JPRS ID: 8608 EAST EUROPE REPORT ECONOMIC AND INDUSTRIAL AFFAIRS

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6 AUtiUST i979 C FOUO i2179 > - i OF i
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. ~012 U~~ICIAL U~~ UNLY
JPRS L/8608
6 August 1979
East Euro e Re ort
p p
ECONaMIC AND INDUSTRI~?L AFFAIRS
CFOUO 12/79) ~
;
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JPRS L/8608
, 6 August ~979
EAST EUROf'E REPORT
ECONOMIC AND INDUSTRIAL AFFAIRS
(EOUO 12/79)
CON1'ENTS PAGE
INTERNATIONAL AFFAIRS
ProapecCs for East-West CooperaCion on Energy Examined
(Friedemann Mueller; EUROPA-ARCHIV, 10 Jun 79) 1
CZ~CHO5LOVAKIA
,
Thi.rd GeneraCion Fluidized Boiler Development
(Vladimir Kanka; TECHNICKY TYDENNIK, 3 Jul 79) 12
YOLANU
Economy Seen Following West Into 'Crisis'
(Frane Barbieri; LA STAI~A, ~8 Jun 79) 17
_ a _ [III - EE - 64 FOUO]
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INTERNATIONAL AFFAIRB
PROSPECTS FOR EAST-WEST COOPPRATION ON ENERGY EXAMINE'D
Bonn EUROPA-ARCHIV in German No 11~ 10 Jun ~9 pp 313-322
~Arbicle by Lr F~iedemann Mueller, Reaea~.rch Institute for International
- Politics and Security, Science and Politics Foundation~ ~benhausen near
Munich~ "All-Puropean Cooperation in the Energy Seatori A Nex Starting
Point for East West Cooperation"
~ex] Viexed as an integrated economic region~ the Council for Faonomic
Mutual Assietancs (CEMA) exhibita a mesaure of harmony betWeen production
and demand in the energy sactor thus of independence from the ~rorld's
economy like that of no other important economic region in the Norld.
Measured by congumption, energy inpor~s are infinitsaimal~ snd s~aaured by
~ pacoduction~ exports of no energy source run higher tha:: 12 percent. Thus
it is not aurp~ising that these countries initially remained al~oat un-
touched by the econo~ni.c and structural effecte of the 19'13-19?4 enesgy
criais. Nevertheless, the energy sector is shoxing gtructural probleats
that could make this a key sector for the overall eaonomic gror?th of CEMA .
and for ita international economic relations.
~,'nergy Production and Conaumption in the CbMA Sector
Betxeen 19')'0 and 19?6~ the Soviet Union xas able to increase its energy
production by an average of 5.5 percent each year, xhile domestic consump- _
tion grex by 4.q percent. This made posaible an increase from 11.9 percent
to 13.9 percent in the net export ahare of p~oduction. Above-average annual
produation rates Kere achieved during thia period for crude oil (6.7 percent)
and natural gas (8.5 percent), xhile there xa8 xelatively little growth in
the production of coal (2.4 percent) and electricity from ~ater poxer and _
nuclear power (1.2 percent).~ The 3oviet Union's most important energy -
source since the 1960'a has been crude oil. In the mid-1970'8~ oil's 8hare
of energy production a~aounted to 43 percent~ and aince 19'T4 the Soviet Union
has been the largest p~oducer of crude oil in the xorld. Thanks to above-
aWerage groxth in o~l production~ increasfng amourats have been left over
for export after domestic demand has been met~ a aituation that has led both
to the coverage of demand from CEMA ,pastners as xell as to an increasingly
more profitable acquisition of foreign exchange.
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~oR or~sciar~ usE ornY
Developments in the area of ne~tural gas have b~en more turbu].ent than with
crude oil in recent years. In oontrast to the oil eituation~ the ap between
gron~e and net natura]. ge?s ex~orts is very lerge (olose to fourfold~s in other
~ words~ the Sovie~ Union has an extaneive export potentie,l by virtue of ita
, substantial importe of natural gaua. On the one hand~ these im,ports
80 percent from Ire~nn and 20 peroent from Afghanietan in 1976 offer the
adva,ntage of ehorter transport routes and favorable economic relationati
on the other~ they make it poeeible to assure supply xithin CEMA and to
build up marketg in Weatern ~urope at the eame time.
