MORE PROGRESS IN THE U.S.S.R.

International oil companies seeking business in the Soviet Union have new reason to believe their patience will pay off in time. The hopeful sign: a draft union treaty under negotiation between Moscow and nine Soviet republics. Only the Soviets can decide whether the treaty in present form should serve as the basis for future national governance. It most likely will not. The two largest republics, Russia and Ukraine, have problems with the document, which they and seven other republics

July 15, 1991

3 min read

Only the Soviets can decide whether the treaty in present form should serve as the basis for future national governance. It most likely will not. The two largest republics, Russia and Ukraine, have problems with the document, which they and seven other republics tentatively accepted last month. Changes are likely.

Nevertheless, the draft sets the proper course for the economically and politically beleaguered Soviet Union. Any official movement in its direction will be good for the country and for oil companies anxious to secure access to Soviet markets, drilling prospects, and other opportunities.

WEAKENING MOSCOW'S GRIP

The treaty would officially weaken Moscow's grip on political life in the Soviet Union. It would shift much power-including the ability to tax and to enter international treaties-to the republics. This divestiture of Moscow's former authority, beyond its historic significance, would essentially signal the official end of Communist central planning in the U.S.S.R.

Proposal of the union treaty comes with hard-line members of the Communist Party in renewed retreat. The Russian Federation's election of reformist Boris Yeltsin as president reasserted popular support for liberalization. It enabled-or forced-Soviet President Mikhail Gorbachev to turn away from the party traditionalists toward whom he had retrogressed in preceding months. Recent passage of a law calling for privatization of most state property, excluding the energy industry, continued the healthy trend.

The party itself is attempting unprecedented internal change. A plan to be published soon denounces much of the Communist past and calls for democratic change, an economy with mixed forms of ownership, and a functional market. It would be a strong statement of support by a still-divided party for the reform movement under which the U.S.S.R. began opening business ventures to international capital in 1987.

Soviet liberalization thus is advancing on several political and economic fronts. Until a couple of months ago the process seemed to be faltering. The reversal is good news for companies seeking business in the U.S.S.R. Fundamental, market-oriented change is essential to the fragile and fractious Soviet economy and to outsiders hoping to function within it.

The draft union treaty is important for another reason. It improves prospects for a prompt solution to the U.S.S.R.'s jurisdictional mysteries. Conflicting bureaucracies represent a difficult problem for international companies. Authority to conduct official business, such as grant permits or enter contracts with private companies, seems to fluctuate between Moscow and the republics and between levels within individual jurisdictions, depending on the politics of the day. The draft treaty is a welcome attempt to delineate authority.