THE SOVIET UNION IN WORLD TRADE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP71T00730R000100010015-5
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 42
• Document Creation Date: December 9, 2016
• Document Release Date: April 8, 1999
• Sequence Number: 15
• Content Type: REPORT

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THE SOVIET UNION IN WORLD TRADE
Page
I.
IL
Introductory Remarks
Soviet Commercial Policy: A New Approach . . . .
1
6
III.
The Pattern of Soviet Foreign Trade
16
A.
The Free World
17
B.
"Ruble Diplomacy" in the Underdeveloped Areas .
18
C.
A Word about Soviet Gold
22
D.
The Soviet Bloc
27
IV.
The Commodity Composition of Soviet Foreign Trade .
31
A.
The Free World
34
B.
The Soviet 13loc
35
V.
Conclusions .
36
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THE SOVIET UNION IN WORLD TRADE
I. Introductory Remarks
A study on world trade published by the Soviet Ministry of
Foreign Trade in 1940 expressed approval of the fact that the USSR
ranked second among the nations of the world from the standpoint
of industrial production and only nineteenth with respect to foreign
trade. By 1956, however, the Soviet government was boasting of a
trade turnover more than ten times the prewIr figure and looked
approvingly upon the progress of the USSR to sixth place among the
trading nations of the world. (Soviet foreign trade in 1956, it
noted, was 170 percent greater than in 1948. France, in contrast
.orrovnalivoimIMMarrnWs*
has registered a gain of 85 percent, the United states 59 percent
,Joracc"'
and the United Kingdom only 35.percent during the same period.
See Chart 1,)
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Ever since 1917 Soviet policy has consistently sought economic
independence fr om the rest of the world. Does the present rapid
expansion of Soviet trade indicate a change in this hiqtoric attitude?
Is the Soviet economy in fact dismantling its autarkic barricades and
it
"embracing radically new attitudes and pattern, of trade? Anything
/
more than a cursory examination of Soviet / heory and practice
with regard to foreign trade should suggest an answer in the negative.
The advantages and desirability of in.ternationa1 division of labor and
world-wide exchange of goods haye, been stressed by Soviet leaders
from Lenin to Khrushchev. If the ac ual policies of the Soviet
governme.nt have been consistently directed toward rendering the
USSR economically independent of the outside world, they appear to
have stemmed from a quest for security from economic blockade
and the desiry to insolate themselves from economic fluctuations
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in the capitalist world, and not from any slavish acceptance of
autarky as an integral element of socialist economy.
Thus Soviet trade policy in the prewar period had, in essence,
two principal goals: TF e desire for expansion of trade with the West;
and the quest for an economically self-reliant state. This apparent
paradox in Soviet commercial policy -- efforts to increase trade on
the one hand and an equally determined desire to achieve self-
sufficiency on the other -- need not be a source of confusion for
Western observers. The two policies, far from being mutually
exclusive, serve to complement one another, selective trade with
the West constituting a primary instrument for the more rapid
achievement of the greater self-sufficiency the Soviet leaders so
fervently desire.
With the establishment of a Communist trading bloc in the
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postwar period, and with Soviet productive capacity and reserves
apparently deemed adequate to meet any unforeseen contingencies,
an element of change became evident in the official attitude of the
USSR toward foreign trade. The concept of trade as primarily an
instrumentality for promoting Soviet industrialization and self-
sufficiency was now merged, within the limits of Soviet capabilities,
with an expanded use of foreign trade to achieve specific objectives
of current foreign policy. The foreign economic activity of the USSR
has become increasingly political in purpose, directed toward the
political and economic domination of the Satellites, the economic
penetration of underdeveloped areas and the nullification of Western
export controls. This emergence of Soviet foreign economic activity
as a powerful adjunct of Soviet foreign policy bears testimony not
only to an increasing Soviet economic capability, but perhaps of
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even greater significance, to a new Communist appreciation of
the role of foreign trade as a tactical weapon in its struggle with
world capitalism. Well could Khrushchev, reflecting this new line,
declare in September 1955, "We value trade least for economic
reasons and most for political purposes as a means of promoting
better relations between countries."
My purpose tonight is to examine with you the current role of
the Soviet Union in world trade and to explore some of the implica-
tions for the Free World of the new Soviet economic diplomacy.
