USSR MONTHLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83T00233R000200130001-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 41
• Document Creation Date: December 22, 2016
• Document Release Date: June 10, 2010
• Sequence Number: 1
• Publication Date: March 1, 1982
• Content Type: REPORT

Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Directorate of Secret
Intelligence
USSR Monthly Review
Secret
SOV UR 82-003
March 1982
554
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
The USSR Monthly Review is published by the Office
of Soviet Analysis. The articles are coordinated as
appropriate with other CIA offices.
Comments and queries regarding the articles are
welcome. They may be directed to the authors, whose
Secret
SOV UR 82-003
March 1982
Directorate of Secret
Intelligence
USSR Monthly Review
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83TOO233ROO0200130001-8
Implications of the
Polish crisis
Contents
Perspective: The Polish Dilemma-Act II
While martial law has eliminated organized opposition and restored a
sullen calm in Poland, for the men in the Kremlin the risks and the
stakes remain high. The time that will be required to rebuild the Polish
Communist Party and the economy will assure Soviet sensitivity and
vulnerability on Polish issues for several years to come.
1 25X1
The Crisis in Poland: Implications for Polish Military Capabilities _ 3
The efficient execution of martial law plans by Polish troops has
probably persuaded the USSR that Poland can still be relied on to play
a key role in Warsaw Pact wartime operations. The Soviets may adjust
their operational planning and force structure, however, if the crisis
undermines Polish military reliability or significantly delays the sched-
uled modernization of the Polish armed forces.F___1
Soviet assistance to Poland in 1981 amounted to about $6 billion. The
burden of supporting Poland is becoming increasingly onerous as the
USSR's resource base shrinks and its hard currency position weakens.
25X1
25X1
25X1
25X1
centers in Europe
The Soviets have so far been reasonably successful in using propagan-
da, diplomacy, and economic pressure to minimize the damage from
events in Poland to their political and economic interests in Western
Europe. They remain uneasy, however, about the impact developments
in Poland may have on their relations with political and financial power
Secret
SOV UR 82-003
March 1982
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83TOO233ROO0200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Secret
NOFORN
East European Response to Polish Crisis 15
East European regimes generally are relieved that the Polish Govern-
ment has been able to check Solidarity and restore order without Soviet
intervention. Many of them, however, are concerned about the pre-
dominant role of the military and the decline of the party. They are
also worried about having to provide economic assistance to Poland
when they are trying to cope with economic problems of their own0
The Impact of the Polish Crisis on West European 19
Communist Parties
The imposition of martial law in Poland has frayed the relations of
many West European parties with the CPSU, heightened the differ-
ences in approach to international Communism among the European
parties, and intensified dissension within many of them.F__-]
The Impact of the Polish Crisis on Soviet Domestic PolicyF__1 23
In the wake of events in Poland, Soviet leaders have shown heightened
concern over the dissatisfactions of Soviet workers and consumers.
They have taken a number of measures to make official trade unions
more responsive to workers' interests, dampen rising consumer expecta-
tions, and learn more about the public mood.
Poland's Economic Strategy I 27
Premier Jaruzelski's economic strategy is to coerce enough output from
a crippled economy and a beleaguered population to ease Poland's
financial problems with the West and to lay the basis for recovery. To
achieve these goals, Warsaw is reducing living standards, considering
forced agricultural deliveries, and seeking aid from its allies.F__-]
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Secret
Briefs
Implications of the Soviet Reduction of Oil Deliveries
to Eastern EuropeF----]
Moscow's reduction of oil exports to some East European countries is
primarily intended to ease Soviet economic problems by freeing the oil
for hard currency sales in the West. The oil cutback's likely disruption
of the East European economies could damage Soviet political, eco-
nomic, and military interests in the region. F__-]
Design and Production
The Polish Aircraft Industry: Soviet Influence in
and have tried to develop a non-Warsaw Pact export market.
Poland ranks among world leaders in number of aircraft produced,
about 900 per year-primarily light transports, gliders, sport planes,
and helicopters. Most of the output consists of Soviet-designed aircraft
and components manufactured under license, although the Poles have
established a few production agreements with Western aircraft firms
Completion of BAM Railroad Delaye4
Central Asian Officials Censured
v Secret
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
25X1
25X1
25X1
25X1
25X1
25X1
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Implications of the
Polish Crisis
Perspective: The Polish Dilemma-Act II
Act I of the Polish crisis ended when martial law eclipsed the broadly
based reform movement spearheaded by Solidarity. The free trade union
organization had become the standard bearer of popular dissatisfaction
with party authoritarianism, bureaucratic incompetence, and faltering
living standards. Most ominous in Soviet eyes was the collapse of the party
amid increasingly political demands from Solidarity
Martial law has been successful in eliminating organized opposition and
restoring a sullen calm in Poland. For the moment at least, the threat that
institutional change emphasizing pluralism could spill over the borders of
Poland and endanger Communist rule elsewhere in Eastern Europe has
been stilled.
Even if the Soviets can regard martial law as a success, it is not
unqualified. Solidarity survives underground as a focal point for popular
dissent. Some of its leaders are threatening an escalation of resistance in
the spring. Poland's economy continues to deteriorate, with little hope of
substantial recovery in the foreseeable future. The burden of foreign debt
will remain crushing, and production will stagnate because of worker
discontent and the absence of critical Western imports. The party is still in
disarray, and the military regime will require years to rebuild it.
For the men who rule the Soviet Union the stakes are high. Moscow's
influence over the European left has been damaged: the Italian Communist
Party-Europe's largest-has taken another step away from Moscow, and
European opposition to INF has been at least temporarily weakened. The
access of Moscow and its allies to Western credits has been reduced. A fur-
ther unraveling of the situation in Poland could:
? Threaten to undermine the Soviet position in Central Europe because of
Poland's location astride the Soviet lines of communication to East
Germany and Poland's key military role in the Warsaw Pact.
Secret
SOV UR 82-003
March 1982
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
? Add a possibly massive aid burden at a time when the economies of the
USSR and its allies are already strained.
? Aggravate the shift in Western perceptions of the Soviet Union, with
negative consequences for Moscow's ability to drive a wedge between the
United States and its NATO allies and to maintain access to Western
credits.
Moscow has strong incentives to maintain a low profile in the Polish crisis
and minimize disruption to its ties with the major West European
countries. The burden of supporting Poland's economy is cutting deeper
into Soviet hard currency and other resources, and the West European
governments, as potential consumers of Soviet natural gas, hold the key to
Moscow's future hard currency earnings.
The Soviets will continue to pursue the cautious off-stage approach they
have used to this point. Over the next year, they probably will be willing to
provide some additional hard currency assistance as well as raw materials
to support the present martial law regime. Jaruzelski's progress in return-
ing control to the party will be slow. Soviet and Polish leaders are girding
for a long-term rebuilding effort in Poland. Hungary's recovery from
similar problems, for example, took the better part of a decade.
The articles in this theme package portray the costs of the martial law re-
gime, primarily as seen from Moscow. The reader is likely to conclude that
while the repressive measures of martial law will contain popular frustra-
tions, the time that will be required to rebuild the Polish Communist Party
and the economy will assure Soviet sensitivity and vulnerability on Polish
issues for several years to come.
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
25X1
25X1
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Secret
The Crisis in Poland:
Implications for Polish
Military Capabilities
The Polish and Soviet leaders' concerns about the
willingness of Polish Army and internal security units
to maintain control in Poland probably have been
allayed by the forces' effective performance in imple-
menting martial law. The Soviets probably have
lingering doubts, however, about the ability of the
regimelto mobilize Poland if it were called to support
military operations against NATO. These concerns
may cause some adjustment in Soviet operational
planning, but unless the Polish situation deteriorates
radically the Polish role in Warsaw Pact war-fighting
strategy will probably not change. The effects of the
crisis-', especially the continuing economic con-
straints-will impede Poland's plans to modernize its
armed forces and bring them up to Pact-wide stan-
dards of organization and equipment
The Armed Forces
Poland!plays a key role in Warsaw Pact war plans (see
In peacetime, the most important function of Polish
forces s to guarantee the viability of Communist rule.
In this role, the armed forces of the Ministry of
National Defense-approximately 400,000 strong in
peacetime-support the security forces of the Minis-
try of Internal Affairs, which include the national
police force (called the Citizen's Militia) and several
organs with more specialized internal security
forces.
missions (see table). All of these forces carried out
their part in imposing martial law with speed and
efficiency
Impact of Martial Law Operations
Implementation of martial law has not seriously dis-
rupted the Polish armed forces. Regular Army troops
were used to back up the internal security forces.
They deployed to urban areas throughout the country
but were used in a support role (manning checkpoints,
conducting patrols, and securing trouble areas), while
the principal enforcement role was played by the
Ministry of Internal Affairs troops. Most units of the
regular Polish forces have now returned to garrison,
and-if relative domestic calm continues-future
martial law duties probably will not seriously inter-
rupt their regular training.
the Army depleted its 1982 fuel allot-
ment in martial law support operations, and this, if
true, could curtail this year's field exercises.
Impact of the Economic Crisis
In mid-1981 General Siwicki, Chief of the Polish
General Staff, told the Ninth Party Congress that
Poland's economic crisis was having an adverse im-
pact on national defense. He warned that it might
reduce the effectiveness of the overall Pact defense
effort if it were not alleviated. Siwicki indicated that
economic problems had weakened Poland's defense
production industry, impaired the economy's ability to
mobilize, trimmed the stocks of strategic reserves, and
created difficulties in the modernization of the armed
The Polish military has attempted to ease the short-
term impact of domestic economic problems by con-
serving scarce resources, particularly fuel and food.
Since early 1981 Polish military units have had their
rations and fuel allocations cut, and this has affected
unit training schedules. Such curtailment, if particu-
larly severe or prolonged through several training
cycles, would reduce Polish military preparedness
25X1
25X1
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Warsaw Pact Forces for Initial Operations in Central Europe
Boundary representation is
not necessarily authoritative.
During the crisis, Polish military manpower has been
used extensively in civil sectors-beyond the normal
participation of troops in harvest support and civilian
construction projects.
this activity has created manpower shortages at
some garrisons. We believe, however, that it has had
only minimal impact on the Army's readiness to fight.
Of 10,000 soldiers assigned to work in the Silesian
coal mines, about a quarter were probably conscripts
who had already been replaced in their units by newly
drafted personnel. The remainder probably were in
"noncombatant service," a category that includes
skilled workers who are drafted, put under military
authority, and then returned immediately to their
civilian jobs.
