The Political Basis for Trade in US-Soviet Relations

intentionally pose the question in terms of 'political basis' and 'American-Soviet' relations. My reasons are to isolate the political arguments in favour of American-Soviet trade from the economic, and also to isolate those factors that pertain directly to the relationship of the two superpowers from those which might be more relevant to bloc relations as seen from a West European perspective. The two sets of considerations are obviously interrelated, but for both analytic ano prescriptive purposes it also is important to separate them.

One source for attributing this statement to Lenin is a speech given to the AFL-CIO by Alexander Solzhenitsyn on 30 June 1975 and cited in Carl Gershman, 'Selling Them the Rope: Business and the Soviets ', Comment (Vol. 67, No. 4, April 1979), p. 35.

See my arguments in the following: 'Khrushchev's Oil and Brezhnev's Natural Gas Pipelines', in Robert J. Lieber (ed.), Will Europe Fight for Oil? Energy Relations in the Atlantic Area (New York: Praeger , 1983), pp. 33-69; 'From Consensus to Conflict: The Domestic Political Economy of East-West Energy Trade', International Organization (Vol. 36, No. 4, Autumn 1984), pp. 625-60; and Pipeline Politics: The Complex Political Economy of East- West Energy Trade (Ithaca, NY : Cornell University Press, forthcoming 1986).

This parallels Johan Galtung's critique of 'naive theories of economic warfare'. See 'On the Effects of International Economic Sanctions, with Examples from the Case of Rhodesia', World Politics (Vol, 19, No. 3, April 1967), pp. 378-416.

Albert O. Hirschmann , National Power and the Structure of Foreign Trade, expanded edition (Berkeley, CA: University of California Press, 1980), p. 10.

E.H. Carr , The Twenty Years' Crisis. 1919-1939 (New York: Harper and Row, 1964), pp. 25-6.

For example, Nazli Choucri and Robert C. North , Nations in Conflict: National Growth and International Violence (San Francisco, CA: W.H. Freeman, 1975); A.F.K. Organski , World Politics (New York: Knopf , 1958), especially Chapter 14; F.H. Hinsley , Power and the Pursuit of Peace (Cambridge: Cambridge University Press, 1963), especially Chapter 13; and George H. Quester , Offense and Defense in the International System (New York : John Wiley and Sons, 1977).

David A. Baldwin , 'The Power of Positive Sanctions', World Politics (Vol. 24, No.1, October 1971), p. 35.

Alexander L. George and Richard Smoke , Deterrence in American Foreign Policy: Theory and Practice ( New York: Columbia University Press, 1974), p. 606.

Robert O. Keohane , After Hegemony: Cooperation and Discord in the World Political Economy (Princeton, NJ: Princeton Univesity Press, 1984), p. 6.

Daniel Yergin , Shattered Peace : The Origins of the Cold War and the National Security Stare (Boston, MA: Houghton Mifflin, 1977), p. 11.

William Zimmerman , 'Choices in the Postwar World: Containment and the Soviet Union', in Charles Gati (ed.), Caging the Bear: Containment and the Cold War ( Indianapolis, IN and New York: Bobbs-Merrill, 1979), p. 91.

See also William Welch , American Images of Soviet Foreign Policy: An Inquiry into Recent A ppraisals from the Academic Community ( New Haven, CT: Yale University Press, 1970).

Russell J. Leng , 'Reagan and the Russians: Crisis Bargaining Beliefs and the Historical Record', American Political Science Review (Vol. 78, No. 2, March 1984), pp. 338-55.

Robert Jervis , Perception and Misperception in International Politics (Princeton, NJ: Princeton University Press, 1976); Robert Axelrod , The Evolution of Cooperation (New York: Basic Books, 1984); Noel Kaplowitz , 'Psychopotitical Dimensions of International Relations: The Reciprocal Effects of Conflicts Strategies', International Studies Quarterly (Vol. 28, No. 4, December 1984), pp. 373-406.

Henry A. Kissinger, White House Years (Boston, MA: Little, Brown, 1979), p.155.

Peter G. Peterson , US-Soviet Commercial Relations in a New Era (Washington, DC: Government Printing Office, 1972), pp. 3-4.

John Lewis Gaddis , Strategies of Containment ( New York: Oxford University Press, 1982), p. 289.

Testimony to Senate Foreign Relations Committee, 19 September ! 974, included in Henry A. Kissinger , American Foreign Policy ( New York: W.W. Norton, 1977), pp. 158-59.

