JPRS ID: 9681 USSR REPORT INTERNATIONAL ECONOMIC RELATIONS

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• Sequence Number: 44
• Content Type: REPORTS

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JPRS L/9681
- 22 April 1981
USSR Re ~rt
p
iNTERNATIC~NAI ECONOMIC REIATIONS
~ CFOUO 1 /81 ~
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JPRS L/9681
22 Apri1 1981
USSR REPORT
INTERNATIONAL ECONOMIC RELATIONS
- (FOVO i/81)
C~NTENTS
USSR-WORLD TRADE
Soviet Economic Association's Ties With Foreign Counterparts
(A.A. Dynkin; VESTNIK AKADEMII NAUK SSSR, No 9, 1980) ,o,,,v, 1
UK Correspondents Describe USSR Gold Links With West
(David Marsh, Bernard Siuopn; FINANCIAL TIMES, 31 Mar 81) o 0 0, 7
USSR-CEMA TRADE
East European CEMA Members Energ~r Probleffis Pnalyzed
(Vladimir Mikhaylovich Gzovskiy; VOPROSY EKONOMIKI,
Dec 80) .........................:.....o.oo.ooo..ooooo0000000 11
,
. - a- LIII - USSR - 38a FOUO]
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USSR WORLD TRADE
i1DC: 33 (100)
SOVIET ECONOMIC ~'~SSOCIATION~S TIES WITEI FOREIGN COUNTERPARTS
~foscow VESTNIK AKADEMII NAUK SSSR in Russian No 9, 1980 pp 79-84
(Article by A. A. Dynkin, candidate of economic sciences: "The Association of
Soviet Scientific Economic Institutions"] `
[Text] The AssociQ~tion of Soviet Scientific Economic Institutions (ASENU) was
created in 1956 at the initiative of a number of scientific-research economic
institutes and economic scholars and in accordance with a resolution issu~d by
the Presidium of the USSR Academy of Sciences. The ASENU includes leading
institutes in the field of economics of the USSR Academy of Sciences and the
_ republic academies, scientific-research institutes of che USSR Gosplan, th~:
USSR State ~ommittee for Labor and Social Problems and the USSR State Comm~ttee -
on Prices. Association members also include teams of professors and instructors ~
from the economics depart-n~nt of Moscow State Universit}~, the Moscow Institute of
Management imeni S. Ordzhonikidze and the Institute of National Economy imeni
G. V. Plekhanov.
The m~~n .functions of the ASENU are to strengthen ties between Soviet scientific -
econamic institutes and international and national research organizations in the
field of economics, and with foreign sc;entists; to arrange bilateral scientific
cooperation with economic societies and asso~.iations of other nations; to
arrange and carry out activities prrtaining to the participation of Soviet `
economists in international congresses and conferences on the economic sciences,
and to conduct such conferences and symposiums in the USSR.
(Jne impoztant area of work for the ASENU has to do with its membership in the -
_ Internati.onal Economic Associaticr~ (IEA) . This international, nongovernmental
_ organi_zation was created in 1950 at the initiative of UNESCO's department of -
social eciences, and the IEA now includes nation2l economic associations of _
S1 nations. Since it was founded the IEA has organized and conducted six world
economic congresses, the s.ixth being held in the first part of August 1980, vnd
~ more than 60 conferences, which contributed to the imFlementation of the number _
of joint research programs, to the development or personal contacts and the
achievement of better mutual understanding among the economists of various
- nations. It has also accomplished a~reat deal wi~h respect to the disseminatiun
of economic information throughout the world.
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The success achieved in economic development by the USSR and the other n~tions
of the socialist commonwealth and in the resolution of pressing sucial prob lems,
the peace-loving foreign policy of the USSR and the intensification and growth of
- conf licts in the capitalist society are providing an opportunity to increase the
_ inf luence of scientists from the socialist nations in the work of the IEA. This
process is also being furthere~ by the expansion of TEA membership to include
national economic assoc;.ations of the developing nations--Soviet policy toward
"third world" nations is finding supp~rt in scientific circles in those nations.
~
The fact that the influence of Soviet economi..c science is being recognized is
demonstrated by the fact that Academician T. S. K!~achaturov, chairman of the ASENU,
corresponding members of the USSR Academy of. Sciences 0. T. Bogomolov ~d K. N.
P lotnikov, and corresponding member of the USSR Academy of Sciences V. P.
D'y achenko have long served in an active capacity as members and advisers in the
governing body of ti~ie IEA, its Lxecut~ve Committee. The apinic~n of the Soviet
rep resentatives has carried great wei~ht in the dPVelopment of IEA scientific
policy ancl in the selection of subjects for its conferences and meetings, They
are the ones who suggested for discussion at international forums of economists
such important scientific matters as planning and market relations (Liblice,
Cze choslovakia, 1070), long-term planning and forecasting (Moscow, 1972) and
"Long-Distance Transport" (Moscow, 1979) . The opinion of the Soviet members was
_ also taken into account for deciding on the sub~ect matter for the fif th World
Con gress of Economists, held in Tokyo in 1977 ("Economic Growth and Resources"),
and the sixth Congress, held in Mexico in 1980 ("Human Resources, Employment and
_ Development"). Soviet scientists are elected as chaii-men and members of the
program committees for conferences, which decide who will be the spea.kers and on
- what subjects they will speak.
In their speeches nelivered from the rostrum of the IEA and their consistent and
pe rsistent adherence to the Marxist-Leninist line in the discussion of theoretical
an d specific, practical issues Soviet economists counter bourgeois theoreticians,
- draw the �ndecided over to thdr side, support the Marxists and scientists siding
w ith Marxism, and demonstrate the high level of development of Soviet economic
- s cience. And this does not go unnoticed. At a conference held in Camb ridge,
Great Britain, in 1979, for example, IEA President (S. Tsuru) of Japan delivered
the commentary on a report made by corresponding member of the USSR Acad~my of
~ ciences Ye. I. Kapustin, "Ways and N"_ethods of Developing Joint Consumption in the
Socialist Nations." He praised both the s.:ientific level of the report and the
- effectiveness of inethods used by the socialist nations in their social and
- economic policy. Academician T. S. Khachaturov spoke at the same conference as
commentator on and critic of a report delivered by B. Frey of Switzerland on
communal choice in joint consumption. At the request of the organizers of the
conference and its participants, T. S. Khachaturov delivered a report on the
basic principles underlying the improvement of the economic system and trends in
the development of planned cuntrol of the USSR national economy.
