It would be hard to imagine anything more blatantly political than President Reagan's meaningless declaration that he is willing to sell to the Russians, and guarantee delivery, up to 23 million tons of American wheat and corn. His two-faced policy toward the Russians -- trying to hype grain sales while trying to choke off the gas pipeline -- has never been more transparent.
"It's a joke," says Washington agriculture consultant John A. Schnittker of the grain proposal. The Russians have an agreement now to buy up to 8 million tons of U.S. grain in the year that began Oct. 1. They don't need anything like 23 million tons from the United States -- although American farmers, facing a 50-million ton surplus, over normal carryover, would love to unload on the Russians or anyone else.
As the grain markets read it, says Schnittker (undersecretary of Agriculture in the Johnson administration), the Russians will buy only about 35 million tons of grain this season, and they will get most of that from grain producers other than the United States. Since the Carter grain embargo of January, 1980, proved that the United States is not a reliable partner, the Russians regard the United States only as a residual supplier.
In response to Reagan's cold-war tactics, Schnittker says, grain sellers dealing with the Societ Union see "a new militancy" vis-a-vis the United States. For example, the Soviets examine American-origin cargoes more closely than before to check quality standards.
Thus, the "guarantee" offered by Reagan that there would be no disruption in delivery of all 23 million tons if the Soviets buy that much in November and ship it within six months appears to be sheer politics. As Reagan hustled the Midwest farm belt for GOP November votes, he dangled this and other purported goodies as evidence of the help his administration is extending to farmers and their families.
But even if it amounts to an empty promise, the very idea that the president would offer a version of "contract sanctity" for grain sales to the Russians drives Europeans up the wall. Reagan's now-familiar rationalization of the contradiction between the policy on the pipeline and the policy on grain is that sales of natural gas to Europe through the pipeline will add to the Russian's hard-currency reserves, while the U.S. sale of grain acts as a "drain" on currency reserves.
Wharton economist Jan Vanous demolished this phony argument in a Washington Post Outlook article Oct. 10. He pointed out that the Soviets save vast sums of hard cash, buying grain cheaper from highly productive Western farmers than producing it themselves on inefficient Soviet farms.
Vanous estimates that the Soviets will save $32 billion this year by selling oil to the West to pay for grain. And by doing so, they free up the Soviet economy to meet other production priorities, including guns and tanks.
"The key here is a concept economists call comparative advantage -- or disadvantage," Vanous wrote. "For the Soviets, there is a huge comparative disadvantage to producing grain." One has to assume that Reagan's cold-war advisers never heard of comparative advantage. The idea that sales of grain, by "draining" the Russians of hard cash, is shrinking the Soviet military potential is pure hogwash. If anything, as Vanous demonstrates, grain sales enhance the Soviet military potential.
The inherent contradiction of the administration's misguided Soviet policy is further underscored by the reason it has lately been touting as one additional reason to justify its anti-pipeline stand: the reported use of "slave labor."
Not only are the Soviets using prisoners from their own gulags to build the pipeline, according to these reports given currency by Defense Secretary Caspar Weinberger, they are using anti-communist South Vietnamese dissidents shipped into the Soviet Union by Russia's North Vietnamese ally.
Whether or not these slave labor stories are true, I don't know. The administration has carefully kept the slave labor bit out of Reagan's own speeches, which suggests they don't have the rumors well-enough pinned down.
But if the Reagan administration (which can turn its cheek to human rights violations in certain other parts of the globe) is offended sufficiently by the Soviets' use of enforced labor, isn't that a good reason to be cutting off grain shipments, as well as pipeline shipments?