Cited in Herbert S. Levine , 'Soviet Economic Development, Technological Transfer and Foreign Policy', in Seweryn Bialer (ed.), The Domestic Context of Soviet Foreign Policy (Boulder, CO: Westview Press, 1981), p. 190.

Cited in M. Elizabeth Denton , 'Soviet Perceptions of Economic Prospects ', in US Congress, Joint Economic Committee, Soviet Economy in the 1980's: Problems and Prospects (Washington DC: Joint Committee Print, Vol. 1, 97th Congress, 2nd Session), p. 32. Raymond Garthoff takes this further, citing a Brezhnev speech on West German television in 973 in which he explicitly repudiated autarky and stated that Soviet economic policy 'proceeds from the premise' of growing economic relations with the West: Detente and Confrontation: American-Soviet Relations from Nixon to Reagan (Washington, DC: Brookings Institution, 1985), p. 88.

US Congress, Senate Committee on Foreign Relations, Detente (Hearings, 93rd Congress, 2nd Session, 1974), p. 33.

Adam B. Ulam , Dangerous Relations: The Soviet Union in World Politics, 1970-1982 (New York: Oxford University Press, 1983), p. 59; Franklyn D. Holzman and Robert Legvold , 'The Economics and Politics of East-West Relations', International Organization (Vol. 29, No.1, Winter 1975), pp. 295-96.

Seymour M. Hersh , The Price of Power: Kissinger in the Nixon White House (New York: Summit Books, 1983), pp. 334-49.

Kissinger does mention the 10 June executive order de-controlling gear-cutting machinery ordered by the Soviets for the $1 billion Kama River truck foundry then under construction; Henry Kissinger, White House Years, op. cit., p.840. The liberalisation of grain exports involved two actions. One removed the requirement that grain exports to communist countries first receive a special licence from the Commerce Department. The other rescinded the requirement that 50 per cent of all grain shipments to communist countries be carried on American flag vessels. Back in 1963-64 when the Kennedy and Johnson administrations made the first grain deal with the Soviets, the longshoremen and maritime unions went on strike until Congress added the 50 per cent shipping requirement. But because American shipping was as much as 30 per cent more expensive than other flags, the Soviets did not buy any more American grain. To bring them back into the American market, the Nixon administration needed to make American grain more price competitive by lifting the 50 per cent shipping requirement.

Not only were the unions retaliating against the lifting of the 50 per cent shipping requirement, they were also long a bastion of virulent anti-communism.

Seymour Hersch , op. cit, p. 347.

Stanley Kamow, Vietnam. A History (New York: Viking Press , 1983), p. 646.

Tad Szule , 'Behind the Vietnam Cease-Fire Agreement', Foreign Policy (No. 15, Summer 1974 ), p. 44. See also Garthoff , op. cit, p. 314.

Joseph L. Nogee and Robert H. Donaldson , Soviet Foreign Policy Since World War II (New York: Pergamon Press, 1984), pp. 260-61.

Cited in Raymond Garthoff , op. cit, p. 259.

Ibid., p. 332.

Robert Keatley , 'The Truce: China and Russia's Role', The Wall Street Journal, 30 October 1972.

Marshall I. Goldman , 'Interaction of Politics and Trade: Soviet-Western Interaction', in Joint Economic Committee, op. cit, p. 121.

Adam Ulam , op. cit, p. 90.

An excellent and detailed study of this issue in particular is Paula Stem, Water's Edge: Domestic Politics and the Making of American Foreign Policy (Westport, CN: Greenwood Press, 1979). See also Kissinger's account in Years of Upheaval (Boston, MA: Little, Brown, 1982), pp. 985-98.

William Safire , Before the Fall (New York : Doubleday, 1975), p. 454.

Henry Kissinger , American Foreign Policy, op. cit, p. 145.

Cited in Raymond Garthoff , op. cit, p. 466.

Robert O. Freedman (ed.), Soviet Jewry in the Decisive Decade (Durham, NC: Duke University Press, 1984), Annex 1.

Gerald R. Ford , A Time to Heal: The Autobiography of Gerald Ford (New York: Harper and Row, 1979), pp. 138-9.