~ Their participation in international scientific forums is helping scientists of the
socialist nations to be more active in the development of t4arxist-Leninist politi-
ca 1 economy and helping them to prove the fallacy of bourgeois concepts. At the
fourth and fifth idorld Congresses of Economists, Marxist-Leninist economic theory
clearly prevailed over bourgeois ~heory, which is experiencing a major
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methodological crisis involving, among other things, final recognition of the
_ failure of Keynesian theories underlying state-monopolistic control in the
bourgeois political economy.
Another important aspect of this participation lies in the fact that by taking
part in I~A activities Soviet specialists gain a first-hand knawledge of the
results of the latest economic studies performed abroad, which frequently help us
to answer specific economic questions. Information presented at a conference on
problQms of technological progress, which was held in St. Anton, Austria, in 1971,
for example, were of practical value with respect to determining long-range
- trends in the creation of new rechnology in the Soviet Union. At a confe rence in
- (Valeskyur), France, in 1973 the reports made by representatives of various
nations contained a number of interesting ideas on the problems of demography and
- demographic policy, and the urgent need to resolve these issues was, of course,
stressed at the 25th CPSU Congress. At a 19J4 conference in Turin, Italy, the
Soviet delegates were interested in what the foreign scientists had to say on the
development of the nonproduction sector.
Tfle IEA conference on "Long-Distance Transport," held in Moscow in October of 1979,
- had a great impact. Soon after the signing of the Final Act of the Helsinki
- Coizference on European Security and Cooperation, as ~ae knaw, Comrade L. I.
Brezhnev, general secretary of the CPSU Central Committee, proposed, among other
- things, that extensive European congresses or international conferences be '
conducted on cooperation in the area of environmental protecta.on and the develop-
ment of transport and energy. Acting on these proposals th.~ Soviet delegation at
the rlorld Congress of ~conomists in Tokyo proposed that such a conference be hald,
and the IEA supiorted the Soviet initiative. More than 30 leading economists and
transportation experts from socialist and capitalist nations took part in the
conference. It discussed the optimization and coordination of all types of trans-
port, ways to improve the efficiency of long-distance fuel shipment, problems
involved in providing transportation fo~ hard-to-reach areas and optimization of
the balance between public and personal transport. The conference brought out
various views on these matter.s and various approaches to them in the socialist and
the capitalist nations, acquainted the participants with how certain nations had
solved their transport problems and produced certain practical conclusions. It
was hi~hly important in that it furthered the Soviet specialists' study of the
role of transportation in the realization of economic ties and of foreign
experience solving serious problems accompanying the development of transport
- systems.
The works of Soviet specialists published abroad and presented at international
conferences serve as an important means of spreading Sovtet economic theory in the
capitalist nations. Soviet scholar5 also do a considerable amount ~f editorial
work on I~A publications. Academician N.P. Fedorenko was the co-editor of works -
produced at the conference "Plann~ng and Markets" published by McGraw Hill in 1969,
f.or example, and Academician T. S. Khachaturov edited materials published by
Ma.cmil.lan in 1976 on a conference on methods of. long-range planning and forecastir_g.
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The Ass ociation of Saviet Scientific Economic Institutions is doing a great deal
- to strengthen bilateral scientific contacts between national economic organiza-
tions. Bilateral scientific symposiums are conducted on a regular basis with
p~rticipation by Sovi.et scientists and scientists from Poland, Hungary, the Uriited
States and Sweden.
The f i rst joint session of the Soviet-Polish Economic Commission was conducted in
- Jab lonna, Poland, in 1975 at the initiative of the USSR Academy of Sciences and
_ the Po lish Academy of Scien~.es, fhe commission's funetions include the organiza-
tion of discussions on ~Cey economic problems, joint research projects, joint
scientific publications and mutual exchanga of scientific information.
The five meetings already tteld discussed the main characteristics and criteria for
� development of the socialist society, forms of socialist ownership, ways to
= improve management of the national economy, social and economic problems involved
in making public production more effective, and the international and internal
factors in public economic development. Material coming aut of the commission
= meetings, i~i which prominent specialists from both nations took part, have been -
published in a Polish-language collection with the title "Economic Problems of
= Developed Socialism: Experience of the USSR and Poland" (it will be published in
the Russian language in 1980) .
_ Contacts between zhe ASENU and the Hungarian Economic Association have also become �
traditional. Between 1973 and the present seven Soviet--Hungarian economic -
sympos i ums have been conducted, with most of the programs being composed of two
sections: discussion of theoretical issues (intensification of the economy,
- planning and control of the socialist economy, effectiveness of capital invest- -
ments, economics of the infrastructure, development of branches producing consumer
goods, e conomics of labor and economics of agriculture) and an explanation of how
specifi c economic decisions have been implemented on the practical level. Among
other things, Soviet specialists were interested in the forecasting of consumer
- goods demand in Hungary, since Hungarian economists have accumulated a great deal
of practical and theoreti.cal material on this matter. Forecasting of demand is
, linked with product quality and with the demands of fashion. There is something
to be learned from Hungarian experience with the flexible development of light
industry, which has achieved the production of high-quality consumer goods and is
moving into international markets. Soviet economists also collected valuable
. material on the development of state-operated agriculture.
Since 1975 the Association of Soviet Scientific Economic Institutions has
conducted bilateral meetings between scientists in cooperation with the American
Economi c Associati.on. These are held alternately in the USSR and the United
States under an agreement on cooperation between the USSR Academy of Sciences and
the .American Council of Learned Societies. A spirit of cooperation and mutual
understanding has characterized all the Soviet-American scientific symposiums held
- to date. The topics for the symposiums (issues perraining to the effectiveness of
capital investments and S oviet-American economic relations, the economics of '
scient~_f ic and technological progress, management of industrial enterprises and
structu ral advances made in the USSR and the U.S, economies since the war) and the
programs for the visiting delegations have been planned with maximum considerat3_on
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_ for the desires of e~.ch party. The discussions have brought out basi~ differences
in the formulation of theoretical problems and in the selection of ways to resolve
them in tEie two dissir.iilar social and economic systems. Certain general problems
- of a techn~cal organizational nature have als o been discussed, problems of
considerable interest to scientists and practical workers of both nations. The
Americans indicated great interes t in the development of bilateral scientific ties.
The Soviet-American symposiums have permitte d economists from the two nations to
keep each other informed on the results of investigations and their trends and
have made it possible thoroughly to study the latest trends in the Soviet and
- U.S. economies. During these meetings the American scientists have learned about
o the achievements of Soviet economic science and the nature of the progressive
reforms occurri,ng in our nation`s national economy an3 its social sector. Soviet
- scientists were interested in American research into methods for making decisions
in situations of uncertainty and methods for eval,uating the effectiveness of
management systems, methodological principles for org3nizing the training and
advanced training of key personnel, and so forth.