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II. Soviet Commercial Policy: A New Approach
During World War II there was much optimism that the end of
hostilities would inaugurate an extended period of peaceful com-
mercial exchange between the USSR and the Western world. It was
hoped by many Western countries that the Soviet government ?
with its security adequately guaranteed and the immense task of
reconstruction ahead -- would be willing to take its place peacefully
in the family of nations. But these hopes went unfulfilled and inter-
national political relations after the war deteriorated rapidly.
With the establishment of a trading bloc in Eastern Europe an
element of change was evident in the official attitude of the Soviet
government toward foreign trade. The concept of trade as primarily
an instrumentality for promoting Soviet industrialization and self-
sufficiency was increasingly coupled with the use of the state
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trading monopoly to attain specific foreign policy objectives. Soviet
foreign trade now assumed new functions in the socialist world. The
Soviet monopoly of foreign trade had become, in the words of Mikoyan,
an instrument for the planned integration of the Soviet economy with
the economies of the People's Democracies."
The Soviet effort to include its European Satellites in a self-
contained trading area was epitomized in the summer of 1952, when
Stalin promulgated the thesis of "the parallel world markets" in his
last work, Economic Problems of Socialism in the USSR. Here,
Stalin contended that "the disintegration of the single, all-embracing
world market must be regarded as the most important economic
sequel of the Second World War," and he warned the West that a
strong and united socialist camp would soon prove to be a powerful
commercial competitor for the capitalist powers.
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"It may be
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confidently said," Stalin wrote, "that with this pace of industrial
development, it will soon come to pass that these countries (i.e.,
the Communist countries) will not only be in no need of imports from
capitalist countries, but will themselves feel the necessity of finding
an outside market for their surplus products." This Stalinist
assertion that the world now encompassed two rival camps, one
on the verge of economic collapse and the other strengthened by
its isolation from the old decaying West, called a temporary halt
to Soviet efforts to facilitate East-West trade.
Despite the steady emphasis on intra-bloc economic cooperation
through mutual trade, the Soviet orbit apparently failed to become
the completely self-sufficient unit the USSR had envisaged. The
need for commercial intercourse with the West, now hampered by
Free World trade controls, grew even more imperative for the
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USSR as imbalances in the growth of certain of its economic
sectors, as well as those of its Satellites, became more apparent.
There is no way of knowing precisely on what date the decision
was made to launch the Kremlin's trade drive. But once made, there
were manifestations of this new policy in every direction. An
intensified propaganda campaign against Western trade restrictions,
increased participation in the work of the Economic Commission for
Europe, and expanded trade ties with Free World countries, all
followed in rapid succession. In April 1952, the campaign to
present the Soviet Union as a champion of peaceful trade was
launched at an International Economic Conference in Moscow,
where the lure of vast markets in the USSR was dangled before
the eyes of Western businessmen.
At the Nineteenth Party Congress, held in 1952, further
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evidence was manifest that the Soviet Union would not seriously
commit itself to the position implied in Stalin's earlier pronounce-
ments. Malenkov stated at that time that "the Soviet Union has always'
stood for, and now stands for, the development of trade and coopera-
tion with other countries irrespective of differences in social systems.
The party will continue to pursue this policy on the basis of mutual
advantage." Mikoya-n, at the same Congress, echoed his future
chief and declared that "the capitalist countries ... who want to
develop trade with the Soviet Union on mutually profitable conditions
will always meet with support from our side."
With the death of Stalin, an even greater impetus was provided
to the Russian trade propaganda offensive, then already almost
two years old. The new regime, motivated by the desire to procure
materials, equipment, and to some extent consumer goods, and to
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continue Soviet efforts to undermine cooperation and trade controls
among Free World nations, tried to convince the world that only
increased East-West trade would promote mutual understanding
and relax international tension. At Stalin's funeral in March 1953,
Malenkov vowed to continue the work of his predecessors for the
promotion of "international cooperation and development of business
relations with all countries."
Upon the accession to power of Nikita Khrushchev, efforts were
renewed, in light of the Kremlin's campaign for "peaceful com-
petitive coexistence" to expand trade relations with the Free World.