The struoture of ener~y eource diatribution is qu~*_a di.l'ferent in the East
European countries than in the Soviat Union~ from the s~;andpoint of both
production as xell as consumpEion. Abur~dant eupplies of ~oa1 in theee coun- ;
tries are balanaed by only negligible opportunitiea for the produation of
natural gas arld orude oil. Only Roma~nia is differant~ Only 16 geroent of
its energy production ie derived from coal~ while 27 peraent comes~from
0~1 r~nd s6 percent from gas ~ ita net im porta of energy amount to onty 7 per-
cent of p~oduction.2 In 19'J'0 the East ~ropean oountries xere atill able
to cover 4bout 30 percent of their oil conawaption from their oxn ~oduotion~ ~
in 19'76 this figure ?ras on].y 19 percent. 31nce domeatic produation has been ;
stagnant ainoe the beginning of tha 19?0's~ import requiremente that have '
bean increasing at an annual rate of 12 peraent have been riaing diep~opor- ~
tionately ~ompared to annual increasea in conswaption (9.3 percant). Tha ~
situation is quite aimilar in the natural gaa aector. Sinca p~oduction in- ~
creases xere unable to kaep pace xith increeaed consumption~ the result xas i
a vigorous expanaion of import dea~and~ Mhich tripled betxeen 1970 and ~976. ;
In t~rms of quantity~ coal is the most important energy aource aa regaz~i8 ;
produation e~nd conaumption. Production not only aaaurea ee'_f-suffiaiancy~ j
it even surps~$es coneumption by 6 percent. ;
i
Trade betxeen the 3oviet Union and the Eaat E~ropenr? countriea demonstratea
tha dispe~rity in the degreeb of self-eufficiency of these txo parts of CII+IA. ~
In the casa of crude oil~ imports froa~ the 3oviet Union supply txo-thirda 'i
of the needs of tha East Eliropean countries and conatitute more than 80 per- ~
cent of the oil imports of these countries. As far as ne~tural gae is con- ~
cerned, the degree of self-sufficiency of the b'ast ELropean countries is ~
still quite high but is on the decline. I~porte are brought in exclusively ~
from thb 3oviet Union. Since the 3oviet Union suppliea the natural gas ~
imports, ar~d the degree of self-sufficiency is decli.ning at the aa~e time~ ~
the result is an increase in natural gas importa from the 9oviet Union at ~
a p~eaent annual groxth rate in exceas of 20 percent. In 1976 the F.a~at ~
F~r~peana spent 2.54 billion tranafer rublas for oil imports and 0.42 billion ~
for gas imports. 011 pe,ymenta by the F~st ~ropear~a rose in 19?7 by an ~
additional 31 percent over the p~eceding year to 3.3 billion transfer rublea; ,
gas payments roae by 30 percent to 0.54 billion transfer rublea. i
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Potential D~velopment
1 The potential for further developaaent of the enaxgy seotor ~n the C~MA region
Qan be deduoed f~om an ECE ~~oonoxic CorsmiesSon ~or ~urope) e~tuc~y that
appeared in 1978~ and whi.ch oontaine a aomp~ehenaive treatment of energy
produa~Eion in ~Ehe 1980's in B~Urope. Aacording to this etudy~ CB~lA xill be
� produoing almost exaotly aa much energy as i~ consumes by 1990. Measurad
by overall production~ the oalcula~ed dsficit of 16 billion tons of hard oosl
unitg (SKE) conetitutes le$s than 0.5 percent. By comp~rieon~ the CB~MA sur-
plua amounted ~0 5.4 percent in 19?5. CE~IA continues to be a net exporter
of coal to a ama11 degree (25 million tons of hard coal unite), xhile net
exporta of natural gas ere rising to 38 billion cubic metera. 011~ on the
other hand~ is experiencing a revexse~l. A$urplus amounting to 53 mil~.ior?
tons (in 19?5) is turning into a deficit of 50 million tons. ~
The central problem nox concerna th.a position of the 3oviet Union With
regard to tha diapo~ition of ite export potential for arude oil and natural
gas. If it continuee its preeent p~aatice of divid~.ng its oi1 exporte about
equa~l.ly betxeen ita CEMA partners and the Weatern aountries~ the IDaat ~1~ro-
pean countries xill atill have a deficit of cloae to 170 mi111on tons.w
According to current oil prices~ it xoul3 co~t U.S. $15.5 billion to p~ocure
this amount on the World market. This xould be about 1.2 times the t~tal -
~export volume of these countries (in 19?7) Ki.th the Weatern nationa. On the
other hand~ going by talay's prioes the Soviet Union xould in thia case taka
in U.S. $ii billion from its oil exports to the West.
~ It is unlikely that the Ee?st ~,Uropean countriea aould ~rithetand euch ~ foreign
exchange burden xithout coming up aga,inst the dabt limite that would be
tolerated bv the west. The 3oviet Union xill therefcre probably find itaelf
conr;trained to make 8 larger ahare of its export potential available to the `
East ~ropean countries. But the result xould be that ita foreign exchange
proceeds from oil (U.S. $6.35 billion in 19'J7) xould no longer increase at
all~ or only slightly. Were the Soviet Uni.on to f~eeze its foreign exchange
receipts at their present level on the asawaption that oil p~ices remained
stable and channel ar~y f'uz~ther deliveries to C~iA~ the East ELropean coun-
tries Kould still have to come up xith about U.S. ~10 billion for their
additional oil imports from the West. 011 p~ice increases would bring
greater losses of fore~.gn exchsnge for the Esat Europeans tha.n gains for the _
Soviet Union. Conversely~ oil price reductione Kould bring relief to the
East European countri~s and CEMA as a xhole but xould cauae the Soviet Union
to lose proceeds.
The Soviet Union has more latitude xhen it comes to natural gas. Even xith
complete satisfaction of Ee~stern E1~rope's import requirements, it could atill
offer (net) exports of 38 billion cubic meters, a volume that represents
: triple the amount of exports of natural ga.l to the Kest compared to 1976.
