The Time Has Come to Help

By RICHARD NIXON

Now is the time to provide economic aid to pro-reform republics of the new Commonwealth of Independent States. Russia and any other republics that break decisively with their communist past in 1992 deserve our help no less than did the new democracies of Eastern Europe in 1989. To put it bluntly, Russian President Boris Yeltsin and those like him in other republics must not fail.

It would have been a catastrophic mistake to provide large-scale assistance to the former Soviet Union under Mikhail Gorbachev. Dominated by communist hard-liners until the August 1991 coup, hostile to free elections and self- determination for the nations of the Soviet Union, and addicted to economic half measures, his government adopted reforms to strengthen the communist system, not to abandon it. With the final lowering of the red flag of the Soviet Union on Christmas Day, that situation changed decisively. The Soviet people finally achieved their deepest aspiration -- not reform under communism but reform without communism. Unfortunately, the West has been slow in committing itself to a comprehensive program of assistance to reform-minded republics.

Much of that reluctance stems from those who overcommitted themselves to Gorbachev. Unlike Gorbachev, Yeltsin has met the conditions to qualify for aid. He led a genuine democratic revolution, winning the Russian presidency through free elections, standing heroically against the August coup, and supporting self-determination for the non-Russian nations. He has expressed a firm intention to resolve outstanding geopolitical issues in ways consistent with our interests. And with the freeing of most prices on Jan. 2, he has staked his political life on the rapid creation of a free-market economy in Russia.

The West should help Yeltsin's Russia for two reasons.

First, no better alternative exists. His staff, which includes the best economic thinkers in Russia, understands what needs to be done. Yeltsin also has unmatched political capital and the courage to tell his people that things will get much worse before they get any better. He has fielded Russia's A team. But in light of the country's shortage of free-market expertise, there is no B team. If Yeltsin's reforms fail, no successor will be able to do any better.

Second, the reform of Russia is a key to the reform of the other republics. We should provide large-scale assistance only to those republics that hold free elections, protect minority rights and adopt free-market reforms. So far, only Russia has met all three conditions. By assisting Yeltsin's government, we will create an incentive for reform elsewhere. Moreover, if the free market succeeds in Russia, it will inexorably spread to the other republics. For the first time in its history, Russia will lead not by force of its arms but by force of its example.

Nonetheless, the West should not entertain illusions about launching a new Marshall Plan. Postwar Western Europe needed only an economic jump start, but markets in the former Soviet Union need to be invented. Beyond humanitarian aid, we can improve the odds for successful reform in four ways:

! -- Create a U.S.-led organization to spearhead Western aid efforts. The West has failed to organize itself to cope with the magnitude of the task the post- cold war world confronts.

After World War II, the U.S. led the way in creating an agency, the Organization for European Economic Cooperation, to coordinate the postwar reconstruction of Western Europe. Today we need a similar organization whose sole purpose is to assess the needs of the republics and delegate specific tasks and projects to private groups, Western governments and international agencies.

Most important, this organization must deploy teams of economic and industry experts to the capital of every republic of the former Soviet Union so that they are available for day-to-day consultation. Embassies cannot fulfill this role because too many career diplomats lack an understanding of and dedication to free-market policies.

-- Provide accelerated assistance to agricultural sectors. The U.S. should immediately send teams of its own experts in agriculture and food processing to all republics. While their economic free falls will continue for at least the next few years, we could help the republics turn the corner on food supplies much more quickly. By decollectivizing agriculture, for example, China doubled its per capita income within a decade. Tangible signs of progress are indispensable to buy time for other reforms to work.

-- Establish "enterprise funds" for reformist republics. For those republics, like Russia, that take the plunge on free-market reforms, the U.S. should create enterprise funds similar to those already operating in Poland and Hungary. These funds train local bankers in sound lending practices and provide them with capital to make small-business loans, which average only $15,000, and have been invaluable in promoting the market at the grass-roots level.

-- Expand educational and information-exchange programs. We should aggressively advance people-to-people exchanges and open American business schools in each republic to train the thousands of managers, accountants and other specialists needed in market economies, as well as direct Radio Liberty and Voice of America to air programs on the nuts-and-bolts operation of a market system.

Once Yeltsin's full reform program is in place, the West should commit the billions of dollars needed to help stabilize the Russian economy. The U.S. cannot be the only banker in the world. While we bore the burden of rebuilding ^ the economies of our allies and adversaries after World War II, Japan and Western Europe must now pull their weight. But as the best example of what free enterprise can achieve, we must demonstrate leadership in organizing the West's efforts.

The nations of the former evil empire lost faith in communism both because of its inhumanity and because it did not work. Now the ideas of freedom are on trial. If they succeed, the end of the cold war will mark not only the defeat of communism but also the victory of freedom.