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event of any future East-West cri–
sis.
A recent European Community
report, in fact, underscores the
potential dependence impact. When
the gas deal is completed, Ita!y could
depend on the Soviets for 35 percent
of gas consumption, West Germany
34 percent and France 26 percent.
This dependence is compounded by
the fact that by 1990 gas supplies
from outside EC production areas,
including the Soviet Union, are
expected to play a much bigger role
in Europe's overall energy picture
than they do today.
United States officials have also
complained about the substantial
interest-rate subsidies European
governments have granted to the
U.S.S.R. for the pipeline's con–
struction . (The pipeline is being
financed by Western banks at Jess
than 8 percent interest.)
Europeans have generally called
the U.S. position an exaggeration,
claiming that the Soviets have prov–
eo to be a reliable trade partner in
the past. Moreover, according to
their argument, the U .S.S.R. des–
perately needs the earnings that the
sale of the gas will produce in order
to buy grain from the United States
(which the Americans have refused
to embargo). Moreover, Europeans
claim, the pipeline project should
reduce Western Europe's depen–
dence upon energy sources from the
unstable Middle East.
America Embargoes Supplies
The pipeline dispute took a sudden
downward turn toward the end of
1981. Sixteen days after Polish
authorities declared martial law,
Washington imposed economic
sanctions against the Soviet Union,
which the United States regarded as
directly responsible for the Polish
action.
Sorne of those sanctions were
aimed at the projected gas pipeline.
The giant General Electric firm
was banned from supplying mil–
lions of dollars worth of parts for
turbines to propel the gas along the
pipeline. A license for Caterpillar
Tractor Company to export pipe–
laying equipment to the Soviet
Union was canceled.
West European politicians, as well
as trade union Jeaders, were alarmed.
4
Several European firms had signed
pipeline contracts with Soviet
authorities and were relying upon
American products to fulfill them.
As the seven-nat ion Versailles
economic summit approached last
June, Western European Ieaders
worked to maneuver the United
States into a softer position on the
pipeline issue. At the Versailles
conference, attended by this writer,
an unwritten compromise appeared
to have been structured. There was
talk of allowing Europeans to once
again have access to the missing
American equipment, in return for
tighter credit restrictions on subse–
quent East-West trade.
Then,
lO
days later, the Reagan
administration dropped its bomb–
shell on the entire project.
After learning that the French
had rejected substanti al credit
reform, the United States extended
its pipeline sanctions embargo to
European subsidiaries of U.S. com–
panies. Further, no company
abroad could use licenses from U.S.
companies to build vital pipeline
equipment. Especially hard hit
were companies in Fram
- ~.
ltaly
and Britain constructing· C<•mpres–
sor turbines for the pipeline, using
U.S . technology.
Europeans reacted with under–
standable outrage. Massive con–
tracts were suddenly tbrown into
question, along with thousands of
jobs. Even the future of sorne
financially shaky companies in
Europe was in doubt.
Over the next severa) weeks, one
nation after another in Europe
announced it would defy the Reagan
ban. The governments of Bri tain,
America's otherwise staunchest ally
in Europe, and France announced
that companies in their nations hold–
ing U.S. construction licenses would
be required, under penalty of law, to
honor Soviet contracts for the pipe–
line.
The Americans countered that it
was the Europeans who were guilty
of breaches of contract; that the
terms of the licenses for General
Electric designed products providcd
for changes in export regulations
toward the East bloc that the U.S.
government might wish to enact.
The West Germans, meanwhile,
threatened to take the United
States befare the International
Court of Justice. And President
Francois Mitterrand of France
declared that the Versailles sum–
mit, for which he acted as host, had
turned into a mockery. The value of
future summits, he said, was nil.
Showdown Unavoidable
Sorne sor t of political showdown
over the pipeline row appears in–
evitable mainly beéause both sides
view relations with the Communist
eastern bloc in quite differing
light.
Mr. Reagan, in European eyes,
embodies the so-called hard-line
view toward the Soviet Union. He
certainly showed as much on bis
stopovers in European capitals ear–
lier this year. In a speech delivered
to the British Parliament June 8,
the American president called for a
global "march of freedom and
democracy" that, he hoped, would
" leave Marxism-Leninism on the
ash heap of history."
It goes without saying that Mos–
cow reacted very vigorously to Mr.
Reagan's remarks. Nota few West–
ern Europeans criticized him as well
for embarking on a crusade to over–
turn the status quo in Europe and to
"destabilize" the Soviet sphere of
influence on the continent.
Others criticized the American
leader for holding out too much
hope for the use of sanctions to
change the nature of affairs in
Eastern Europe. Reduced trade,
they argued, would only make the
resilient and strongly patriotic
Soviet population, accustomed to
more austere living conditions than
the West, only tighten their belts
more, if convinced sorne sort of
economic warfare had been de–
clared against them.
lt
is foo lish , they claim, to
believe that the world 's second
largest economy, the U.S.S.R. ,
could be forced by economic mea–
sures to compromise on its vital
security interests in Eastern Eu–
rope, gained at much expenditure
of human and material resources in
the last war.
"Pull Back from the Brink"
Still other voices on both sides of the
Atlantic have criticized the adminis-
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The PLAIN TRUTH