The attempted coup to depose Mikhail Gorbachev had hardly been foiled before some Western politicians began calling for large sums of assistance to the Soviet Union. These were the same officials who called for such aid at the Group of Seven conference in July. But the "we told you so" tone of their rhetoric today seems strangely at odds with last week's events. Government financial transfers to the Soviet Union make even less sense now than before.
The logic behind last month's drive was to support Gorbachev's efforts to reform the Soviet economy. Germany was particularly sympathetic to his perceived need to appease hard-liners by gaining access to Western technology and pools of cash. But the Grand Bargain is no longer applicable. We don't have to respond to Gorbachev's not-so-veiled threat that there could be catastrophic consequences if the West refused to provide massive aid. The nightmare has played out, and thanks to Boris Yeltsin, the forces of freedom have prevailed.To be sure, some will insist that Western assistance was not meant to be a payoff to extortionists, but was rather aimed at encouraging economic reform. But why is it necessary for the West to offer a carrot now when there exists a much more effective stick in Yeltsin?
Western leaders can hardly go back to discussing how to provide economic assistance to Gorbachev and the Soviet Union when clearly it is Yeltsin and the Russian federation who control the future. We should be listening to what Yeltsin has to say on the subject of economic cooperation with the West.
Yeltsin did not climb onto a tank the first day of the coup because he was looking for money from the West. He was looking for moral support for the principles he represents: democracy and free markets.
Contrary to Gorbachev, he has eschewed the tactics of soliciting Western funds. "We are not beggars," he told President Bush during his visit to Washington in June. Indeed, Yeltsin has emphasized instead the investment possibilities his country has to offer. "We are firmly committed to the principle of free enterprise as the basis of economic reform in Russia," he declared in a speech on that trip.
The main task confronting Yeltsin is to clarify the Russian federations's role within a new union structure. Who will take responsibility for the primary economic and financial functions formerly exercised by central government officials? Who will control the union budget, regulate the money supply, establish a new banking system to serve the needs of the republics?
Well-intentioned but ill-informed efforts to provide financial subsidies to the Soviet Union will not add to the cause of democracy and free markets. Even providing grain credits raises an awkward question: Who gets them, the Soviet Union or selected republics? Indeed, aid packages can have a negative effect if they become cast as Western attempts to influence the destiny of Russia and her neighbors. The United States should not compromise its own economic principles, even under pressure from our allies. Government subsidies are anathema to free markets.