President Reagan yesterday brushed aside appeals from European allies and major U.S. companies and ordered tough new trade sanctions aimed at delaying the Soviet Union's natural gas pipeline in retaliation for continued repression in Poland.
In a move certain to cause new friction with the western allies, the president expanded his Dec. 29 ban on the sale of U.S. oil and gas equipment to the Soviets to cover overseas subsidiaries of U.S. companies and non-American firms producing such equipment under U.S. licenses.
Officials explained that the unprecedented measures are intended to prevent companies in France, West Germany, Britain, Italy and Japan from taking over business lost to U.S. firms as a result of the Dec. 29 embargo. They said legal action, to be spelled out later, would be taken against foreign companies that violate the new sanctions.
The president's action represents a major victory for forces inside the administration that want an all-out campaign to weaken the Soviet economy as a way to make Moscow divert resources from its military buildup.
Secretary of State Alexander M. Haig Jr., the major opponent of this policy inside the administration, argued that it would anger U.S. allies that depend heavily on trade with the Soviets and would not significantly slow construction of the 3,600-mile pipeline from Siberia to Western Europe.
As recently as Tuesday, State Department spokesman Dean Fischer said it was "neither the intent or the substance of U.S. policy" to wage "economic warfare" against the Soviets.
One option before the president would have allowed U.S. companies to go through with deals made with the Soviets prior to Dec. 29. This would have enabled Caterpillar Tractor to sell $90 million worth of pipelaying equipment and General Electric to sell more than $100 million worth of gas turbine rotors.
Officials said this possibility, favored by Haig, had been rejected in favor of the "toughest" option.
"The objective of the United States in imposing the sanctions has been and continues to be to advance reconciliation in Poland," the president said in a statement Friday. "Since Dec. 30, 1981, little has changed concerning the situation in Poland; there has been no movement that would enable us to undertake positive reciprocal measures."
Although Reagan has been under pressure from fellow conservatives to maintain the sanctions, his decision touched off criticism from members of his own party on Capitol Hill.
House Minority Leader Robert H. Michel (R-Ill.), whose district includes the world headquarters of Caterpillar in Peoria, said he was "distressed, to put it mildly, that the administration persists in this foreign policy farce."
"We are aiming at the Soviet Union but we keep hitting the American worker, and in the long run America looks even weaker because we cannot persuade our allies to follow our lead."
An even stronger reaction came from Senate Foreign Relations Committee Chairman Charles H. Percy (R-Ill.). Noting that three Illinois companies--Caterpillar, Fiat-Allis and Sunstrand--have been hurt by the embargo, he said that "the voices of Illinois business and labor have not been heeded."
Percy added that the action would "split the western alliance," and he questioned the "methods that may be used to enforce this controversial new policy."
When the administration first considered extending the sanctions to include overseas subsidiaries and companies operating with U.S. licenses, officials said a number of enforcement measures were available, including "blacklisting" violators from doing business in the United States, attaching their assets here and even arresting officials of those companies when they traveled to this country.
The new measures appear aimed mainly at several European companies licensed by General Electric to manufacture turbines of the kind sought by the Soviets to pump gas through the pipeline.
Three of these companies--AEG-Kanis of West Germany, John Brown of Britain and Nuovo Pignone of Italy--are now under contract to sell the Soviets 125 turbines, utilizing rotors supplied by GE in the United States. As these rotors were embargoed, the companies had been seeking to obtain the same components from a French firm, Alsthom-Atlantique, which also has a GE license.
But under the measures announced Friday, the administration would seek to block Alsthom-Atlantique from supplying the rotors, made under GE license.
This puts French President Francois Mitterand on the spot, since he has publicly opposed the American sanctions policy.
In a brief statement, GE said:
"While we have not seen the details of the president's decision, GE has said from the beginning that it would comply with the directives of the U.S. government."
Administration officials stressed Friday that they were pleased with the results of the Versailles summit's "significant first step" in obtaining some agreement to monitor trade with the Soviet Union and limit credits to it. They said the measures were aimed not at the Europeans, but at the Soviet Union to relax martial law in Poland.
Nevertheless, the attempt to put restrictions on European companies dealing with the Russians is certain to revive allied charges that the Reagan administration is one-sided in its policy, given the fact that American grain exports to the Soviet Union are continuing at record levels.
Administration officials, mindful of this, said that restoration of the grain embargo imposed by former president Carter, which Reagan lifted last year, was an option.