorbachev, advises Thierry de Montbrial, director of France's Institute of International Relations, the West should take a tough line. "If they really need our help," he says, "then we should at least get them to pay the very highest price possible." Concedes a NATO diplomat: "Judging how far we can go to help the Soviets without hurting ourselves is a very tricky business. Some countries have clearly decided that the rewards are worth the risks."

Helmut Kohl last week seemed to be including himself in that group. But he was treated to a taste of just how tough it will be for the West to collect the sort of rewards it wants most from Moscow. Before he left Bonn, Kohl had said he would tax Gorbachev on Germany's most enduring sore point: the Berlin Wall and the prospects, however distant, for reunifying Germany. But Soviet spokesman Gennadi Gerasimov sharply dismissed the subject, adding, "Who can tell what will happen in 50 or 100 years?" Kohl had to content himself with a vague and unconfirmed announcement that "all people considered in the West to be political prisoners" in the U.S.S.R. would be freed by the end of this year. Even the number was left vague.

Kohl's experience was a useful reminder to the West: if it would be foolish to ignore the opportunities implied by perestroika, it would be foolhardy to rush heedlessly into the Soviet embrace.

With reporting by James O. Jackson/Moscow and Christopher Redman/Paris