Nor, it should be pointed out, are such parameters of pressure peculiar to the Soviet Union. Numerous studies of economic coercion involving other nations have shown that the more overt the tactics, the less likely they have been to succeed in bringing a coercer state political influence over its target state. Johan Galtung , op. cit ; Richard Stuart Olson , 'Economic Coercion in World Politics: With a Focus on North-South Relations', World Politics (Vol. 21, No. 4, July 1979), pp. 471-4; and Jerrold D. Green , 'Strategies for Evading Economic Sanctions', in Miroslav Nincic and Peter Wallensteen, Dilemmas of Economic Coercion: Sanctions in World Politics ( New York: Praeger, 1983), pp. 61-85.

Marshall Goldman confirms this, based on his discussions with Soviet officials. See his 'The Evolution and Possible Direction of U.S. Policy on East-West Trade', in Abraham S. Becker (ed.), Economic Relations with the U.S.S.R. ( Lexington, MA: D.C. Heath, 1983), pp. 164-5.

Harry Gelman , The Brezhnev Politburo and the Decline of Detente (Ithaca, NY: Cornell University Press, 1984), pp. 122-3, 148-51; Alexander L. George , 'Detente: The Search for a "Constructive' Relationship" in his Managing U.S.-Soviet Rivalry: Problems of Crisis Prevention (Boulder, CO: Westview Press, 1983), p. 22; Raymond Garthoff , op. cit, p. 88; and Adam Ulam , op. cit., p. 123.

Harry Gelman , op. cit, p. 151; John Lewis Gaddis , op. cit, p. 315; and Samuel Pisar , Of Blood and Hope ( Boston, MA: Little, Brown, 1979), p. 269.

The New York Times, 5 August 1983, p. 1.

Cited in Gordon B. Smith , 'The Impact of Western Technology Transfer on the Soviet Union', Paper presented to Conference on Technology Transfer in the Modern World, Georgia Institute of Technology, April 1984, p. 22.

Joint Economic Committe , op. cit, Section 2; Smith , op. of.. pp. 14-18; Robert W. Campbell , 'The Economy', in Robert F. Bymes (ed.), After Brezhnev (Bloomington, IN: Indiana University Press, 1983), pp. 68-124; Abram Bergson , 'Technological Progress', in Abram Bergson and Herbert S. Levine (eds.), The Soviet Economy: Toward the Year 2000 (London: George Allen and Unwin, 1983), pp. 34-78.

'Without constant infusion of advanced technology from the West', Secretary of Defense Caspar Weinberger has written, 'the Soviet industrial base would experience a cumulative obsolescence .... Thus, the West helps preserve the Soviet Union as a totalitarian dictatorship'. Annual Report to the Congress of the Secretary of Defense, FY 1983 (Washington, DC: US Government Printing Office, 1982), Section I, pp. 22-3, and Section 2, pp. 26-32.

Herbert Levine , op. cit, pp. 187-8.

US Congress, Office of Technology Assessment, Technology and East- West Trade (Washington, DC: Government Printing Office, 1979), pp. 228-42; Organisation for Economic Co-operation and Development (OECD), East- West Technology Transfer (Paris: OECD, 1984); Philip Hanson , Trade and Technology in Soviet- Western Relations (New York: Columbia University Press, 1981).

Joint Economic Committee , op. cit, pp. 529-30.

Thomas H. Naylor , 'Changing the Economic Mechanism in the Soviet Union', Fugua School of Business, Duke University (mimeo).

Jerry F. Hough , 'Gorbachev's Strategy', Foreign Affairs (Vol. 64, No. 1, Fall 1985), p. 40. See also Gorbachev's speech of 12 June 1985 to the CPSU Central Committee , Current Digest of the Soviet Press (Vol. 37, No. 23, 3 July 1985 ).

Karl-Eugen Wadekin , 'Soviet Agriculture's Dependence on the West', Foreign Affairs (Vol. 60, No. 4, Summer 1982), p. 894; Douglas B. Diamond , Lee W. Bettis and Robert E. Ramsson , 'Agricultural Production', in Abram Bergson and Herbert Levine, op. cit, pp. 143-77.

Karl-Eugen Wadekin , op. cit, and D. Gale Johnson and Karen McConnell Brooks , Prospects for Soviet Agriculture in the 1980s (Bloomington, IN: Indiana University Press, 1983).

Jochen Bethkenhagen estimates a 300 per cent increase in Soviet oil imports from Iraq and Libya from 3.5 million metric tons per year in 1980 to 10.5 million in 1984. Total Soviet oil imports are estimated at 5.5 million metric tons for 1980 and 20 million tons for 1984. 'Soviet Energy: Oil Exports Stabilise Thanks to Increased Natural Gas Production', Economic Bulletin (Vol. 22, No. 7, September 1985), German Institute for Economic Research (DIW), p. 11.