In an interview with five visiting U. S. Senators in September of
1955, Khrushchev told them that a deal on surplus American
agricultural commodities would be "highly desirable." He
hastened to add, however, that Russia's desire to expand trade
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with the United States was not the result of any particular economic
need but rather represented a political goal. "We do not want your
machines to create atomic energy or to build hydrogen and atomic
bombs," Khrushchev declared. "We have plenty of machines our-
selves that can do that. With us questions of trade are not mainly
economic. They are practical. We want more trade because we
think that will help to improve political relations."
Notwithstanding Khrushchev's protestations of Soviet self-
sufficiency, he perhaps betrayed the true meaning behind the
Russian trade offensive when he closed the interview with a
characteristic tirade against what he termed "silly" Western
trade restrictions and inveighed against America's unwillingness
to let the Russians buy heavy machinery and machine tools. "You
want to buy our manganese, " Khrushchev said, "but you want to
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sell us toys!"
At the Twentieth Party Congress, held in January 1956, the
restrictive implications for irade contained in Stalin's "two market"
concept underwent further modification. Mikoyan denied that the
existence of two world markets precluded trade between countries
and foresaw mutually profitable trade relations between the East
d the est. oreover, he took a position unique in recent
Soviet pronouncements -- that there was much to be gained from
universal division of labor.;
Abroad too, Soviet representatives were vigorously pursuing
their trade offensive. At the April 1956 meeting of the United
Nations Economic Commission for Europe, Russian Foreign Trade
Minister Ivan Kabanov held forth glittering opportunities to
Western Europeans if only they would overcome their fear and
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suspicion and remove all "strategic" controls from trade with the
USSR. In a dramatic gesture, the Soviet delegate presented a
proposal for drafting an All-European Agreement on Economic
and Technical Cooperation within the framework of the ECE.
Apparently undaunted by the lack of any positive response in
the 28-nation committee, similar proposals were submitted in 1956
to the UN Economic and Social Council, in July, and to the General
Assembly itself, in November. Although few concrete results are
expected from these Soviet maneuvers in the United Nations, they
may well herald the beginning of a more accelerated and well-
publicized Soviet campaign to portray the USSR as a champion of
increased East-West trade.
Although it is perhaps too early to predict the inclusion of
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a new element in the Soviet Union's basic foreign trade doctrine,
there is evidence to suggest that postwar Soviet foreign economic
activity has assumed a decidedly more political orientation than
it had in the past. The consolidation of the USSR's military power,
the creation of a Communist trading bloc, and technological develop-
ments in Soviet industry have apparently enabled Moscow to, employ
foreign trade more fully for the achievement of specific foreign
policy objectives. With increasing intensity, the Soviets have
utilized their foreign economic relations to secure the political
and economic domination Of tile Satellites and the economic
penetration of underdeveloped areas, and to conduct a propaganda
offensive designed to create dissension in the West and to weaken
Free World security controls.
For the next few moments, however, let us turn our attention
to some of the more practical manifestations of the current Soviet
trade offensive.
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The Pattern of SovietTrade
Foreign trade plays a relatively minor role in the economy of
the Soviet Union. In 1937 Soviet trade turnover (exports plus imports)
was equal to 2.5 percent of the gross national product; in 1949 it was
3.3 percent and by 1955 it had risen to only 4.6 percent. By corn-
parison, the relationship of U.S. trade turnover to a much higher
gross national product for those years was 7 percent, 7.2 percent
and 7 penLrespectively.
In terms of total world trade, Soviet trade has been and pro-
bably will continue to be of little quantitative significance. In 1931,
the peak prewar year of Soviet foreign trade, the USSR accounted
for little more than 2 percent of world exports and less than 3 percent
of world imports. Since the end of the War, Soviet trade to world
-
trade has risen steadily and in 1955 it totaleci,3.7 percent of world
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trade, placing the USSR in sixth place among the trading nations of
the world. (Chart 2 illustrates the rapid growth of Soviet world
trade, and particularly its trade with the Satellites.)
A. The Free World
Soviet trade turnover with non-Bloc countries rose from
$1, 079 million in 1954 to $1, 216 million in 1955, a percentage rise
of 12.7 percent. This increase is small, however, in comparison
with the 24 percent expansion in the trade of the rest of the
Communist states with the Free World during the same period.