Imports from Iran and Afghanistan can release ad,ditional amounts for export.
The expectecl net foreign exchange pzviceeds Kould amount to about 2 to 3 bil-
lion U.S. dollars according to current p~ices.
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The ECE study indicate~ ~hat regardleas of how the Soviet Union apportions
it~ energy exporte~ by the~end of the 1980'$ it xill b~ t~king in le~eer
amounts of foreign exohange from energy exportd than its C~MA parEnere xill =
have to be paying out, xhile tod,ay it is atill oovering the impart ~equire-
menta of these oountries almost completely, and~ a+. the eame time~ more than
50 peraent of its exporte to the Wegt are energy exports. Conaequently, a
thoroughgoing rsetructuring of CH~IA foreign tr~de xill be imperativa in the
- 198o's.
To be sure~ the possibillties of effecting guch a restruoturing through the
Soviet Union's oxn investment efforta are 1lmited. Of the total inveatment
. funds available to the industrial seator in the Soviet Union in the firat
half of the 1970's~ a 28.6-percent share5 ttent for ~anergy investments. Theae
_ fund.s xere distributed as folloxes 35 percent for the p~oduction of electric
power ahiefly nuclear poker instal~.$tions= 33 percent for oi1 p~oduction=
17 percent for natural gas production.b The inarease in total. energy pro-
duction for the same period (1971 to 1975) amounted to 73 percent for oil,
22 percent for gas~ 5 percent for coal and 0.3 percent for electrio poWer.
~ At least two facts can be deduced from this comparison~ firat~ the,t enormous
investments are tied up in the electrSc poNer aector, a eituation that Mill
not ease the burden on the overall energy balance to an~y meaningful degrae
in the short and. mediuca ter~s = second~ thaet the ratio of investment to p~o-
duction is much more unfavorable in the case of cca7. than it ie for oil and
gas.
The current 10th Five-Year Plan calls for an annual increase of 3.8 percent
for industrial investments. Applied to the energy seotor~ this rate of in-
crease is very low. Indeed~ a ahift in inyestmen~ diatri.bution in favor of
the energy sector is certainly conceivablel if the total increaees in
indu$trial investments Kere to be channeled to the energy sector~ a groxth
af 12 percent could be attained but the data from the paist 2 years do not
indicate that the Soviet Union actually has this latitude in the area of -
inveatment apportionment.
On the other hand~ investment costs per unit of energy produced have been
' rising. For instance, each year betxeen 19?1 and 19?5 these costs for oil
averaged 5 percent mare per unit of energy than for the preceding five yeax
plans they averaged 10 percent more for gas.8 One reason for this is that
drilling costa xere 17 percent higher in 1975 than in 19'j0 beca.uae of greatar
depths and mc+re unfavorable geological conditions.9 Mother reason is that
fnvestment costs per unit of energy rise ae the distance from the glace of
consumption increases. In viex of the fact that energy production is being
shifted to Siberia to an ever greater degree there has been an absolute
decrease in the production of crude oil in the E~ropean part of the Soviet
Union since 1974 and conaidering the geological and climatic conditions
that axe becoming more difficult~ substantial increases in production
costs per unit of energy praduced must be expected in the future as well,
so investment groxth ti?ill largely be eaten up by cost increases.
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The ra.pidly increasing import of equipment for crude oi1 and natura]. gas pro-
duction betxeen 19'74 and 19'l6 can be considered an ind~cator of the limited
opportunities for providing the neoea~ary teahnology from the Soviet Union'g
oxn reaouroes.
nptions of Soviet Uni,on a.nd OEMA
The figures aited above are based on the relatively opbimigtio ECF pro~ection.
- Plevertheless~ 1n the area of foreign exchange and investment~ in particular~
they reveal obvioue pmb].eme that make unstable developaa~nt appear to be a
~ posaibillty~ If the SovSet Union and the pthar CEMA countries do not suaoeed ~
in ohanging their export atructure in auch a xay ttu?t a subetantial ehare
of energy export.s is replaced by other exports (in the caee of the 3ovSet
Union), or unle~s energy im,ports are finanoed by additional exporte (in tha
case of the East European countriea)~ then a p~ooe~~ could beretarted that
could increa~singly reatrict the planning latitude of these countries.
M expected economic gro~rth o;f leaB tha.n 4 percer. neans minimal freedom of
action in the apportionleent o,f investment funds but also in efforta to re-
etructure overall p~oduction with the aim of obtainSng greater opportunities
for export. If investment coats per unit of energy pzbduced inoreaee so
sharply that the extra inveate?ents cannot aclaieve the exp~ected increasa in
p~oduction, this once again reducae overall economic groxth and export oppor-
tunities~ thus further li~iting investment funda� -
The 3oviet Union could break out of thia sp~ral under the folloxing aondi-
tions~ 1 Inveatment costg per unit of energy nust not increa8e subatan-
tially~ f2 even xith minimal economic groxth~ a shift xithin the national
p~oduct xould have to set aside inveetment f~r~ds for energy p~oduction euf-
ficient to permit a stabilisation of economia groxth at a lox lavels
- (3) addition~]. energy eourcea xould have to be developed xithout additional.
outlays of foreign axchange or inareasing inveetment outlays= (4) economies
in the conawnption of energy xould have to be achieved through ita more
effective use in the production pirocessf (5) ~ast ~ropea,n and Weatern in-
dustrial nations xould have to provide a portion of the investment fundsi _
(6) gro~ring trade deficits ~rith the Wastern industrial countries irould in- -
creeaingly have to be covered by credits fYom these countries.