The meetings betwe~n Soviet and Amerlcan economists have given us the opportunity
~ to gain a fuller understanding of the contemp orary economic situation in the
United States, to inform the American participants ot the position taken by S oviet
scientists on various aspects of Soviet-Ameri can relations, and to hear opposing
opinions. The same holds true for the Ameri cans. For this reason the American
~conomic Association proposed that bilateral scientific ties be expanded by
conducting a joint study into a nLmber of economic problems. The plan and program
for the joint research are to be discussed a t the forthcoming, regular Soviet-
American symposium of economists, to be held in 1981.
In 1978 Moscow's "Progress" publishing house issued a collection of information
produced by the Soviet-American symposiums.
Soviet-Swedish symposiums began to be held in 1974 under an agreement between the
USSR Acade~y of Sciences and ASENU, on the on e hand, at~d the Swedish Roy~l Academy
of Sc~ences and the Federation of Swedish In dustry, on the other. They have
discussed problems of incre~:rsing labor productivity and Soviet-Swedish economic
ties, the interdependence between enterprises and other components of the national
economy, ttie effectiveness of capital investments and plan selection, social and
economic problems pertaining to use of the work force, and ways and methods of
carrying out structural reforms in the national economy of the USSR and the
Swedish economy.
In the course of the discussions, especially during the first meetings between the
economists, it became clear that the Swedes derive many of their concepts about
the Soviet economy from biased information contained in the works of various
= Sovietologists, who present a false picture of. our national economy and our system
- of managing it. .Therefore, when the Soviet s cientists spoke they endeavored to
dispel the illusions c;f the Swedish economis ta with res~ect to the principles
and the specific machinery involved in the p lanning and management of the national.
_ economy under developed socialism, while at the same time attempting to satisfy
tneir interest in Soviet know-how in providing the nation with energy, developing
= atomic-power engineering and environmental pr otection.
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The Soviet economists, in turn, learned about the work performed by their
Swedish colleagues in the macromodeling of the Swedish economy and the forecasting
of its development and rates of economic growth according to the age makeup of
fixed capital, characteristics of the economic policy followed by Swedish firms
in view of the stiff competition by foreign concerns, and so forth.
On the whole the discussions at the symposiums have taken place in a friendly and
constructive atmosphere and have c~emonstrated a desire to gain a better under-
standing of each other's viewpoints. It should be mentioned that in a large -
number of areas the Swedish economic school occupies a leading position in
bourgeois political economics. A number of reforms, progressive compared with
the other nations of Westerri Europe, have been carried out in the nation`s economy
(especially during the period of government by the Social Democrats). All of this
indicates that it would be beneficial to expand ties between economists of the
USSF and Sweden. The next Soviet-Swedish symposium on economic problems of
scientific and technological progress is planned for October o.f 1980.
At the last symp osium, held in Stockholm in 1979, the Swedish scientis ts stated
that the discuss ions and the exchange of opinions with their Soviet colleagues
stimulate them in thei r creative investigation and stated that they must con-
stantly study the position of Soviet economists in both the theoretical aspects of
economic science and on the practical level for the purpose of seeking specific
" ways to resolve the Swedish economy's acute problems and to achieve better mutual =
unders tanding between s cientis ts of the two nations .
In 1981 the Association of Soviet Scientific Economic Institutions will have been
in existence a quarter of a century. The international prestige of Soviet
economic science has g rown immeasurably during this time. Leading economists of
the socialist an d the capitalist nations are expressing growing interest in
expanding cooperation with their Soviet colleagues. The activities of the ASENU
are def initely helping to develop ~nd strengthen the international scientific
contacts of Soviet scholars-and-social scientists.
- COPYRICHT: Izda tel'stvo "Nauka", "Vestnik Akademii nauk SSSR", 1980
11499
CSO: 1825/14
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USSR WORZD TRADE
UK CORRESPONDENTS DESCRIBE USSR GOLD LINKS WITH [dEST
LD311315 London FINANCIAL TIMES in English 31 Mar 81 p 18
[Article by David Marsh in London, Bernard Simon in Johannesburg: "Russia`s Dis-
creet Gold Chain"J
[Text] Rising East-West tension over Afghanist an and Poland has given the Kremlin
a glittering windfall by helping push up the price of gold and other precious metals
which Russia sells to the West.
- But as the stakes climb both on the bullion market and in the international politi-
ca1 arena, Moscow's links with the West over the mining and trading of the world's
a~ost cap~talist metal are becoming ever more intricate.
Evidence is gro,aing of discreet contacts and an increasing comanon interest with a
country officially reviled by the Krenlin--South Africa, the world's number one gold
producer. -
91
_ The two co~.mtries , which mine about 75 percent of the world's gold and a~so domin- '
ate production of diamonds and strategically-important metals like chrome and -
~ platinum, already maintain links over sales of minerals to Western markets.
At the moment, co-ordination amounts to little more than the passing oi information
about sales policies, and the two sides still appear deeply suspicious of each other..
But it is possible that the two countries could eventually extend co-operation to
exchanges of mining expertise and metals technology.
~ This is an area where the Russiatu^still have a lot to learn from the West in their
' efforts ta develop the en.ormous mineral wealth of Siberia and Central Asia--and
where collaboration with the U.S. and possibly Europe, too, may become more diffi-
cult if detente flags.
Significantly, it is also a sector where the Russians themselves have developed
technological expertise of interest to the South Africans. -
_ The two ~.ounr_rias maintain no fo rmal diplomatic or trade ties, so direct government-
to-government contacts are impossible. But through various channels Russia has forged
contacts with the Anglo American Corporation, the giant South African mining empire
which has trading and mining connections throughout the world. _
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Com~~anies in the Anglo American group account for one quarter of gold output of
the non-communi$t world, ~ahile its sister company, De Beers Consolidated Mines,
' dominates international diamond production.
Mr. Harry Oppenhe~.mer, the cha~rman of Ar.g1o American and De Beers, has the
advantageous credenfi~l.s,from the Russian point of view, of being an implacable
opponent of apartheid. But he is ~tili widely regarded as the most important in-
' dus*_rial figure in a country which relied on gold last ye~r for more than 50 per
- cent of its total exgorts.
~ The two sides ha-ve been putting out feelers over mining and metallurg~� at a time when
both have been holding back the volume o~ bsllion sent to world markets in an effort
to support the price.
~ The South African and Soviet governments ar.e both firm believers in a strong mone-
tary role fo r gold. The ruble is still formally backed by the Soviet State Bank's
. reserves of the yellow metal. And both countries have been rewarded by the sight of
gdld price shooting up to an average price of over $600 per ounce last year.