Approximately 80 percent of USSR trade with the Free World
in 1955 and 1956 was with the countries of Western Europe.
A rise of about 25 percent in Soviet exports to the Free
World, coupled with relatively stable Soviet imports from that
area, resulted in a favorable balance of East-West trade for the
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USSR in 1955, an unusual condition in the Soviet Union's postwar.
trade. Its exports to most West European countries exceeded its
imports and it earned its most substantial export surplus, as in
1954, from trade with the United Kingdom. The 1955 performance
appears to have been only temporary, however, and did not initiate
any trend, as evidenced by the sizable Soviet import surplus for 1956,
estimated to have been at least $150 million.
B. "Ruble Diplomacy" in the Underdeveloped Areas
Let us turn to what is perhaps the most dramatic aspect
of the new Soviet economic diplomacy: the Communist Bloc entry
kinto the foreign lending field especially in the lesser developed
areas. After years of denouncing foreign aid as an unvarnished
instrument of Western imperialism, the USSR and European
Satellites have now signed agreements to extend to 11 underdeveloped
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countries about $1.4 billion in credit for the purchase of Soviet
Bloc goods and technical services -- including arms. This is more
than double the level of credits outstanding at the end of 1955. On
the basis of reported offers, the largest single beneficiary is to be
Yugoslavia with $464 million; although this requires qualification
in light of precarious Soviet-Yugoslav relations. With the exception
of Yugoslavia, the emphasis of this lending drive has been on the
underdeveloped nations of the Near East and South Asia. Three of
these nations, Egypt, India, and Afghanistan, account for the bulk
of the total remaining credits. The USSR is providing a little over
half of the credits extended and the European Satellites the remainder.
The composition of these Soviet Bloc credits reveals a
? fairly wide variety of projects for developing industry, power,
transport, and mineral resources as well as facilities for scientific
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research and education. In each case, projects have been skill-
fully devised to have a particular appeal to the recipient country,
and it must be recognized that, initially at least, the psychological
impact of the assistance has been substantial. We should not
underestimate the favorable impression which the Soviets have
made on most of the recipients by the speed with which they have
completed loan negotiations and moved to implement agreements,
and by the quality of equipment and technical service furnished
thus far.
In looking at recent Soviet economic activities abroad,
however, we tend perhaps to be overly impressed with their foreign
aid program and we tend to lose our sense of perspective as to the
dimensions of this venture and its place in the overall volume of
Soviet trade. The aid efforts of the Communist Bloc are certainly
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novel and spectacular, but the magnitudes involved are still rela-
tively modest. As we have already noted, the credit agreements
actually concluded by the Bloc now aggregate roughly one and
one-half billion dollars; a major portion of these agreements were
concluded during 1956 and the credits will be drawn on over a
period of about five years. Thus the annual flow of trade resulting
from these arrangements, although large to the recipients, will
_
not bulk large in world trade. Moreover, both this and other Soviet
efforts to promote trade with the underdeveloped countries have
been launched from an extremely slender base of existing
commodity exchange, so that despite these new trade and aid
arrangements, few underdeveloped countries as yet conduct more
than ten percent of their trade with the Bloc. I do not wish to
imply that the Soviet effort in this area may not be highly
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effective,. but its effectiveness sterns from its selectivit rather
than its size.
Another point to bear in mind is the fact that the Soviet
excursion into the underdeveloped areas represents only a small
portion, and a quite unrepresentative portion, of overall Soviet
trade activities. The overwhelming bulk of Soviet trade (more
than 90 percent) is conducted within the Communist Bloc and with
the countries of Western Europe.
C. A Word About Soviet Gold
Perhaps I would be remiss if I did not at least make men-
tion of the recent heavy sales of Soviet gold which have already
elicited much comment and speculation in the press and elsewhere.
The sales of Soviet gold in 1956, estimated at around $150 million,
are not difficult to rationalize. It seems evident that these
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Soviet sales can no longer be accounted for simply in terms of
normal replenishments of Soviet sterling reserves. It is true,
of course, that despite trade surpluses with the Sterling Area in
the past, Soviet sterling resources are not believed to be large
and the demand for transferable sterling with which to settle the
Soviet Union's net deficit with other non-dollar countries has not
measurably diminished. But it is the abnormally heavy Soviet
purchases of raw materials and semi-processed materials in the
Sterling Area (tiring 1956, coupled with the increasing Soviet
assumption of Satellite foreign exchange obligations, that appears
_ .
to,be the major motivation of the recent Soviet s ales.
