Russia looks westward

Press, Volume CXII, Issue 33096, 11 December 1972, Page 16

Russia looks westward

The Soviet Union is in need of vast sums of money—estimated by the chairman of the New York Stock Exchange, Mr James Needham, at $l,OOO million —to expand and diversify its economy. The renewed American interest in investing capital in Russia follows logically on the conclusion of arms and environmental pacts between the two Governments, and on the Russian offer to settle, at long last, the bill for American lend-lease aid during World War 11. In terms of the agreement, Russia will make regular payments to the United States over 30 years, after which, by mutual consent, the debt will be liquidated. The most important outcome of this agreement will be an improvement in Russia’s terms of trade with the United States. President Nixon has already authorised the Export-Import Bank to make credits available for sales to Russia. He has indicated also that he will ask Congress for legislation to give the Russians most-favoured-nation tariff rates.

To handle the huge grain deal concluded earlier this year—which lifted Russian purchases on world markets to about $2,000 million worth of grain, most of it for delivery next year—some 40 ports in each country are to be opened for trade, with an understanding that American and Russian ships will each carry at least a third of the grain cargoes. Foreign charters will account for the rest. An unusually harsh winter heavily reduced this year’s Russian harvest of grain and vegetables, notably potatoes. The gravity of the situation was revealed in an official Russian statement in September that, in spite of desperate shortages, “ there would be no starvation ”. Enough wheat has apparently been bought on foreign markets to provide for at least minimum needs. Even allowing that the winter of 1971-72 was exceptionally rigorous, it is apparent that much greater areas of land will have to be cultivated and stocked. For this purpose huge sums are being invested in farm equipment. The population of Russia is estimated to have doubled since the overthrow of the Tsarist regime; production of food has not kept pace. Mr Brezhnev must be remembering uneasily that the failure of the collective fanning plans brought about the downfall of Mr Khrushchev. It will not be enough for the Russians to mechanise their farms. They must also expand their production and export of manufactures if a reasonable balance of trade is to be attained. They want capital for new plants and modernised transport systems, and they will be looking largely to the Americans to fill their needs. They have already made huge purchases of tractors and pipe-laying equipment. Liquefied natural gas is also on the export list among the “ large Soviet “ energy and raw-material resources ” in which the Americans are interested

In brief, the Russians are being compelled to think in terms of joint production agreements and participation by Western capital. They are finding, as other nations have found, that they cannot be indifferent to official and public opinion in the countries with which they hope to co-operate. Most American Senators have firmly opposed any liberalisation of trade with Russia while the Kremlin imposes a heavy tax on Jews seeking to leave the Soviet Union. The abolition of this discriminatory tax would be an unexpected gain for the cause of human rights.