Althaugh it is now down to aroimd $530 per ounce, more than $300 below the shc~rt-
lived peak in January, 1980 immediately after Russia's ~invasion of Afghanistan, the
pricz is st1Z~ more than double the end-1978 level, providing an important boost
to both economies.
The Soviet LTnio*i, always an enigmatic operator on world gold markets , has become
even more my sterious by taking greatzr efforts to hide the metsiods with which it
channels met al to the West. It has al~o added to the puzzle by cutting back sup�-
- plies at the same time as making large purchases on a number of other metal markets.
Metal dealers believe the Soviets may be increasing consumption of inetals like co-
balt, titanium and tungsten for military purposes.
The Soviet Uinion has always strongly denied any suggestion of collusion with South
Africa over mineral sales. In November, the government newspaper IZVESTIYA said
stories about South African links in the FINANCIAL TIMES and other newspapers were
reminiscent of the propaganda methods of Dr. Goebbels.
- Russia has always, however, been willing to compromise its ideological prin~iples.
Lenin wrote in 1921 that gold would eventua~ly be used to line public lavatories.
But pending the final socialist victory, Russia would have to exploit the capit3list
~ system to get the best price for its gold. "When you live among wolves you must howl
like a wolf," he said.
It has been an open secret for years that the Russians have been co-operating with
De Beers in diamond marketing. Rough diamonds f.rom Moscow are passed through a
sma11 ~Qndon company to De B~er's central selling organisation, which distributes
them through its ncrmal London sales.
South African and Russian pl3tinum producers meet regularly in the offices of pre-
cious metals traders in London and at the annual platinum industry dinner at the Savoy
Hotel. In the words of one senior executive of a South African platinum mining
_ ccmpany, "Each of us tries to find out as much as possible from the other while
_ giving nothing away ourselves."
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Suspicions that platinum cooperation might go a little deeper were strengthened last _
November w}~en Mr. Gordon Waddell, an executive director of. Anglo American, was
spotted with Soviet officials in Mosc~w. He was watching the opera "Boris Goduncv"
at the Bolshoy Theatre.
~
Mr. Waddell, who has since become chairman of ~ohannesburg Consolidate Investment, -
the major shareholder in the world's largest platinum mine, told the reporter who "
- saw him that he was just "passing through."
Short ly befo re, in September last year, Mr. Michael Beckett, an executive director -
of Consolidated Gold Fields, the London Mining Finance House 29 per cent owned by
the Aitglo American-De Beers group, visited Moscow with two other Consgold executiv~es.
The prime purpose of the visit, hosted by the Soviet Foreign Trade Bank, which con-
- trols Russia's gold exports, was to allow the Consgold team to b uild up information -
on Soviet gold activities for use in the comp any's bullion surveys.
Consgold believes, however, that the relationship coul.d eventually broaden out to
exchanges of view on mining techniques and metallurgy. -
Thi.s could include the question of some kind of joint mining veature--although any
deal w ould certainly be years off. Consgold which held a stake in a Russian gold
mine before the 1917 revolution, makes clear th at at the mo~ent it h~s a lot of
_ oCher international mining projects under consideration. -
Consgo ld maintains that Anglo American's shareholding, most of which was built up -
just over a year ago, is purely an investment stake. In Johannesburg, however,
suspicions that Anglo American is flexing its muscles have been aroused at gold _
fields of So uth Africa, 46 per cent owned by Consgold. Gold fields execuLives are
reported to be annoyed that their office mernos are being circulated and discussed
~ at the Anglo American headquarters. ~
Consgold itself has underlined the principal reason why the Russians are interested
_ in mining co-operation with the West. Last year the company drastically lowered its
estimdte of Soviet annual gold production to around 300 tons. Previous estimates
of over 400 tons had been based on over-generous assumpbions of the efficiency of -
Russian equipment. =
'i'he experience of the British mining company, Rio Tinto-Zinc, shows that any talks _
with the Rus sians on mini.ng ventures would be long and hard. Before the talks
broke off in 1973, ltio Tinto spent years negotiating with the Soviet Union over a
projecl-. to exploit the huge Udokan copper deposits in Siberia.
. One stumblin g block was that Soviet law forbids shareholdings by Western co:npanies
in joint ventures: Rio Tinto wanted more than just a contract to ~anage the mine.
The Soviet Union already relies on the West for supplies of heavy bulldozing and
earth-moving equipment for use in its large open-pit gold and diamond mines.
U.S. companies like International Harvester and Caterpillar head the list of sup-
pliers, although a large amount of equipment comes through Finland.
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Consgold underl~nes the fact that co-operation might not be a one-way street. The
- Soviet Union :night itself be able to offer technology to the West. _
~his is in fact already happenii~g. Guld Fields of South Africa is one of a stiririg
of companies interested in buying Russia's Kivicet lead smelting process--reputed to
be one of the best in the world--for use at the Black M~untain lead/silver mine in
the N.W. CapP. A decision on the smelter is expected within two years.
- The Black Mountain mine is being run jointly with Phelps Do~.ge, the U.S. mining
company, with finance for the lead smelter possibly coming from South African Govern- _
ment's Industrial Development Corporation.
~
Talks on the smelter project are taking place with the West German engineering com-
- pany Kldeckner-Humboldt-Deutz, which has close cantacts wi*h the T.ussians and is
handling licensing arrangements for the Soviet process in the West. Sigtiificantly,
Anglo American itself made contact ~aith KHD two years ago to express interest in the
process .
Other companies interested in acquiring the technology include C~minco in Canad~,
Amax in the U.S., Preussag in West Germany and Broken Hill Associated Smelters in
Australia. -
South Africa might also have something to learn from Russia in the art of gold mar-
keting. The Soviets have become "very shrewd and btisiness-like" says Herr Hubert
Baschnagel, executive board merober re~ponsible for gold and currency trading at
Swi~s Bank Corporation. ~
Other ban?cers:, says the Zurich-based Wozchod Handelsbank, the Soviet-owned trading r~
bank which carries out Russian gold sales, has become a slick and profitable dealing _
- operating b uying and selling gold in London, Zurich and the Far East.
- By contrast, the South African Reserve Bank, which handles Pretoria's gold market-
ing, is a great deal. less sophisticated. Although last year it started a new "flex-
ible" policy o~ holding back part of its production from the European markets.
The South Africans anc; Russians keep in touch largely thxough the bullion dealers in
the trading centres of London, Zuri ch and Frankfurt, according to one West German
dealer.
Representatives of Russian banks aiso use personal contacts with market participants _
--includin g some with South African connections--to keep fully abreast of gold de-
velopments.
Russian sales to the West are thought to have fallen to 80 to 100 tons last year
fro~a over 200 tons in 1979. The two years' sales would each however have netted
aro~ind the same amount of foreign exchange because of the 1980 price surge.