To maintain the relative combat capabilities of its
forces, particularly in the face of NATO moderniza-
tion efforts, Poland had planned to continue its gradu-
al equipment modernization. Polish combat units (like
those of the other East European allies) are more
poorly equipped than similar Soviet forces, and some
of the equipment in their inventories is of World War
II vintage. The crisis is already hampering several
military production programs, however.
the.political and economic situation made it
impossible to consider beginning the licensed produc-
tion of T-72 tanks in Poland-though the agreement
to do so was concluded in the late 1970s. In addition,
strikes and material shortages have interrupted deliv-
eries of Polish-manufactured military equipment to
other Pact countries.
We anticipate that the Polish regime will attempt to
expedite military production and that some of the
planned modernization will take place regardless of
economic conditions. we
judge that the Poles are moving~ith T-72
production plans, albeit on a delayed schedule. Never-
theless, most goals almost certainly will not be met,
and the primary effort will be devoted to extending
the useful life of weapons the forces already have.
Prolonged curtailment of modernization efforts will
widen the gap between the capabilities of the Polish
and the Soviet forces.
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Polish Armed Forces
Ministry of National Defense
Armed Forces
Ground Forces
Personnel 290,000
(13 active divisions and two brigades)
3,400 tanks
1,136 artillery pieces
3,185 armored personnel carriers
Air and Air Defense Forces
Personnel
20 MIG-23s
360 MIG-21s
175 MIG-17s
30 SU-7s
35 SU-20s
36 SA-2 sites
14 SA-3 sites
Navy
Personnel
4 W-class submarines
I Kotlin DDG missile destroyer
23 medium landing ships
Ministry of Internal Affairs
Regular) Security Forces
Regular Police (Citizens Militia-MO) 100,000
Mdtorized Regional Citizens 25,000
Militia (ZOMO)
Voluntary Reserve of the Citizens 350,000
Militia (ORMO)
Border Guards (WOP) 20,000
Nadwislanskie Units 3,500
Military Reliability
The So I viets probably remain confident in the commit-
ment of the top Polish political and military leader-
ship to the Warsaw Pact. Throughout their careers,
the key military leaders have been trained by and
have cooperated with the Soviets, and during the crisis
many of them have stated publicly that a firm alliance
with the USSR is the only guarantee of Poland's
security. The Soviets have sometimes criticized the
Poles, but Polish military leaders apparently are still
being included in Pact military planning, Polish units
continue to participate in Pact military exercises, and
Moscow continues to .provide military assistance.
We believe the prospects for Polish security forces to
maintain order are good: Overall, Polish and Soviet
military leaders probably have been encouraged by
the steadfastness and obedience to authority displayed
by Polish troops. Before martial law, they were con-
cerned about Solidarity's influence in the enlisted
ranks, but Polish Army and security forces have
performed creditably throughout the crisis. During
disturbances at the Gdansk shipyards and at coal
mines near Katowice, for example,- Polish regular
Army units sealed off the areas to allow Polish
security forces to go in and deal forcibly with the
demonstrators. So long as the Army and security
forces remain loyal-and their recent performance
suggests they will-the Polish martial law regime
probably can prevent serious disorder and avoid pro-
voking a Soviet military intervention.
Nonetheless, the Soviets probably remain concerned
about the ability of the Polish regime to mobilize the
politically unsettled country if it had to play its role in
military operations against NATO. With or without
the crisis, the wartime behavior of the Polish people
would depend greatly on whether they perceived an
unambiguous threat to their national interests. The
Soviets probably are confident that, even lacking such
a threat, most of the Polish units could still be
directed into planned Warsaw Pact operations. How-
ever, they would have to reckon that the successful
operation-and even the security-of their lines of
communication through Poland might be jeopardized
by popular disapproval.
Soviet Response
Whatever loss of confidence the Soviets may feel,
their military responses will be constrained by eco-
nomic realities and the political context of what they
are trying to accomplish-the maintenance of Poland
as a stable, reliable ally. Thus, so long as there is no
military collapse or serious disaffection, the Soviets
are likely to resolve their doubts in Poland's favor and
to sustain and strengthen the Polish military posture
in its accustomed roles.
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Secret
To keep Warsaw's military modernization effort from
complete stagnation, Moscow may increase the level
of its military aid. The Soviets and Poles have dis-
cussed the types and amounts of military equipment
to be supplied. We doubt, however, that the Soviets
will view military aid as a principal solution to the
problem of Polish force development. Reestablish-
ment and growth of the defense industry will be given
high priority in Polish plans for economic recovery.
We are confident that Warsaw Pact planners will not
make major changes to deemphasize the Polish role in
operations. Such changes would serve only to decrease
the Pole's sense of responsibility and obligation to the
Pact. Nonetheless, the Soviets may make subtle ad-
justments to their unilateral plans for military contin-
Considering the fragility of Poland's political situa-
tion, any changes of Soviet force posture in Europe
and the western USSR will almost certainly be
gradual and unobtrusive. Barring a major breakdown
of order in Poland, the Soviets probably will not send
additional divisions into Eastern Europe. Permanent
increases in the readiness posture of a few selected
divisions in the western USSR would serve as a hedge
against a decline in Poland's capability to fulfill its
role in Warsaw Pact plans
If in the coming months the Polish Army or security
units demonstrate an inability or unwillingness to
maintain internal security, the Soviets will probably
augment their forces in and around Poland. Such
deployments could precede or accompany direct
Soviet intervention in security operations. More than
likely, they would be carried out with the passive
cooperation of the Polish military.
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
The Cost of Soviet
Assistance to Poland
Mosco w has sharply increased its economic assistance
to Poland since the beginning of the Polish crisis in
July 1980. The burden of providing this support is
becoming increasingly onerous as the USSR's re-
source; base shrinks and its hard currency position
weakens. Last year, direct and indirect hard currency
aid to Poland represented roughly 5 percent of Mos-
cow's hard currency earnings. This cost will cause
Moscow to place an even higher premium on achiev-
ing sufficient stability in Poland to allow a reduction
in Soviet aid. The Soviet-Polish relation profits War-
saw th1e most in economic terms but provides Moscow
The Assistance Record
Soviet assistance to Poland now accounts for roughly
one-fourth of Soviet economic support to all of East-
ern Europe.` It consists largely of subsidized exports
of oil and other materials. Planned precrisis support to
Poland in 1980 (mostly in the form of price subsidies,
especially for oil) amounted to roughly $3 billion.
Following the emergence of worker unrest at midyear,
Warsaw was unable to live up to its export commit-
ments, especially for coal, and the trade deficit quick-
ly climbed to $1.2 billion for the year. Moscow
granted Poland about $300 million in hard currency
assistance, largely in the form of a rollover of earlier
Soviet Ihard currency credits, to help mitigate the
effects of the unrest. On balance, total assistance for
1980 lit an estimated $4 billion, roughly twice the
previous year's level
Soviet, assistance to Poland rose to an estimated $6
billions in 1981. The growing gap between the price
Moscow charges Poland for oil and world market
prices accounted for a major portion of the increase.
' The costs calculated in this article include (a) conventional
economic aid in the form of ruble credits to cover trade imbalances,
(b) opportunity costs involved in charging "bargain prices" for
exports and paying "premium prices" for imports, and (c) direct
hard currency assistance in the form of credits and/or the rolling
The USSR charged Poland only about $17 a barrel
for its oil last year, or one-half the amount it was
receiving for oil sold in the West. At the same time,
Poland's trade deficit with the USSR rose to the
equivalent of $2 billion. Finally, the Soviets boosted
direct hard currency help to $1 billion, all in the first
quarter of the year. This help included a financial
grant of about $200 million, credits for food purchases
in the West worth another $200 million, and resched-
uling of the $820 million hard currency debt owed the
USSR in 1981. In addition, the Soviet Union agreed
to postpone until 1985 all repayments on Poland's
ruble debt.
The Situation in 1982
A promise of substantial ruble credits for Poland in
1982 comes at a time when the USSR is trying to
lessen the burden of providing economic support to
Eastern Europe.' The military takeover last Decem-
ber, however, forced the USSR to modify its policy
regarding economic support for Poland. While Mos-
cow probably has not decided on the actual amounts
of aid that will be required, Warsaw hopes the USSR
will provide more rather than less support. In a
protocol signed in early January, Moscow agreed to
allow Poland to run a deficit of 1.2 billion rubles in
their mutual trade in 1982. Although the amount is
less than the 1.4-billion-ruble deficit the Soviets al-
lowed in 1981, the agreement represents a major
reversal from the negotiating stance that was being
taken before martial law was imposed-that trade 25X1
would be balanced.
7 Soviet-East European trade growth had slowed markedly in real
terms by the mid-1970s as Moscow curbed exports of oil and
industrial materials. Not only did the USSR want to husband its
resources, but it presumably also wished to limit assistance pro-
vided through subsidized export prices. Trade agreements for 1981-
85 signed with East European countries in early 1981 called for a
leveling-off of Soviet oil deliveries and little or no increase in
exports of other industrial materials. Later in he year, Moscow
reportedly informed the Czechoslovaks, East Germans, and Hun-
garians that their purchases of Soviet oil on concessionary terms
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Secret
Moscow has not yet indicated a willingness to provide
Poland new direct hard currency assistance this year,
but the need to prop up the new government may
force its hand on the issue. Poland desperately needs
Soviet funding for foodstuffs and essential industrial
materials such as steel and chemicals-goods the
USSR would be hard pressed to supply from domestic
production. If Moscow were to completely fill these
immediate needs, the hard currency could total $2-3
billion in 1982 alone. Such expenditures on behalf of
Poland could add as much as 10 percent to Moscow's
hard currency outlays this year. The USSR would
probably be less willing to cover a portion of the $3
billion in interest and $7 billion in principal payments
due this year on Poland's hard currency debt to the
.West out of concern that such aid would not help
provide goods for the Polish economy. The USSR's
own emerging hard currency problems provide strong
incentives for Moscow to hold down its assistance as
much as possible.
during Jaruzelski's early March visit to Mosco
the Soviets agreed to provide Poland with more aid
than called for in the January protocol.
did not, however, indicate how much additional aid
would be provided or what form it would take. We
believe the Soviets will allow the Poles to run a 1982.
trade deficit larger than called for in the January
accord. Along with some likely hard currency assist-
ance, the USSR could accelerate deliveries of Soviet
goods. In any event, the offer probably falls well short
of what the Poles were asking. The Soviets may
attempt to make further aid contingent on Warsaw's
continuing to pursue policies that Moscow approves
and, thus, may dole out additional aid piecemeal.F-
Economic Interdependencies
Although the Soviets will want to minimize future
support to Poland, providing too little could cause
Poland's economy to collapse. Even without conces-
sionary aid, Warsaw is heavily dependent on Moscow
for critical industrial materials, which it has pur-'
chased for the most part in exchange for goods not
readily marketable in the West. Overall, roughly 40
percent of Poland's imports dome from the USSR
For several products, (notably oil, iron ore, and cot-
ton), Soviet deliveries have become indispensable be-
cause Poland lacks the hard currency to buy Western
substitutes. Without any foreign exchange in its cof-
fers, Warsaw has ceased buying OPEC oil. Soviet
crude oil now accounts for nearly all Polish consump-
tion. In contrast, Poland was purchasing 25 percent of
its oil in the West as recently as two years ago.
