President Carter's new policy to tighten controls over American oil technology exports to the Soviet Union have touched off a brisk debate between profit-minded Fortune 500 corporations and the administration's advocates of a tough trade policy toward Moscow.
It is the businessmen who are chafing at the new restrictions on Soviet energy development purchases while government foreign policy advisers defend the policy inaugurated after the trials of two prominent Soviet dissidents last July.
President Carter's decision to use oil technology as a lever on Soviet human rights policy has teetered on contradictions: U.S. energy objectives and trade goals and on one hand, and efforts to improve relations with the Soviet Union without becoming vulnerable to charges of being "soft" on the Russians on the other.
The issue of controlling U.S. high technology to the Soviet Union came to a head during the trials of dissidents Anatoly Scharansky and Alexander Ginzburg. The administration disapproved the sale of a Sperry Univac Computer to the Soviets and suspended part of a $114 million deal by Dresser Industries of Dallas to sell the Soviets sophisticated oil-drilling equipment. The Dresser transaction was subsequently approved.
Since the program was inaugurated on Aug. 1, no American oil and gas technology exports to the Soviet Union have been disapproved. Of the 91 export applications filed with the Commerce Department, 50 already have been approved.
Yet there is growing criticism both inside and outside the adminstration at the new procedure requiring White House, Central Intelligence Agency, State and Energy Departments to approve the sale of any oil technology to the Soviet Union.
Zbigniew Brzezinski and others backing licensing controls disagree, saying they give the president greater flexibility to deal with the Soviets on issues from strategic arms limitation treaty to Soviet adventurism in Africa. Oil technology, they contend, is leverage.
The Export restrictions were the result of a National Security Council study, President Review Memorandum (PRM) 31, drafted and gingerly steered through the foreign policy bureacuracy by NSC staff member Samuel P. Huntington.
Huntington's plan drew on two controversial CIA studies: one forecasting that Soviet oil production would peak before 1980, and another saying that delaying the sale of American oil technology to the Soviets was among the most critical nonmilitary weapons in the American arsenal.
For the American Companies, the Soviet Union represents a $7 billion oil and natural gas technology market between now and 1985. This is why they chafe at the new restrictions.
One senior adminstration official says the debate over export licensing "comes across as a battle between the cold warriors and the free traders."
Controversy over the program has trailed Huntington, who has left NSC and returned to Harvard. Huntington, a friend and co-author of Brezinski's, said in an interview, "I think the new system under PRM 31 is working very well."
"You have created a two-edged sword without a handle," says one international businessman critical of the Carter program, adding that the Soviets only will turn to the Europeans and Japanese if American companies can't compete in the Soviet market.
The most vocal criticism, not surprisingly, has come from American companies such as Dresser Industries and Armco International, who have been pressing sales to the Soviets for years.
They cite the case of Otis Engineering, a subsidiary of Halliburton, which lost a $40 million sale of gas-producing equipment to a French firm because of the two-to three-month delay in processing export license applications.
The breach between the cold warriors and free traders, who in a earlier era have stood together in dealing with the Soviets, had evident durings a recent conference at Harvard University on Soviet oil technology transfer.
Huntington argued the case for "bear trap" controls in reprisal for what he regards as provocative Soviet conduct in Angola, the Horn of Africa, South Yemen, and Afghanistan.
"If the Soviets will behave themselves, I would be very much in favor of helping them develop their resources," Huntington said.
"At the moment, I think it would be unwise to make an inducement," Huntington continued, labeling President Carter's approval of the sale of a Dresser drilling bit plant to the Soviets "a bad mistake."
The greatest impediment to Soviet energy development is their drilling technology - especially drilling bits - which lags far behind the American state of the art. Dresser, which had been negotiating to sell a $144 million drilling plant to the Soviets since 1973, was the first company to face a delay under the new licensing procedures.
When Carter eventually approved the sale it was over the objections of Huntington, Brzezinski, Energy Secretary James R. Schlesinger, and the Senate's leading hardliner, Henry M. Jackson (D-Wash).
James Giffin, president of Armco International, spoke against what he called "a trade policy tied to day-to-day political events. He said the continuing licensing restrictions ran counter to what President Carter told Armco president C. William Verity last Oct. 6 at a private White House meeting. Giffin said Carter assured the head of the parent Armco company that it is not the policy of the United States to inhibit development of Soviet energy resources.
As for the capability of American companies to negotiate with the Soviets, Giffin said, "No one should question the ability of American businessmen to make profitable deals with the Soviets . . . we will get the same profits in the Soviet Union we get in the United States.
The contradictions alleged by administration critics do not end with Carter's private assurances to American business.
Last September the president unveiled a set of initiatives to boost U.S. exports to improve the trading position of the dollar.
Privately, Commerce Department officials are rankled by the possibility that, because of the new regulations, American firms might lose the competitve edge in exporting oil technology in the potentially lucrative Soviet market.
Perhaps the most intriguing irony in the Soviet energy technology debate is Energy Secretary Schlesinger's position as the most resolute member of the administration in delaying or blocking the sales.
The curiosity is that DOE planners and the CIA say the world could face a severe oil shortage in the 1980s because Eastern bloc countries, now served by Soviet oil exports, would be forced to compete with the industrial countries in a tight world oil market.
If the United States were interested in averting the crisis, the proposition goes, why wouldn't the United States be trying to get as much new supply on the market by assisting the Soviets?
One DOE official offers this answer: "The national security concerns and foreign policy concerns are more important."
Other DOE officials say that it is still not clear whether it is in the national interest to help the Soviets develop their energy resources.
At the State Department, officials say that the restrictions to date have been ineffective. They remind reporters that Secretary of State Cyrus Vance favored the Dresser sale when it was being argued in the NSC and say he continues to favor it today.
At the Defense Department, there is a cautious attitude on the role American technology can play in helping the Soviets develop their oil and natural gas resources.
Dr. Morris Mountain, a senior Defense analyst, has testifed before Congress that military use of energy in the Soviet Union accounts for only 3 percent of the Soviet Union's total energy demand.
Since Carter approved the Dresser sale, Undersecretary of Defense William J. Perry has said the military spinoff from the Dresser deal was "a red herring." He added that the real question remains whether the United States wants the Soviets to develop their oil.
The CIA has been hesitant to comment publicly on the oil technology question, though the agency's analysts, including John Eckland, have stood by their forecasts that the Soviet oil production is about to peak, and that the Eastern bloc countries and Soviets together will face a shortage of 2.7 million barrels a day or more by 1985.
The CIA report released by Carter when he sent his energy message to Congress last year said the Soviet shortage would be 3.5 million barrels of oil a day or more by 1985.
While most experts agree that the Soviets face short-term difficulties and are clearly in need of a strong infusion of Western technology to develop their substantial oil and natural gas resources, the debate over export restrictions continues.
Marshall Goldman, a member of the Harvard Russian Research Center, said the CIA report and debate over U.S. exports has spurred the Soviets to develop their resources, and to seek imports from the industrial countries.
"The CIA report has helped them enormously . . . it may be a nonful-filling self-prophecy," Goldman said.