While doctrinal inhibitions apparently do not prevent the
Soviets from using gold either to settle moderate import surpluses
or to extend economic assistance to friendly nations, it appears
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unlikely that the USSR will resort to gold financing on any large
and permanent scale. If this be true, a question worth pondering,
for a moment, is the rationale behind what appears to be the
inordinately large Soviet gold reserve, far larger than the pre-
scribed 25 percent gold backing for the ruble would appear to require.
Has the USSR thus far refrained from any large scale
diminution of its sizable gold reserve in the continued belief in
the inevitability of a major capitalist crisis during which Soviet
gold stocks could be employed with much more telling effect? It
has often been suggested, of course, that the USSR may "dump"
gold on the world market in an attempt to further disrupt already
dislocated Free World economies.
The answer, certainly, cannot be given here with any
finality. If the Soviet Union does indeed intend to employ its
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gold reserves as a weapon of economic warfare, Soviet economic
writers are, quite understandably, reluctant to discuss the matter.
It does appear unlikely, however, that the Soviet Union seriously
harbors any such plan. Any economic dislocations which would
result from Soviet "dumping" -- in view of existing national and
international devices to insulate Free World economies from such
contingencies -- at most, would be merely temporary. Furthermore,
if such a policy were vigorously pursued, its effects could act as
a stimulant to faltering Western economies through a reinforcement
of foreign exchange reserves and might depress the price of gold
to the great disadvantage of the USSR, itself a major gold producer.
The answer might more properly be sought in the peculiar,
almost mercantilist pre-eminence which the Soviet Union attributes
to its store of precious metals, and most particularly to its gold
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reserves. This psychological attachment to gold, however, may
be explained on several very practical grounds. The Soviet quest
for security, which so dominated Soviet thinking in a period when
the USSR considered itself "an oasis in the capitalist encirclement,"
has lost none of its urgency in an era when Soviet confidence in the
strength and security of the "socialist camp" has undoubtedly been
shaken by Satellite manifestations of economic and political
independence. The emphasis on large and evergrowing state
reserves as a protective buffer against the economic encroachments
of world capitalism has not measurably abated. Soviet gold reserves
in the words of the Soviet economist Notkin still "provide the
insurance necessary to protect the USSR from major shifts in
international market conditions, the possibility of partial or
general economic and financial blockade, the possibility of crop
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failure within the country and the possibility of direct armed assault
upon the USSR."
D. The Soviet Bloc
At the Twentieth Congress of the Communist Party, Premier
Bulganin announced that Soviet trade with the rest of the Bloc in
1955 totaled 19. 5 billion rubles, nearly 5 billion dollars. This
figure, however, represents a slight decrease in Soviet trade with
its Satellites from 1954 levels, the first such decline since the
development of the so-called "Socialist" world market. China still
remains, by far, the largest bloc trading partner of the USSR,
accounting for approximately a third of total Soviet trade with its
Satellites.
The recent decline in Soviet trade with its European
Satellites can be explained in a variety of ways. One apparent
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reason was the failure of the Soviet Union to maintain its previous
level of consumer goods exports, particularly grain, to Eastern
Europe, where two bad harvests had raised import requirements.
Consequently, the Satellite quest for foreign exchange with which
to purchase needed goods in the West necessarily led to a forced
expansion of their exports to that area. However, current Soviet
economic policy demonstrates an obvious difference in approach
in its relations with its European Satellites. In the case of
Poland, the degree of political automony granted carries with
it a certain economic freedom and, in point of fact, Poland.ts trade
has displayed an increasingly Western bias. On the other hand,
it would be hard to argue that the Hungarian uprising has not resulted
in the resurrection of some degree of Stalinist control in Eastern
Europe, and the loans and promises of increased trade and aid to
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the Satellites both before and after the rebellion would seem to
indicate that economic ties, too, are being fairly firmly maintained.