A stagnation or only minimal rise in the cost tr~rd !or investmenta (point i)
can be ruled out in viex of the knoxn data on tranaport routes and exploita-
tion conditions. To be sure~ investment coste per unit of energy could be
reduced by reducing the proportion of investment-intensive installations
mainly poxer plants~ but this could result in rellef from p~esent p~oblea~s
at the expense of the future.
The allocation of a sufficient volume of inveatment fw~ds (point 2) is
oppoaed bg other aectors xith groxing investmant requirements~ pe?rticularly
tha transport sector and the arms sector. A shift of this sort xould hava
to be ma+de at the expenae of the conawner aector and posaibly.other -
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groxth-inducing eectora of produotion a~a xell. The 3ovie~ Un~on would thue , ~
be forced to aut itself off from the Western induetrial nations~i~ a aitua - '
tion that xoul~d run counter to interdependenoa in foreign trade as aell as to ~
a atabilize~tion of the detente p~ocesg~ A~dditional energy sources could be ;
develop~id without added foreign exchange arid inves~raent outlays if CEMA xere
to forge economic tiea xith countries of the Near fl~,et. Of course~ t here ~
is little reaeon to belisve that petroleum-producing coun~Eriea would in their
oNn intereste give up their foraign exchanRe p~oceeds in favor of economic '
interdependenae aith CEMA (point 3).
Opposing any esaential energy saving through effe~:tir~e use in the production ~
process (point 4) are experience and progno~ea� An initiel starting point ~
for E~nst-West cooparntion might be found in the area of energy conservation ;
technologies. ~
The procurement of inveatment fl~nde (point 5) from CEMA xould be obatructed ~
by the limited capacities of tkeae cou~!tries. The W~stern industrial coun - ,
trieg xould be able to provide more potential if they could be convinced of
the desirability of extensive involvement. ~ ;
And finally~ an even more far-reaching xillingneas on the pe~rt of the Weetern
industrial nations to advance credits Wfluld increase the Soviet Union'8 free-
dom of action (point 6). A necessary condition of auch a r~illingness~ hox- ~
ever~ xould be a comp~ehensive safeguarding of Weetern interests.
Starting Padnts for Eest ~1eat Cooperation
~
As regards a stabilization of the poliay of detente~ it cannot be in the
best interests of the ~lest (1) if the 8oviet Union and the East European
countries cut themselvea off from the ~fest to a greater degree because of
economic p~oblems= (2) if the East ~laropean countries become even more de- i
pendent upon the Soviet Unions (3) if the Soviet Union ahould seek to extend (
its sphere of influence in the Near Ee~at as the result of an un~desira?ble ~
eaonomic situation. ~
In keeping xith the idea of preventing the Sovi.et Union from pursuing theee '
goals, it xould be in order to deteriaine to xhat extent a common realization ~
of intereats in the energy sector is conceivable for Eastern and We~tern
Elirope, pe~rticularly since the West has to be intez~eated in an expsn:ion of ;
the xorld's energy aupply~ even f~.^om the Soviet quarter.ii , ~
The Soviet Union has for a long time been seeking to convince Weatern El~rope ,
of the desirability of cooperation in the energy sector. At the 24th CPSU ~
F'e~rty Congress in 19?1, Premier Alexei Koaygin suggested in conn6ction Kith
the proposed L~ropean security conference the eubsequent CSCE --,the eatab-
liehment of a 3oint energy syatem for Europe that could lesd to fundamental ~
changea in the aolution of energy balance pocoblems.12 Four years later~ the ~
energy sector xas asaigned special importance xithin the saope of Basket II '
at;the Conference on Security and Cooperation in ELrope. In the section on '
1
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~ox or~icraL us~ ornY
"p~o~ect~ of mutual interest~" the pa.rtiQipating states expressed the view
"that the areas involving energy sources~ particulaxly orude oi~~ natural
gas and coal...axe $ui.table areas in xhich to step up long-range economic
oooperation and develop trade, ir~eofar as this txe,de ehould come about."13
Folloxing the CSC~~ perty chief Leonid Brezhnev proposed in Deoember 1975
that all -~ropean conferenoee be held on the environment~ ti�aneportation
and eepecially energy. Thia proposal has been repeated mat~y times sinoe then
and ~s aleo brought up again at the 197? 1978 aSC~ fellox-up ~ession in
Belgrade and at the ECE level.
