SOME OF the most contentious issues in NATO over the last 20 years have centered on economic relations with the Soviets. From time to time Washington has insisted that its allies participate in embargoes against Moscow; they have often resisted, arguing that these do little good and that Europe has continental trade ties with the U.S.S.R. on which many jobs depend. As the ultimate protector of Europe, for whose security it pays a large bill, this country has regarded such disputes as a repudiation of our leadership of the alliance.
If, in the current environment, America's allies move rapidly to increase economic ties with the Soviets -- while the United States hangs back from concern that Soviet economic progress will enhance its military capabilities -- frictions are likely to resurface. Americans might charge that an increase in Western European trade with the Soviet Union constituted "overly enthusiastic" support, "creeping neutralism" or, at a minimum, risky dependence.
Europeans might respond that Americans were too quick to expect the worst from the Soviets; many feel that Soviet reforms offer an opportunity for long-term improvements and should be encouraged. Moreover, some might observe that at a time when this country must reduce imports and expand exports, it isn't in a position to tell its allies not to explore other markets.
To head off such potentially divisive arguments, the United States and its allies should agree upon criteria for evaluating Soviet policy changes and applying pressure for Soviet moderation in foreign, security and emigration practices. In developing this consensus, a few points should be borne in mind:
Closer economic relations with the U.S.S.R. and moderation in Soviet performance should go hand in hand, not least because businesses will not commit large sums of money to new investment or management time to developing new trade ties if they believe that political relations will sour in the future. Moreover, increased flows of Western funds and technology -- and observer status in international economic institutions -- are important enough to the Soviets to serve as an incentive for Kremlin moderation.
Trade and investment decisions involving non-strategic goods and technology are best left to private decisions. Western governments should refuse to provide subsidized credits, which distort trade flows, while continuing efforts to decontrol low-level technologies.
To obtain their requested observer status at the General Agreement on Trade and Tariffs (GATT), the Soviets should demonstrate (with close monitoring) that they will rely more on real as opposed to administered prices and renounce attempts to steal militarily significant technology from the West.
To obtain observer status in the World Bank and International Monetary Fund, Moscow should, at a minimum, provide now secret information about its economy (similar to that submitted by large Western nations). Accurate borrowing projections, for example, would help the West assess whether expected Soviet debt levels can be serviced.
Exchanges of information among Western leaders on economic relations with the Soviet Union would help avoid our working at cross purposes and allow the West to take the initiative in structuring economic proposals that serve our interests.
Whether it is Gorbachev's intention or not, the Soviets might emerge from the reform effort not only as a strong economy but also a more vigorous and aggressive power. But economic cooperation with the Soviets entails benefits as well as calculated risks. Closer commercial, scientific and financial ties would require Moscow to tolerate more foreign business people, engineers, bankers and scientists. These contacts at all levels of the Soviet economy could give us far better "signals" of Soviet intentions, including early signs of any resource shifts away from the civilian sector back to the military -- a sort of "economic verification" process.
Eastern Europe accounts for about ten percent of world trade and is a significant international borrower. The Soviets have the capacity to disrupt world trade (as demonstrated by their massive grain purchases in the early 1970s.) Candid discussions with Moscow on trade, borrowing and investment rules -- and greater Soviet adherence to accepted global economic practices -- might be achievable at a moment when the Kremlin wants to expand ties with market economies.
If we maintain our security, cohesion and standards for participation in global economic institutions, while our private sectors take advantage of opportunities for increased trade, investment and contacts with Soviet officials, we can put Moscow's intentions and reforms to an honest test -- and even give them a boost -- without compromising our own interests.
Robert Hormats, vice chairman of Goldman Sachs International, was a senior National Security Council staff member during efforts to normalize economic relations with the Soviet Union in the early 1970s.