NEW SOVIET APPROACHES TO ECONOMIC PLANNING AND MANAGEMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83T00853R000100180008-9
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 15
• Document Creation Date: December 20, 2016
• Document Release Date: February 28, 2007
• Sequence Number: 8
• Publication Date: September 1, 1982
• Content Type: REPORT

Approved For Reease 2007/02/28: CIA-RDP83T00853R000100100{8~9
`r, - Directorate of On 1 ential
to Economic Plannin2y
New Soviet Approaches
and Management
Confidential
SOV 82-10145
September 1982
511
Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
 Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
 Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
Directorate of Confidential
Intelligence
New Soviet Approaches
to Economic Planning
and Management
This paper has been prepared b
Office of Soviet Analysis. Comments and queries are
welcome and may be add~essed to the Chief. Policy
Analysis Division, SOVAI
Confidential
SOV 82-10145
September 1982
 Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
Conf dential
New Soviet Approaches
to Economic Plan
and Management 25X1
Key Judgments The Soviet leadership is moving toward a new approach to economic
Information available planning and management. The Politburo is trying to improve the cumber-
as of 3 September 1982 some coordination process, overcome the diffusion of authority among the
was used in this report.
many overlapping government ministries, and gain a tighter hold on
national priorities:
? Special goal-oriented programs are being drafted and included in the
11th Five-Year Plan (1981-85) to focus attention and resources on high-
priority civilian economic problems-energy, food, conservation of re-
sources-that transcend traditional lines of bureaucratic authority and
suffer from fragmented management.
? So far three special monitoring and troubleshooting commissions have
been created under the Presidium of the USSR Council of Ministers to
oversee management of target programs and to force interagency
coordination, and others may be in the offing.
Moscow is attempting to apply project planning and management tech-
niques-Soviet-style "management by objectives"-developed in the de-
fense sphere to critical problems in the civil sector. The changes at the
Council of Ministers appear aimed at institutionalizing to some extent civil
economic counterparts to the Military-Industrial Commission (VPK),
which oversees coordination of defense programs. These efforts, however,
do not constitute a genuine reform of the economic system and are not like-
ly to be effective. Rather, they reinforce the system's traditional bureau-
cratic features by increasing centralization and control.
Though not radical or innovative, this approach is, nonetheless, highly
controversial because it threatens to undermine political-administrative
arrangements that have prevailed for nearly two decades. In pressing the
target-program approach over the past two years, General Secretary
Brezhnev has drawn the party apparatus more directly into economic
decisionmaking and has blurred party-state roles and responsibilities.
Whether this approach will survive him, however, is not certain. The key
decisions and policy choices for the next plan will be made at a time (1983-
84) when leadership maneuvering and succession politicking are likely to be
especially intense. At the same time, the political uncertainty and risk
generated by the succession process will probably constrain both the pace
and scope of management reform.
Confidential
SOV 82-10145
September 1982
 Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
This approach could also add a new dimension to military-civilian rela-
tions. The creation of other commissions under the Council of Ministers
Presidium possibly could evolve over time to the detriment of the VPK and
may have caused concern that the military may lose some of its privileged
status and that civilian priorities increasingly may compete with defense
programs for scarce resources and leadership attention. Should the new
commissions and target programs begin to encroach on the prerogatives of
the military-industrial complex, such apprehension would mount rapidly
and impact significantly on leadership debate and the political succession.
On another level, the target-program approach may reflect added leader-
ship concern over Soviet vulnerabilities and weaknesses exposed by recent
Western trade sanctions and technology embargoes. The programs suggest
some regime efforts are under way to reduce economic dependence on
foreign imports over the long run and to limit Western political leverage.
Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
 Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
Conf dentiaO
New Soviet Approaches
to Economic Planning
and Management
Groping Toward a New Approach
In the past Soviet leaders have sought to manage
major civilian development projects through normal
administrative channels and without fully integrating
them into the five-year plan. As a result, such projects
have fallen victim to divided responsibility, fragment-
ed organization, and piecemeal solutions. Built pre-
dominantly along rigidly hierarchical and narrowly
compartmental lines, the Soviet administrative system
lacks effective mechanisms for securing the close
interaction and integration needed for these multi-
agency policy efforts. 25X1
Current leadership efforts apparently are geared to
build into planning and management a "program"
frame that focuses on priority problems that crisscross
sectoral and regional lines rather than to supplant the
basic branch-of-industry and territorial dimensions of
the continuing economic slowdown and sluggish re- 2 At times, the Soviets have created special management systems,
form efforts of the bureaucracy, General Secretary headed by councils or commissions subordinated to the highest
organs of the government, to make policy and ensure resource
Brezhnev announced, in November 1981, that the allocation for certain priority programs, such as for the nuclear and
Politburo had decided to air the whole question of space programs. Isolating such national programs as special objects
organization and management at a forthcoming meet- of high-level management has been clearly the exxeeyy~~t~~'pp however.
In general responsibility remains undefined or di ffa `1nd special
Introduction
As the presuccession struggle gathers momentum, the
improvement of economic management-a perennial
problem that has become a key issue in succession
politics in the past-is once again rising to the top of
the Soviet leadership's agenda. Ever since the summer
of 1979 the Brezhnev regime has seemed determined
to improve the basic workings of the so-called eco-
nomic mechanism. In particular, the planning and
management of key large-scale development problems
have moved to the center of the economic debate.