Nikita Khrushchev's disclosure at the Twentieth Party
Congress that the USSR has thus far extended to countries of the
Soviet Bloc (redits totaling 21 billion rubles ($5.25 billion) and
subsequent announcements of long term credit extensions to
Bulgaria, East Germany and Poland in 1956, heralded a new and
well publicized Soviet program of economic aid to its European
Satellites. China has also been a major recipient of Soviet aid.
Since 1950 the USSR has extended to China an industrial loan of
$300 million and military loans which averaged about $500 million
annually during the years 1953-1955.
The rationale for this new Soviet move with regard to its
European Satellites is fairly clear. The USSR must either help
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alleviate the acute shortage of foreign exchange and consumer goods
which plagues the European Satellites or risk a recurrence of the
political unrest already evidenced in East Germany, Poland and
Hungary. Perhaps, too, the Soviets feel it politically expedient
to appear more sympathetic to the economic needs of the Satellites
in view of the USSR's announced policy of economic assistance to
non-Communist countries.
On balance, it seems a fair guess that Soviet aid to the
Satellites will in the future continue to include some proportion
of straight financial aid, leaving them freer to call on Western
rather than Soviet industry to meet some of their needs. Recent
Soviet sales of gold for sterling reinforce this feeling and I
would think such sales presage anything but a diminution of East-
West trade.
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IV, Commodity Composition of Soviet Foreign Trade
The problem of what to export is a perennial one for the USSR
and its East European empire. The major traditional exports of
most of those countries have been the products of farm, forest and
mine. Yet, these products are hungrily sought internally by those
responsible for the ambitious heavy industrial program which has
been the main economic goal of Soviet planners. Furthermore,
Soviet predilection toward the creation of an industrial empire has
stacked the cards against agriculture thereby diminishing Soviet
export capability in that area. At the same time, Soviet industrial
goods are not yet competing very successfully in world markets
where similar products of Western industry are available. Certai
basic types of Soviet heavy machinery and equipment have found
a ready market, however, in the lesser developed Bloc and Free
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World countries.
The most significant change in the commodity composition of
Soviet foreign trade since the end of World War II has been the
emergence of industrial equipment as a ..../12.2..j2L22_p_oliaarn. of Soviet
exports. The Soviet government has recently reported that
machinery and equipment made up 22 percent (an estimat d 700
million dollars) of its exports to all markets during 1955., This
_
contrasts wit1(1938, when only 5 perce 't of Russia's exports con-
sisted of goods in the machinery category, worth approximately
$13 million in prices of that year.
Another major change that emerges from the latest Soviet
data on trade is the decline of grain as a dominant export item.
In 1955 grain accounted for little more than 10 percent of total
exports compared with over 20 percent recorded for 1938.
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Considering the growth of domestic requirements, Soviet grain
production figures hardly suggest that the USSR is about to regain
the old Russian pre-revolutionary position as a major world exporter
of grain.
Apart from machinery and grains, a variety of raw materials
continue to make up the core of the Soviet export potential. This
broad group of commodities accounted for 57. 7 percent of total
Soviet exports in 1938. In 1955, this share remained virtually
unchanged, amounting to 59. 9 percent of all exports. Within this
broad category, however, a number of notable changes have occurred.
Exports of semi-processed metal and raw cotton have increased
markedly. Coal and petroleum exports remained on a par with
1938, as a proportion of total value of goods shipped out of the
country, At the same time, exports of raw furs and lumber
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declined in relative importance.
A. Trade with the Free World
The Commodity pattern of Soviet imports from Free World
areas during 1955 showed a marked shift towards increased procure-
ment of industrial equipment and ships. The record for the year
shows an increase of 27 percept in 1955 shipments to the USSR in
the broad category of machinery and transport equipment.
Imports of metal into the USSR during 1955 doubled the
value of the previous year, namely $57 million as against $28
y
million; the largest element in this expansion was copper wire.
Soviet imports of foodstuffs declined somewhat from the 1954 level,
despite an increase in Soviet imports of sugar and rice. The
absolute decline was due in part to reduced purchases of meat
and the cessation of butter imports.
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Soviet exports to the Free World continue to demonstrate
an increasingly high proportion of crude materials, mineral fuels
and lubricants which together have accounted for approximately
42 percent, 54 percent and 59 percent of total Soviet exports to the
West in 1953, 1.954 and 1955, respectively.
