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The Administration is in a delicate position as it tries to bolster Gorbachev's standing at the very moment when the Soviet President seems to be retreating from democratic reform. "I want perestroika to succeed," Bush declared flatly. But Shevardnadze acknowledged a "certain instability" in Soviet society, igniting fears that a bad winter could prompt a retreat to more authoritarian tactics. Gorbachev recently appointed hard-liner Boris Pugo as Interior Minister and enlisted the KGB to crack down on black marketeers, whom some in the West view as the Soviet Union's fledgling entrepreneurs.
In Houston, Baker warned Shevardnadze that resorting to repression could damage superpower relations. At the same time critics charge that propping up Gorbachev's failing economy could retard rather than promote reform, especially since the aid is being delivered to central authorities instead of the individual republics. Gorbachev has come under fire for balking at truly radical market solutions, settling for half measures. Critics say he is undermining his commitment to private enterprise by trying to root out the thug-infested black market when he should be encouraging its entrepreneurial spirit.
Bush also had his own domestic economic agenda. Other major grain producers, from Canada to Australia, have already eased the Soviets' access to credit; failure to follow suit, U.S. farmers argued, could shut them out of the huge Soviet market. But farm- belt lawmakers complained that the credit guarantees did not go far enough: Senate minority leader Robert Dole of Kansas had hoped for at least $3 billion. Trade experts note that because of Moscow's shortage of hard currency reserves, the U.S.S.R. needed the credits simply to match its normal level of U.S. imports.
Amid all the grousing, hope was rising that a new, historic era of trade had begun -- with vast opportunities for U.S. exporters. To open that door, however, Bush had to waive the 1974 Jackson-Vanik amendment, which prohibited normal trade relations until Moscow allowed free emigration for its citizens. The Soviet parliament still has not passed a free-emigration law. But in the past year alone, authorities have permitted the departure of more than 150,000 citizens, mostly Jews headed for Israel, and it is likely that a satisfactory emigration law will be enacted next year. Once the law passes, the Bush Administration is expected to grant the Soviets most-favored-nation status, which would vastly reduce tariffs on goods exported to the U.S. "The Soviet Union has tremendous potential resources and capabilities," Baker said. "The right market reform can tap this in a manner to give that country a vibrant economy."
Such visions, however, depend both on political stability and a complete overhaul of the Soviet system. With that in mind, Bush proposed that the Soviet Union be granted "special association" status in the IMF and the World Bank. Those organizations would help integrate the U.S.S.R. into the world economy by dispatching experts on the banking system, stock markets, currency exchange, transportation and energy. Eventually the Soviets could be eligible for full membership in the international bodies.