If we weren't so transfixed by the Persian Gulf, we'd be watching the Soviet crackup with immense anxiety. No one knows what will happen. The possibilities stretch from more human hardship (a certainty) to an authoritarian dictatorship (a possibility) to civil war (a legitimate fear) to -- somehow -- a loss of control over nuclear weapons (a plausible nightmare).
Food shortages and futile political debates barely convey the depth of the crisis. Imagine our turmoil if we suddenly abandoned democracy, lost faith in free enterprise and faced the secession of major states (say, California and Texas). What confronts the Soviets is this sort of multiple crisis of ideology, economics and national legitimacy. Each feeds on the other. Separatist pressures -- from the Baltics to Moldavia -- and ideological strife stymie action on the economy. And a failing economy worsens the political disarray.
It's hard to overstate the economic debacle. Consider the grim picture painted by a new report from four major global groups (the International Monetary Fund, the World Bank, the Organization for Economic Cooperation and Development and the European Bank for Reconstruction and Development). In 1991, the report predicts that:
Soviet economic output may fall more than 5 percent after 1990's 2 percent drop. (The largest annual drop in the U.S. economy since 1950 was 2.5 percent in 1982.)
Inflation could exceed 40 percent.
The budget deficit could remain between 6 and 8 percent of the economy's output.
These forecasts, which may turn out to be optimistic, reflect deeper problems. The ruble is seen as worthless and has almost ceased to function as money. And the normal production and distribution systems are breaking down.
Because people don't want to hold rubles, most food and consumer goods -- which are being sold at artificially low, controlled prices -- are snatched from the shelves. Farms withhold food from market, because they don't want to be paid in rubles. Factories insist on being paid in dollars or other goods. In turn, this bartering cuts production of basic industrial materials (chemicals, steel, parts), which threatens output of finished goods.
A decade ago the Soviet Union was an inefficient but a viable command economy. State enterprises received production quotas and supply allocations. Now, this system is collapsing because the power of the central bureaucracies has been weakened. But no effective market system -- the intricate network of profit-driven buyers and sellers -- has arisen in its place.
On paper, remedies seem possible. The Soviets' worst problems are self-inflicted, says Jan Vanous of PlanEcon, a consulting firm. Restoring the ruble's value would curtail hoarding of goods, he argues. And that could be done in one of two simple ways: freeing prices and letting them rise rapidly to absorb excess money (that's the Polish approach), or enacting a "monetary reform" (today's rubles would be exchanged for fewer "new" rubles).
Vanous can also imagine a loose Soviet federation. Disaffected republics would get freedom -- up to a point. The union (comprising the Russian Republic, Belorussia and perhaps the Ukraine) would still control the military, foreign policy and a common currency. There would be a single economic market. Republics would be bound to the union by their need for raw materials (oil, minerals), which are now supplied at artificially low prices. Ironically, the Baltic states, Georgia and other unhappy republics are now heavily subsidized by the Russians they despise.
The trouble is that most imaginable solutions have so far proven politically impossible. Mikhail Gorbachev has been indecisive and his government inept. "They've got such a bad reputation that no one trusts them," says economist Ed Hewett of the Brookings Institution. Without popular support, Gorbachev won't take tough measures that might ultimately work. For example, stabilizing the ruble would require sharp cuts in subsidies for food and state enterprises. These subsidies bloat the budget deficit and flood the country with rubles. But the cuts would cause immediate hardship and bankrupt weaker enterprises.
Nor is a modern Marshall Plan the obvious answer. The U.S. aid to Europe in the late 1940s was catalytic. It provided the food and machinery that devastated nations needed to restart economic growth. The Soviets' problems are deeper. The basic question is whether their ravaged system can now generate growth. The need for food imports, for example, mainly reflects waste (20 percent of the wheat crop doesn't reach market). And technology? "The Soviets have imported hundreds of billions of capital goods," says economist Steven Rosefielde of the University of North Carolina. "The results speak for themselves."
Even Western experts disagree on solutions. The international organizations urge a rapid shift to free markets. Although tight money and subsidy cuts might mean two years of hardship, a fast recovery would then begin, their report says. Rosefielde thinks it "utopian" to expect free markets to emerge quickly.
What makes Soviet instability so threatening is the country's size, location (affecting Europe, Asia and the Middle East) and nuclear arms. Europeans fear that unrest will produce waves of immigrants. No economic progress is possible without stronger government, but a conservative repression might alienate the West and jeopardize arms reductions.
Everyone's guessing. "There is no danger that the Soviet Union will break up, only a question of how much force will be needed to hold it together," Duke political scientist Jerry Hough wrote recently. William Hyland, editor of Foreign Affairs, predicts a federation emerging from turmoil. "I think the most likely outcome is . . . civil war and bloodshed," he has said.
The experts don't know. Like us, they are spectators wondering whether the Soviet crackup leads to a dark future.