americans should say no to financing the soviets

8/9/2019 Americans Should Say No to Financing the Soviets

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Americans Should Say No to Financing the SovietsPhyllis Schlafly is the author of 13 books, including five books ondefense and foreign policy: Kissinger on the Couch (1975 and Ambush

at Vladivostok (197! covering the "issinger years# and The

Gravediggers (19!$, Strike From Space (19!5, and The

Betrayers (19!% covering the &c'aara years) She is a eber of the*oission on the +icentennial of the nited States *onstitution, by

appointent of President -eagan) She is an attorney, aditted to thepractices of la. in /llinois, &issouri, the 0istrict of *olubia and the)S) Supree *ourt)

The following article consists of extracts taken from The Phyllis Schlafly Report,Vol. 22, No. 8. March !8!.

Resche"#ling an" con$erti%ility are not exactly ho#sehol" wor"s, %#t they may%ecome so soon. Those are the names for the mechanisms %y which some %ig

&.S. %anks an" %#sinesses are planning on making a ti"y profit %y #sing'merican taxpayers( an" %ank "epositors( money to %ail the So$iet &nion o#t of

its economic "epression.

Resche"#ling is a fancy fo#r)sylla%le wor" which means that So$iet %orrowersfrom &.S. %anks ne$er ha$e to pay %ack the principal of their "e%t, while e$en

the interest payments are postpone", finance" %y new loans, conceale" fromthe %ank(s stockhol"ers, an" rolle" aro#n" from one %anking consorti#m toanother so they are "iffic#lt to trace.

The %anks which are most acti$e in making loans to the So$iets are *irst

+hicago, +hase Manhattan, +iti%ank, Man#fact#rers ano$er, +hemical, -ankersTr#st, Marine Mi"lan", an" -ank of 'merica. 'ccor"ing to the h#man rightsorganiation calle" Resistance /nternational, of the ten largest &.S. %ankslen"ing to the So$iets, not one of them mentione" one wor" a%o#t So$iet)%locloans in its 'nn#al Report to stockhol"ers.

The chief reason 0or%ache$ is c#rrently so conciliatory towar" the 1est, p#llingo#t of 'fghanistan an" playing the role of Smiling Mike on tele$ision, is that hewants 33 %illion of 1estern capital o$er the next fi$e years. 'n", like mostSo$iet %osses, he thinks 'mericans are s#ckers eno#gh to pro$i"e it.

4espite perestroika, the &.S.S.R. has a long, long way to go %efore %eingconsi"ere" for the preferential treatment represente" %y 5most fa$ore" nation5tra"e stat#s, let alone mem%ership in 1estern financial organiations that are

s#%si"ie" %y &.S. taxpayers.

No %#sinessman wo#l" call someone a 5c#stomer5 who lacke" any $isi%le meansof paying for his p#rchase. -y any reasona%le #se of the term, the R#ssians

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cannot %e calle" c#stomers of 'merican goo"s %eca#se they ha$e no money to

%#y o#r goo"s an" $ery little to sell that we want to %#y.

So how "oes the So$iet &nion finance its massi$e military %#il"#p an" its glo%ala"$ent#res in 'fghanistan, +entral 'merica, the *ar 6ast, the Mi""le 6ast, an"

all o$er 'frica7 -y getting #nsec#re" an" #nrestricte" calle" #ntie"9 loans fromthe 1est, that(s how.

1hile resche"#ling has %een going on for se$eral years, con$erti%ility is the newhoc#s)poc#s coming "own the pike. :ne of the principal c#rrent impe"iments to

the greatly increase" flow of 'merican capital for which 0or%ache$ an" his palsare l#sting is the fact that the R#ssian r#%le is not con$erti%le on worl" c#rrencymarkets.

So, if &.S. corporations make any money %y "oing %#siness in the So$iet &nion,the r#%les are not goo" for anything except to tra$el insi"e R#ssia. /t ispro%a%le that most exec#ti$es an" their wi$es9 can fin" lots more excitingplaces to $isit.

Plans are now %eing form#late" to gi$e a false image of r#%le con$erti%ility. Thegame plan calls for sec#ring the conni$ance of 1est 0erman an" ;apanese%anks to s#pport a limite" amo#nt of r#%les on the market at a pre)agree"le$el.

:f co#rse, that wo#l" not %e a market r#%le at all< it wo#l" =#st %e "one withmirrors. /f 'mericans let the So$iets get %y with this, the So$iets will then %eeligi%le for mem%ership in all the international money organiations that ser$eas con"#its to %lee" the 'merican taxpayers for the %enefit of foreigners.