Without Soviet oil, insurmountable transportation
bottlenecks would occur. Petroleum accounts ,for over
four-fifths of the energy used, in the transportation
sector. Since only a fraction of the railroad system is
electrified, a cutoff of oil would halt the. movement of
most products within Poland. Given the small stocks
of almost all vital raw materials, the impact.on the .
economy would be instantaneous, far reaching, and
paralyzing.
Warsaw, on the other hand, is not without leverage
over Moscow. Poland's rail network and pipelines are
critical to both the USSR and the CEMA economies.
A breakdown in the transportation network between
the USSR and Poland would place particular and
immediate pressure on East Germany. It would, for
instance, pose a logistical threat to the security of the
Group of Soviet Forces, Germany. Alternate overland
routes from the USSR simply are inadequate to
transport the supplies normally shipped through Po-.
land. The rail network in Czechoslovakia is already
overburdened, regional road systems are poor, and
there are shortages of trucks.
Moscow also would be hurt-albeit temporarily-by
the cutoff of Polish deliveries that would result from a
cessation of Soviet trade. Although Soviet dependence
on imports from Poland is small,-this trade can be
helpful at the margin given the USSR's resource
pinch. Of greatest importance to the USSR are Polish
deliveries of sulphur, coking coal, and some transpor-
tation equipment. If Moscow were no longer to receive
Polish sulphur-which accounts for about, 7 percent of
Soviet consumption-the USSR would have to turn to
the West or do without. Doing without could jeopard-
ize Soviet output of sulphuric acid and its derivatives,
including nitrogenous fertilizers.
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Secret
Only 5 percent of the coking coal consumed in the
USSR came from Poland prior to the cutbacks in
deliveries in 1980-81, but Soviet steel mills located
close to !the border rely heavily on Polish coal. Current
coal production difficulties in the Ukraine have com-
pounded the problem for the Soviets. Moscow could
mitigate the effects of disruptions from Polish deliv-
eries bye arranging to purchase coal and sulphur from
the West in return for oil and other raw materials
previously sent to Poland, but only over time.
Moscow can exert strong economic pressure on War-
saw without cutting off aid. It could, for example,
hold out the promise of sizable hard currrency support
for political good behavior. It could-and probably
will-also make the granting of future ruble credits
contingent on Polish good behavior. Moscow will have
to balance its perception of what is necessary to keep
Poland on the right track against the USSR's own
deteriorating hard currency position in making deci-
sions onl assistance to Poland.
9 Secret
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
The Polish Dilemma
in Soviet-West
European Relations
The Soviets have so far been reasonably successful in
using propaganda, diplomacy, and economic pressure
to minimize the damage from events in Poland to
their interests in Western Europe. If the situation
remains relatively calm, they will continue their at-
tempts to divert Western attention from Poland and
refocus, it on issues such as arms control negotiations
and the Peace Movement. In the event of a serious
upheaval, they will seek to moderate the European
response by blaming US interference and economic
sanctions for pushing Poland over the brink. 0
Propagl nda Campaign
Although the Soviets appear to have contained the
European reaction, they seem to have been caught off
guard by the outpouring of Western criticism over
Poland! They must have expected a negative reaction
to the imposition of martial law, but they do not
appear to have anticipated the degree to which they
would be charged with responsibility for the actions of
the Polish generals. The widespread condemnation of
the Soviet role has caused some damage to Soviet
interests, for example, by robbing the European peace
and antinuclear movement of some of its momentum.
Still more worrisome, however, is the prospect that
future events in Poland may result in wider sanctions
and credit restrictions, thus adding to the strain on the
already hard-pressed Soviet economy.
The Soviets have relied heavily on propaganda to
counter the negative effects of Polish events. The
main thrust of their effort has been to differentiate
between the United States and its European allies,
denouncing the former for its "dangerous" words and
actions!, and warning the latter against permitting
themselves to be used-or misused-to serve US
interests. Moscow publicly expressed approval of the
moderate response of West German leaders following
the imposition of martial law. It also assessed as
positive the EC countries' failure to join in the
economic sanctions adopted by the United States on
29 December. Similarly, it absolved the West Euro-
pean member states of primary responsibility for the
NATO Council communique of 11 January by "sym-
pathetically" conceding that the NATO Alliance is
"used as a mechanism for imposing on West Euro-
peans the will of their overseas partner."
Central to Soviet responses to European expressions of
concern over Poland has been the allegation that
Washington is dramatizing the situation in Poland to
"worsen the East-West dialogue" and block talks on
"the most important issues," namely, arms limita-
tions.
In a 20 January Pravda article two senior foreign
affairs spokesmen cautioned European signatories of
the 11 January NATO communique that siding with
the United States on political and economic measures
against the USSR and Poland could lead to a "sec-
ond, expanded, and enlarged Cold War." Other Sovi-
et commentaries sounded the theme that the Yalta
agreement had sanctioned the division of Europe into
capitalist and socialist spheres and that US criticism
of Polish developments was really aimed at overturn-
ing the postwar order in Europe. The latter argument
had particular resonance in West Germany, where
some influential opinion makers have argued the same
case.
Diplomatic Reaction
The effort to distinguish between US and European
actions and interests has been even more evident on
the diplomatic level. Soviet President Brezhnev's re-
plies to letters sent him in late December by President
Reagan and Chancellor Schmidt reportedly differed
significantly in tone, the letter to Reagan being
negative and uncompromising, and the one to
Schmidt, moderate
Foreign Minister Gromyko's January meeting with
Secretary Haig in Geneva was also shaped with an
eye to the European reaction. Although Gromyko was
publicly contemptuous of Haig's announced intention
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83TOO233ROO0200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Secret
to focus on Poland, the Soviets apparently determined
that it was in their interest to participate. Gromyko's
efforts to refocus the talks on questions of disarma-
ment in Europe were primarily intended for a Euro-
pean audience.
The thrust of Moscow's diplomatic strategy emerged
in Gromyko's talks with East German Government
and party officials immediately after the Geneva
meeting. Gromyko was concerned with coordinating
the Eastern response to Western criticism of Polish
events, particularly at the CSCE talks which resumed
in Madrid in early February, and with preventing the
inclusion of West Germany in a united Western front
on Poland. Soviet strategy has been to counter West
Germany's uneasiness about being isolated in NATO
because of its relatively low-key response to Poland
with hints of improvements in intra-German relations.
The Soviets have used disarmament meetings to
charge the United States with pursuing a confronta-
tional course and for being the main impediment to
progress in arms control and peace in Europe:
? While US and Soviet INF negotiators pondered in
Geneva, the Soviets suddenly went public. On
2 February, Brezhnev intoned that diplomacy re-
quires "denouements," not "linkages"-an obvious
allusion to US attempts to link arms control talks to
Soviet restraint in Poland and elsewhere. Eight days
later TASS disclosed the Soviet proposals at the
INF talks)
Economic Relations
A primary Soviet concern has been to prevent the
Western reaction from spilling over into effective
economic sanctions. Although resigned to US sanc-
tions, the Soviets have sought to prevent the emer-
gence of a united front which could be much more
damaging than US sanctions alone.
The Soviets believe that West Germany is central to
any unified Western action. They have sought to take
advantage of the priority the Federal Republic's
governing coalition, as well as the opposition, assigns
to insulating East-West economic relations from other
international developments. The Soviets have publicly
argued that adoption of a policy of sanctions against
the USSR would inflict the worst damage on the
FRG-the USSR's biggest trading partner in West-
ern Europe
of their trade with socialist states.
The Soviets have played heavily on the theme that
sanctions could result in further economic dislocations
in a West European economy already in the throes of
a recession. In a major article in Pravda in early
January, Soviet Minister of Foreign Trade Nikolay
Patolichev warned that countries yielding to pressure
"from across the ocean" could pay for it with the loss
The Soviets have been most concerned with protecting
the giant Yamal pipeline, which is crucial to Mos-
cow's hard currency earnings over the next decade.
They now appear confident that the West Europeans
will resist US pressure to scuttle the gas pipeline,
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
since the French ignored US protests and proceeded
to sign a framework long-term gas purchase contract
after the imposition of martial law, and the Germans
have held to the agreement signed in November. The
decision by a consortium of French banks in early
February to grant the USSR low-interest credits of
$140 million for the pipeline was probably viewed in
Moscow as a psychological victory in its efforts to
discourage further NATO trade sanctions. Other
Allies have competed with each other to provide
financing at rates as much as 5 percent below the cost
of money to Western governments, although some
German banks recently deferred to NATO and EC
declarations on Poland and denied the Soviets addi-
tional'credits.
Assessments and Prospects
Soviet officials publicly exude confidence that West
European countries will not go too far in exerting
political or economic pressure on Poland or the
USSR . Events so far have reassured them that the
Europeans do not want Poland to take precedence
over economic interests and are not prepared to see
East-West relations deteriorate seriously because of
Nevertheless, Soviet officials remain uneasy because
of their inability to guarantee the future course of
events in Poland. Demonstrations there which result-
ed in serious casualties could heighten the Western
reaction and raise the prospect of agreed and damag-
ing sanctions. Moscow knows that the likelihood of
damage to Soviet interests in the West would increase
if Soviet troops were to become directly involved.C
If the situation remains relatively calm, the Soviets
will attempt to make Poland recede from the minds of
the West Europeans by focusing attention instead on
the INIF talks and Soviet willingness to begin START
negotiations. In the event of a serious upheaval, the
Soviets will probably support further repressive meas-
ures by the Polish military regime, while attempting
to attribute their necessity to US economic sanctions
and interference.
The Soviets are concerned about the adverse effects
that military intervention could have on their eco-
nomic interests in the West, particularly as they are
already witnessing an erosion of their creditworthiness
with Western banks. If intervention does become
necessary, however, the Soviets will not be deterred by
Western threats of further economic sanctions, but
will calculate-on the basis of Czechoslovakia in 1968
and Afghanistan in 1979-that West European
memories are short.
