Soviet Trade

Big Business and the Reagan administration are seething with mutual antagonism over a major conflict that has yet to break into broad public view. Tension is growing over American corporations’ selling technology to Soviet bloc countries–actions that powerful Reaganites and New Right leaders believe to be damaging to U.S. security interests.

Last year a high official in the Commerce Department fumed to an interviewer about the need to “do something about the multinationals.” He was talking about a seemingly unstoppable flow of high technology and advanced capital equipment to the Soviet Union from major corporations in the United States. The government’s export control system is being tightened up, but there are many ways around the controls, ranging from congressional pressure to third-country diversions through subsidiaries and transit brokers.

The campaign to start turning the screws on sensitive exports began with remarks by Deputy Secretary of Defense Frank Carlucci on Nov. 3, 1981, to the influential Council on Foreign Relations. For some reason Carlucci did not deliver these remarks personally, but the unpublicized text is unmincing in its condemnation of this trade.

Carlucci did everything but name the companies as he accused them of “clear-cut violations of international export laws.”

“Our enforcement program was lax,” he said. “Too many loopholes…persisted…. It is a sad fact the United States actually requested and received more exceptions to the international control list than any other participating Western nation. It is even more grim to note, in retrospect, that many of the exceptions granted to the United States under the international control program contributed directly to Soviet military modernization.”

Carlucci described such technology sales as “high-speed computers used for designing weapons systems, semiconductor manufacturing know-how used to make Soviet weapons more reliable and precise, polymers for improving fighter aircraft performance and equipment to improve the Soviet military industrial base–ranging from precision machine tools to process know-how technology.”

Two months later, Defense Secretary Caspar Weinberger and Assistant Secretary of Commerce Lawrence J. Brady were sounding similar warnings. At the same time, New Right zealots were furious over huge Western bank loans to Poland and other Soviet-tied nations–loans which if subject to massive default could start a panic spiral of bank failures in the West.

Reacting to the Polish crisis, President Reagan announced trade restrictions on computers, electronic gear and oil and natural gas equipment. General Electric was stopped from completing a $175 million deal to sell turbine parts to three West European companies working on the Soviet natural gas pipeline connecting Siberia with Western Europe.

All this was happening without government officials criticizing specific companies known to be strongly resistant to losing lucrative business with the Russians. Nor were corporate violators of export-license controls, mentioned in Carlucci’s speech, publicly known.

Nonetheless, the U.S. Chamber of Commerce could stand the Reagan policy no longer. On Feb. 5, 1982, Chamber president Richard L. Lesher wrote Reagan to protest any consideration of sanctions against West European firms dealing with the Soviet gas pipeline project. Lesher made a case for the pipeline and deplored any strategy of economic warfare that would “require a recalculation of international business strategies for many U.S. firms involved in trade with Eastern and WesternEurope.”

If right-wing groups decide to take on the multinationals, the conflict could burst into the open. Already, the Heritage Foundation has objected to Dresser Industries’ selling the Soviets “a computerized electronic-beam welding machine.” On a recent David Brinkley show, Richard Viguerie complained about “a big business, Wall Street view of how to run this country.”

These conservatives are not the only people questioning the patriotism of U.S. multinational corporations. But they are the sector of public opinion that the giant companies can least afford to alienate.

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