Washington

Ban on Soviet trade: a defense or a disaster?

IT IS ironic that President Reagan, who was highly critical of President Jimmy Carter's grain embargo against the Soviet Union, should find himself in much the same position as Carter — defending trade sanctions against the Soviets which many American businesses (and even some of the president's advisers) contend are hurting America and its allies more than the Soviet bloc.

Carter imposed the grain embargo on January 4, 1980, in retaliation for the Soviet invasion of Afghanistan. American farmers complained the embargo hurt them more than the Soviets, who simply bought their shortfall of grain from other countries. But Carter refused to lift the embargo as long as Soviet troops remained in Afghanistan. Reagan, who criticized the selective agricultural embargo as a foreign policy tool during his campaign, lifted the grain embargo three months after taking office, on April 24, 1981.

But then came Poland. Polish authorities, under the gaze of Soviet officials, declared martial law in Poland in December 1981 and threw leaders of the trade union movement, Solidarity, behind bars. America was once again helpless as a Soviet supported-and-supplied army crushed resistance within the Soviet bloc. Reagan decided to impose economic sanctions against both Poland and the Soviet Union, holding the latter at least indirectly responsible for the Polish crackdown. In mid-June, Reagan extended the ban on selling oil and natural gas equipment to the Soviet Union (for its new gas pipeline from Siberia to Western Europe) to include foreign companies producing such equipment under license from U.S. companies. Europeans and U.S. companies that will lose business immediately protested the president's action.

Sen. Charles Percy, chairman of the Senate Foreign Relations Committee, said the move could "split the NATO alliance ... by attempting to enforce our laws in their countries." Closer to home, Percy said the sanctions "seriously affected" Illinois companies who lost business and jobs to European and Japanese firms.

Affected by the sanctions were the export licenses of Caterpillar Tractor Co. (pipelayers), Fiat-Allis Co. (crawler tractors), Sundstrand Corp. (grain drying equipment), and General Electric (turbines). Percy charged that "thousands of jobs in our state have been exported abroad without any noticeable adverse effect on the U.S.S.R." Percy "regrettably" noted Reagan's action was not consistent with his lifting of the Carter grain embargo.

At Percy's request, administration officials met in late June with Percy and a delegation that included Republican Reps. Bob Michel of Peoria, Paul Findley of Pittsfield and Lynn Martin of Rockford, as well as company officials of Caterpillar, Fiat-Allis, Sundstrand, GE and International Harvester Co. The administration was represented by Commerce Secy. Malcolm Baldrige and national security adviser William Clark.

"It was a very good meeting," said an aide to Martin. "They [the administration] listened, although they didn't change their mind. Perhaps we made them think about it a little more." Clark promised to convey the group's concerns to the president, who had just received a similar appeal from British Prime Minister Margaret Thatcher. She told Reagan the sanctions were harming a Scottish-based British company. Perhaps the appeals had some effect.

Reagan began searching for some way to ease the sanctions, shortly after an "explosive" meeting of Cabinet-level officers in the White House on June 27 — three days after the Percy delegation was there. Administration officials said U.S. Trade Representative Bill Brock and others voiced opinions that the sanctions were a disaster for U.S. relations with Western Europe. The exchanges became so heated that Clark was said to have asked two staff members to put their notes on the table and leave the meeting. Later, Reagan reportedly agreed to ease the sanctions if Polish and Soviet authorities make "some progress" toward lifting martial law in Poland — apparently a signal to the Soviet Union that Reagan would ease the sanctions if it did not look like a concession that the sanctions were a failure.

Meanwhile, Percy and others kept the pressure on. Percy argued the president's action would cost tens of thousands of U.S. jobs during a recession and create "a crisis in the western world" without delaying completion of the pipeline.

Similar arguments were being made two years ago during the grain embargo. But Reagan was on the other side of the issue then, and not yet in the White House.

40 | September 1982 | Illinois Issues