One reason xhy the Soviet Union ie seeking a aomprehensive conferenca on
this aub~ect ia that it cannot continue to count on big inareasea in petro-
~ leum and natural gas exports to the West rrithout a reorientation of ita
energy policy. Another reason is that it Would like to bind the We~t to an
integrated p~ogram that xould (1) p~ovide for cooperation in the reseaxoh
and development of nex energy sources~ in the transport of ener resourcea
_ and in the introduction of enargy conservation technologiea~ (2~cover the
question of finanoing a:~~i crediting as xell as making compensatory peymenta
on investments, u~ing ~ximary and soconda energy eources and thoee the~t
have been p~ocessed into rax materials~ (3~ clarify the extent to xhich the
Western countriea are p~epared to transfer investment fLnds and teahnology
on a long-1;erra basis~ and to xhat extent security policy considerations
impose limits on this type of cooperation. Only ar~ integrated pmgram such
as this could enab].e the Soviet Union to engage in long-range planning.
. In particular~ the Soviet Union is ~e~~sking assurances that export restric-
tions on strategic goods and the granting of credits xill not be made to -
hinge upon day-to-day policy decisioas b~t that limitations Will be fixed
in clear terms on a long-range basis.
M all-E1~ropean accord Would have to be conceived on tha basis of the fact
that the resources of Eastern and Western E~rope complement one another.
_ Balanced against a large supply of energy reserves (and, under certain cir-
cumatances~ aizable reserves in the matter of burdens on the environment) and
a scarcity of investment fwuis and technology in Eastern E~rnpe (Soviet
Union) are a la~rge supply of investment funds and technology in Western E~,~r-
ope and a saarcity of energy reserves and fex reserves in the area of environ- -
mental concerna. Agreement on long-~term energy deliveries such as the
one that already exists in the natural gas sector for the period up to and
beyond the yeax 2000 Frould therefore also have to conform to long-term
arrangements in the areas of financing and the tranefer of cagital and tech- -
nology.
The East E~ropean countries would be the most amenable to ties based on an
all-E1~ropean electricity system. This could consist in a cooperative effort
in the construction of poxer plants as xell as of high-voltage lines running
across state boxders. Moreover, Poland is also intereated in cooperation
designed to convert coal into liquid and gas energy aources as Kell as
electric poxer= it also has an interest in collaborating xith the Soviet
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Union~ the GDR and the FRG on the oonstruction of an East-West natural gas
pipeline.14
A central iesue is the question of how far the Westex~n countriee are prepa,red.
to go in the matter of granting credS.ts. It makes little sense to designe,te
economioa].ly determined 1lmite of borro~ring poxer, espeoially in the case of
atate tra~de countriee. On the one hand~ these countriea carefully observe
their payment obllgations, and~ measured by their economic potential, their
credit volume is not largei or; the other ha,nd~ their annual foreign exchange ,
proceeds figuro oompe~red to overal.l indebtedneas is larger than that of aaoat -
developing countriea.15 The 11mit of willingness to grant credits is not 1
lea~t of all a matter nf international liquidity. In view of the ma~or
economic arul political significance of a cor,?p~ehensive cooperative effort
in the energy seator, the question ari~es of Whether from the credit ;
standpoint as xell an all-European p~o3ect such aa this should not carry
more Neight than similar pro~ects with other countries. Economic doubts like
those that are being expres$ed in opposition to an expansion of CFMA's
borroxing power would have to be many time$ greater in the case of China ,
especially� ;
The Question of Economic Dependencies ,
The reason why the West European countries have thus far reacted wi~h ao
little interest to the Sovi.et offer of all Europear. cooperation in the energy
sector is that this cooperation oould lead to unilateral dependencies at the
expenae of West ~mpean freedom of action, pa.rticularly in criais situations.
A comprehensive cooperativ~ effort betkeen Esstern and V~sstern ELrope in the ;
energy sector xould (1) make Western ELrope dependent upon energy importe=
(2) create through the regular export of capital goods a dependence on ex- ;
ports that xould affect ~ob security in pe~rticulars (3) result in an increas- '
ing dependence on the repe~yment of credita caused by the neceasary crediting I
of exports. Conversely, the CEMA countries xould ~e deperulent upon a regular (
supply of long term exploitation and transport investments arul i~estern willing- ~
neas to grant long term credits. i
~
~Issurance of West Elzropean raw ~naterials supply alone would be important from
the.aspect of p~essure being applied in the short term. All other forms of
dependence might indaed Itiave an influence on economic and structural develop-
men~ but xould not f~dversely affect the seaurity of one of the bloca in the ~
event of a crisis. The extent to xhich dependence on the iwport of raK !
materials can be a atarting point from which to apply pressure depends pri- ~
marily upon the percentage of imports fYom CEMA out of Western E~rope's
total conswaption~ or consumption by the respective West E1~ropean country.
The FRC imported 4.7 percent of its oil consumption and 8.2 percent of its �
gas conaumption from the Soviet Union in 19?6 (~C ~mports amounted to 3.9 per-
cent and 4.3 percent~ respectively). Critical limita for import dependency
are normally considered to be betxeen 13 and 15 percent for oil and betxeen '
15 and 20 percent for natural gas. The greater the assurat?ce of substitution
i
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for tho$e products through other markets~ and the greater the ehort-range
economies in the p~aducts~ the further theae limits can be atretched beaauae
they are not of vital importance.
