TIME: Almanac 1990s

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<text id=91TT1699> <title> July 29, 1991: Soviet Union:Helping Him Find His Way </title> <history> TIME--The Weekly Newsmagazine--1991 July 29, 1991 The World's Sleaziest Bank </history> <article> <source>Time Magazine</source> <hdr> WORLD, Page 26 SOVIET UNION Helping Him Find His Way </hdr> <body> Forced to settle for sacks of advice instead of money at the London parley, Gorbachev promises to apply those ideas at home By Bruce W. Nelan--Reported by James Carney and William Mader/ London and Dan Goodgame with Bush Ordinarily, diplomatic protocol prevents hosts from lecturing guests on how to manage their affairs at home. But the summit meeting in London last week was far from ordinary. The leaders of the world's seven biggest industrial democracies, the so-called G-7, did not mince words when Mikhail Gorbachev arrived to appeal for Western assistance. George Bush and his colleagues told the Soviet President that his reforms had not gone nearly far enough, and he seemed to take their words to heart. Just before returning to face his critics in Moscow, he conceded to a British television interviewer, "We still have a lot to learn about living in a democratic framework." He agreed Western money alone could not rescue the Soviet Union. "We will have to do the work ourselves," he said. "But we need the help of the West to get the job done." Like a guest invited for coffee but not for dinner, Gorbachev appeared ill at ease when he arrived for his postconference session with the Western leaders. His face was pale and rigid as he plodded wearily into Lancaster House, a 19th century mansion where the summiteers had met. During the four-hour meeting, Gorbachev and the Seven exchanged vague but optimistic pledges. The Soviet Union would continue its promised transition to a free-market democracy, and the West would help it along with good advice, technical assistance and, if all went well, possible economic aid in the future. If that was a less bankable outcome than Gorbachev had hoped for, it was at least a proof of his international stature, which could give him comfort back in Moscow. He had been treated with great respect, and his seat at the table of the mighty was more than symbolic: the Soviet Union's links with the G-7 and such world financial institutions as the International Monetary Fund and the recently created European Bank for Reconstruction and Development now seem permanent. To crown his pilgrimage, Gorbachev struck a deal with George Bush on the last issue holding up the START treaty that will cut the number of strategic nuclear weapons on each side to 6,000. The Soviets now have 10,180, and the U.S. has 9,251. While the treaty does not slash the arsenals by as much as Washington originally hoped, it is the first such agreement that will actually reduce the stocks of existing weapons. The treaty will be signed during Bush's visit to Moscow at the end of this month. The East-West encounter in London might have gone awry had there not been some final-hour course corrections. Moscow had startled the G-7 several weeks earlier when Gorbachev and some of his economic advisers began speculating about obtaining billions of dollars in aid from the West to support Soviet progress toward a market economy. When Western capitals quickly became noisily negative, the Kremlin backed off, saying Gorbachev would not be asking for any specific amounts of cash. Then, the week before the summit, Gorbachev sent a 23-page letter to the leaders of the U.S., Britain, France, Germany, Italy, Japan and Canada, telling them the time had come for the "Soviet Union's organic incorporation into the world economy." He buttressed his letter with a 31-page document outlining areas of the Soviet economy in which the West was invited to invest. Even the German government, more eager than any of the others to offer Moscow solid support, agreed with Washington, Tokyo and London that Gorbachev's promises were too general. They focused on creating a "mixed economy" rather than a free market that could pull the U.S.S.R. out of its accelerating collapse. Officials in the Soviet advance party were still talking in ominously demanding terms when they landed in London before the summit. Gorbachev's personal envoy, Yevgeni Primakov, told British Prime Minister John Major that Moscow expected "grants, debt relief, investment." If they were not forthcoming, Primakov warned reporters, Gorbachev's position might be endangered and there would be "a risk of social uprising, of civil war." Deputy Prime Minister Vladimir Shcherbakov claimed that "there could be turmoil in the whole world." The Western response to the letter and the dire predictions was still "no sale." Faced with the G-7 decision that no hard cash would be offered yet, the Soviets shifted gears. "It would be naive," spokesman Vitali Ignatenko assured reporters, "to say that we expect President Gorbachev to come away with black limos filled with money." Soviet Ambassador to Britain Leonid Zamyatin passed the word that Gorbachev was reworking his economic reform plan. Gorbachev's two-hour presentation was "impassioned and eloquent," according to a British official, but was only "an expanded version of what we had been given on paper." Even so, both Bush and Major said they had been convinced that Gorbachev's commitment to economic reform was now irrevocable. Bush pledged the G-7 would "try to help in every practical way." What the Seven offered in their six-point response was practical measures, specifically aimed at solving the Soviet Union's problems rather than bailing the country out. The remedies include unprecedented special association with the IMF and the World Bank, which will provide the Soviets with access to expert advice on creating a convertible currency and a market-oriented economy but not access to money; loans are available only to full members. The Seven said they would provide technical assistance in developing the Soviet transport network, legal and banking systems, energy resources and food production. They also offered to help convert Soviet military industries, which, according to some estimates, still account for about 20% of the gross national product, to civilian production. The G-7 chairman--Major until the end of the year, then German Chancellor Helmut Kohl--will visit the U.S.S.R. "to keep in close touch" with the progress of reforms. It was a sensible list of steps, but the Soviets were visibly disappointed. They are now fully aware of how skeptical the West remains about their reform plans. They are on notice that they cannot expect large-scale aid and investment until they translate their words into action. In a separate session, the Western finance ministers told Primakov that the Soviets would have to "earn" future aid by proving the reality of their economic transformation. Complained a senior Soviet diplomat: "It is humiliating. They talked like bankers." Or perhaps like professors, since many of the Western leaders believe the Soviets, Gorbachev included, do not fully understand what they are trying to do. "Every time we see him, we're reminded how profoundly ignorant of basic economics Gorbachev is," says a senior White House official. "He studied Marx and Lenin, and he still has a lot of trouble with the idea of private property." Says a British expert: "He mistakes some adjustments, some tinkering, for economic reforms." The Western conclusion, however, is that Gorbachev deserves help and advice, not scorn. Gorbachev must now decide how radical he is prepared to be in transforming his country's economy. Until he does so, he cannot expect the West to bankroll his efforts. He is still trying to have it both ways, an economy with both market forces and central control. In the coming months the G-7 countries will keep tabs on how reform is moving and consider whether they will be able to put some money where their advice is. The knowledge that the West is watching may help steel Gorbachev's own resolve to push for significant changes. While the Soviet President did not return to Moscow with sacks of money, he achieved something perhaps equally dramatic. He dispersed the cloud of suspicion that had always shrouded Moscow's dealings with the Western democracies. By sitting down at the negotiating table with the leaders of the West and by seeking membership in the leading capitalist institutions, Gorbachev announced that the Soviet Union's ideological isolation from the rest of the civilized world is over. </body> </article> </text>