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Secret
East European Response
to Polish Crisis
The East European regimes generally are relieved
that the Polish Government has been able to check
Solidarity and restore order without Soviet interven-
tion. Many of them, however, are concerned about the
predominant role of the Polish military and the
decline of the party. They fear that the regime will
not be able to maintain control and that Soviet troops
will yetibe required. They are also worried about
providing economic assistance at a time when they are
suffering economic problems of their own and their
creditworthiness is being questioned by Western
bankers
i
Before Martial Law
The other East European Warsaw Pact governments
generally disagreed with the compromises the Polish
regime made with Solidarity. Czechoslovakia and
East Germany felt most immediately threatened and
often were ahead of the Soviets in publicly criticizing
Soilidarity and the Polish Government's willingness to
bend tol the union's demands. Similarly, Romania
viewed many of the Solidarity gains as excessive and
feared that the Soviets might see intervention as the
only solution in Poland and as a necessary reassertion
of the Brezhnev doctrine in Eastern Europe. Even
Hungary, which at first gave the organization cau-
tious praise, retreated when it sensed that its own
liberalization program might be threatened if Solidar-
ity achieved too much and the Soviets decided that a
return to more orthodox political behavior was in
order.
Most regimes recognized that Solidarity's achieve-
ments liad little to do with the level of dissident
activity, in their own countries. Nonetheless, several
took steps to improve conditions seemingly in response
to events in Poland.
? Although Czechoslovakia cracked down on dissident
groups, it delayed scheduled consumer price hikes
until early this year.
? Bulgaria, while criticizing activities that would fos-
ter liberalism in culture and the arts, also took
special measures to increase food supplies and con-
tinued modest economic reforms.
? The Hungarian Government ordered local officials
to be more sensitive of citizen complaints, postpone
scheduled retail price rises, and start dialogues with
unions and students.
? East Germany became slightly more attentive to
worker complaints.
In contrast, Romania and Yugoslavia, which have
shown increasing signs of unrest over the past year,
have taken a much harder line. Romanian President
Ceausescu, who always has feared that reform will
lead to pressures for additional compromises, has
chosen instead to use repressive measures to curb
unrest, although he did postpone price rises until early
this year. Yugoslav leaders likewise slowed their plans
to introduce major economic reforms because of
domestic unrest. No one in the Yugoslav hierarchy
has assumed Tito's decisive leadership, and those in
power fear that Albanian and Croat nationalism may
get out of hand if controls are relaxed.
Since Martial Law
East European regimes view the imposition of martial
law as a mixed blessing. Most approve of Jaruzelski's
move but fear that his approach will not work and
that Soviet intervention may still occur. Many are
concerned that the power of the Polish military will
spell trouble for the future of the Polish party and
could set a dangerous precedent for their own coun-
tries.
The regimes already following the Soviet line have
had the easiest time dealing with martial law. Prague
was relieved that the Polish public did not resist and
pleased that the Church did not call for massive
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Secret
popular resistance. The Balkans are somewhat uneasy
with the "banana republic" solution in Poland, but
only Yugoslavia has expressed its fundamental dis-
agreement with the military regime.
Since the imposition of martial law, official comment
from Budapest has become closer to that of the
Soviets while private comments show growing sympa-
thy for the plight of the Poles. The regime continues
to reassure the Soviets that liberalization in Hungary
does not threaten party control.
Economic Impact
The East European countries have been bearing part
of the costs of the Polish experiment. Between Sep-
tember 1980 and the imposition of martial law in
December 1981, they probably shipped at least $750
million in grain, food, and other consumer goods to
Poland; since then they have sent amounts worth
another $250 million. We do not know whether these
deliveries were grants, loans, above-plan sales, or
advance deliveries, but such amounts were above
earlier levels and are high for countries that are
themselves short of consumer goods. Apparently the
only outright hard currency aid has been East Ger-
many's grant of $100 million in late 1980.
The East Europeans also have provided indirect aid
by agreeing to accept reduced deliveries from Poland,
to pay more for Polish goods, and to send raw
materials to Poland for processing in idle factories.
Some increased shipments to the USSR may have
been to compensate the Soviets for larger deliveries- to
Poland.
The tightening of access to Western credit markets in
recent months, but particularly since the imposition of
martial law, has been the most troubling economic
problem for many of the East European regimes.
Poland's continuing financial troubles, Romania's
growing arrearages, and a general downturn in East-
West relations have made Western bankers increas-
ingly- Leary of lending to East European countries,
including Yugoslavia. Intermediate and long-term
financing have now all but disappeared. In combina-
tion with generally poor current account positions-
Czechoslovakia and Bulgaria are exceptions-the
deepening shadow of Poland's crisis threatens forced
reductions in badly needed Western imports and still
slower industrial growth rates. A further deterioration
in the Polish situation could force still greater auster-
ity measures elsewhere in Eastern Europe and possi-
bly rescheduling or default on debt to. the West.
Along with these economic burdens, the decline in the
Polish economy and the disruptions in various Polish
industries hurt other East European countries. East
Germany and Czechoslovakia, heavily dependent on
imports of Polish raw materials such as coal and
sulfur, were especially hard hit when Poland failed to
deliver because of production declines or because it
chose to sell in the West. These countries were forced
to seek alternative sources of supply, primarily in the
West and Yugoslavia, where they had to use scarce
hard currency for payment.
Finally, the loss of Polish imports and the general
economic uncertainty in Poland have complicated
economic planning throughout Eastern Europe. An-
nouncements of the new national five-year plans have
been delayed, and bilateral trade protocols with Po-
land through 1985 are meaningless in light of the
uncertainty about Poland's economic future. As a
result, leaders of the CEMA countries last June were
unable to agree on a five-year plan
Foreign Policy Implications
Thus far, changes in Poland have not altered relations
between the USSR and the other East European
countries, even though the Soviets have privately
protested the stands of the more independent ones,
primarily Yugoslavia.
Within the Soviet camp, Hungary probably feels the
most vulnerable to Soviet pressure because of Kadar's
internal liberalization, and if Moscow demanded more
orthodox behavior, the Kadar regime would acquiesce
despite the potential for internal unrest. The Soviets
apparently have tapped the East Germans to try to -
drive a wedge between the West Germans and the
United States. East German party leader Honecker
and West German Chancellor Schmidt were meeting
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11 : CIA-RDP83T00233R000200130001-8
when martial law was imposed, and Schmidt did not
break off their talks. Since then the East Germans
seem to be weighing how their actions will play in
Bonn, and media treatment, especially of Western
"interference" in Poland, seems to be muted in an
effort to avoid poisoning intra-German relations.=
For many of the regimes, heightened East-West ten-
sions and worsening relations with the West have been
the most difficult problems to tackle. In addition to
the decline in Western financial help, countries such
as Romania and Yugoslavia are finding it hard to
assert their independent foreign policy views. Even
BulgarI ia, which privately has been trying to improve
economic relations with the United States, has public-
ly joined in the Warsaw Pact's propaganda campaign
against US policies
Out[ooI k
Poland will continue to be an economic drain on the
rest of Eastern Europe, where the regimes in any case
had little hope of getting their economies back on
track soon. Indeed, the decline in or loss of Polish
deliveries increases the likelihood that they will face
lower economic growth and a need to spend scarce
foreign' exchange to find alternative sources of supply.
Their economic links with the West, which several
saw as ways to assert their independence from the
Soviets and to boost their economies, will be severely
curtailed or even broken.
The immediate spillover from Poland, however, is
unlikely to convince the various East European re-
gimes t!o alter their basic strategies for coping with the
political and economic challenges of the 1980s. Those
states that take refuge in orthodox practices will stick
to them, while those that seek progress through
innovation will go on experimenting-if a bit more
cautiously. All will continue to be sensitive to Soviet
guidance.
17 Secret
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
The Impact of the
Polish Crisis on
West European
Communist Parties
The imposition of martial law on Poland has frayed
the relations between many West European Commu-
nists and the Communist Party of the Soviet Union
(CPSU). It has also brought into question differences
in approach to international Communism and intensi-
fied internal problems already plaguing most parties
in the region.
The West European Communist parties have not,
however, made the same sort of specific recrimina-
tions against Soviet pressure on Poland that the non-
Communist parties and the West European govern-
ments have. Italian and Spanish Communists have
treated the Polish issue as a focus of a deeper
ideological and political question: the importance and
viability of the Soviet model in contemporary Com-
i
mu
ist thought and practice
i
Polish repression has done nothing to ease the West
European Communists' opposition to US reactions to
Polish developments or to US security policy in
general. They reject what they feel are US interfer-
ence in Polish affairs and US efforts to use Poland's
problems as an excuse to destroy detente and chain
the Allies to US policies. West European Communists
remind their audiences of alleged US sins in Turkey
ands Latin America, which many of them see as
analogous to the Polish situation.
The rhetorical response of the various West European
Communist parties to the Polish crisis follows from
their attitude toward Polish developments before mar-
tial law. By moving away from the Soviet model, the
creators of Polish renewal lent credibility to a major
thread of "Eurocommunism": the search for a road to
socialism based on indigenous European Marxist tra-
dition and on the premise that Communist parties in
developed capitalist states-rather than the Soviet or
Third World parties-are the cutting edge of histori-
cal development.
To West European Communists, the Polish renewal
was evolving into a practical example of the difference
between themselves and social democrats, on the one
hand, and Soviet-style Communists on the other.
Polish renewal promised to provide an atmosphere of
democracy and trade union independence in a politi-
cal structure still dominated by a party with revolu- 25X1
tionary rather than reformist traditions. West Euro-
pean Communists were fond of pointing out that
many of the strikes and political actions in Poland
after August 1980 would have been just as illegal in
the Western countries that praised them as in the
Warsaw Pact States that condemned themF 25X1
The Italians
Approach to International Communism. The Italian
Communist Party (PCI) is the largest and most
influential West European Communist Party and a
major political actor both in Italy and throughout
Western Europe. Its ideological challenge to Soviet
leadership of the international Communist movement
is the most serious intra-Communist dispute since the
Sino-Soviet split.
In a sense, Poland is only the latest in a series of
international crises that have moved the challenge
from the theoretical to the practical plane. It is
specifically European, however, and more important
The PCI leadership forthrightly condemned the impo-
sition of martial law. The problem was central to
European security and to the major differences be-
tween Soviet and. Italian Communists. The PCI has
been successful in gaining media support for its
condemnation. In addition, the imposition of martial
law revived memories of the 1968 invasion of Czecho-
slovakia. PCI leaders used both events to attack
Soviet repression and to underscore their belief that
their brother Communists in Eastern Europe would
take a democratic direction if permitted to do so.
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
The Communist slippage and Socialist advance in
Western Europe have encouraged PCI leaders to
move from Eurocommunism to a "Third Way"-a
search for common ground with non-Communist left-
ist parties to help their climb to domestic legitimacy
and international respectability. The PCI needs to be
all things to all people-it must continue:
? To oppose Polish repression.
