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Dollar diplomacy takes key role in foreign policy

When it comes to China, George Bush champions trade to nudge a recalcitrant regime toward freedom. But when it comes to the Soviet Union, he resists appeals for massive infusions of aid until democratic reforms are fully in place. Some in Congress call for the opposite. They demand that China be punished for its repression and that the Soviet Union be encouraged with aid as it takes each shaky step toward free markets.

As effects of the Persian Gulf war fade, U.S. relations with the world's two communist behemoths loom large once again. Only the terms have changed with the end of the Cold War. Instead of arms control, proxy wars and ideology, dollar diplomacy now animates Washington's relationships with Beijing and Moscow.

It is only coincidence that debates over China trade and Soviet aid have emerged at once. But it has prompted some in Congress to charge that, for all his talk about a new world order, President Bush acts like an unreconstructed cold warrior _ tilting toward Beijing despite its abysmal human rights record, while treating the crippled Soviet regime like an adversary, even though it evinces more commitment to reform than the Chinese.

The issue has been most clearly defined by Bush's decision to seek renewal of China's most-favored-nation (MFN) status, which allows low tariffs on exports to the United States. Although the Soviets may receive MFN status and export credits, the administration responded to Soviet requests for massive aid by insisting that President Mikhail S. Gorbachev first achieve economic and political reforms.

"For the life of me, I can't understand why we have one standard for human rights and decency in ... the Soviet Union and another one in China," said Rep. Sam Gejdenson, D-Conn.

For its part, though, Congress is also groping to find a coherent policy toward the communist world in an uncertain era. Despite strong sentiment that the United States should punish China, many members of Congress are inclined to grant MFN status if conditions are attached. And while some prominent members strongly urge Bush to move more boldly to reward Soviet reform, doubts run deep about a "grand bargain" that would be subsidized by U.S. taxpayers.

In a sense, the debate revolves around one question: How should the United States respond as the military and ideological threat once posed by the Soviet Union declines, along with the need to court China as a bulwark against Soviet expansionism?

Bush answers that there are good reasons not to isolate China by withdrawing MFN status: Doing so would hurt reformist elements of Chinese society _ those whose livelihoods are tied to exports _ but would not chasten the Beijing government.

Critics who want Bush to use MFN as a lever to force liberalization in Beijing point out that MFN status has been used to influence Soviet policies.

Normal trade relations with the Soviet Union have not been possible until now because the Jackson-Vanik amendment to the 1974 trade act bars MFN status unless Moscow allows free emigration. And it was Bush who said the Soviets must enact emigration reform into law, which they did last month, before he would grant MFN.

"The root of it may be the different way we look at China and the Soviet Union," said Peter W. Rodman, a fellow at Johns Hopkins University's Foreign Policy Institute, who supports Bush's position. "It's a vestigial reflection of the Cold War analysis that we have a stake in China. It's not clear whether we have a stake" in the survival of the communist government in Moscow.

Congressional Quarterly Inc.)