A letter from Mikhail Gorbachev was delivered in the middle of the 1989 Paris summit. It appeared to be a bid to take part, on equal terms. But between the lines, as Sir Geoffrey Howe remarked, it read more like a cry for help. President Mitterrand returned a courteous, non-committal reply, on behalf of all. But from then on the idea was born in London - and perhaps elsewhere - that Gorbachev might one day sit down with the G7 leaders.
Over the next 12 months- Gorbachev's foreign policy was helpful to the West, facilitating the spread of democracy in Eastern Europe and the unification of Germany. Economic reform was also gathering pace in the Soviet Union, though the economy itself was deteriorating. There was a strong political disposition in Europe, and especially in Germany, to offer the same sort of help to Gorbachev as had been given to Poland and Hungary in 1989. But doubts remained, especially in the United States, about both the political and the economic commitment to reform in the Soviet Union. The Americans covered Eastern Europe but not the Soviet Union in the Houston summit preparations. They were therefore taken aback when the European Council in June, under German and French encouragement, invited the Commission to draw up plans for helping the Soviet Union and expected the other economic summit participants to join in.
At Houston itself a compromise was found by asking the IMF, the World Bank, the OECD and the EBRD, in consultation with the European Commission, to draw up a study on the Soviet economy, the measures needed for reform and the criteria for Western assistance. The study was completed by the end of the year and presented a coherent set of reform policies, though based on the assumption that the Union would hold together. The parallel EC study, commissioned in June, looked more deeply into the relations between republics. The December 1990 European Council, in Rome, made commitments of food aid and technical assistance for the Soviet Union as its economic problems worsened.
Meanwhile, in a speech at Aspen, Colorado, on 5 August 1990, Mrs Thatcher suggested 'bringing the Soviet Union gradually into closer association with the economic summit' (5). Next year's summit, which Britain would host, could take a first step along that road. Thus she introduced the major innovation of the British G7 chairmanship - an unprecedented meeting by the summit leaders with a third party. Early in 1991 an invitation to Gorbachev looked unlikely. Gorbachev was going backwards over economic reform, bringing in the conservative Valentin Pavlov as Prime Minister and doing nothing to implement the policies in the Houston study. Politically he was moving to more authoritarian measures, notably in the Baltic States. At the sherpa meeting in early Mat there was no decision to invite Gorbachev to London.
But Gorbachev then launched a diplomatic offensive. He revived a series of economic reform proposals, some sponsored by Pavlov, others put together by Grigory Yavlinsky, with advice from a group from Harvard. Gorbachev wavered between first one and then the other, while all the time power was shifting from him to Boris Yeltsin and the other republican leaders. In these conditions, the G7 heads decided that an invitation to meet them in London was the best way to encourage Gorbachev's own commitment to implement genuine, workable reform. But the encounter was clearly separated from the main summit, to remove any suggestion that a 'G8' was being created.
There was even less disposition than in 1989 to offer Gorbachev massive financial assistance while his reform plans remained so inchoate. The intention was to inaugurate a process of economic cooperation which would encourage reform and could be adapted in the light of events. The shape of this was much debated in the preparations and at the summit itself and some quite elaborate plans were drawn up. But the approach finally agreed on had a simple structure, as outlined publicly by the Prime Minister. It focused on 'association' with the IMF; technical assistance from the other institutions and the summit participants; better trade access; and the involvement of G7 finance ministers and ministers for small business creation.
In the event, what mattered was not the details of this structure but the manifest involvement of the G7 in the economic fate of the Soviet Union and its republics. Some argued at the time of the August coup, that a more generous response to Gorbachev from the G7 would have prevented the coup from happening. This seems improbable. The coup leaders disliked Gorbachev's links with the West; to avert the coup, Gorbachev should not have gone to London at all. In any case, the coup leaders' real worry was about the shift of power to the republics. The London visit was irrelevant to that, but the coup itself made the shift irreversible .
Of the points agreed at London, association of the Soviet Union with the IMF, rather than membership, proved of particular value. It enabled the Fund staff to develop links and offer advice not only to the Union authorities but also to the Russians and other republics, without blocking the republics' route to full membership, which can now move forward. But the two issues of greatest concern to the G7 leaders as the year ended did not feature at London at all. One was the debt problems of the Soviet Union and its republics, which involved the deputies of the G7 finance ministers in the complex negotiation of a debt deferral. The other was emergency assistance, especially food supplies to relieve shortages this winter which could undermine efforts at reform. The coordination of this assistance was addressed by ad hoc meetings of officials from the G7 countries plus the EC, an exceptional use of the summit machinery in the latter part of the year.
Emergency assistance and debt deferral brought the Soviet republics some $15bn by the end of the year, including amounts committed earlier by G7 participants. Action by the G7 formed the basis for wider measures, through both the Paris Club and the Washington conference on humanitarian aid for the republics in late January 1992. Meanwhile the prospects for economic reform in Russia and the other republics, and the nature of Western support for these reform efforts, are likely to be the first item on the agenda for the Munich summit of July 1992.
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