? To stress the, doctrinal and political failures of the
Soviet system.
? To attack US foreign and security policy.
? To show that its Third Way is- not a mere retreat to
social-democratic reformism, but a revolutionary
strategy based on the necessity of class struggle in
developed capitalist states.
The PCI will need more Polands or Czechoslovakias
to illustrate the practical vitality of the Third Way in
comparison to the Soviet System0
Frayed PCI-CPSU Relations.
Polish events brought the PCI and CPSU closer
than ever to an actual rupture in relations. The PCI's
response to Polish repression has led it another step
toward legitimacy in Italy as a loyal opposition and
PCF's Polish policy in his speech to the party's
congress in February 1982. It is difficult to imagine
how the PCF could have managed matters worse.
The French Communist leaders' dealing with Polish
problems has caused significant tension within the
party. Earlier crises did not have this effect; the
party's support for the Soviet invasion of Afghanistan
caused considerable damage to its public image but
did not lead to major soul-searching among the
members, and Pol Pot's excesses made it relatively
easy for the PCF to support Vietnam's overthrow of
his Democratic Kampuchea.
The Polish crisis has caused public demonstrations of
rank-and-file dissatisfaction as well as internal policy
debates. The powerful French trade union movement
has been a particular source of restlessness. Commu-
nist trade union leaders reluctantly followed the party
line and stayed away from mass demonstrations pro-
testing martial law. Individual groups of Communist
unionists attended, however, and voiced as much
displeasure at PCF policy as at Polish repression.
potential governing party.
It is unlikely that a formal break will occur, but the
PCI will probably try to intensify its substantive
debate with Moscow. The tone of this debate will
reflect the PCI view that Soviet-style socialism is as
obsolete as the Socialist International (with which the
PCI is also willing to work)
The French
The French Communist Party (PCF) has been the
major West European political loser in the Polish
crisis. It took a position rationalizing the imposition of
martial law as necessary because of Solidarity's ex-
cesses, a position which has run against the grain of
West European feeling and clearly destroyed what
little remained of PCF claims to ideological and
political independence
A belated and tentative effort to modify the position
hurt the party further. A letter from PCF leader
Marchais to Jaruzelski expressing concern over mar-
tial law was generally scorned as a hypocritical
attempt to regain public favor. The damage increased
when Soviet Politburo member Chernenko praised the
The blow to PCF credibility does not immediately
threaten Marchais' position, however.* He was re-
elected at the congress, and no clear alternative is in
sight
Nevertheless, unless French Communists can find' a
new focus for party unity, the Polish crisis will
continue to weigh them down. The PCF's stock is the
lowest it has been since World War II, and if the
crisis moves to increased repression and bloodshed or
to Soviet intervention, it may sink even lower. The
party probably would condemn a Soviet invasion, but
few in France would take its line seriously.
The Spaniards
Spanish Communist leaders initially hesitated to com-
ment on martial law, perhaps fearing that strong
criticism might jeopardize their financial support
from Cuba, North Korea, and other Communist
states. More recently, however, they have denounced
it, in an effort to refurbish their international image
as the most independent West European Communists.
25X1
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
While the Italians have been careful to avoid an open
break with Moscow, Carrillo declared a formal rup-
ture between the Spanish Communist Party (PCE)
and the CPSU.
The PCE, weaker than its French and Italian counter-
parts, has long sought to establish a reputation on
international issues, and it hoped that Poland would
be a good vehicle for enhancing the party's doctrinal
and political independence. Unfortunately, the PCI-
CPSU polemic has overshadowed PCE statements,
and Carrillo's break with Moscow seemed like a
shallow effort to regain public attention. The Soviets
hardly noticed-a fact that probably infuriated Car-
rillo and embarrassed his followers. Rather than
dignifying Carrillo by a rebuttal, Moscow may plan to
work around him with pro-Soviet elements in Spain.
Most importantly, Spanish Communists are deeply
divided, and this prevents them from developing either
and effective domestic strategy or an effective line on
Poland. The "Renovators" (PCE leaders interested in
greater internal party democracy) were, to a large
extent, the ideological fathers of PCE Eurocommu-
nism. Since Carrillo ousted them, he seems unable to
generate sophisticated ideological and political argu-
ments to support his policies.
The weak PCE risks being overshadowed permanently
byi the strong Spanish Socialist Party, and Carrillo
does not need a PCI-style Third Way to increase
Socialist domination of the Spanish left. The PCE
thus continues to stress its Eurocommunist credentials
and hopes to stave off a proliferation of Socialist-
Communist united fronts in Europe. The Italians'
interest in such fronts could become a cause of future
differences between Spanish and Italian Commu-
nists-although the PCE cannot afford to differ too
sharply from a party whose attention and support it
needs.
10s likely that Carrillo will fail in his efforts to win
the PCE international prominence and that the Third
Way will replace Eurocommunism as a vibrant leftist
movement. Until Carrillo can settle his internal prob-
leins-or is replaced by someone who can-the Span-
ish Communist Party seems destined to lose interna-
tional stature and domestic strength.
Other Parties
The Polish issue has seriously affected other parties as
well. The Portuguese Communist Party, largest pro-
Soviet West European party except for the French,
has been hurt domestically by public reaction against
Polish repression. Party members seem to be ignoring
the Polish issue as much as possible and trying to
concentrate public attention on opposition to NATO
security policy.
The Belgian and British parties are badly divided over
Polish developments, and the former may even suffer
a formal split over the issue. Dutch Communists,
more Eurocommunist in outlook, are'relatively unified
in opposition to martial law but have suffered domes-
tically from the anti-Communist fallout from Polish 25X1
repression. Pro-Soviet parties, such as the West Ger-
man and Austrian, have suffered even more
The Dutch, British, and similar Eurocommunist par 25X1
-
ties have so far refrained from joining the ideological
offensive against Moscow led by the Italians and, to a
lesser extent, the Spaniards. The smaller parties do
not have a significant electoral base on which to rely
in lieu of international Communist support. So far,
the PCI has been slow to offer international political,
polemical, and organizational help to other parties
claiming independence from Moscow. All of these 25X1
Communists probably want to avoid the impression at
this stage of creating a new organization, or of cutting
themselves off irrevocably from existing Communist
forums
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
The Impact of the
Polish Crisis on Soviet
Domestic Policy
Events in Poland have heightened the sensitivity of
Soviet leaders to dissatisfactions among their own
Population. Several high party officials have stated
publicly that the shortcomings of official trade unions,
unfulfilled consumer expectations, and the leader-
ship's misreading of public opinion were the principal
factors leading to the breakdown of authority in
Poland, and have suggested that similar problems are
a cause for concern in the Soviet Union. To prevent
such mistakes, some leaders have stressed the need for
greater responsiveness to the concerns of workers and
consumers, while others have called for a reaffirma-
tionlof traditional values to strengthen public morale.
Soviet leadership concern over the USSR's own eco-
nomic problems, including recent shortages of food
and other consumer goods, has been increased by the
problems in Poland.
The' first public assessment of the implications of the
Polish situation for the Soviet Union was made by
President Brezhnev at the 26th Party Congress in
February 1981. Brezhnev attributed Poland's prob-
lems to the leadership's lack of understanding of the
public mood, the country's economic problems, and
the influence of Western views on society. He suggest-
ed that party leaders in the Soviet Union should learn
a lesson from the Polish experience, and he urged
the, to pay more attention to the "voice of the
masses."
During Jaruzelski's visit to Moscow in March 1982,
Brezhnev also indicated that the Soviet leadership was
rethinking some domestic policies in the light of
Polish events. He stated that the "bitter lessons" of
Poland are something to learn from and that Commu-
nists "know how to learn."
Trade Unions
Soviet leadership concern over the domestic impact of
events in Poland has been reflected in efforts to make
Soviet trade unions appear more responsive to work-
ers. Shortly after the start of the Polish crisis, Soviet
leaders publicly began to encourage trade unions to be
more assertive in defending workers' interests and
showed new concern for improving their living and
working conditions. At the same time, however, they
stressed that unions must not challenge the leading
role of the party. These rhetorical gestures to improve
the credibility of the unions were soon followed by
measures to demonstrate the leadership's new solici-
tude for workers.
In January, for example, the CPSU issued a decree to
help improve vacation facilities for trade union mem-
bers. Last July, the organization charged with pro-
tecting workers' safety was upgraded to state commit-
tee status, and a former trade union official was
appointed as its head. There has also been a broad
effort to strengthen the hand of trade unions in
factory production conferences-the principal forum
for union officials and administrators to resolve dis-
putes. Managers who try to bypass its authority have
been sharply criticized in the press.
Party leaders and the press have repeatedly urged
party organizations to provide greater support for the
unions, particularly in their dealings with manage-
ment, and several.party organizations have been
reprimanded for failing to give such support. In
addition, unions have been encouraged to take a
bolder stance, and numerous press reports of negligent
administrators being dismissed at the initiative of
local unions have appeared. F_
25X1
25X1
Apparently displeased with the way trade unions have
been run, Soviet leaders removed trade union chief 25X1
Aleksey Shibayev on 5 March. Although his replace-
ment, Stepan Shalayev, has a trade union back-
ground, he was not a part of the current union
leadership. This change follows repeated criticism of
the trade unions from Brezhnev and other party
leaders, who have stressed the need for the unions to
more actively defend workers' interests. F_~
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
April Ideology Conference
The themes raised by Brezhnev at the 26th Party
Congress were discussed in greater detail at a major
national ideology conference organized by Suslov last
April. One Soviet journalist privately described the
conference as an effort to "tighten the ideological
screws" in the wake of Poland. At the session, party
leaders assessed the impact of the Polish situation on
the Soviet population and outlined measures to com-
bat its effects. Although most of the speakers did not
specifically mention Poland, many did, and the
speeches from the conference provide a comprehensive
overview of the Soviet leadership's assessment of the
domestic implications of the Polish crisis
Central Committee Secretary Rusakov pointed to
Poland's economic problems as a key factor leading to
the unrest. Other speakers at the conference reported
that, as in Poland, Western ideas are having a
negative impact on the Soviet population. Central
Committee Secretary Zimyanin, for example, report-
ed that it was "no secret" that Western propaganda is
having a negative impact on certain people, and he
called on ideology workers to make new efforts to
demonstrate to the Soviet people the advantages of
socialism over capitalism. Party secretary Suslov stat-
ed it would be "wrong" to ignore the effects of alien
ideologies on the population, strongly condemned
"consumerist" attitudes, and indicated that it would
be necessary to lower the expectations of Soviet
consumers. Deputy Premier Makeyev attributed the
need for belt-tightening to the arms race, and in an
appeal to Soviet patriotism stated that the "heavy
burden of defense expenditures is preventing us from
achieving our goals for improving social welfare."F-
Campaign Against Consumerism
The concerns of the ideology conference were further
elaborated in a ringing editorial in Kommunist, which
lashed out against "bourgeois-consumerist cosmopoli-
tan" values within Soviet society. The editorial
strongly condemned Western stress on individual and
material comforts and referred scornfully to the no-
tion that the West is a "land flowing with milk and
honey." The editorial made a strong appeal to tradi-
tional, patriotic values and particularly stressed the
importance of historical traditions.
