Secretary of State George P. Shultz yesterday denounced a plan sponsored by Senate Majority Leader Robert J. Dole (R-Kan.) to subsidize U.S. wheat exports to the Soviet Union, calling it "ridiculous" and in conflict with a U.S. agreement with western allies.
The Dole proposal, attached by the Senate on Tuesday to the Export-Import Bank bill, would require the administration to apply the wheat subsidy provisions of last year's farm bill to the Soviet Union. Dole, backed by 17 cosponsors, argued that Moscow should be given access to the "export enhancement program" in order to sell more U.S. wheat to a "traditional customer" and thus help the ailing Midwest farm economy.
Shultz, in a breakfast meeting with reporters, said the subsidized wheat sale being advanced by Dole is one of several recent agricultural moves that present major complications for U.S. foreign policy.
A cutback in U.S. purchases of imported sugar, also mandated by last December's farm bill, has been "devastating to traditional suppliers" such as the Philippines, Shultz said.
A State Department aide said the economic trouble on the Philippine island of Negros, where a communist-led insurgency is strong, is attributable in part to the cutback in U.S. sugar imports. Sugar-producing nations in the Caribbean are also being hurt, the official said.
A subsidy for U.S. rice exports, also contained in the 1985 farm bill, "has caused tremendous strains" in U.S. relations with Thailand, Shultz said. He noted that Thailand is on the "front line" of the war in Cambodia involving Vietnamese military forces.
In the case of wheat, the farm bill provided a subsidy program for grain sales at the discretion of the executive branch, which so far has refused to apply it to the Soviet Union or China. Dole told the Senate Tuesday that he "does not want to subsidize communism" but "we have a farm depression or recession" and that the government is paying $700 million annually for storage of surplus agricultural commodities.
Shultz said he is "very much opposed" to application of the grain subsidy to the Soviets, noting that part of the agreement with European countries in the 1982 gas pipeline dispute was that western trade with the Soviet Union should not be subsidized.
"That was a big thing we drove hard for," said Shultz of the agreement. "I don't see any reason why we should be subsidizing the Soviet Union -- none."
He went on to mention a heated protest about the Dole proposal in a telephone call Thursday from Australian Prime Minister Bob Hawke, who estimated that his nation stands to lose $620 million in wheat sales to the Soviets if U.S. subsidized grain undercuts its share of the Moscow market.
In Canberra, a spokesman for Hawke said the prime minister told Shultz the wheat issue "would bring into question, across a broad political spectrum in Australia, the nature of our relationship," Reuter news service reported. Hawke has been under pressure at home to link the grain sales issue to the future of U.S. military bases in Australia, but so far has refused to do so.