A Rare Opportunity for Our Leaders to Lead

Perhaps the major consequence of the Group of Seven summit has already occurred. Gorbachev's coming has concentrated the minds of hundreds of officials at the top of G7 government on the single most important international question of 1991:what about the Soviet future? No less than in the aftermath of the second world war, the end of the cold war requires Soviet and western leaders to decide what kind of Soviet Union they will seek to reconstruct.

The contrast between this summit and last July's G7 meeting in Houston is instructive. There the issue of the Soviet Union was confined to an hour's discussion, dismissed in a paragraph of the communique, and then buried in a long-term study.

This year the Soviet question dominates the agenda. Differences aside, a consensus has emerged about how this issue should be approached. Specifically:he Soviet political and economic system requires not reform but transformation;

While this fundamental choice must be made by Soviet leaders, the west now recognises its stake in the outcome and thus is inescapably involved;

The process of co-operation must be step by step and strictly contingent upon Soviet actions, not promises;

The solution is not a give-away, bail-out or bribe;

The goal is the integration of the Soviet Union into the world economy, and the admission of the Soviet Union to the institutions of this society on the same terms as the other members.

As the leaders meet today, the Soviet Union stands at a fateful fork in the road. Six years of perestroika have sought to repair a failing command economy that is fatally flawed and cannot be saved. Down this path the current economic deterioration is likely to become a freefall. Economic collapse will fuel political disintegration that could easily turn violent, with all that would mean.

Alternatively, Soviet leaders have an opportunity to choose decisively the steep path up to the market economy. Whether Soviet leaders can muster the political will to make and sustain this journey, only they can say. But what the international community knows is that only an economic programme built on all the fundamentals of a market economy has any real chance of success.

At today's summit then, what may happen? In our view, there are three basic scenarios for the London meeting.

In the first, President Gorbachev presents a concrete programme for transforming the Soviet Union into a market economy and announces unambiguous first steps towards this goal. There may be initial dissent, but western leaders will engage, endorsing not only his objective, but his starting initiatives. A new '7 plus 1' will prepare a joint programme of actions to be taken not only by the Soviet Union, but by the west.

In a second scenario, Gorbachev presents a programme that is completely unacceptable. It will be met with uneasy silence. Western leaders will devise suitably ambiguous generalities behind which to hide their concerns. Whatever they say to Gorbachev privately, they will adjust their policies and support for Soviet reform to prepare for failure. In this scenario, there is some risk that the summit will not only be, but also look like, a failure. The possibility of this outcome is not great.

A third scenario is thus most likely. President Gorbachev brings to London a mixed bag:well-stated intentions, some appropriate actions, several steps backwards or sideways, and much abstraction. In effect, as he did last autumn when merging the 500-Day programme and the Ryzhkov plan, he will have sought to marry a hedgehog and a snake. In this case, western choices will be difficult and their consequences complex.

On the one hand, the west could publicly signal support for Gorbachev's programme, while privately concluding that failure is foreordained. Some in the west will feel confirmed in their view that Gorbachev is incapable of real economic reform. Others will be genuinely disappointed. But as realists, they will conclude that they should concentrate on consolidating gains in other areas in the time that Gorbachev remains in power. Western leaders are committed to supporting Gorbachev at almost any price - in words, not dollars - because of all he has done and is doing in international affairs. Thus, in any case they will announce a package of measures including special associate status in the International Monetary Fund, most favoured nation status in trade, technical assistance, and co-operation in several sectors such as energy and defence conversion. The list will be long in order to give the impression that the measures are weighty.

What signal will this send to Gorbachev and his colleagues - and to the many others in the Soviet Union seeking to find their way to the market economy? If leaders of the Seven fail to offer Gorbachev their candid views about what is required for successful economic transformation, they will do him a disservice. Moreover, their public statements will be watched with care in the Soviet Union. If they fail to distinguish between continuing down the current path, and a coherent programme for economic transformation, they will compound the general disorientation of the Soviet people.

A more constructive western response would begin by endorsing Gorbachev's goal of a Soviet market economy, applauding the steps he proposes that move in the right direction, but also pointing out the gap between his programme and what is required. Its operational content would be to initiate an IMF-led process for defining as rapidly as possible a coherent economic programme worthy of western investment. To give this process impetus, western leaders would announce their willingness to meet again with Gorbachev, perhaps joined by leaders of the republics in the new Union, as soon as he is prepared to present a credible plan.

While this outcome will certainly mean a loss of momentum, it might nonetheless provide a last chance for the constellation of political and economic forces to converge. It will certainly convey western willingness to go the extra mile. And the process itself could play a significant role in helping the Soviet leaders appreciate the necessity for a new voluntary Union committed to comprehensive economic transformation.

If some version of this final scenario transpires, those assessing the probable effects of summit decisions should watch carefully several indicators. Is the IMF-led activity just a study or the preparation of a programme of action? Does it have a short timetable, for example, with a scheduled review by G7 leaders in early autumn, or is it pushed off to next year? Who in the G7 governments is engaged in this process, specifically the sherpas? Does the programme focus exclusively on Soviet reform, or is it a joint programme in which western governments agree to think about the form of support that could improve the odds of success?

By the time of the G7 summit meeting in July 1992, the present window of opportunity for transforming the Soviet Union to a market economy and democracy may well have closed. Today, those who meet at the summit have a rare opportunity to lead.

Graham Allison is professor of government, Kennedy School of Government, Harvard University. Grigory Yavlinsky is former deputy prime minister of Russia. They are joint authors of the 'Window of Opportunity' plan for the Soviet economy.