More recent expressions of concern over consumerism
have drawn sharper parallels between the situations in
Poland and the USSR. The economic factors leading
to the Polish unrest, along with their implications for
the Soviet Union and other "socialist" countries, were
discussed in a November Pravda article by Petr
Fedoseyev, a member of the Central Committee and a
vice president of the Academy of Science. Fedoseyev
asserted that Poland's "complicated economic situa-
tion" and the deteriorated ideological climate were
major factors contributing to the crisis. He indicated
that other Bloc countries should draw a lesson from
this experience, warning that unchecked "private
property habits" and other bourgeois sentiments can
corrupt any socialist system from within.
In September, Central Committee member Richard
Kosolapov confirmed that Soviet leaders were reas-
sessing some domestic policies in the wake of Polish
events
Kosol.apov stated that the CPSU was now conducting
a "high priority" analysis of Polish unrest and that
economic problems were a key factor leading to the
crisis. He said that one lesson for other socialist
countries was the danger of incurring large debts to
the West. Kosolapov stressed similar themes in a July
Pravda article and stated that.Poland shows the
danger of pursuing unrealistic, "utopian" economic
programs.
These expressions of concern have been accompanied
by a well-coordinated media campaign to dampen
rising expectations among Soviet consumers. A sharp-
ly worded article in Pravda on 9 November by Feliks
Kuznetsov, the head of the Moscow Writers Union,
touched on many of the themes that have since
become common. Kuznetsov strongly condemned the
"consumerist mentality" of Soviet citizens, who he
charged had become "slaves" of money and material
possessions. To evoke a sense of sacrifice, he suggested
that people should pursue nobler goals "sacred to.the
human soul." He attributed the growth of consumer-
ist tendencies among Soviet citizens to their increas-
ing exposure to Western material values, warning that
in an era of mass communications it would be "naive"
to assume that the "consumerist myth" of Western
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
propaganda would "float over us like an innocent
cloud without making any mark on human hearts."
While these themes have been raised before by Soviet
writers, they have gained currency over the past year.
Other officials have also tried to placate consumer
demand by appealing to traditional patriotic values
and evoking a sense of sacrifice. This tactic was
evident in a question and answer session by Aleksandr
Chakovskiy, the editor of Literaturnaya Gazeta and a
Central Committee candidate member, broadcast on
Soviet television in February. Chakovskiy stressed the
past "sufferings" and "hardships" of the country and
expressed concern that Soviet youth today would find
it difficult to make the types of sacrifices made during
World War II. Chakovskiy continued to play upon
these patriotic themes when he stated that current
shortages of food and consumer goods bore a "direct
relation" to the costs of the arms race.
Current shortages of food and consumer goods in the
Soviet Union and the specter of Polish unrest over
similar shortages appear to be key factors behind this
campaign to dampen consumer expectations. Over the
past year the food situation has deteriorated through-
outthe country and rationing has been introduced in
many regions.
Attention to Public Opinion
Against the background of this attack on consumer-
ism, other leaders have been warning of the need to
payI more attention to public opinion. They have
stressed the Polish leadership's misreading of the
public mood as a key factor leading to the unrest and
have called for increased monitoring of public opinion
in the Soviet Union. Brezhnev first linked this issue to
Poland in his speech to the party congress, stating that
events there show the need to follow the views of the
masses more closely. Although some leaders had
previously called for greater attention to public opin-
ion,! this theme has been pressed with new vigor since
the party congress. Several months later
acknowledged in a
private conversation that pressures for reforms similar
to those in Poland were slowly building in the Soviet
Union.
Politburo member Konstantin Chernenko has offered
the strongest warning of the danger of ignoring public
opinion in the light of events in Poland. Writing in the
February 1982 issue of Voprosy Istorii KPSS, Cher-
nenko cited Brezhnev's remarks to the party congress 25X1
and reminded readers that the "harsh lessons" of
recent years underscore the danger of political crisis.
To forestall such a crisis he strongly urged party
leaders to pay more attention to public opinion, to
broaden public discussion within the party, and to be
more receptive to new methods of resolving problems.
Chernenko gave a similar warning in Kommunist in
September 1981. He wrote that the experience of
"other socialist countries" shows that Communist
parties must constantly stay in close touch with the
"vital interests" of the people. He cautioned that the
party is powerless without popular support and quoted
Lenin as saying that if the party does not "correctly 25X1
express what the people feel ... the whole machine
will break down." Chernenko further warned that
unless the interests of all elements of society are taken
into account by the leadership, there is a "danger of
social tension and political and socioeconomic crisis."
Over the past year the themes raised by Chernenko
have received increased attention in the press. In a
major Pravda article in September, for example, R.
Safarov, referring to Poland, stressed the importance
of understanding the public mood in reaching "correct
political decisions." Safarov stated that public opinion
provides a "sensitive barometer" to the "hidden proc-
esses of social life" that are otherwise scarely percep-
tible, and can provide leaders with "advanced warn-
ing" of potential "conflict situations."
25X1
25X1
25X1
25X1
25X1
2 oA"I
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Strategy
Premier Jaruzelski's economic strategy is to coerce
enough output from a crippled economy and a belea-
guered population to ease Poland's financial problems
with the West and to lay the basis for recovery. To
achieve these goals, Warsaw is reducing living stan-
dards, considering forced agricultural deliveries, and
seeking aid from its allies. Austerity, however, risks
intensifying discontent and jeopardizes Jaruzelski's
hopes of reaching an accommodation with the people.
After earlier periods of unrest, Polish leaders rapidly
increased wages and food supplies to reduce political
tension. Jaruzelski does not have this option, however,
because of Poland's huge hard currency debt and
limited access to new credits. He also has to contend
with widespread shortages of food and consumer
goods, excess money in circulation, and the reluctance
of farmers to sell to the state
Western stern sanctions compound these problems by re-
ducing imports and production and by complicating
Poland's financial situation. Sanctions prevent War-
saw from importing on credit and using export earn-
ings to pay interest to banks. This reduces the
amounts of vital materials and food that can be
purchased from the West.
Jaruzelski seeks to increase output to a maximum by
requiring a six-day workweek in key industries and by
slashing Western imports. The regime plans to run a
$530 million trade surplus with the West in the first
half of 1982 in order to pay some debt service and
reassure Western creditors.
Enforced Austerity
The Premier is relying primarily on massive retail
price increases to force down living standards, absorb
excess money, and correct market disorder. The price
hikes on food and utilities enacted on 1 February
raised the overall cost of living by more than 30
percent, while wages were increased by only an
the adjustment only after February 1985
real value of private savings by adjusting savings
accounts upward by only 20 percent and by crediting
estimated 20 percent. The regime also has reduced the
Almost one-fifth of the population-including private 25X1
and collective farmers, craftsmen, many service em-
ployees, and clergymen-has not received any com-
pensation under these measures. Private farmers,
moreover, have to contend with price hikes on equip- 25X1
ment, fertilizer, and other supplies that outweigh the
increases in prices they receive for their products.F_~
Consumers also face more retail price increases on
manufactured goods this year, although the govern-
ment will monitor price changes by enterprises and
consider further wage compensation. The impact of
the additional burden may be just as severe as the
food price increases.
25X1
25X1
Jaruzelski clearly hopes that higher retail prices will
reduce hoarding, shorten lines, and leave more goods
available for sale. This might help to mollify consum-
ers and give farmers more incentive to sell to the state.
The price increases on 1 February apparently have
helped keep more goods available, although some of
the improvement probably reflects government efforts 25X1
to put more goods on the market to cushion the blow.
CEMA Assistance
Warsaw is seeking help from its CEMA allies to
compensate for reduced supplies of Western materi-
als. The Poles have asked for large trade deficits, a 25X1
grain "loan," additional raw materials, and acceler-
ated deliveries in order to reduce idle production
capacity. In addition, they almost certainly want hard
currency assistance.
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
The USSR has been more responsive than East
European countries in allowing a 1.2-billion-ruble
deficit this year. This is less than the deficit of 1.5
billion rubles in 1981 but double what the Poles
sought last fall.
The Soviets also have agreed to reduce machinery
exports in favor of more useful goods and to provide
some above-plan shipments. These concessions do not
cover Poland's needs, however, and Jaruzelski will
keep pushing for more help.
One concession by CEMA will help only temporarily.
The CEMA countries agreed-apparently to help
soften the impact of martial law-to ship a larger
share of planned deliveries of a wide variety of goods
for 1982 in the first three months of the year and to
let Poland defer temporarily some exports. Warsaw is
required, however, to increase exports substantially
from April through June and to make do with fewer
imports.
Outlook
Jaruzelski is aware that his economic policy is a
gamble, requiring patience by the Polish people and
Western creditors as well as generous aid from other
members of CEMA. At best, Poland probably will
only be able to pay less than half of the $2.5 billion in-
terest obligations due this year to private bankers,
thereby keeping default an ever-present possibility. F
Polish consumers may well react to further reductions
in their living standards by increasing resistance. The
likely failure of Poland's allies to grant enough assist-
ance will generate tensions within the Bloc. It also
may undercut the arguments of Polish hardliners that
Poland should rely completely on the East and push
Warsaw back toward the West.
The combination of martial law restrictions under
declining living standards reduces the chance that any
accommodation with the populace will be reached or
significant economic reform be made. Compulsory
agricultural deliveries would bring the regime into
conflict with private farmers and the Church. Jaru-
zelski's economic policy, thus, will favor perpetuating
a strong martial law apparatus.F_~
25X1
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Secret
Other Topics
Implications of the
Soviet Reduction of Oil Deliveries
to Eastern Europe
The Soviets will reduce oil exports to some East
European countries in 1982 and possibly through
1985 to roughly 10 percent below 1981 levels. Mos-
cowlprobably is motivated primarily by the need for
hard currency and apparently calculates that the
political risks are acceptable. Nonetheless, the likely
weakening of the East European economies could
damage Soviet political, economic, and military inter-
estsin the region.
