Faced with a deepening food crisis, the Soviet Union has approached the Bush administration about obtaining approximately $2 billion in loan guarantees to finance purchase of American grain later this year, Agriculture Secretary Clayton Yeutter said yesterday.
"They are quite intent on obtaining credits if at all possible," Yeutter said in an interview. But he cautioned that a number of hurdles remain before the Soviet Union could receive such credits, including Soviet passage of a law codifying that country's more liberal emigration policy -- required before Most Favored Nation trading status can be considered -- and a separate U.S. decision to open the credit program to Moscow.
Officials said the Soviets had expressed an interest in the loan guarantees in a recent meeting with Deputy Agriculture Secretary Jack C. Parnell and Undersecretary for International Affairs Richard T. Crowder. Previously, the Soviet Union has purchased grain with hard currency, but Moscow's reserves have been running low, making the credit purchases more attractive.
Soviet Prime Minister Nikolai Ryzhkov warned in a report to the Soviet leadership made pubic Sunday that government purchases of grain from state and collective farms are falling behind, and that the nation faces a serious food shortage that could spark civil unrest.
According to U.S. officials, the Soviets will have a sizeable grain harvest this year, but are suffering major distribution bottlenecks and a hard currency squeeze. Secretary of State James A. Baker III last week gave Soviet Foreign Minister Eduard Shevardnadze a paper describing possible technical assistance to Moscow, including improved distribution and storage methods, but President Bush has ruled out direct economic assistance to Moscow, at least for now.
The United States annually makes about $5 billion in Commodity Credit Corporation loan guarantees available worldwide for export of U.S. farm goods. The Soviet Union would have to compete with other nations who are already recipients of loan guarantees. The two largest are Iraq, whose program has been suspended, and Mexico. A U.S. government panel usually makes the decisions about recipients at the beginning of the fiscal year, Oct. 1.
Citing administration objections to Soviet aid to Cuba, Yeutter said, "I do not see" the U.S. allowing Moscow to participate in the subsidized Food for Peace program "any time soon." Even with the loan guarantees, he said, Moscow would have to certify that the purchases are in addition to, and not a substitute for, its cash purchases from American farmers.
In a separate move related to the Soviet Union's economic troubles, President Mikhail Gorbachev has invited leading U.S. and Western European business executives to spend a week in Moscow advising him on ways to make the transition from a centrally-planned economy to one driven by market forces. One source said the U.S. executives, who were approached by Gorbachev during the White House dinner President Bush gave for the Soviet leader last month, expected to be acting "as sort of a brain trust" in Moscow.
Gorbachev picked American business executives who long have supported increased trade with the Soviet Union, including Donald M. Kendall, chairman of the executive committee of PepsiCo Inc., which pioneered barter trade by swapping Pepsi Cola for vodka; and John J. Murphy, chairmen of Dresser Industries Inc. and the new president of the US-USSR Trade and Economic Council. Others, who were invited later, reportedly included former deputy secretary of state John Whitehead, a New York investment banker, and Whitney McMillan, chairman of Cargill Inc.