, So far this year the Soviet Union seem~ to have made no significant sales through its -
main outlet, Zurich. Dealer~ believe that It is holding out for higher prices, and _
is keen to build up gold reserves diminished by heavy selling eailier in the I970s.
- CSO: 181?/26
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y USSR-CEMA TRADE
EAST EUROPEAN CEMA. MEMBERS ENERGY PROBLr'~iS ANALYZED
Moscow VOPROSY EKONO~fIKI in Russian No 12, Dec 80 pp 97-103
[Article by Vladimir Mikhaylovich Gzovskiy, candidate of ecoiiomic sciences, junior
- staff scientist of IEMSS AN SSSR (Institute of the Economics of the World Socialist
System of the USSR Academy of Sciences): "Conservation of Energy Resources in the
CEMA Countries"]
[Text] Supplying fuel and energy for the economy of the CEMA countries is now one -
- of tne most urgent problems in economic development. A long-range target program
for raw materials, fuel and energy, aimed at further expansion and improvement of
the country's cooperation in production and consumption of energy and raw material
_ resources, was adopted at the 32d CEMA Session (1978) in order to solve it.
The long-range strategy for development of the fuel and energy industry of the CEMA
countries provides, fir~ t, for ever fuller exploitation of domestic energy re-
sources; second, for more extensive international division of labar to meet the
needs of the CEMA countries for energy sources, and third, for increaGing the effi-
- ciency of use (conservation) of fuel ar~d energy. ~
The policy of energy conservation, taken in the broad sense, in cludes the following
principal dir.ections in various spheres of economic activity:
i. at the macro~conomic level--restructuring the sectoral pattern of production
toward less energy-intensive sectors will help to reduce energy consumption in the -
economy; ~
- ii. at the microeconomic level--introduc.tion of new energy-saving technology (in-
c?uding a restructuring of energy consuraption toward inorganic resources, above a11
toward fissionable elements) and encouragement of more optimum energy consumption
in production through imProvement of economic activity;
iii. in the sphere of residential consump tion--opti:mization of energy use in the
household and instilling in the p~pulation a thrifty attitude toward fuel and en-
ergy.
'.L'he trend toward a shortage of fuel and energy resources which is now typic~i~ ;,f
all the socialist countries has become evident earlier and more intensely in the
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European CEMA countries than in the USSR because their natural potential is lim-
- ited. In time the problems they now face in the field of energy conservation will
e vidently arise in some form and some degree in the USSR as well; even now much at-
~pntion is being paid to them in our country. From the standpoint of prospecCa fdr -
development of the USSR's fuel and energy complex, then, there is considerable in-
terest in summarizing the experience of energy conservation policy in the CEMA
_ countries and in evaluating the measures being implemented under that policy.
We should note that the experience of the CEMA countries in the field of energy
conservation is just now taking shape, since the countries began comparatively re-
cently to react to the increasingly intense imbalance in the sphere of energy con-
sumpt ion. Until recently energy-saving measures were regarded as only one of the
many ways of reducing production costs. While that purpose is still served, con-
servation is now becoming a means of obtaining amounts of energy crucial to achieve-
ment of projected growth rates of production, that is, it is becoming not only some-
thing to be wished, but an urgent necessity.
There are a number of reasons for this new role of energy conservation. First of -
~ all, not every CEMA coun try is able to meet growing needs for energy from domestic
resources. For instance, in Czechoslovakia and GDR feasible (balansovyye) reserves
of brown coal and lignite--the resources which are the basis for further develop-
_ ment of the fuel and power industry and the chemical industry--will last 50-70
years at the present rate of mining. Theoretically it is possible to increase the
annual level of mining in those countries, but taking advantage of that opportunity ~
- would result in considerably faster exhaustion of those reserves. An analogous ~
situation is taking shape in a number of other CEMA countries with respect to one
or another form of energy. In Hungary, for example, petroleum and gas reserves are
sufficient for 15-20 years. Taking into account future needs of the economy for
energy and raw materials, then, many European CEMA countries have in recent years
been stabilizing or even reducing growth rates, and sometimes they have even been
reducing the absolute annual volume of extraction of certain primary energy re-
sources. This tendency has been observed with respect to petroleum in Hungary and
Romania, with respect to brown coal in Bulgaria, Hungary, GDR and Czechoslovakia,
with respect to gas in Bulgaria and Romania, etc. It is this tendency which moti-
vated the CEMA countries to undertake conservation not only of imported sources of -
energy, but domestic ones as well.
Moreover, expansion of [a country's] energy base involves growing specific capital
investments because conditions for extraction are less favorable. In the 1971-1978 -
period the costs of mining coal in Poland doubled per ton of standard fuel; in
Czechoslovakia it cost 60 percent more to produce a ton of coal in this 5-year pe- -
_ riod than in the last one, and so on. In certain cases the higher costs made it
necessary to increase capital investments above the amount envisaged by the plan.l
Socialist economic integration is making it possible for the CEMA countries to
solve the problem of energy sources through cooperation in this field, through
_ joint capital investments in the extractive industries, and through mutual deliv-
eries of energy. The USSR has the leading role in this process.2 At the same time
the costs of extracting and shipping fuels are rising in our country, it is becom-
ing increasingly problematical for the extractive industries of the USSR to make
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provi.sion for larger exports of fuels. It is evident that in future the relative
' share of the energy needs which the foreign countries of CEMA satisfy through im-
ports f rom third coun tries could increase. But these pos~ibilities are also lim-
ited because the terms of trade are worsening on the world market for countries im-
porting fuel and energy.
It should also be borne in mind that aside from deyeloping national fuel and power
- industries, the CEMA countries also face other equally important socioeconomic
problems ur.gently in nee d of solution. Expansion of export industri es, which are
- called upon to cover the costs of the increasing importation of fuels, the need fo_r
- Further development of the industrial infrastructure, housing construction pro-
grams, the food problem and other lines of economic activity require large invest-
ment funds. A further increase in the relative share of the capital investments
the CEMA countries are now making in the fuel and power industry could have an ef-
fect on the solving of these problems.
The CEMf~1 countries now face the task of preventing the rise of capital investments
in the fuel and power industries +~rom increasing faster than those in other indus- _
_ tries. If this is to be done successfully, the amount of energy "not taken" be-
cause the share of capital investments in the fuel and power industry has been held
_ stable will unfailingly have to be provided through energy conservation. This con-
ception was reflected in the decree of the GDR Council of Ministers on measures
con cerning optimum use and conservation of heat, electric power and fuels, which
was adopCed in 1979. Under this decree the principal goal of energy conservation
measures in the GDR is to prevent capital investments in the fuel and power indus-
try from exceeding one-third of investments in the industrial sector, that is, the
proportion which has now been attained. This approach, in our view, is outstanding
for its construc~tiveness and is promising from the standpoint of long-range plan-
nino. It reflects one ot the requirements of present-day energy conservation pol-
icy, a requirement wh ich is to be met at the macroeconomic level and is aimed at
reducing the relative share of energy-intensive industries in the sectoral pattern
- of production.3
The most energy-intensive industries in the CEMA countries include metallurgy, the
fuel and power industry, the chemical industry and the building materials industry.
