SOVIET - WESTERN ECONOMIC TIES

• Document Type: FOIA
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 06902819
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 4
• Document Creation Date: July 13, 2023
• Document Release Date: February 17, 2022
• Case Number: F-2017-01794

Approved for Release: 2021/11/22 C06902819
Soviet-Western Economic Ties
1. Soviet Stake in Economic Ties with West
During the 1970s the USSR looked increasingly to the
West to help bolster a faltering economy.
Share of trade with non-Communist countries climbed
from less than 35 percent of total soviet trade in 1970
to almost 45 percent of trade turnover last year.
In value terms, exports plus imports jumped from less
than 10 billion to more than $50 billion.
Purchases of grain and other farm products by the USSR
have become increasingly important in the wake of
agricultural failures.
- Bought nearly $9 billion worth of agricultural
goods last year and will buy even more this year.
- US has been and will remain major supplier in
normal circumstances
Also buy substantial quantities of steel products, both
pipe and rolled products.
But Soviet leaders have given highest priority to
acquisition of Western technology through legal trade,
evasion of COCOM controls, and clandestine channels.
- Share of equipment imported from West is less than
10 percent of Soviet investment in new machinery
but impact is large in number of key areas.
- Western drilling rigs, submersible pumps, large-
diameter pipe, and pipeline equipment have played
important role in Soviet oil and gas development.
- Soviets have used Western automotive technology to
modernize and expand production of heavy trucks
and passenger cars (Kama River plant builds trucks
and engines for both civilian economy and
military).
- Because of importance of semiconductors for
computers and military electronics, USSR has spent
hundreds of millions of dollars for Western
production and testing equipment, much of it
illegally.
- Soviet computers of poorer quality and in short
supply, so Moscow has bought $500 million worth of
computers and related equipment in past 10 years.
CLONFI
Approved for Release: 2021/11/22 C06902819
Approved for Release: 2021/11/22 C06902819
CONFIDENTIAL
- US part in supplying technology is not dominant;
other countries can supply most equipment except
for oil and gas industry and computers.
With economy strained in 1980s, USSR needs major boost
in productivity to satisfy demands of consumption,
investment, and defense.
- increasing imports of Western technology most
certain source of productivity gains
- and as oil exports decline (and imports begin)
Western credits will be needed to pay for grain
and machinery.
2. Western Dependence on USSR
Developed country dependence small in aggregate; USSR
accounts for only about 2% of total Western exports and
imports
- Among the major West Europeans, 2.1 percent of
West German exports go to the Soviet union, 1.0
percent of UK exports go to the Soviet Union; US
figure is 1.9 percent.
- USSR buys mainly grain, steel, and manufactures
from West and sells oil and gas, raw materials,
and semi-finished goods to the West.
Instability in Persian Gulf, however, has made Soviet
oil and gas more attractive to Western Europe.
- Willingness to buy in on huge new natural gas
pipeline project (although some second thoughts by
French).
Although by no means in a monopoly position, the USSR
is an important supplier to the West of certain
strategic minerals and metals such as chromium,
platinum, and palladium.
And for some West European countries and Japan, Soviets
are major market for regions and companies.
- FRG's Mannesman built large plant specifically to
service Soviet orders for large-diameter pipe.
- Japanese steel makers in 1980 signed long-term
agreement to sell 1 million tons of pipe per year
to USSR.
�2�
CO
FIDLN 1AL
Approved for Release: 2021/11/22 C06902819
Approved for Release: 2021/11/22 C06902819
CONFIDENTIAL
J. Relative Vulnerabilities
If there were a major reduction in East-West trade,
Soviets would suffer far more than West.
- West's diversity of supplies of oil and gas and
some minerals would be less; thus more dependent
on Middle East and Africa.
USSR would not be able to sustain its livestock
program.
- Effect would be sudden.
- Under best of circumstances living standards
unlikely to improve much in the 1980s; loss of
access to Western grain would be heavy blow.
Denial of Western technology would compound USSR's
technological inferiority unless they made unexpected
strides in assimilating new technology.
Energy shortages would be more serious than we already
expect, limiting economic growth.
- USSR lags behind US in technology for exploiting
oil and gas, especially in deep structures and
offshore.
- Although Soviets have vast long-term potential,
they need Western help.
Competition for machinery between military and civilian
uses would be greatly aggravated; either investment or
military programs would have to give.
-3-
CONFIDENTIAL
Approved for Release: 2021/11/22 C06902819
Approved for Release: 2021/11/22 C06902819
C) FIDE TI L
(b)(3)
Soviet Foreign Trade in 1979
(Billion US$)
Soviet Soviet
Exports to: Imports from:
Communist Countries
Industrialized West
36.1
19.1
32.7
20.3
Less Developed Countries 9.6 4.9
Soviet Commodity Trade with Non-Communist Countries
Exports
$19.5
Crude and oil products*
9.6
Natural gas*
1.4
Machinery and equipment
1.6
Wood and related products
1.4
Other
5.5
Imports
$21.6
Machinery and equipment
6.0
Grain**
3.7
Other agricultural goods
1.3
Steel
3.4
Other
7.2
* Soviet energy exports were 6-7
consumption of primary energy.
** Grain imports were equal to 16
production.
percent of West European
percent of Soviet grain
Approved for Release: 2021/11/22 C06902819