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Trading With the Soviets

November 13, 1988

The announcement by the West Germans that they will afford the Soviet Union billions of dollars in trade credits should be recognized by all as a significant historical event. For the Soviets, it is the latest in a series of dramatic actions directed at stimulating the Soviet economy; for the Western world it should be marked as the end of the cold war and the beginning of the "green war"--an era in which world politics are driven less by military strength than by economics.

Actually, the green war has been under way for some time. The Japanese have achieved a decisive victory over the U.S. in the early going, and it is not likely that we will ever recover. They have purchased a controlling interest in the U.S. debt, and, while playing by their own trade rules they have rendered America largely dependent upon them for manufactured goods. The U.S., with a very myopic view of world economics, has all but laid down its economic guard. The Reagan Administration has mortgaged our future and created a false sense of economic prosperity.

While the U.S. hurls empty political charges at the Soviets (such as technical breaches of arms treaties) and follows U.S.-Soviet foreign policy guidelines worthy of the 1950s, the Soviets have found that they can achieve their most important objectives with immunity to U.S. interference. By reaching economic accord with other Western powers, they attack their critical domestic problems and at the same time achieve new political alliances.

The flagship of the new Soviet perestroika reforms has been the joint venture law permitting companies from capitalist nations to go into partnership with Soviet commercial enterprises. The Germans and Japanese have been among the most aggressive in exploring the opportunities presented, despite the irony borne of the historical antagonism between the Russians and these peoples.

Now the Germans have agreed to finance Soviet commercial projects. Since the Soviets lack hard currency for repayment of this debt, it is not difficult to speculate as to the finer points of the deal which has been struck: The Germans will be receiving natural resources--oil--in the deal.

The next event in the war is predictable: Japan will soon announce that it too has achieved an economic accord with the Soviets; the result will be more hard currency financing to stimulate the Soviet economy, and a new economic-political alliance.

It is time that America wakes up to the landscape of the new world battlefield, hopefully before it is too late. In 1992 the Common Market countries will achieve full harmonization of trade among themselves and become the largest economic system in the world. The U.S. will then find itself in the number two position in size, and still, as today, the greatest debtor nation in the world.

It is the stated position of the U.S. government that when the Soviets achieve a better human rights record, the U.S. will encourage trade with them. The Department of Commerce has adopted a policy of discouraging U.S. businesses from entering into joint ventures under the new Soviet joint venture laws.

The Germans and Japanese are teaching us the fallacy of our thinking. If the U.S. would put its foreign policy in reverse order, and seek political stability through enhanced trade relations, we too may find ourselves winning a few battles in the green war, rather than seeking victories in the cold war which will forever be illusory.

TIM C. BRUINSMA

Los Angeles

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