The So$iet economy is an economic %asket case an" not cre"itworthy in anysense of the wor". 4r. ;#"y Shelton of the oo$er /nstit#tion estimates that thec#rrent So$iet national %#"get "eficit is now r#nning at close to > percent of0ross National Pro"#ct. :#r &.S. %#"get "eficit, a%o#t which we hear so m#ch,

is less than ? percent of o#r 0NP.9

/t is %a" eno#gh that &.S. %anks an" corporations are %ailing the r#thless r#lingregime in the &.S.S.R. o#t of its +omm#nist)ca#se" economic woes. -#t it isintolera%le that those %anks an" corporations are a%le to impose half the costs

on the 'merican taxpayers.

1hen the So$iet %loc an" Thir" 1orl" %orrowers "efa#lt on their loans from'merican %anks, an" when &.S. corporations ha$e a loss on their tra"e or

in$estments, the &.S. %anks an" %#sinesses =#st "e"#ct those losses on theirincome tax ret#rns. /t wo#l" %e a simple matter for +ongress to amen" the taxco"e to eliminate "e"#ctions for foreign losses.

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/f the %ig &.S. %anks an" %#sinesses want to risk their own money, let them

pro$i"e" they tell their stockhol"ers9. -#t it is wrong for them to roll half theirlosses onto the %acks of the 'merican taxpayers. 'sk yo#r +ongressman to p#ta stop to this racket.

)+ank and +usiness avoritis tothe )S)S)-

R64 +'RP6T %y ;oseph *in"er. The capitalists, @enin claime", will sell R#ssia therope it nee"s to hang them. /f that is tr#e, then 'rman" ammer, '$erallariman, the late +yr#s 6aton, 4onal" Aen"all an" 4a$i" Rockefeller rankamong the chief rope sellers. -ase" on extensi$e inter$iews %oth in the &nite"States an" the So$iet &nion, the %ook explores not only what these men "o %#t

why they "o it, an" what role they play in international politics. /t is theexciting, re$ealing, $ery ironic history of h#she")#p si"e of the &.S. ) &.S.S.R.

relations. This book is available from Catholic.

The &.S. %anking %#siness is one of o#r most reg#late" in"#stries. -ankexaminers ha$e $ast powers to %ring a%o#t compliance with strict reg#lationsan" stan"ar"s.

ow is it that &.S. %anks can get %y with len"ing &.S. "epositors( money toforeigners on terms so m#ch more fa$ora%le than 'merican %#sinesses an"

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farmers can get7 The %iggest %anks in the &nite" States ha$e %een len"ing $ast

s#ms to +omm#nist co#ntries on easy terms not a$aila%le to any &.S. firm orfarm or e$en to the &.S. 0o$ernment.

1estern co#ntries an" ;apan ha$e pro$i"e" the So$iet %loc with a%o#t ?3

%illion in low)interest, #nsec#re" loans, an" this s#m is rising at the rate of 2%illion per month. The &.S.S.R. share of these loans is a%o#t B? %illion.

Most of these loans were sent eagerly, with no strings attache". They incl#"e" a233 million loan %y *irst National -ank of +hicago to the So$iet &nion in !8C,

an" one the pre$io#s year to +omm#nist #ngary for 23 million.

1hen #ngary threatene" to "efa#lt, *irst +hicago postpone" the payment)"#e"ate for fo#r years. The %anks call that resche"#ling the loan, %#t that(s a

e#phemism for "efa#lt that is artf#lly conceale" %y a mislea"ing a#"it.

' *irst +hicago %ank representati$e was aske" if the money co#l" %e #se" for

missiles. e replie", 5/t co#l", of co#rse, %#t we wo#l" hope not. 1e can(tcontrol that.5 :f co#rse they can(t. -eca#se the Aremlin can "ictatorially

allocate reso#rces, cash from &.S. %anks helps to finance military s#pport forterrorist states, genoci"e in 'fghanistan, A0- operations, an" the So$ietmilitary %#il"#p.

1hy are %anks so eager to 5loan5 their money to #ncre"itworthy +omm#nists7Pro%a%ly the same reason why %#sinesses are so eager to 5sell5 their pro"#ctsto +omm#nist 5c#stomers5 who can(t pay in real money. &.S. %anks an"%#sinesses can write off their losses, which means the &.S. taxpayer en"s #phol"ing the %ag.