In terms of inputs of energy carriers per unit output the fuel and power industry
in the CEMA countries as a rule exceeds the industrial sector as a whole 15-20- -
fold, ferrous metallurgy 2.3-3.5-fold, the building materials industry 2-4-fold,
and so on. It is sufficient to state that these four industries consume, for exam-
ple, 70 percent of all the energy consumed in the industrial sector in Poland and
74 percent in Romania. It would seem at first that the simplest way of reducing _
the energy intensiveness of the industrial sector would be to reduce the growth
rates of these industries and correspondingly their share in production. But these -
industries play sucii a substantial role in the economic development of the CEMA
coun tries that at the present time the trend is in the opposite direction: the
- growth rates of these industries are as a rule higher in many CEMA countries than
- the average for the industrial sector as a whole, especially because of the accel-
erated development of the chemical industry and the fuel and power industry. Nor
do we observe a drop in the share of sources of energy c~nsume d in metallurgy, the -
fuel and power ind~istry, the chemical industry and the building materials industry. -
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Thus the most realistic ways of reducing energy consumption by the energy-intensive
industries in the C~IA co~tries are not seen to be reducing the growth rates of
these industries as a whale, but, f irst, utilizing potential for improvement of
their intrasector pattern, and second, industrial application of more economiCal
manufacturing processes, machines and equipruent, use of substitute materials, uti-
lization of secondary resources, and so on.
Large opportunities for conservation lie in restructuring the fuel and power indus-
try of the CEMA countries, above all by speeding up construction of nuclear power
p].aats. In accordance with the Agreement on Industrial Specialization and Coopera-
tion and Mutual Deliveries of Equipment for Nuclear Power Plants in the 1981-1990
Period, ~~hich was signed at the 33d CEMA Session, it is assumed that by the end of
this period the total capacity of nuclear power plants in the European foreign
- countries of the GEMA, together with Cuba, wilZ be 37 million kilowatts, which will
- afford an annual saving of organic fuel amounting to approximately 75 million tons
of standard fuel.
Still greater significance is being attributed in the CEMA countries to moderniza-
_ tion of energy-intensivg manufacturing processes. Though such a policy necessi-
tates sizable investments (comparable in scale to the capital investments necessary
to increase extraction of the fuels in the CEMA countries), its implementation is
still more advantageous, since it makes it possible to achieve, first, a sizable
saving of energy, and second, a rise in labor productivity and production effi-
ciency, which is being held back at present by the high proportion of outdated
equipment. In Romania, for example, it is assumed that modernization will in fu-
- ture reduce energy consumption 25 percent in cement production, 15 percent in pe-
troleum refining, 65 percent in the refining of aluminum, and so on. In GDR great
efforts are being aimed at increasing the refining of secondary raw materials. In
1980 the plan calls for their share to reach 10 percent of all raw materials used
in the economy. Improvement of machines and equipment is also taking pla;.e in
other economic sectors of the CEMA countries. For instance, in Hungary, Bulgaria
and Poland trucks and buses are now being cociverted to diesel fuel, power transmis-
sion lines are being modernized to reduce losses, etc.
Now that ttie energy made availab le through conservation is a part of planned energy
consumption, and not an amount over and above the plan, it is becoming very impor-
tant to link the reference figures of energy conservation programs to planning tar-
gets for energy production.4
Experience demonstrates that ener~y conservation programs adopted previously in the
CEMA countries were often not carried out. For instance, in Poland "programs pro-
jecting rising energy needs turned out to be inaccurate, especially in the light of
the excessively slow progress in energy conservation";5 in the 1976-1979 period
the program for optimum c~nsumption of fuel and energy in Czechoslovakia was not
altogether carried out, e~c. In the new context nonfulfillment of the energy con-
servation plan and inaccuracies in planning this process (for example, overly opti-
mistic anticipated results) are extremely undesirable, because this will have a di-
rect impact on fulfillment of production plans in industries consuming energy.
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- One of the conditions necessary to successful fulfillment of energy conservation
- plans is tliat the relevant programs be capable of detailed elaboration, that they
be broken down to the level of enterprises, and that they be strictly monitored.
This can b e illustrated by ths experier.ce of the GDR, where targets for enPrgy con-
servation have in recent years been fulfilled and overfulfilled (specific energy
consumption has been dropping in the country at an annual average rate of approxi-
mately 3-4 percent f.or the entire economy). Asstgnments for energy conservation in
the 5-year period now coming to an end, which were reflected in the materials of
the Ninth Congress of the Socialist Unity Party of Germany, were straightforward,
detailed and binding and specifically indicated the conservation measures and size
of the saving for eaCh sector and industry. Iu GDR fulfillment of conservation
targets is monitored not only by specialized agencies (worker-peasant inspector-
ates), but also by people's ~nspectors and activists. For instance, in late 1979
and early 1980 190,000 voluntary inspeczors took part in the large-scale check on
fulfillment of the target for energy conservation.
At the same time experience in carrying out energy conservation programs in the
CEMA countries indicates that substantial organizational difficulties are involved
in their fulfillment. It is now taken for granted that the saving of any amount of
energy is equivalent to obtaining it for considerably smaller outlays af capital
_ investments and considerably less manpower, since this eliminates the need for geo-
:Logical explorations, for development of deposits, for transportation, etc.6
_ But the question is the source of the funds for these more efficient investments.
It is highly problematical to take them in any great extent from the funds sched-
uled for development of the fuel and power industries of the CEMA countries, since
the rising capital intensiveness of domestic energy resources has made th~ situa-
tion with investments in these industries rather strained even at low growth rates
of production. Since ttiere is a shortage of reserve capital, priority is being
given in the CEMA countries to those energy conservation measures which are aimed
at identifying potential for conservation that does not require capital investment
nor large outlays, that is, measures of an organizational nature.
