One month after President Reagan announced economic sanctions against the Soviet Union for its "heavy and direct responsibility for the repression in Poland," the administration is studying new steps that could delay if not block the completion of the largest single East-West project: the $25 billion natural gas pipeline from Western Siberia to Europe.
A working group in the administration is considering an attempt to extend trade sanctions to European companies that plan to produce $1.25 billion in turbines, compressors and other equipment for the pipeline project under license from U.S. firms.
The step would close a major potential loophole in the president's Dec. 30 decision by precluding European companies from going ahead with their sales to the Soviets while American companies are forbidden from providing pipeline components.
U.S. officials who favor the tough approach acknowledge that cooperation from European governments in enforcing sanctions against European firms would be helpful, but they contend that there are also steps the United States might be able to take on its own to force the European companies to comply.
Delays in the completion of the new pipeline would strike a body blow at the Soviet economy because Soviet planners are counting on natural gas exports to provide most of the country's hard currency earnings in the last half of this decade, when oil exports are expected to decline.
Congress' Office of Technology Assessment concluded in a study just released that "gas is the key to the Soviet energy future in this decade," and that Soviet hard currency earnings could rise substantially by 1990 "with extensive western assistance in energy development, particularly gas."
However, officials here also acknowledge that an all-out effort by the Reagan administration to delay or even block the pipeline could precipitate strains with West European countries, which look to the project to provide jobs and exports for the next four years, and energy after that.
"It boils down to weighing the damage to the Soviet Union against damage to the alliance," said one official.
Another said, "This is a fundamental question dressed up in legal and technical garb. It goes to the heart of our relationship with the Soviets as well as with our allies."
According to informed sources, the issue of pipeline sanctions has generated sharp divisions in the administration, between friends and foes of East-West trade and detente. Representatives of the Defense Department, Central Intelligence Agency and National Security Council have favored a tough stance with the Europeans while the State Department and Treasury have been more sympathetic to the European view. Officials at the Commerce Department were said to be divided on the question.
The sources said it would probably be necessary for President Reagan to decide the issue, perhaps this week.
At issue is whether the president's Dec. 30 restrictions are broad enough to cover not only the export of hardware and components from the United States but also the U.S. technology and engineering that a number of European companies use in building the turbines that will push gas through the planned 3,000-mile pipeline.
Experts on the West Siberian pipeline project say the Soviet Union could supply the turbines, but their turbines are far less reliable and it is doubtful enough could be built to get the pipeline opened on schedule in the mid-1980s.
Under deals worked out last year, the Soviet Union contracted to buy 125 high-performance General Electric 25-megawatt turbines from three European firms, AEG-Kanis of West Germany, Nuovo Pignone of Italy and John Brown Engineering of Scotland.
According to arrangements with General Electric dating to the early 1970s, these three firms assemble the GE turbines under license, utilizing rotors imported from GE.
The president's Dec. 30 rules prohibit the export of the rotors, which include bearings, shafts and critical moving parts of the turbine.
However, a French company, Alsthom-Atlantique, is licensed by General Electric to manufacture the GE turbine in Europe from components produced entirely outside the United States.
The French firm already is reported to have contracts to provide GE turbines to the Soviets, and presumably also could eventually produce rotors for the turbines assembled by AEG-Kanis, John Brown and Nuovo Pignone.
However, allied governments have promised to do nothing to undermine the U.S. sanctions, and officials say that allowing Alsthom-Atlantique to do this would be a direct violation of that promise.
Complicating the situation, the Howmet Turbine Components Corp. of Greenwich, Conn., which was bought by the French firm Pechiney several years ago, has issued licenses to European firms for the blades used in GE rotors.
A spokesman for AEG-Kanis, reached by telephone last week in Frankfurt, Germany, said his company was "looking at alternatives" that would allow it to fulfill its Soviet contracts despite the cutoff of GE rotors.
One issue in the discussions is whether the U.S. government has any legal authority over independent foreign companies operating with long-standing American licenses. Some officials, arguing that the transfer of technology is a continuous process once a license has been granted, maintain that such authority exists.
If European governments refuse to help close the possible loopholes, administration officials add, the United States still has measures to force the European firms into line. These possibilities, they say, include asking U.S. firms to revoke licenses; prohibiting all commercial transactions between American companies and European firms that break the sanctions, and even arresting officers of those companies if they visit the United States.