- As a result of the "Agreement on an Intesnational Fnergy Frogran?" amor?g the
member states of the International Energy Agency (TEA)~ eoonomy meaeures go
into effec~t in all member ~tatae ~s soon as one eountry loses e~t xee?st 7 per-
cent of ite oil supply for a lengthy period. If deli.veries drop off by
12 percent, redistributions are made among tha member nations. This means
that cou?~tries which are lese dependent upon Soviet oil xould make pe?~rtial
substitu~ions. The po~~ibilities for eaonomizing in the sectors that are
able to react flexibly to presaure applied for reasons of secur.ity policy
are assuming substantial proportions. Tf necessary~ a considerable share
could be s~ved in the private trangport aector alone~ whick~ aocounte for
20 percent of the oil conswaption. In addition~ if the stockpile estab-
' lisi~ed for this eventuality were to be dra~rn doxn for 900 days~ for example~
this Kould provide a 10-percent share of total oil conewnption. Furthermore,
if a coalition between the Soviet Union and OPEC is z~ul.ed out, an increased
dependency upon 9oriet energy deliveries xould then mean a decreased depend-
ency upon the members of dPEC. But even considering the possibility of a
coalition~ dependence upon the Soviet Union plus OPEC Nould be no greater
than present reliance on OPEC alone if the additional demands made on the
Soviet Union Were to be lifted from OPEC.
No one can determine a precise level at Khich the psrcentage of impc~rta out
~ of total consumption becomes relevant 1n terms of aecurl.ty policy. But even
assuming an unfavorable state of affairs~ if the Soviet Union were to b
able to control 20 percent 4f the crude oil and natural gas conaumption~6
of the West European countries, it could at most exacerbate an existing ~
crisis situation, bu~ not contro~l it in terms of security policy. The de-
per.dency aspect is losing its significance~ however, since it is not antici-
pated that the Soviet Union Kould be able to cover 20 percent of Wegtern
Europe's oil and gas require~nents even ~tith an inteneiv~ investment contri-
bution on the gart of the West. With this in~trunaent~ which xould be tanta-
mount to a break in economic relations~ the Soviet Union kould only be ~ble
to do economic damage to the West= it could not decisively ~rea.ken its defen~e
capability.
A comprehenaive cooperative effort in the energy sector involving CEMA and
the Western nations would be meaningful only if organized on a long tern~
basie. This is because profitability can be achiaved from infrastructure
measures and production investments only over a time frame of much more than
txo decades. A cancellation of this cooperation would be difficult for the
Western side to absorb, since export obligations xould go unmet and portions
of future energy supply xould be 3eo~e~.rdized. Neverth~less~ it can be assumed
tha.t the diaruption of long-range planning in the Soviet Union and the East
E~ropean countries brought about by this break xould create supply problems
and an investment deficit that xould have graver consequences than the econ-
omic disadvantages in the business sector for the Western countries.
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In the monetary sector~ the Ee~stern eide rr~.l1 be depending for deoa,dea to
aome on having expirSng oredits reneued repeat~dly a~nd~ tempo~sly~ on h~?vSng
the oredit volume expanded as xell. A single instance of nonpayment Would _
3ecpardixe the entire oredit syetem~ particulasly the gr~nbing of future ~
oredits. A breakdoxr~ of credit relationa would in reality be virtua.lly
equivdlent to a brAakdoxtt in the trans�er of aapitd]. and technology. A
refuaal to r~pay oredit~ that were expixi.ng rrould aoarcely cause the aolia~p~e
of banke and busineases Ln We~tern countrieg~ at leest not in the F'HG. The
, state aould absorb the loee ~f~eh~ e~e~dob ~lof~the oapital~mexke~ oryr ,
ments by borrowing frotia the ~ Y
through h~ budget~ kith no expeatatiorus of eerLouB harm to the eoonomy as
a Nhole~~?
Consequently~ it is inconceivabla that one~of the txo eides would ~eopardi~e
for the sake of a queationable ehort-~Eerm adv~u~?tage a cooperative effort in
t~e energy aector that rrould be meaningful oniy from its long-term aapecte.
It can rather be assumed that the long-range p~o~eation of such a ooopera-
tive effort xould produce stxuctures that could areate the kind of tiee en- ;
visaged in the C3CE Fina1 Aot~ enduring ties which Would extend beyond the
planned pro3ects themselves.
~ FOOTNOT~S
i. Calculated,according to "World Energy Supglies~ 19?1-19?~~" NsW York~
1977�
2. Cf '"dorld Eynergy 3upplies~ 1972�19?6~" Nex York, 1978.
3, Economic Commission for Europe~ "NeW Issuea Affecting the Energy Economy
of the ECE Region in the Medium and Long Term~" preliminary version~
Ceneva~ 1978. A quantitative analysis of this study as xell as of the
Soviet energy aector since 1970 can be found in ~iedemann Mueller's ;
~"The Situation in the Energy Sector in the 3oviet Union xith a Viex to
the 1980's~" 03TEUROPA wIRTSCHAFT~ tfo 1~ 1979. ~
- 4. Subtracting the allotment to Cuba (about 8 million tona at present) ~ ~
from the CEMA aupply~ the deficit increasea to 180 million tons.'