It cannot but be talcen into account in this connection that if the number of indus-
= tries engaged in obtaining and transforming sources of energy is limited, all
spheres of economic activity, without exception, are involved in the consumption of
energy. In practice, then, the lower capital intensiveness of the energy resulting
- from conservation is achieved through a very substantial increase in the complexity
of the organizational aspect of the matter, especially zn those cases when conser-
vation policy is based on purely administrative measures. As a rule these measures
- are effective for relatively short periods of time af~er their adoption, they re-
quire constant "pressure" on the part of central economic authorities, and often
they are simply ignored by enterprise managers. For instance, in GDR the large-
scale check we have mentioned, which was conducted at one-third of the enterprises,
revealed serious violations of the prescribed conditions for fuel use, though under
regulations now in effect in the GDR, an enterprise that exceeds the assigned al-
lowance for energy consumption is subject to a fine for overconsumption in the
amount of tenfold the amount of overconsumption.
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Measures in the conservat~ton field based on the use of administrative levers, that
is, on adoption of allowances and restrictions on energy and fuel consumption,
along with a corresponding system of fines for violating them, represent the ini-
tiel stage of long-range conservation programs and make it possible to identify the
- "upper strata" of the reserves that exist in this field. Goverr.ment decrees used
- as the basis for such measures were adopted in Bulgaria, GDR, Poland, Romania, and
Cz~ choslovakia in 1979 and in Hungary in 1980. They call for reduction of standard
rates of co~nsumption of fuel, elec~ric power an~ heat at enterprises and in insti-
tutions; for retirement from use of outdated transportation equipment with high
fuel consumption; for introduction of limits on f~.lling the tanks of governnent mo-
tor vehicles and for reducing their total number;~ for restriction on traffic move-
_ ment from region to region, etc.
The next and qualitatively higher stage of energy conservation policy is an improve-
ment of planning, management and the economic mechanism that will provide instru-
men ts for reducing the energy intensiveness of production that will retain their
effectiveness and conform to a socialist economy. In the CEMA countries growing
attention is now being paid to developing and adopting new instruments of this kind
to encourage energy-saving economic activity.
For instance, under ttie Czechoslovak energy program the energy intensiveness of
capital construction projects is to be regarded as one of the most important cri-
teria in planning investment projects. In the GDR energy consump tion has been
adopted as one of the government planning indicators.
Measures in the field of price setting could become the most fruitful of the energy
conservation measures b~ing worked out in the CEMA countries. The reform of whole-
sale prices in Hungary which took effect in January 1980 is of interest in this
connection. With respect to the energy conservation problem, its essence is as
follows. Wholesale prices of finished products are being reduced by an average of
8 perc~~.nt, prices of fuels and materials are being raised an average of 15 percent,
and those of fuels alone are being raised an average of 30 percent. Wholesale
prices ~~s a whole are at the same time being reduced 4 percent. Consequently, ac-
cording to the calculations of Hungarian economists, the average profit in the in-
dus trial sector will drop from 15 to 6 percent of the residual value of fixed capi-
tal and working capital. At the same time, however, enterprises producing energy
and materials must become highly profitable (with a profit up to 15 percent) and
must get along entirely without government subsidieso EnteY�prises producing
finished products, on the other hand, are to have a low rate of profit (in
= light industry, for example, profit is dropping to 2 percent of the residual
- value of fixed and working capital) and will thereby be faced with the need for
strict conservation of energy and materials, which are becoming more expensive,
It is assumed that over the first 5 years these enterprises ~aill be receiving gov-
_ ernment subsidies. Moreover, to compensate for rising prices the charge on capital
lias been abolished in Hungary, and the tax on wages and social insurance has been
cut in half. Thus government subsidies are being redistributed, and as a result
efficiency should rise and there s~ic:~ld be a substantial saving of materials and
ene rgy .
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- It is still early ta speak about the effectiveness of this reform. There is no
question that raising wholesale prices will yield definite results in combating the -
wasteful attitude toward energy. Eut this kind of "artificial" raising of the
profit rate of the fuel and power industry, while that rate is at the same time be-
- ing reduced in other industries, could, in our view, create the prerequisites for
_ extensive gro~ath of the fuel and power industry. As specific capital investments
for energy consumption rise, this increase could be accompanied by a further rise _
_ in the share of the fuel and power industries in �ross invastments in the industrial
sector. This tendency, as we have alre~dy said above, did exist previously (in
Hungary 30 percent of capital investments in the industrial sector were spent for
the fuel and power i.ndustry in the last S-year period, azid in the current one it is
~S3 percent) and was viewed as an adverse tendency. rioreover, in and of itself the
new price system does not cover the entire problem of conservation, since mod?rni-
zation ef energy-intensive manufacturiag process is a principal method of conser.va-
tion.
One of the important directions for energy conservation in the CEMA countries is "
` reducing ~nergy consumption for municipal services and the residential needs of the
~ public. Mea~ures in this fi.eld are divided into two groups according to their na-
ture. rhe first group pertains to the sphere of activity of the construction in-
dustry, industries producing consumer goods and utilities and municipal services.
These measures are aimed at improving thermal insulation of existing residential
and public buildings and of those under construction, optimization of the use of
heating and lighting systems and hot-water supply, establishment of standards gov-
_ erning the rate of energy consumption of household appliances and equipment pro-
duced, etc.
Certain steps have been taken along these lines in the CEMA countries in recent
years. For example, in 1979 the time for lighting the streets was reduced and lim-
_ its were set on electric power and fuel for residential buildings in Bulgaria; in
Hungary, GDR and Romania the temperature limits were set for living, commercial and
public space, hot-water temperature standards were introduced, etc. Moreover, in a
majority of che European CEMA countries daylighL saving time was introduced (moving
activities up 1 hour from the beginning of April to the end of September), which,
as experience has shown, makes it possib le to save 12-15 perr_ent of the electric
power used for lighting; speed limits were set on motor traffic in the countries in
: order to save fuel, etc. :
= Yet "centralized" measures of this kind are inadequate to achieve a sizable saving
- of energy in the utility and residential sector of the CEMA countries. Every mem- ~
ber of society must be aware of the need to optimize energy consumption in the
household. That is why a se cond group of ineasures in this field is aimed at chang- `
ing social psychology and the habits which the public has developed. But, as the
experience of the CEMA countries demonstrates, use of the news media to popularize
energy conservation in the household and also use of such new forms of educational
effort as, say, organization of national competition for energy conservation and
payment of money prizes to the winners,8 is at present proving not to be effective
enough for one reason or another.
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Raising retail prices of certain types of energy carriers consumed in the household
(mainly those of hydrocarbon origin) is seen as a more effective means of reducing
household energy u~e in the CEMA countries. This was done in 1979 and 1980 in Bul-
g2ria, Hungary, Romania and Czechoslovakia.