The foc#s for this promotion of s#%si"ie" loans an" tra"e is a #niD#eorganiation calle" the &.S. ) &.S.S.R. Tra"e an" 6conomic +o#ncil &ST6+9. /thel" a conference in Moscow in 'pril !88 at which some >33 'merican%#sinessmen an" go$ernment officials met with a like n#m%er of So$iet

representati$es.

The Pie" Piper of this exc#rsion was the then Secretary of +ommerce 1illiamVerity, a fo#n"er of &ST6+ in !C? an" its chairman from !C8 to !8B. e%oaste" that, 5The &.S. is going to ha$e to get #se" to the i"ea that the So$iets

are goo" tra"ing partners. Right now we "on(t ha$e that feeling. ' lot of people

feel it(s a lo#sy i"ea.5

/n"ee", many people "o think that gi$ing the +omm#nists preferential

treatment thro#gh easy loans an" tra"e on cre"it is a lo#sy i"ea. Senator ;esseelms calle" &ST6+ 5D#ite simply an arm of the So$iet 0o$ernment, #n"er A0-control, whose p#rpose is to s#%$ert the &.S. economy.5

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1hen Mikhail 0or%ache$ came to 1ashington, 4.+., in 4ecem%er !8C, the

principal p#rpose of his $isit was not to sign a treaty, %#t to atten" a pri$atemeeting at the So$iet 6m%assy with some of the most powerf#l promoters ofeasy)cre"it tra"e %etween the &.S. an" the &.S.S.R. Those men incl#"e" theperennial 'rman" ammer, longtime frien" of Aremlin %osses since the "ays of

@enin< 4wayne 'n"reas, one of the &.S. grain mog#ls who ha$e %een making%ig %#cks on grain sales to R#ssia s#%si"ie" %y the 'merican taxpayers< an"

&ST6+ presi"ent ;ames . 0iffen.

:n the N-+ T:4'E show the next "ay, 0iffen pre"icte" that 5the le$el of non)agric#lt#ral9 tra"e co#l" go from a %illion "ollars ... #p to fo#r or fi$e %illion peryear an" may%e e$en higher F into the 3) to >)%illion range9.5 'ske" if he

really wante" to make the So$iet &nion an economic s#perpower, 0iffen replie",5/ think we "o.5

'll Rep#%licans electe" on No$em%er 8, !88, sho#l" %e hel" to f#lfillment of

what their !88 Platform calle" a 5f#n"amental principle5. The Platform"eman"e" 5an en" to #ntie" cre"its, partic#larly general p#rpose loans whichpro$i"e the So$iet &nion with "esperately nee"e" har" c#rrency to %olster itsweak economy an" facilitate illicit So$iet p#rchase of &.S. technology.5

' h#man rights watch"og organiation calle" the 'merican *o#n"ation forResistance /nternational has release" an excellent fi$e)point test for loans toSo$iet)%loc states. &.S. %anks sho#l" not len" to So$iet)%loc states 9 at ratesor terms more fa$ora%le than a$aila%le to &.S. taxpayers, 29 when there is lessrepossessa%le sec#rity than 'merican %orrowers m#st pro$i"e, ?9 #nless the

%anks p#%licly "isclose all the terms, B9 #nless the f#n"s are earmarke" an"monitore" to pre$ent "i$ersion to military p#rposes, an" >9 #nless the%orrower complies with generally accepte" a#"iting an" acco#nta%ility practices.

2uidelines for )S))S)S)-) 4rade

/t is imperati$e that we stop &.S. %anks from gi$ing preferential loans to theSo$iet -loc. 1e m#st make s#re that &.S. %#sinesses are not s#%si"ie" in theirtra"e with the So$iet -loc.

First, it is intolera%le for &.S. %anks to gi$e %etter rates an" terms to So$iet %locnations than to cre"itworthy 'mericans. There is something "rastically wrongwith a %anking system that resche"#les foreign +omm#nists( loans that are in"efa#lt while foreclosing on farmers( properties that ha$e %een owne" %y theirfamilies for generations, an" on %#sinesses that faile" for reasons %eyon" their

control.

Second , %ank loans to the So$iet %loc are #n=#st %oth to "epositors an" totaxpayers F an" a "anger to &.S. financial sec#rity F %eca#se the reser$es of

the *4/+ *e"eral 4eposit /ns#rance +orporation9 are ins#fficient to co$er the#ncollecti%le "e%ts alrea"y owe" %y the Thir" 1orl". Since the *4/+ is

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g#arantee" %y the &.S. 0o$ernment, in the last resort the 'merican taxpayers

co#l" %e st#ck with the "e%ts.