- 5. Cf ECE~ "NeK Issuea...," loc cit~ Supplement 1~ p?1.
6. Ibid.
7. For instance, in a atudy on flxture crude oil production in the Soviet
Union, the Ge=man Institute for Economic Research assumes that a ahift
of this kind has to take place and that the Soviet Union also recogni~ea
the urgency of this ~aove. Cf Joachim Bethenhagen, "U5SR ~hcing 011 .
- ~ Deficit?"~ DIi1 WOCHENBERICNT~ No 50~ 15 December 1977~ p 428.
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ro~ ox~zc~ni, vs~ orrr,Y
8. Cf A�K~ ~Y~aher~ "~he Mineral 011 ~aonomy in ~Ehe ~oviet Union~" AN~P/
Annual of the ~uropean Petroleum Industry~ lg?7~ p 51� _
9~ ~R CYA- 10~O4z5~Washington~i1977~~p~22 uation A 3upplemental Analyeis~"
~ r
10. This argument is aleo eupported by Robert Campbell. Cf "Implications for
the goviet Faonomy of Soviet ~nergy Prospeot~~" T}~ A530CrATION F`OR
COMPARATIVE ECONOMIC SmUDIES 9ULLETIN, Y~1 20~ No 1~3pacing 1978)~ p 46.
ii. Cf, for example, The Tri.lateral Commigsion~ "II~ergy Managing the Tranei� ~
tion~" Washington~ 1978~ p 91.
12. Cf PRAVDA~ 7 Apri1 1971.
13. Cf text of C18CE Fitul Act~ EUROPA-ARiON~V~ No 1?, i975, pp D 43?-~?84.
14. Cf apeech by Ka$imier~ Kopeaki at the Cerman-Polieh talke in Allen~tein
in Ootober 1978�
15, On thi8 que~tion~ eee ~`riedemann Mueller~ "CEMA Indebtednees in Relatlon
to the Weat A 3tudy of Ite Critical. Limita from ~conomtc and Political
St,andpoints." Ebenhausen, Oatobar 19?7 (8cience and Politicg Foundation
AZ 2i48).
ib. In the case of natural gas, dependence in Veatern ~irope ie less senai-
tive than for oil in terma of imports becauae of the high level of
SuPP~Y i~ oxn reaerves.
17. At the present time ~ the F'FtG'a snnual volwne of nex debt aalounta to
betxeen DM 30 and 40 billion xithout causing a aubatanti.al rate of _
inflation.
COPYRIGMT~ i9?9 Varlag fuer Interna.tionale Pelitik GmbH~ Bonn
7458
' Cso ~ 23~
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I ~dtt OrI~'~CIAL US~ ONI~Y
~ CZ~CHOSLOVAKIA '
THIItU G~N~RATLON ~LUIUIZ~U BOILEIt ll~K~LOPM~NT
t
Prague T~CHNICKY TYD~NNIK in Czech 3 Jul .79 p 4
[Article by Vladimir Kanka, PhD: "The Fluid3zed Boiler: Sti11 at the '
Experimenral Stage"]
~TexC] Saving energy and economizing on the use o� fuels are.daily problema
at every place of work; they are also Che topic of research e�fort~. tn
Prague we have an inventor wfio back in 1970 was awarded a patent for hie
invenCion of a Chird-generation fluid~zed combusCion boiler that, if put
into producCion, could have 1engChened the "life" of the NorCh Bohemian
soft-coal diatrict by 15 to 20 yeara, according to mining apecialiata.
Wh~re has thia boiler been inetalled? Is it already being manufactured?
No!
Advantagea of the Third Generation Boile~r
The combustiott process and ehe disadvanCages o~ lirst- and second-generation
boilers are well known: snlfur=removal is impossible in the first-generation
boilers, and for the second-generation lioiler, Dnklafluid, only 20 percent
can be removed. A feature the two ~oilers share is their large size--another .
disadvanCage. Duklatuid is liuilt to burn fvels having a high asfi-content.
The third-generation fluidized boiler makes use of the more advantageous
characteriatics of the fluidized technique. Sulfvr removal and combuation
tske place in a single fluidized layer from which the heaC is extracted very
intensively, and thus the size of the boiler ts substantially reduced. Such
boilers are being developed by the Soviet Union, Japan, Australia, and India,
among othere.
Engineer Jaroslav Beranek of the Prague Institute of the Theoretical Basea
of Chemical Engineering of the Czechoslovak Academy of Sciences (UTZCHT)
came up with an entirely new and original solution to the concept of the
third-generation fluidized boiler about 10 years ago. The boiler desulfurizes
at all levels o! output, independently of tfie amount of ateam produced. The
optimal temperatures of the fluidized level for desulfurization can be
independent of the kind of fuel being bnrned. Burning takes place at
temperatures between 750 to 900 degrees Celcius.
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I
~oK ni~rzcznL us~; orrLY !
