Evening star., 1934-09-02
Soviet Debts and Credits.

Although 1t is nearly a year since
, Mr.. Litvinoff came to the United
States to pave the way for Soviet
recognition, the dual question which
lay at the root of his mission
debts and credits-remains unsettled,
Months of negotiation at Moscow hav-
ing proved Intellectual, discussion this
Summer was transferred to Washing
ton, but the deadlock which ensued
over there has its counterpart in the
stalemate at which Ambassador Troy
anovsky's dealings with the State
Department have now arrived.
It Is indicated that the rock on
which the negotiations have foundered
concerns a Moscow demand for a
United States Government loan to
finance American exports to the
Soviet Union. Hitherto it had been
supposed that the total sum due to
this country on account of advances
to pre- Communist Russian govefh-
ments and for the claims of American
citizens despoiled of their property
was the principal issue still in dis
pute. Now it appears that an ad-
justment of outstanding differences
depends mainly on our willingness to
grant the Soviet direct financial aid
in purchasing American goods.
The Washington Government seems
to have generated no enthusiasm for
this proposal. To begin with, the
johnson act effectually bars financial
transactions with any state in default
on its obligations to the United States.
But apart from that, it was clearly
understood, at the time recognition
was granted, that a debt accord was
regarded at Washington as a definite
prerequisite to the granting of credits.
There are suggestions that by way
of Cancellation the United States Gov
ernment would be willing to guarantee
seventy-fve per cent of any credits
granted to the Soviet by American
exporters. Such plan would re-
semble the arrangements under which
during the past two or three years
the Soviet has done business in Ger
many and Great Britain. Washing
ton is understood to be adamant in
its refusal to grant the Soviet an out
right loan, so it remains to be seen
whether the Moscow authorities will
consider the partial guarantee of its
private paper an acceptable substitute.
Meantime the Washington Export
Import Bank for Russia is rusting in
inactivity. Doubtless diplomacy, re-
sorting to its traditional last recourse
Of compromise, will eventually find a
way out of the impasse. The Soviet to
date has achieved the record of meet
ing its trade obligations abroad, and
there is no present reason to fear that
it would not honor those which it
seeks to incur in the United States.
Even though there is a diminishing
prospect that the U. S. s. r. would
forthwith embark upon a fabulous
buying campaign in this country,
the amount of business to be done by
our exporters is tempting enough to
make them legitimately anxious for
the conclusion of arrangements which
will enable them to take advantage
of the huge Soviet market.
Meantime this Government is
properly moving with all the care
necessary to safeguard the important
American interests involved. Recog-
milton of the Communist government
was granted by the country on the
implicit understanding that the un-
derlying matter of debts and credits
would be regulated on a basis in
volving no possibility of disadvantage
to the United States at any point.