Dimensions of the Cutback
Thel reduction could exceed 95,000 barrels per day,
roughly 6 percent of planned shipments to Eastern
Europe. pe. The burden will not be evenly distributed:
? Czechoslovakia, Hungary, and East Germany,
which in 1981 received more than 90 percent of
thleir combined oil imports from the USSR, will
pri bably absorb nearly all of the reduction. They
can each expect cutbacks of. at least 10 percent in
1982: 38,000 b/d for Czechoslovakia and the GDR
and 19,000 b/d for Hungary (see table).
? Bulgaria, which also receives more than 90 percent
of its oil imports from the USSR, has at least been
denied increases; there have been no reports of cuts
tlius far.
? Romania pays hard currency (or hard goods) for the
Soviet oil it buys (roughly 20 percent of oil imports
in 1981) and probably will not be included in the
cutback.
29
Eastern Europe: Crude Oil Thousand Barrels Per Day
Consumption in 1981
Consumption
Imports
Improts From
USSR
Total
1,995
1,965
1,620
Bulgaria
320
340
300
Czechoslovakia
390
405
385
GDR
395
435
380
220
185
185
330
340
320
340
260
50
? Soviet interest in propping up the Polish regime
probably precludes any cutback in deliveries to
Warsaw.
Soviet Motivations
Moscow's substantial economic support of Eastern
Europe-in great part through exports of oil at
subsidized prices-has aggravated the Soviet Union's
own economic difficulties. In the coming years, the
drain will be accentuated because Moscow's ability to
draw on imports for its needs will diminish. Oil
exports-the Soviets' largest source of hard currency
earnings-will gradually fall, and natural gas exports,
the only alternative major earner of hard currency,
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
cannot be increased substantially until after 1985.
The Soviets now apparently want to transfer some of
the resources previously committed to Eastern
Europe-particularly oil-to bolster their own slug-
gish economy
Impact of Oil Export Cutbacks on
Soviet Economic Problems
Cutting oil deliveries to Eastern Europe will ease
temporarily the Soviets' growing economic difficul-
ties. The largest benefit will come not from using the
oil domestically, but from selling it for hard currency.
Even in today's soft oil market, the potential sales
could earn more than $1 billion in hard currency.
These revenues appear increasingly important in view
of Moscow's rapidly deteriorating hard currency posi-
tion and the need to provide economic assistance to
Poland. The poor 1981 harvest forced the Soviets to
spend some $4 billion more in hard currency for
agricultural imports in 1981 than in 1980. We expect
the agricultural import bill to climb even higher in
1982. The Soviet deficit in hard currency merchan-
dise trade more than doubled in 1981, to some $6
billion, and a similar or larger deficit is likely for
1982.
Sales of oil diverted from Eastern Europe will not
prevent the deficit from increasing. It will, however,
help the Soviet leaders for the time being to increase
food imports, avoid a substantial decline in current
living standards, and assuage popular grumbling over
consumer goods shortages and diversion of Soviet
goods to Poland. Recent press attention to the need to
remain sensitive to public opinion and needs indicates
leadership sensitivity to the political implications of
shortages
The longer term economic benefits of reductions in
aid to the East Europeans will be slight unless
deliveries are scaled back much further. The currently
projected cutbacks will not measurably help to accel-
erate Soviet GNP growth through 1985, and rising
domestic oil consumption will still reduce substantial-
ly the oil available for hard currency exports. The
Soviets would have to reduce annual oil shipments to
Eastern Europe by half between now and 1985 to
satisfy most domestic needs and still maintain sub-
stantial oil exports to the West. The risk of serious
economic and political problems in Eastern Europe in
the event of such a cut, however, makes that option
unlikely
Impact on Eastern Europe
The reduced Soviet oil deliveries are a serious blow to
the already stagnant economies of the East European
countries affected. Virtually stagnant per capita GNP
would have been likely in those countries in the 1980s
even if Soviet oil supplies had remained constant; a
decline in per capita GNP is now a real possibility.?
The East Europeans have little prospect for buying oil
on the world market or for buying Soviet oil for hard
currency. Czechoslovakia, East Germany, and Hun-
gary have already made painful cuts in Western
imports because of hard currency debt problems.
Czechoslovakia and East Germany would each have
to spend an extra $500 million and Hungary $250
million to maintain their 1981 levels of oil supply.
They cannot substantially boost hard currency earn-
ings, and the reluctance of Western banks to increase
their lending in the region will preclude their borrow-
The East Europeans intend to deal with the oil
reduction primarily by increasing energy conserva-
tion. To date, however, many energy-saving programs
have been ineffective, and industrial energy use has
generally increased in step with industrial output.
Cutbacks in investment are hindering conservation by
slowing the replacement of older equipment that uses
more energy than newer machinery.
At least in the short run, therefore, all three of the
East European economies targeted for cutbacks will
suffer:
? In Czechoslovakia, national income will stagnate at
best, and a decline in living standards is likely.
Substantial reductions in heating oil and motor fuel
supplies are already part of an austere 1982 plan.
? In East Germany, the reduction in Soviet oil sup-
plies could hamper growth in 1982. Recent conser-
vation measures such as a 12.5-percent decrease in
diesel fuel allocations will slow the growth of indus-
trial output.
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
? In Hungary, the prospect is for continued stagnation
if Soviet deliveries are reduced by 10 to 15 percent.
The Hungarians have already imposed three
straight years of economic austerity in an effort to
provide an incentive for them to seek other sources of
economic support. Over the long term, this could
weaken Soviet influence.
balance their foreign trade accounts.
Soviet Calculations
Moscow recognizes that reduced oil deliveries could
.damage its interests in Eastern Europe, but it appar-
ently does not expect serious problems. The Soviets
may reason-or hope-that, even if economic per-
formance is hurt, consumer dissatisfaction will not
lead to open unrest, or that if it does, the East
Europeans themselves will be able to contain it. They
probably believe, moreover, that most East European
countries will be able to adapt eventually to the cuts.
Nev ertheless, the Soviet decision to make the oil
cutbacks selective and to show greater tolerance on
some other issues suggests awareness of the political
hazards involved.
? Pioland has apparently been exempted thus far,
undoubtedly because of the high potential for fur-
ther unrest. It may even receive some of the oil
diverted from the other CEMA countries, even
tliough Moscow also may continue to use the threat
of reductions in food and fuel deliveries as levers
against the Jaruzelski regime.
? Similarly, Moscow has not openly protested Hunga-
ry's application to join the International Monetary
Fund. In addition to expressing confidence in Ka-
dar, this may signal that it has recognized the need
to loosen some traditional controls in partial com-
pensation for a tighter Soviet aid policy.
Prospects
Nonetheless, the oil reductions are likely to work
against long-term Soviet interests. Most important, a
more conservative Soviet aid policy will diminish the
political leverage that Moscow has derived from its
role as the major supplier of energy and raw materials
to its allies. The problems the oil cutbacks will cause
the East Europeans, and their concern that there may
be more cutbacks in this and in other areas, will
31
More immediately, any setback to the East European 25X1
economies would affect regional economic and mili-
tary planning. The economic burden of effecting
Warsaw Pact force improvements and sustaining cur-
rent levels of training activity would be increased.
East European resistance to Soviet pressure for accel-
erated force modernization would increase
Reduced Soviet oil deliveries may lead to increased 25X1
political problems for some East European regimes. If
tighter oil supplies cause more severe shortages of fuel
and consumer goods, consumer dissatisfaction will
almost certainly hamper efforts to increase worker 25X1
productivity and may cause more serious popular
unrest and anti-Soviet feeling.F__1 25X1
Although for economic reasons Moscow might prefer
to reduce oil exports to Eastern Europe much further,
it realizes that there are political limits to its freedom
of action. If the present cutback should prove to be
based on a miscalculation, the USSR will probably
restore some of the cuts. It can only do this, however,
at the expense of its own economy. Moreover, even a
reversal of course would not repair all the damage
done to the confidence of East European leaders in
Soviet economic support.
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Secret
The Polish Aircraft
Industry: Soviet
Influence in Design
and Production
Poland's aircraft industry ranks among the world's Principal Products of Polish Aircraft
leaders in the number of aircraft produced, with Industry in 1980s
production focused primarily on transport and agri-
cultural aircraft, helicopters, light sport aircraft, and
glicers. Over the period 1975-80, production was MI-2
11 M f
fairly stable at about 900 aircraft annua y. ost o
theloutput consists of Soviet-designed aircraft and
components manufactured under license, although the
Poles have established a few production agreements
with Western aircraft firms and have tried to develop
a non-Warsaw Pact export market. The current politi-
calsituation may result in a temporary decline in
production, but overall output over the next five years
is expected to remain at roughly the 1975-80 level.
The Soviet MI-2 helicopter and AN-2 and AN-28
transports will be the primary products.
Background
The Poles began producing foreign-designed aircraft
under license in the 1920s and indigenous aircraft
shortly before World War II. Immediately after the
war, they attempted to develop a number of domesti-
cally designed sport and trainer aircraft and light
transports, but the lack of a market within the Soviet
bloc limited production. Consequently, since the early
1950s the Polish aircraft industry has largely concen-
trated on the production of Soviet-designed aircraft,
engines, and components.
In'the 1970s the Polish Government, seeking to lessen
its dependence on production agreements with the
S ~viet Union, authorized expanded contacts with
Western aircraft producers. As a result, the Polish
aircraft industry now:
? Produces under license aircraft engine components
for Pratt & Whitney of Canada.
? Has purchased the manufacturing and marketing
rights for the entire range of air-cooled piston
engines produced by the US Franklin Engine Com-
pany (a now-defunct manufacturer of engines for
light aircraft).
33
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Major Polish Airframe Plants
AN-28 Cash
TS-11 Iskra
M-20 Mewa
M- 18 Dromader
PZL-104 Wilga
PZL-106 Kruk
PZL-110 Koliber
MI-2 Hoplite
Kania, Taurus, and Super Kania
W-3 Sokol
Over 9,000 Colts produced through 1981; production expected to
continue until 1983.
Production expected to begin in 1983.
Polish-designed jet trainer, produced in small numbers; currently
believed out of production.
Soviet-Polish-designed agricultural jet, total production not expect-
ed to exceed 270.
Piper Seneca.
Composite of the Rockwell International Thrush and the AN-2.
Polish-designed general-purpose monoplane.
Small Polish agricultural aircraft.
French Rallye Socata produced under license; production is not
expected to exceed 40 per year.
Over 3,500 helicopters produced through 1981 in military and
civilian configurations; production expected to continue to 1985.
Three variants of the MI-2 incorporating engine changes and
cosmetic changes to the airframe for export to the West.
Possible replacement for the MI-2; production is not expected until
1985.
