PRESIDENT REAGAN'S campaign against the
Soviet gas pipeline has every attribute of bad policy. It won't prevent construction of the line; at most, it can only cause a limited delay. The West German banks have now formally extended the loans. The Soviets will get the pipe. Western Europe will get the gas. The United States will get the losing end of a rancorous and divisive quarrel with its friends.
That quarrel gives the Soviets an unexpected-- and unearned--dividend in the pipeline deal. The United States has gone well beyond the conventional limits of an embargo. Mr. Reagan is trying to apply it retroactively, voiding sales that were perfectly legal when they were made. Worse, he is attempting to reach across national borders to impose American law on foreign companies through their American owners, or their licenses to American technology. The Europeans, Japanese and Canadians consider this to be a challenge, not only to their foreign policies, but to their sovereignty.
American presidents before Mr. Reagan have tried it, and there is a long history--of which the White House seems serenely unaware--of outrage in other capitals. In a press conference last week, Canadian Prime Minister Pierre Trudeau acidly observed that Europeans can see, in the pipeline case, why Canada has been taking extraordinary steps to protect its sovereignty. Canadians point out that the United States wants its companies abroad to be treated on the same terms as locally owned companies--but it also occasionally wants the right to use them as instruments of American foreign policy and impose American law regardless of any conflict with the host country's law. Canada is currently screening all new foreign investment and imposing discriminatory rules on foreign--i.e., American--oil companies.
The damage done by the assertion of extraterritorial control is cumulative and, as the Canadian reaction shows, it can be highly damaging to American business abroad. But, even more dangerous, these American claims strengthen all of the protectionist tendencies in governments abroad. They give those countries reasons not to allow American technology and American investment in the crucial sectors since, as the argument goes, you can never tell when the Americans will try to use them to push you into line with their foreign policy.
You have probably seen the forecasts of another huge American grain harvest, and another disastrous one in Russia. Of course the United States is going to continue selling grain to the Soviets--and in a big way. As long as the United States sells wheat to the Soviets, Europeans will deride American efforts to disrupt their own trade with the East. Steel tubing and natural gas, after all, are hardly in the same class with the most sensitive of strategic commodities, grain.