Aid That Would Work

If George Bush could sweep away all the political and legal roadblocks to U.S. economic aid for the Soviet Union, he would still be hard pressed to find prudent ways to provide it. Loans from the West, no matter how generously dispensed, could not transform the huge and irrational Soviet economy into a productive enterprise. Moscow is $2 billion behind in its payments to foreign suppliers right now, and is running a budget deficit of more than $100 billion. Transfusions will not provide a cure.

Even food aid would be almost useless, since the primary cause of the Soviet Union's meat and vegetable shortage is its primitive storage and distribution system. More than half of all fruits and vegetables end up unfit for human consumption, and the same thing would inevitably happen to American shipments. Mikhail Gorbachev's path to salvation must lead away from centralized socialist planning and toward a market economy. Any future American assistance will probably be aimed at pushing him down that road.

One program the U.S. might contemplate is providing the Kremlin with credit ! to buy Western consumer goods for resale in the Soviet Union for rubles. While some economists dismiss this as a palliative, it could bring several benefits. The goods -- clothing, household electronics, large items like autos -- could be sold at whatever the market would bear. This would absorb much of the $670 billion of savings "overhang" locked up in banks or stashed away at home because Soviet shoppers can find nothing worth buying. Sopping up that excess cash would make subsequent restructuring, from price reform to the convertibility of the ruble, less likely to produce hyperinflation.

Putting consumer goods on Soviet shelves might also help revive the vanished work ethic and boost productivity by establishing a link between earning money and being able to buy desirable merchandise. That link was severed in the Soviet Union in the late 1920s, when Lenin's relatively liberal New Economic Policy was replaced by Stalin's industrial planning and forced collectivization of agriculture.

Soviet purchases of the new technology of communication -- desktop publishing, computers and modems, fax and Xerox machines, cellular telephones -- could also have far-reaching effects. Washington has been cautious about releasing some of this, for fear it might enhance Soviet military power. On the contrary, it is more likely to advance the free flow of ideas and the growth of political diversity. A centralized state would find it hard to turn back the clock.

Bush says he is willing to send technical advisers to show the Soviets how to expand institutions that are just taking shape there, like commercial banks, a stock market, accounting firms, private construction and agricultural businesses. He could go further and outflank the stultifying bureaucracy by offering to provide funds directly to those market-oriented innovations. He might give loans, along with managerial training, to budding Soviet entrepreneurs who want to buy state enterprises that are marked for privatization. Well handled, such new companies could demonstrate the virtues of perestroika and provide employment for some of the millions who will be thrown out of work once the Soviet Union embraces efficiency and productivity.