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The Soviet plea for Western economic aid, addressed in writing to the Group of Seven, contains a most remarkable admission:

"History shows that the success of postwar reforms in West Germany and Japan, and of the economic revival of Europe devastated by the war, was to a great extent achieved through comprehensive assistance to these countries."The parallel that the Soviet leaders themselves drew between the current condition of the Soviet Union and that of the defeated Axis powers is not only a staggering concession of historical failure. It is also a plea for a Western policy of magnanimity comparable to that shown after World War II. The plea deserves a sympathetic but also a prudent response.

The postwar recovery of Germany and Japan was aided by the West because the reforms that were adopted were comprehensive not only in their economic dimensions; they were also far-reaching politically and internationally.

They not only ensured the economic recovery of the two defeated countries, but they involved also the emergence of truly democratic political institutions as well as guarantees against renewed aggressive behavior. Germany and Japan were not merely reformed - they were transformed.

Some of the Soviet leaders, while willing to swallow bitter economic medicine, make no secret of the fact that their model is Augusto Pinochet's Chile or South Korea while it was under martial law.

Clearly, the West's goals must be more ambitious. They must aim at the transformation of the Soviet Union into something politically altogether different.

The forthcoming London summit should provide the occasion for a historic Western declaration that, in positive and constructive tones, would spell out the legitimate Western preconditions regarding four fundamental dimensions of the needed changes: privatization, democratization, self-determination and demilitarization.

Especially important will be the issue of privatization, which is the key to achieving a basic change of the existing system. President Mikhail Gorbachev has been on the record in opposing full privatization, notably in regards to land ownership, as contrary to "socialism."

This issue will, therefore, have to be clarified and guarantees for private ownership ensured. Otherwise, it will be difficult to justify any significant diversion of capital toward the Soviet Union.

And a political democracy is likely to be more secure when the individual has genuine freedom of choice, both politically and economically.

That freedom must be formally institutionalized, with competitive parties enjoying free access to mass media and legal guarantees of individual rights.

Thanks to Gorbachev, the Soviet Union has already made a significant break with its totalitarian traditions, but even his own presidency is derived from a one-party monopoly of political power. It thus lacks basic democratic legitimacy.

Finally, a genuine transformation must entail the demilitarization of the Soviet economy and society. The ethos of the country, including especially the education of the young, is heavily imbued with martial values and training.

The Soviet government should be expected to initiate a staged program of military budget cuts to bring down, over time, the percentage of the GNP allocated to military purposes to levels approximating those of the major Western powers.

Progress toward a formal democracy should also be helpful in this regard, because the Soviet people themselves are likely to press for major cuts once they realize the degree to which their poverty is made more acute by the size and privileges of the Soviet military behemoth.

How any eventual Western aid is distributed will also be of importance in promoting the peaceful transformation of the Soviet Union. Much of it should go directly to the various national republics.

The authorities of some of these republics have already been chosen in democratic elections, and they are likely to be in better position than the Kremlin to make rational economic decisions regarding the best use of Western aid.

In time, the existing Soviet Union may - and should - give way to a loose, democratic and non-militarist confederation of some of the existing republics, with Russia as its core, and to a looser yet association in specific economic and security matters with those national republics that choose to secede altogether.

Such an outcome would represent a truly benign conclusion to the tragedy that befell the Soviet peoples in 1917, isolating them for many decades from global progress. The world would benefit as well, and that is why the choice the West confronts is strategically so significant.

(Zbigniew Brzedinski was national security adviser in the Carter administration.)