The ddv~neag~g of ~ngine~r B~ranek'~ 3nveneion are ~usC whae tihe pre~ene
energy ~ieuaC~.on requiree. '~ha oCher, foreign, thl~d-generation fluid~.xed
boilerg do nde h~v~ tihe~~ propereie~. In Chem, eA~ Cemp~rature of eh~
fluidiz~d layer changeg wieh a change in the amoune of seeam, and Che ~
~on~umpt~.on t~� ].imestone necesaarily increasee, by ae much a~ a factor '
nf Cwo. '
According Co extengive te~Ce on the boiler made at UTZCNT, it removea '
90 p~rc~nC of tihe ~ulfur presene, has a caloric effici~ncy 1.0 to ].5 perc~nC
- higher Chan preaent boil~rg~ and iCa flue ga~es contain a minimum of n~.eric ~
oxid~, 0.003 percent. For a pulverized coal boiler tihe percent o� nitiric
oxide ~e 0.16 percent. '
Since combuseion occurs at relatively low temperatures, heavy metals do noC ;
get as far ag the flue gases, ~ut remain in the aeh~ The aeh i:s removed ~
from Che hearth in greater quantities than in oeher boilers, and only gbour ,
15 percene o� it f13es into tTie el.ectric filtera before the aeack. With the ~
advanCagee of ehe beilers deacribed, the sCacks could be lower. ,
Anoeher advantage ia ehat Che surfaces of the boilere do not scale up and ;
do not corrode. Since the Cemperature 3s uniform throughout the fluidized '
layer, no sooC whataoever is Eormed. Also, there is a uniform load on Clie ;
Cu6e material and thus it is possible to auperheat the ateam 20 to 30 degrees
Celcius closer to the allowed maximwn Cemperature, increasing the efficiency
of the transformation of the energy conCained in Che fuel into electric
energy.
Using Waste Materials i
The ma~or advantage of Engineer Beranek's boiler, however, is that it burns
refuae materials that cannot be ott~erwised used and that as Crasfi add to the
problems of enterprises and, in large quantities, inCertere with tf?e ~
eco-system. This ia about all refuse from tbe food indnstry and from
tanneries, and in the fluidized boiler being installed in Kladno they are !
beginning to burn lubrication oil, refuse tar, and Kladno [coal mining]
offal. :
It is not ~ust a matCer of bnrning refuse, then, but of turning it into
thermal energy. Operating the 6oiler does not require more manpower tfian
previously used boiler types.
There are so far only two of the third-generation fluidized boilers designed '
by Engineer Beranek in existence. The first, the previously mentioned test
unit with an output of 0.1 megawatts, is at UTZCHT, and the second is~under
construction at the United Steel Works, National Enterprise, in Kladno (SONP).
It will have an output of three megawatts.
;
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Unnece~sary Deleye
Why only two boilers? The tnvenCar d3d not stop working, he did not give up~
when the rea~ization of his 8eeign aas poeCponed. He ~ecause acCastomed eo
Che l~ck of interese he encountered when ~ie wantied to un~ertiake la~ioratiory
experimene~, eo eonstiruce an exper3menCal model, anfl tihen ehe boi].er ~n
Po1di-SONP. There wae not enougli interea~ in embodying Che progress m~de in
~ research ~n indnsery, ie looked as ehough ~t wou~.d all end up as ~uet a
reeearch publication.
No chgnge was brought about by the request of ehe North Bohemian electric
plant for ehe construce~on of third generation fluidized boilers. From 1973
on pract~.cal eese~ o~ Che invention's principle were puC ofl, even though
the poaitive resulta of the �luidized comBueCion tec~inique and its advantagea
had been known since 1972. Ae that time tiRe firet proposal was made to
include the task in the ~tate plan of the davelopment of science and teclinology.
And ehua the Vitkovi~:e ironworke and the Klement Gottwald maciiine worka ae
coordinator el3minar,ed from their production plan the fireC third generation
boilers, even ttioi~gh many people tRere literally rooCed for the idea. It wae
the same even at the CKD (Ceskomoravska-Kolben-Kanek Heavy Mach3nery Plants)
in 1975.
_ The siCuation ~;~as changed by the decision made by the tederal government in
1977, which acceleraCed the construction of the pilot operation.
Shortly thereafter, the construction of tfie pilot third-generation flnidized
boiler wae enthusiastically undertaken by the Poldi SONP power snpply. At
Che heating plant even in engineering development there are many snpporters
of "Beranek's boiler," and noboay tlas pointed ont that tfie boilers are not
a par.t of Poldi's production program. In order that the boiler go into
operation as soon as possible, a complex rationalizing Brigade was formed at
_ the Poldi SONP under the leaderehip of Eng Zdenek Kodytek.
No Larger Boilers Until 1983?
The construction of a 20-megawatt boiler based on Beranek's design is planned
for the electric power plant in Trmice far 1983 as an element o! the state
plan for the development of scieace and technology, and anotfier 50 megaWatt
boiler in Tatra in Koprivnice is also in the technological de~relopment plan
after 1983. Series prodnction of these boilers is to be tnsured by CKD Dukla -
and will not begin nntil 1983.
A great deal of time has been wAated in putting the invention of third-
generation fluidized boilerg to vse. WHy?
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