B. Trade with the Soviet Bloc
While precise information on the composition of Soviet trade
with Bloc countries is scarce, there is little evidence to suggest
any major change in the general pattern of Soviet-Satellite
commodity trade in 1956. On the basis of published trade agreements
and other data the USSR apparently still remains, with the Bloc as
with the Free World, a net importer of capital equipment, while
the bulk of Soviet exports to its European Satellites consists of
raw materials, fuel and foodstuffs.
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V. Conclusions
What then can we conclude from this rather brief survey of
the role of the Soviet Union in world trade? Let us, for a moment,
disregard dramatic Soviet excursions into the underdeveloped areas
and flamboyant propaganda gestures emanating from Moscow, and
Locus our attention, rather, on those areas toward which the over-
whelming bulk of Soviet trade is directed i.e. , the Satellite Bloc
and the countries of Western Zurope. It is here, I think, that we
must look for a clue as to whether Soviet trade is in fact undergoing
a transformation.
What do we f ind when we look at the volume and commodity
composition of this trade? Despite substantial gains in recent
years, the volume of USSR trade remains unimpressive. With a
tot. al trade' tiiin-o-v-e-r-c-o-m-p-a-r-a-ble to thai of the Netherlands; the USSR
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accounts for little more than three and a half percent of total
world trade. Within its own Bloc we find the Soviet Union a net
importer of capital equipment, absorbing nearly half the capital
goods exported by the Satellites, while the bulk of Soviet exports
is made up of raw materials, fuels and food. When we look at
Soviet trade with the West, we similarly find that its exports are
dominated by raw materials and semi-processed goods. An interesting
recent development is the einergenc!::::!_V_..n.7.,7j.7 foreign
exchange earner. Its imports continue to be predominantly manu-
___---
factured goods. Soviet irriports of machinery and equipment,
particularly, have been growing steadily while exports in this
category, though expanding at a rapid rate, remain quite small.
In other words, when we look at what has actually been
happening to the volume and commodity structure of Soviet foreign
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trade we find little, if any, significant shift away from the traditional
pattern.
What then are the implications to be drawn from the current
position of the USSR in world trade? I think, first, in light of
critical shortages in the USSR and the increasing economic demands
of its Satellites, shortfalls in planned production might be countered
to a? rather greater extent than hitherto by imports. This is most
likely to concern foodstuffs where, in spite of this season's
successes, and anticipated higher levels of agricultural production,
fluctuations in weather might cause temporary shortages to be met
by increased imports.
Secondly, the fundamental order of Soviet priorities is not
likely to be altered in the near future; certain raw materials and
machinery for industry are still more likely imports than consumer
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goods. The much vaunted Soviet export capability in heavy industry
will probably be devoured by the ambitious growth rates of the
Soviet Five Year Plan and the heavy demands of the developing
economies of Eastern Europe and particularly China, and will
probably make no serious inroads on world markets outside areas
singled out for special attention by Soviet diplomacy and propaganda.
Thirdly, there seems little doubt that the modest but ingeniously
designed Soviet efforts in underdeveloped areas have reaped
significant political and economic rewards. Although exports of
capital goods might tend to intensify Soviet domestic economic
problems, the goods which the Soviets receive in return, especially
agricultural commodities, have a countervailing effect. With its
total aid program only a small fraction (less than one percent) of
Soviet GNP, there is every evidence that the USSR has the capability
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to carry on indefinitely with an economic program of the type under-
taken in the undeveloped areas of the Middle East and Asia during
the past two years.
Finally, any move toward significant expansion of Soviet
trade with the Free World would appear to be inhibited by the
continuing reluctance of the Soviet Union to tolerate more than a
minimum degree of dependence on external sources of supply. The
apparent difficulty of finding goods for export to the West is as
much a political phenomenon as it is an economic one. The USSR,
with large and diversified economy, could certainly enjoy more of
the advantages of foreign trade if it only wanted to do so. True,
there appears to be some official recognition of the advantages of
international specialization and some efforts have been made to
promote an intra-Bloc division of labor, but the Soviet quest for
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self-sufficiency cannot but exercise an important limiting influence
on the magnitude and growth of Soviet foreign trade.
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