Jochen Bethkenhagen , op. cit, p. 9, puts Soviet domestic oil consumption for 1984 at 34.9 million tons coal equivalent, an 8.9 per cent reduction from 1980 consumption of 38.3 million. Domestic natural gas consumption, in contrast, increased 22.4 per cent during the same period. Total energy consumption increased 12.3 per cent.

After averaging 7.6 per cent in the first half of the 1970s and 3.6 per cent for 1976-80, the aggregrate average economic growth rate for Eastern Europe in 1981-83 sunk to 0.8 per cent. An 'energy squeeze', as The Economist put it, 'will be a big obstacle to improving growth rates, in the rest of the 1980s and the 1990s'. The Econamist, 20 April 1985, Survey 12.

When Italy finally signed its new contract for Soviet natural gas in May 1984, the volume was only about 60 per cent of what had been set in a preliminary agreement back in October 1981. Then in 1985 the Soviets were pressured into renegotiating existing contracts with Gaz de France and Ruhrgas for lower prices and stretched-out delivery periods for the agreed volumes. This assessment is also based on extensive interviews conducted by the author in Europe during June and July, 1985.

Nor are there the same security-related constraints as with natural gas on imports from the Soviet Union. The current Soviet share of the West European oil market is only about 15 per cent, roughly half its share of natural gas markets. Moreover, the spot market nature of most oil sales makes them less sensitive to the fears of supply interruption characteristic of the less flexible natural gas infrastructure.

US Congress, Office of Technology Assessment, Technology and Soviet Energy Availability (Washington, DC: US Government Printing Office, 1981), pp. 35-37, 46-48, 53-55, 62-64, 67-70. See also Robert W. Campbell , Soviet Energy Technologies (Bloomington, IN: Indiana University Press, 1981).

Robert G. Jensen, Theodore Shabad and Arthur W. Wright (eds.), Soviet Natural Resources in the World Economy (Chicago, IL: University of Chicago Press, 1983), pp. 316 and 316-23.

Thane Gustafson , 'Energy and US-Soviet Relations: The Question of Eastern Europe', in Donald J. Goldstein (ed.), Energy and National Security; Proceedings for a Special Conference (National Defense University Press, 1981), p. 148 (emphasis added).

Robert O. Keohane and Joseph S. Nye , Jr. , Power and Interdependence ( Boston, MA: Little, Brown, 1977), pp. 11.19.

Robert L. Pearlberg , Food, Trade and Foreign Policy : India, the Soviet Union and the United States (Ithaca, NY: Cornell University Press, 1985 ), p. 197 and generally.

Bruce Jentleson , Pipeline Politics, op. cit, Chapter 6.

Albert Hirschmann , op. cit, p. 29.

Bruce Russett and Harvey Starr , World Politics : The Menu for Choice (San Fransisco,CA: W.H. Freeman, 1981), pp. 237-8.

Samuel Pisar , op. cit, p. 281.

Strobe Talbott , 'Social Issues', in Joseph S. Nye, Jr. (ed.), The Making of America's . Soviet Policy (New Haven, CT: Yale University Press, 1984), pp. 183-205; Jewish emigration data from Robert O. Freedman , op. cit , Annex 1.

Strobe Talbott , op. cil, p. 205.

This was the Carter administration approach. See Samuel P. Huntington , 'Trade, Technology and Leverage: Economic Diplomacy', Foreign Policy (No. 32, Fall 1978), pp. 63-80.

Raymond Vernon , 'Apparatchiks and Entrepreneurs: US-Soviet Economic Relations', Foreign Affairs (No. 52, January 1974), pp. 249-62.

The Khrushchev anecdote is included in Angela Stent, From Embargo to Ostopolitik:The Political Economy of West German-Soviet Relations (New York: Cambridge University Press, 1981), p.93.

Marshall Goldman and Raymond Vernon , 'Economic Relations' in Joseph S. Nye, Jr., op. cit, p. 168; see also William A. Root , 'Trade Controls That Work', Foreign Policy, (No. 56, Fall 1984), pp. 61-80 and Ellen L. Frost and Angela E. Stent , 'NATO's Troubles with East-West Trade', International Security (No. 8, Summer 1983), pp. 179-200.

Bruce Jentleson , Pipeline Politics, op. cit, Chapter 7.