Economic Vulnerability in International Relations: East-West Trade, Investment, and Finance

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Economic Vulnerability in International Relations: East-West Trade, Investment, and Finance

By Beverly Crawford
Columbia University Press, 1993
283 pp. $55.00
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The disintegration of the Soviet Union and the divulging of many of its secrets will make available additional evidence relevant to the vigorous and impassioned debates in the West over the desirability of pursuing Soviet commerce during the height of the Cold War. This book unfortunately does not draw on Russian sources to illuminate this question, but it does a fine job of delineating the issues of economic vulnerability among potential adversaries and reviewing the evidence available in the West on issues that were contentious. In particular, Crawford examines the impact on the Soviet economy of imports of technology-laden products and joint ventures with Western firms, the vulnerability of Europe arising from imports of Soviet gas, and the impact on both borrowers and lenders of the substantial buildup of hard currency debt, especially in Eastern Europe.

Crawford finds that the Soviet economy did not benefit significantly from Western technology for a variety of reasons, but chiefly because new technology could not easily be spread throughout the Soviet planned economy. It thus failed to stimulate the countless pressures and incremental improvements that occur in a competitive market economy.

Crawford reports a consensus among specialists that restrictions imposed by the Coordinating Committee on Multilateral Export Controls (COCOM) on militarily relevant products succeeded in slowing the advance of Soviet military technology. But she makes an interesting case that the Reagan administrations efforts to tighten COCOM controls by much more than Europeans were willing to accept actually led to the worst known violation of those controls, the infamous Toshiba sale to the U.S.S.R. of a milling machine that could produce (with Norwegian software) high-quality submarine propellers. The case, she argues, weakened COCOM's legitimacy in the eyes of private manufacturers, whose cooperation was ultimately required to enforce the regime.

A European vulnerability arising from purchases of Soviet gas was grossly exaggerated by opponents, Crawford finds. And she unpersuasively finds a high, mutual risk from large loans, which were reasonably well managed because they were in the interests of both creditors and debtors.

The author speculates on the motives for exaggeration of Western vulnerability to economic intercourse with the U.S.S.R., especially during the first term of the Reagan administration. But she neglects the most likely one: some officials, including a number of emigres, were waging a private war with the Soviet Union that was neither accepted nor acceptable as national policy.

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