The Coming Soviet Crash: Gorbachev's Desperate Pursuit of Credit in Western Financial Markets

Why did Gorbachev take the unprecedented step of allowing Western businesses to invest directly in the Soviet economy through joint ventures? Why has Moscow dropped hints that it wants to join the World Bank and the International Monetary Fund? What prompted the Soviets' rash of heavy borrowing and public bonds floated on the international market? The underlying reason, claims Shelton, is that the Soviets desperately need Western capital to reduce a massive budget deficita deficit hidden in the Kremlin's official statisticsthat is only now being acknowledged, as recent news stories attest. Providing a fresh, unorthodox perspective ignored by Western economists of the left and right, this brilliant expose by a Hoover Institution scholar offers a convincing interpretation of Gorbachev's plans for perestroika. Shelton argues that the proposed economic restructuring will actually mean a financial squeeze for the average worker, while Moscow borrows more and more to meet its needs for fixed investment and military spending. A model of clarity, her analysis offers alternative scenarios for U.S. policymakers who must decide whether, and to what extent, American taxpayers should help bail out an ailing Soviet economy. (Feb.)