To make more loans to foreign %orrowers on preferential terms is a %etrayal of'merican taxpayers( interests. The So$iet %loc co#ntries are not cre"itworthy %y

any accepta%le %anking stan"ar"s.

Those co#ntries ha$e no collateral to sec#re their %orrowings, an" there is no =#"icial system in which we can o%tain =#stice. /n the last se$eral years, se$eralSo$iet %loc go$ernments, Polan", +echoslo$akia an" #ngary, ha$e alrea"y

"efa#lte" on their "e%ts to 1estern %anks.

Third, cre"its an" s#%si"ie" tra"e with the So$iet &nion are a threat to &.S.military sec#rity %eca#se &.S. %ank cash is #se" for the o$ert an" co$ert

acD#isition of military har"ware an" technology from the 1est. S#ch cre"its arealso a threat to the peace of the worl" %eca#se they are #se" to finance So$ietmilitary s#pport for terrorists, a"$ent#res in aggression, an" worl"wi"e A0-operations.

Many if not most of the 'merican corporations that are so eagerly promoting&.S.)&.S.S.R. tra"e pro"#ce high)tech eD#ipment an" therefore are primeespionage targets. These companies( sole o%=ecti$e is to sell their pro"#cts, an"their slogan is 5tra"e is tra"e5.

Fourth, cre"its an" transfers of high technology cost the 'merican taxpayers%illions of "ollars to o$ercome the technology a"$antages that %#sinessmen an"%ankers sen" to the So$iets. The 4epartment of 4efense state" that tra"e an"technology transfers to the So$iet &nion ha$e alrea"y sa$e" the So$iets %illions

of "ollars, re"#ce" weapons)"e$elopment time, an" amo#nte" to a gain of%etween G.G an" ?.? %illion in military technology.

'ccor"ing to a No$em%er 2?, !8C, report of the ;oint 6conomic +ommittee of+ongress, this wo#l" translate into a nee" for the &nite" States to increase its

"efense costs %y an a""itional >3 %illion. The %est way to a$oi" increases in&.S. "efense spen"ing is to stop shipping &.S. technology to R#ssia.

Fifth, 'mericans are taxe" enormo#s s#ms of money to pro$i"e military an"economic protection for 1estern 6#rope an" ;apan. 1e maintain ?33,333

'merican troops in 1estern 6#rope to protect o#r N'T: frien"s from So$iet %loc

aggression, an" they certainly "o not spen" their fair share of the "efensecosts.

1e spen" large s#ms to keep oil tankers mo$ing thro#gh the Me"iterranean,primarily for the %enefit of ;apan an" 1estern 6#rope. ;apan spen"s next tonothing for its own "efense, relying almost totally on the &nite" States.

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Eet these same co#ntries ha$e %een falling all o$er themsel$es to sen"

"elegations to Moscow offering cash to the Aremlin. The 1est 0ermans offere".G %illion, the *rench %ankers offere" 2 %illion, the /talians grante" CC>million on low)interest terms, an" -ritish %anks are offering .C %illion.

:%ser$ers call this N'T:(s 5len"ing freny5, an" it will net the So$iets ! %illionin new capital from N'T: 6#rope an" ;apan. To a"" ins#lt to in=#ry, /talianPrime Minister +iriaco "e Mita calle" for a 5Marshall Plan for the So$iet &nion5.

/t makes no sense to contin#e the high costs of "efen"ing o#r so)calle" 1estern

6#ropean an" ;apanese frien"s while they #se their rea"y cash to make h#geloans to the So$iet &nion, which then %#il"s more weapons that increase o#rown military costs to "efen" the *ree 1orl".

*inally, cre"its are the wrong %asis for a &.S. relationship with the So$iet &nion.:#r relations sho#l" foc#s on "ismantling comm#nication %arriers an"promoting 6ast)1est contacts %ase" on h#man rights. 6xten"ing loans to %ail ar#thless "ictatorship o#t of its pro%lems con$eys the worl" perception that'mericans "on(t care a%o#t h#man rights %ehin" the /ron +#rtain.

The %est way to promote perestroika is to let the So$iet economic pro%lems,agric#lt#ral fail#res, an" scarcity in cons#mer goo"s force 0or%ache$ to re"#cehis military spen"ing.

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americans should say no to financing the soviets

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