It is assumed that consumption of fuel and energy to meet the needs of the general
public will be reduced as much as one-fifth by means of these measures in fihe CEMA
� countries. Various forms of compensati.on are being used in the CF..MA countries so
that these measures specifically promote energy conservation without affecting the
_ level of real personal income. For instance, when rates were raised for gas, heat-
ing and electric power in Romania, the monthly wage of all worlcers was at the same
time raised hy 10-100 leus (depending an *he number of children); in Czechoslov=kia
- minimum amount:: of pensions and ~ther social security benefits and also family sup-
plements were increased; in Hungary spe~ific supplements were applied to wages and
pensions in the amount of 140-180 forints per month, and so on.
In a number of cases the CEMA countries do not resort simply to raising the rates,
but undertake to use a new procedure for collecting charges for sources of energy.
We are referring to the transition from fixed monthly payments, raising which does
not in practice promote conservation, to a charge that depends on the amount of en-
ergy consumed, which sharply enhances the motivation of every consu~r to take a
thrifty attitude toward energy. Implementing this principle necessitates install-
ing in houses apparatus to monitor consumption, which involves rather sizable out-
- lays by the government. Electric meters are now being used everywhere in the CEMA
countries; as for meters measuring residential consumption of pipeline ga~ and es-
pecially hot water in water supply and heating systems, they do not exist every-
where. In Romania, for example, the decision to put into production, to manufac-
ture and to introducE ?neters to measure consumption of thermal energy in households
was adopted after the raFes were raised--only in April 1980.9 Their design, pro-
duction, installation and the monitoring of their use require certain funds and or-
ganizational efforts and a rather lengthy period of time before this measure will
begin to yield a benefit--a motivation to conserve thermal energy.
We should note that the potential for energy conservation is rather limited in the
municipal service and residential sector.
We will indicate first of all the impossibility of repeated periodic performance of
measures to reduce rates of energy consumption in the household. Such measures, by
whatever methods they are carried out, are in practice exhausted once the optimum
and scientifically sound specific rate of energy consumption for lighting, heating,
hot-water supply and the like is attained.l0
In addition, the relative share of the municipal service and residential sector in
total energy consumption in the economy of the various CEMA countries varies a
great deal, reflecting the peculiarities of the climate, the extent of urbaniza-
tion, historical traditions, the standard of living thaC has been attained, and so
on. In countries where this figure is low, the ultimate result of ineasures aimed
at conservation of energy in the household is rather limited even if they are pre-
pared and carried out with the greatest care. In Romania, for example, the share
_ of the municipal service and residential sector in total energy consumption is only
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8-9 percent, and tlie assumed saving--one-fifth of that amount--will make it possi-
ble to reduce total energy consumption in the country by only 1.5-2 percent~ On
the other hand, Romanian industry consumes about 85 percent of all energy, and it
_ ie clear that the principal potential exists in this sector.
Finally, regulating the l~vel of energy consumption in i~he household must take into
- account that a further rise in the standard of living of the population of the CEMA
countries will be accompanied by an increase in the housing stock, a rise in the
supply of household appliances and equipment, more privately owned means of trans-
~,.:rtation, comprehensive development of the consumer service sphere, etc. All of
this will naturally involve increased energy consumption in this sector.
In other sectors of the ecoromy, above all in industry and transportation, these
limiting factors are absent, and the possibiiities for reducing energy intensive-
ness are far broader. That is why the principal directions~for energy consumption
in the CEMA countries are speeding up the process of modernization of production in
order to introduce energy-saving technologies, machines and equipment, and also
further improvement of planning, of management and of the economic mechanism in or-
der to reduce energy consumption in production.
In conclusion we should emphasize the more general aspect that is associated with
the problem of energy conservation. Against the background of the worldwide trend -
toward exhaustion of energy sources now being used, no conservation measures--on
whatever scale they are carried out--can yield a definitive solution to the problem -
of energy sufficiency over the long run, since all the wi11 in the world cannot re-
duce energy consumption to zero. Consequently, conservation ensures only a more or
less sizab le gain in terms of time, thereby facilitating the transition to new -
forms of ene;.gy resources and to new technologies for their consumption. The prin-
cipal task that now faces the CEMA countries in the energy field is to take advan-
tage of that time to restructure the fuel and energy complex.
FOOTNOTES
1. For instance, in Poland in the 1976-1980 period 22.5 percent more than planned
was allo cated to mining (34 billion zlotys).
2. In the current S-year period the CEMA countries are receiving from the Soviet
Un ion approximately 364 million tons of petroleum, 90 billion cubic meters of
gas, and 67 billion kilowatt-hours of electric power. We should emphasize
that energy carriers from the USSR are being delivered to the European social-
ist countries on preferential terms: the price of petroleum on the market of
the CEMA countries is now approximately 25-30 percent below the level of world
_ prices.
3. Evaluating this experience and the po5sibility of using it, we should take
into account that unlike the other GEMA countries, the GDR has a potential for -
reduction of energy intensiveness that is being worked on at a fast pace; it
consists of convert~ng a portion of the chemical industry from brown coal to
_ petroleum, which requires smaller inputs of energy. The other CEMA countries
develop their chemical industry on the basis of petroleum from the very outset.
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4. For instance, in the GDR a 6-6.3-percent annua~ growth of industrial output at
the present level of supply of those sources of energy, raw materials and sup-
plies which are most important from the economic standpoint requires that
their specific consumption be reduced by 2.8-3 percent per year on the ave r~ge
(see "IX s"yezd Sotsialisticheskoy yedinoy partii Germanii" [Ninth Congress of
the Socialist tlnity Party of Germany], Politizdat, 1977, p 50).
5. NOWE DROGI, No 3, 1980, p 61.
~ 6. In the European part of the USSR, for example, capital outlays for the ext rac-
tion, enrichment and shipment of fuel are 60-75 rubles per ton of standard
fuel according to design computations, whereas measures for fuel conservation
require capital investments amounting to 35 rubles per ton of standard fue 1 in
ferrous metallurgy, 20-25 rubles per ton of standard fuel in nonferrous metal-
lurgy and petroleum refining, and so on.
7. In Hungary, for example, the pool of government motor vehicles attached to en-
terprises and institutions was reduced by 40 percent in the 1973-1979 period
and is to drop another 15 percent by the end of 1980.
8. Such competitions were conducted in Bulgaria in 1975.
9. SCINTEIA, 4 April 1980.
10. Carrying out energy conservation measures in the household may also involve
unexpected ~ide effects. In the Unite~ States, for example, lowering the air
temperature in the household and in public buildings, which resulted from
higher prices of energy carriers, led to a sharp increase in the demand for
woolen articles, warm underwear, and so on, during the winter of 1979.
COPYRIGHT: Izdatel'stvo "Pravda", "Voprosy ekonomiki", 1980
7045
CSO: 1825 /17 END
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