The World Bank said yesterday that all discussions with Moscow about technical assistance had been suspended following the Kremlin's use of force to crush independence movements in the Baltic states.
The announcement by World Bank President Barber Conable was the latest in a series of steps by Western governments and multinational institutions to drive home displeasure with the Soviet Union's use of troops in the Baltics by withholding food shipments and suspending plans to prop up the crumbling Soviet economy.
At a weekend meeting in New York, Treasury Secretary Nicholas F. Brady announced that the Group of Seven industrial nations had put the whole question of aid to the Soviet Union "on hold."
Prior to the unexpected use of military force in the Baltics, Brady had planned to ask the G-7 to endorse and arrange for further examination of President Bush's proposal late last year for a special "associate" status for the Soviets in the World Bank and International Monetary Fund.
If the crackdown against the Baltic states had not occurred, the G-7 was believed to have been prepared to endorse a program of technical assistance, as visualized in a study commissioned by last summer's Houston economic summit and released in December. At that time, Bush also partially lifted trade restrictions linked to Soviet emigration policies.
U.S. policy is to "freeze things where they are, not to go backward on anything we have done, but not to go forward, either," a senior Bush administration official said yesterday. "Then we will appraise things and perhaps we will have to take a step backwards."
Instead of extending the olive branch, the G-7 nations -- the United States, Germany, Japan, England, France, Italy and Canada -- unanimously agreed to wait out developments in the Soviet Union.
Finance Minister Theo Waigel, leading the German delegation, did not contest the "on hold" decision, even though Bonn would like to avoid a confrontation with Moscow on the question of Baltic independence. Bonn's dealings with the Soviets are particularly sensitive because of the more than 300,000 Soviet troops stationed in the former East Germany.
Waigel said the Soviet Union had to demonstrate it was moving toward a market economy before the West could decide how to hasten a link to the IMF and World Bank, and Moscow could not move toward a market economy while it is "restricting pluralism and democracy."
But while Waigel moved in tandem with the G-7 in New York, the Foreign Ministry in Bonn on the same day reaffirmed that the German government would not halt the flow of its own economic aid to Moscow. Earlier, German Chancellor Helmut Kohl had publicly criticized the Baltic states for pushing their independence demands too swiftly. The German view is that the best chance of preventing a wholesale breakup of the Soviet Union is to try to support Soviet President Mikhail Gorbachev. But other European governments, as well as the United States, are taking a firmer stance, and the response to Moscow's actions in the Baltics has been swift. The European Parliament on Tuesday voted to block $1 billion in food aid, approved only a month ago as a goodwill gesture by heads of government.
The World Bank's action was in the form of a Conable decision made last week, but revealed only yesterday, to cancel a top-level "president's council" meeting that was scheduled to discuss details of the bank's plan to offer technical aid to the Soviet economy.