? Produces the French Rallye Socata sport aircraft
(given the Polish designator PZL-110 Koliber) and
the US Piper Seneca light aircraft (M-20 Mewa).
? Has purchased production rights for portions of the
Rockwell International Thrush Commander S-2R
executive aircraft (designated M-18 Dromader).
Poland has not yet developed a significant export
market for these non-Soviet products, and Western-
related activities remain a minor segment of the
aircraft industry.
Airframe Plants
The Polish aircraft industry is concentrated in three
airframe plants and two engine-production facilities,
plus assorted component suppliers. The airframe
plants are at Mielec, Warsaw/Okecie, and Swidnik/
Lublin and primarily produce transports, agricultural
aircraft, and helicopters (see table 1).F---]
Mielec. The largest airframe plant is WSK-PZL
Mielec.' It is best known for licensed production of the
Soviet AN-2 Colt light transport, of which it built
over 9,000 between 1958 and the end of 1981. AN-2
production is expected to range between 200 and 250
aircraft per year through 1983; then it is to end and li-
censed production of the AN-28 Cash light transport
is to begin. The AN-28 will not be manufactured
anywhere except in Poland, where it probably will be
produced at the same rate as was the AN-2.
Mielec also produced the TS-11 Iskra jet trainer, the
Polish candidate for the Warsaw Pact common train-
er. The Czechoslovak L-29 was chosen, and only a
few Iskra trainers were produced (for domestic use
and export to the Third World). We believe the Iskra
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Secret
is no longer in production, but the Poles have recently Table 2
discussed a new engine for it and may still be building
Major Polish Aircraft Engine Plants
In addition, Mielec has produced the M-15 Belphe-
gor,'an agricultural jet of joint Soviet-Polish design,
which has not lived up to advertised expectations. The
program will probably be completely scrapped after
only, limited production. Other light aircraft produced
at Mielec are the Piper Seneca (M-20 Mewa) and the
M-1'8 Dromader, which combines parts of the Rock-
well! International Thrush Commander S-2R with the
AN_~2. Production of these two systems is approxi-
mately 75 aircraft per year. Mielec also supplies
components for the Soviet IL-86 Camber wide-body
transport; these include wing flaps, ailerons, and
vertical tail sections.
Warsaw/Okecie. The Light Aircraft Science and
Production Center PZL Warszawa (commonly re-
ferred to as WSK Okecie) has been a leader in the
design and development of light sport aircraft. It is
the primary production center for Polish-designed
aircraft of this type, including the PZL-104 Wilga
and the PZL-106 Kruk. WSK Okecie produces the
PZL-110 Koliber, but because the export market is
limited, production is not expected to exceed 40 per
year
Swidnik/Lublin. The Swidnik/Lublin complex (also
called WSK-PZL Swidnik) has concentrated on the
production of Soviet-designed helicopters. Since 1966,
the plant has produced more than 3,500 MI-2 Hoplite
helicopters in both military and civilian configurations
for customers in the Warsaw Pact and the Third
World. In a desire to expand exports to the West,
Swidnik has developed three new variants of the
MI-2, incorporating only cosmetic changes. Sales
have not been as successful as hoped. In addition, the
facility has developed a Polish-designed helicopter,
which reportedly has been accepted by the Soviet
Union for use (throughout the Warsaw Pact forces) as
a replacement for the aging MI-2. This helicopter,
designated the W-3 Sokol, is not expected to enter
serifs production until the mid-1980s
PZL-Engine Factory
GTD-350
M1-2/Hoplite
Number 2 at Rzeszow
PZL-3S
PZL-106
LIT-3
Unspecified Polish-
designed helicopters
SO-3
TS-1 I
PZL-Franklin
PZL- l 10 and powered
series
gliders
PZL-10
W-3 Sokol
AI-14R
PZL-104
ASZ-621 R
AN-2 Colt
VK-lA
MIG-15
Engine Plants
Poland's two major engine plants are at Rzeszow and
Kalisz (table 2). PZL-Engine Factory Number 2 at
Rzeszow supplies turboshaft engines to the
Swidnik/Lublin airframe plant for the MI-2 helicop-
ters; turbojet engines to the Mielec plant for the TS-
11 trainer; and piston engines for the PZL-110 Ko-
liber and for powered gliders. Rzeszow is also the
production facility for the piston engines purchased
from the Franklin Engine Company._~
The WSK-PZL Kalisz engine plant has been involved
primarily in the production of piston engines for
Polish light sport aircraft and for the AN-2 transport
assembled at Mielec. Since 1971 it has also been
producing a copy of the Soviet VK-1A turbojet engine
that is used on the MIG-15 fighter. We believe the
Soviet Union has stopped producing this engine and
that Kalisz provides replacement engines for the
MIG-15 aircraft still in use in the Warsaw Pact and
the Third World.
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Outlook
Production rates for most aircraft systems probably
have declined somewhat during the crisis in Poland,
but we expect overall production during the next few
years to remain at approximately the same level as
during 1975-80. Emphasis will remain on the two
major systems-the AN-2 light transport (until the
AN-28 light transport comes on line) and the MI-2
helicopter.
The Poles have marketed the MI-2 throughout the
world and,
the Warsaw Pact
has no immediate plans to curtail production in favor
of the newer Polish variants currently under develop-
ment.
We believe the Soviets will continue giving the Polish
aircraft industry enough contracts to keep its employ-
ment and production levels up. There is no developed
market that would support a growing demand for
Polish-produced light aircraft, however, and prospects
for Polish trade with the West are currently poor.
Thus, production under license to Western aircraft
companies will probably constitute only a small per-
centage of the total output of the industry for some
time.2
25X1
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Decline in Soviet
Industrial Output
Briefs
Civilian industrial production fell an estimated 3.5 percent in January compared
with January 1981-output declined in every major sector except electric power
and gas. Production of machinery for civilian applications, which fell more than
6 percent, was the chief casualty. The drop was caused by interruptions in electric
power generation in some regions and an 8-percent decline in finished rolled steel
production. Shortages of fuels hindered production and transportation. Coal
production dropped, and deliveries were slowed by intermittent failures in the rail
system. Although sufficient gas supplies may have been available, the inadequate
distribution system and storage capacity prevented gas from offsetting the coal
Rail Transportation
Problems
and oil shortages.
delayed the unloading of imported grain.
An acute shortage in railroad rolling stock has led to major bottlenecks in freight
traffic and contributed to a poor industrial performance during January. Some
industrial enterprises have reduced production or shut down temporarily because
of a lack of raw material or fuel deliveries. Deficiencies in rail transport also have
Agricultural, military, and trade requirements for rail transport remain high,
while road and inland-waterway transport still is unable to relieve railroads of
excessive short-haul tonnages. A cumbersome railroad administrative structure,
complicated by mismanagement, hoarding of railcars, and inefficient hauling
practices, further aggravates the situation. The railcar shortage cannot be 25X1
alleviated in the near term, because production of locomotives and railcars
continues to decrease. The output of freight cars has declined by about 3 percent
per year since 1976. While net imports of rolling stock-mostly from Eastern
Europe-offset some of this decline, they too have been falling since 1978.F__1
Completion of BAM The Soviets are now admitting that they will not be able to complete the Baikal-
Railroad Delayed Amur (BAM) railroad by 1985, as called for last November by Nikolay Baybakov,
Deputy Chairman of the Council of Ministers. This past December, Radio
Moscow noted that the punctual opening of traffic along the entire BAM depends
on the completion of the Severomuyskiy tunnel and is planned for 1986. The Soviet
Government recently negotiated a contract with a West German firm for two large
tunnel-boring machines for use on the Severomuyskiy and Kodarsk tunnels (15.3
and 2 kilometers long, respectively). The manufacturer does not expect to deliver
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
the machines until July and October 1983. Considering boring progress on the
tunnels to date, it is unlikely that drilling, lining, and track-laying operations along
the unfinished BAM sections will be completed before 1988.
Subway Expansion The cities of Alma-Ata, L'vov, and Perm' were recently added to a list of 21 Soviet
Enhances Civil cities where subway systems are either in operation, under construction, being
Defense (s) expanded, or planned. Subway tunnels and underground station platforms in
operation in 1981 could provide blast and fallout protection for slightly over
3 million people, approximately 14 percent of the January 1981 population of the
cities they serve. Those currently under construction in 16 Soviet cities probably
could shelter an additional 1,200,000 people, or roughly 3.7 percent of their total
urban population. Subway expansion planned for the 1980s could accommodate
2 million more city dwellers. By 1990, the total urban population that could be
sheltered in tunnels and underground stations listed for-19 cities is estimated at
some 6.2 million people. Subways for five other cities are to be completed after
1990
Continued development of efficient subway and underground streetcar transporta-
tion in the USSR's largest cities increases Soviet ability to provide civilian shelter
and to use subways in conjunction with helicopters and high-speed commuter
trains to evacuate key government, military, and highly skilled technical personnel.
Evacuation from Moscow, for example, could take from 15 to 45 minutes,
depending on the distance to nearby control and command bunkers or other
relocation sites.
Propaganda Foul-Up (u) Ever since the Soviet publication Whence the Threat to Peace? was heralded at a
Moscow press conference on 25 January, we have been expecting it to appear in
large numbers in Western capitals as part of a propaganda campaign to rebut the
US publication Soviet Military Power. This has not happened. Throughout
Western Europe the situation is uniformly the same-the publication, one of the
best pieces of propaganda the Soviets have produced, is available only in small
numbers, has been given scant media attention, and has had no discernible impact
on public opinion. The reason, is a foul-up in the
original printing order. A forei n-language press run of 50,000 was intended, but
only 500 were produced.
Central Asian Officials Numerous Soviet officials are being censured as the countrywide anticorruption
Censured (u) drive launched last summer gains momentum. Two recent cases were reported in
Soviet Central Asia. In the Kirghiz Republic, about a half dozen senior law
enforcement officials were either dismissed or reprimanded for laxity in the
prosecution of cases of large-scale embezzlement, bribe-taking, and speculation.
25X1
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Local officials were given until I March to improve the state of affairs. In the sec-
ond case, reported in the Kazakh Party newspaper, the director of the Alma-Ata
Polytechnicum was fired and officials in the Kazakh Ministry of Higher and
Secondary Education were indicted for falsifying the results of Russian language
exams. Their actions indirectly impugned the party's own propaganda on the
success of Soviet language programs. The publication of these improprieties
follows similar crackdowns elsewhere in the USSR and serves as a warning to local
officials to curb abuses of power.
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
 Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8
Secret
Secret
Sanitized Copy Approved for Release 2010/06/11: CIA-RDP83T00233R000200130001-8