Workers from a small Belgian machine tool factory, their exports to the Soviet Union opposed by the Reagan administration, told U.S. Ambassador Geoffrey Swaebe today that it was the United States' duty to help prevent the financial collapse of the company.
"We insist . . . that you use your influence with your superiors to see that they respect their commitments to the survival and development of our company," said a letter handed to Swaebe by four workers from the Pegard Co.
Swaebe received the letter as he entered a reception at the gilded 18th century governor's palace in this provincial capital 40 miles southeast of Brussels. His one-day trip was made to underscore the interests of American companies in making further investments in Belgium, but it also came as Belgian and U.S. officials wrangled over the interpretation of the administration's policy on the transfer of sensitive technology to the Soviet Bloc.
The dispute centers on Pegard, located 15 miles from Namur, and the precision machine tools made by its 280 workers.
Both sides publicly have played down the dispute, but some Belgian officials have expressed surprise over the intensity of the U.S. interest in Pegard, and the doubts that have been cast upon the loyalty of one of Washington's most dependable NATO allies.
"Since the beginning of NATO, Belgium has always fulfilled its obligations to the alliance," said Guy Cudell, who heads the Belgian Senate's defense committee. "We don't think we should help with the military development of the U.S.S.R."
"But we know the United States is doing business with the Soviet Union," Cudell added. "We are surprised to see that this affair is such a big deal." The United States stopped the sale of one Pegard metal milling and reaming machine to the Soviets in August by agreeing to give $680,000 to the financially pressed Belgian government so that it could buy the $1.7 million machine for its Army.
U.S. officials in Brussels have refused to discuss the reasons why the administration opposed the export of the machine, but Belgian officials have said they were told it could be used to step up the pace of Soviet arms production.
Before the U.S. funds for Belgium could be delivered, the Belgian Cabinet granted export licenses Sept. 14 for five similar Pegard machines to be sold to the Soviets.
The United States learned of that decision the same day through Belgian Foreign Minister Leo Tindemans, who casually mentioned it to Deputy Secretary of Defense William Howard Taft IV, then visiting Brussels, a U.S. Embassy official said.
Embassy officials accompanying Taft were surprised by the Belgian decision, the official said. Two weeks later, the embassy announced that the United States had decided to "retain the funds in question until we have had the chance to review the technology transfer implications" of the new Belgian sales.
Officials in the Belgian Ministry of Economic Affairs, which granted the export licenses, said there was a misunderstanding between Washington and Brussels when the August agreement was concluded.
Defense Secretary Caspar W. Weinberger "seems to have understood the agreement in August was for Belgium to stop all sales of machine tools to the U.S.S.R.," said an aide to Belgian Economics Minister Mark Eyskens. "Of course, that was not the settlement. It just involved the machine that the Americans regarded as helpful to Soviet arms production."
The aide said Eyskens, who met with Weinberger in Washington last week, repeated Belgium's "full endorsement, . . . no more, no less" of the regulations of the Coordinating Committee for Multilateral Export Controls (Cocom), the western group that monitors trade with the Soviet Bloc.
"That means we are still free to export within the rules of Cocom," the aide said. "When we allowed the export of five machines, our staff decided they were not strategic products."
The Economic Affairs Ministry, the aide said, believes Cocom rules do not require prior approval for the export of the five machines. The aide said Belgium had provided answers to five questions raised by Defense Department experts about the capabilities of the five machines, which are to be delivered next July.
Weinberger "seemed to be satisfied" with Belgium's assurances that it would abide by Cocom rules, the aide said.
The machines have computerized controls but are regarded here as relatively unsophisticated. Experts hired by the Belgian government last summer reported the machines were of little strategic value. "Nobody could pretend Pegard is making stuff that is not being made elsewhere as well," a Foreign Ministry official said.
On the basis of the experts' report, the Belgian government was ready to approve the export of the machine when the United States intervened with its financial aid. But, the official added, there is a fear in NATO circles that Pegard may become a kind of bridgehead for high technology purchases in Belgium.
"The main reason why the Soviets come to Belgium for their shopping may well be that manufacturers in other NATO countries do not even try to get exporting licenses from their authorities," he said.
Ambassador Swaebe, a former executive of a California department store who was appointed by President Reagan, said U.S. officials in Washington are still reviewing the Belgian answers.
In the August agreement, the United States said it would "endeavor to be helpful to Pegard in the long term." After receiving the letter from the Pegard workers, Swaebe said he hopes to see "our problems resolved amicably," but made no specific commitment to help the company.
Pegard's creditors voted Monday to let the company continue operating despite debts totaling $10 million. New managers are to be appointed as part of the agreement.
The company's problems began before it became entangled in the export dispute, but the Pegard workers say the United States bears the major responsibilty.
"The Belgian government under American pressure refuses to grant us the export license," the letter said, and the denial "is causing serious commercial harm to our company."