Why does President Reagan risk breaking up the Atlantic Alliance, as well as destroying confidence in America's commercial reliability, by punishing European companies that sell equipment to the Russians for their gas pipeline to Europe?
The official line is that this is the way to keep pressure on the Soviet Union to lift martial law in Poland.
But despite the embargo on American suppliers of components, which was followed by a June 18 Cabinet decision to extend the sanctions to European suppliers who use American technology, the pipeline is going ahead, and repression continues in Poland.
The suspicion in Europe is that the U.S. position on the pipeline has deeper roots, in Reagan's anti-Soviet ideology. As former assistant trade negotiator Harald Malmgren has observed, the Europeans think that the sanctions are "really part of a broader effort to bring all industrial relations with the Soviets to a halt."
There is evidence to support the view that the Reagan administration decided the time was ripe to launch all- out economic warfare against the Russians. A high official told this reporter that the extension of sanctions to the European companies was taken with no real consideration of the consequences. When presidential aide William Clark was advised of the serious economic impact those sanctions would have in Europe, he responded, in effect, "That's not my problem."
If the American sanctions were to work well enough to halt the pipeline or delay it seriously, the result would not only be to deepen Western Europe's economic distress, but to prevent the Russians from earning enough hard currency to subsidize the Eastern bloc.
And that would only hasten the day when Poland and other Eastern bloc nations might have to default on their debt to Western governments and Western banks, already up to their eyeballs in trouble elsewhere around the globe.
The "hawks" argue that Russian sales of natural gas -- in contrast to Russian purchases of U.S. grain -- will enable the Soviets to increase their hard currency earnings dramatically later in this decade. They would then be able to buy Western technology or other goods that would strengthen them militarily.
But this argument is effectively challenged in a report on East-West trade by the Trilateral Commission-- hardly a radical organization. The report was first published during the Versailles summit, and is now available in an updated version.
The Trilateral Commission makes a point that the White House ignores: Russian oil exports are declining--and so is the price of oil. With Russian earnings from oil exports thus moving down, ". . . gas sales through the pipelines appear to provide the Soviets the best, and perhaps the only, means of sustaining the level of real imports from the West prevailing in the early 1980s," say banker economists Robert V. Roosa, Michiya Matsukawa, and Armin Gutowski.
They add that "the key question" in the years ahead is whether the Soviets can or will subsidize Eastern Europe, up to $25 billion annually, "to support both the living standards and the debt service of these other countries."
That gets to the guts of the issue: if there is a prospect of maintaining peaceful relations with the Soviet Union through trade, it could be destroyed if a major means by which the Soviets earn dollars is cut off. The Europeans don't want that to happen, but the present American attitude is: we don't give a damn.
There remains one, and only one valid argument on which the United States can make an anti-pipeline case, and that relates to security. By making Europe more dependent on Russian energy, do the Soviets gain a new economic weapon? Could the Soviets -- the Trilaterals ask -- "cripple Europe's ability to resist in case of actual warfare?"
These are meaningful questions, and the answers depend on deciding where the dependency lies. Does Europe become more dependent on Russia for the gas, or does Russia become more dependent on Europe for the cash?
There clearly is a risk here, but Roosa-Matsukawa-Gutowski don't view it as a big one. "What might, if overdone, become a trap of vulnerability for one side or the other, can, if carefully managed, become a stabilizing linkage," they say.
A safety net, natural gas "grid" exists in Europe which could replace Soviet gas, even if it were completely cut off, according to Roosa et al. Stupidly, Great Britain has not yet agreed to participate in the grid. The Reagan administration, for its part, appears unwilling to trust its European partners not to get "hooked" on Soviet gas. The unhappy underlying lesson is that mistrust abounds in the alliance. They must be laughing up their sleeves in Red Square.