Future economic growth, technical progress, and an
improved standard of living hinge on how well the
Soviets deal with such problems as improving the food
supply, restructuring the energy balance, raising labor
productivity, or developing new natural resource
bases. Yet, it is increasingly evident that the prevail-
ing structure and methods of economic and political
administration are inadequate to the task. Spurred by
iri of the Central Committee. organizational arrangements to facil' ipn have not
a
special plenum on management is currently in the
works and could take place this fall.
This paper is one of a series examining recent re-
sponses of Soviet leaders to unusually serious ques-
tions about the functioning and future of the
economy.' It describes Moscow's development of new
approaches to the planning and management of high-
priority national programs, examines the growing
intervention of the party bureaucracy in economic
decisionmaking, and discusses the economic and lit-
ical implications of these new approaches] I
' For a detailed discussion of the July 1979 party-government
decree on economic reform and related measures, see DDI Re-
search Paper SOV 82-10068 (Confidential), May 1982, Soviet
Economic "Reform"Decrees: More Steps on the Treadmill (u) and
forthcoming DDI Research Paper The Role oI Territorial Produc-
tion Complexes in Soviet Economic Policy. (u)
been made or fall short of the mark. X1
General responsibility for organization an a ministration of
complex programs is usually entrusted to a "head" ministry or
department. In practice, however, the powers of hN)4i iistries are
inadequate to ensure effective operational control of participants
belonging to other ministries. An April 1982 arti(Kpmmunist
noted that the question of clarifying and expanding lle specific
functions and prerogatives of head ministries "has been raised
frequently but in vain. The problem is that some departments have
no intention of surrendering their rights." Another Soviet manage-
ment expert in an economics journal in November 1981 similarly
stated, "The economic mechanism, in fact, has functioned apart
from [the system of head ministries].'
Currently, the controversy centers on whether cn bodies,
with some limited reorganization and changes in their powers,
should act as lead agencies for programs or whether new, tempo-
rary program management bodies should be creaticse ques-
tions concern more broadly problems of redefining the roles and
responsibilities of interbranch functional agencies (especially Gos-
plan and other state committees), of brqnch s and depart-
ments, and of territorial organs as well. X1
 Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
the existing system.' Institutionally, the leadership
appears to be creating, to some extent, civil economic
counterparts to the Military-Industrial Commission
(VPK).? These commissions, under the USSR Council
of Ministers Presidium, provide integrating mecha-
nisms to monitor and steer hi h- riorit programs
through the bureaucracy-51
Target Programing. For the 1981-85 plan the Soviets
drew up for the first time a list of top-priority
economic and social problems for which special target
programs are being drafted (see table). These pro-
grams are to be formally incorporated into the plan as
' The cost of some of the largest programs equals and even exceeds
that spent on the development of entire branches of the national
economy. Writing in the official planning journal in June 1979, one
Gosplan expert estimated that the target programs may consume
up to 20 to 25 percent of all resources allocated for the development
of the economy. In a September 1980 Kommunist article, another
Soviet specialist suggested that the target programs should not
garner more than 15 to 20 percent of all capital construction funds.
The size of the share of capital investment devoted to these
programs has itself been-and is likely to continue to be-a subject
of heated controversy within the leadership. Too many long-term
and very costly projects could constrain even further the already
limited flexibility of economic planners in the new era of scarcity
when capital investment is expected to grow even more slowly. The
number of programs also must be limited lest the priority principle
becomes diluted
'The VPK oversees an coordinates military research, develop-
ment, and production programs. It provides liaison and mediation
for the Ministry of Defense the military-industrial ministries,
Gosolan, and the party
' In an article in the economics journal o the Siberian Division o
the Academy of Sciences in March 1981, one Soviet expert
summarized the general role of these high-level commissions as
"coordinator and monitor as well as arbiter and judge in interde-
partmental disputes." Setting up special commissions under the
Council of Ministers Presidium is not a new innovation. Such
commissions have often been formed to handle specific tasks, but
they are usually ad hoc and temporary bodies. Similarly, USSR
deputy premiers have long exercised general coordination for
related branches of the economy or for special policy areas. As with
head ministries, however, the specific powers and executive over-
sight functions of deputy premiers have been poorly defined, and
they apparently have onl a small support staff to help them
conduct their business
In a sense, then, the a new Presidium Commissions
to monitor specific target programs may be seen largely as an effort
to institutionalize on a more formal basis arrangements and
methods of coordination that have been conducted on an informal
basis in the past but are no longer effective in the contemporary
soon as they are ready.6 The Soviets describe these
superprograms as the "main links" and "backbone"
the current plan and economic strategy
The actual preparation of these target programs,
however, has been slow and difficult. Last November
both Brezhnev, at the Central Committee plenum25X1
and First Deputy Premier Ivan Arkhipov, in a Kom-
munist article, stressed the novelty and complexity of
this task. While joint party-government decrees issued
since mid-1981 provide a framework of authorization
for several programs, some programs, in fact, still
appear to exist in name only. In January 1982 a
deputy chairman of the USSR State Planning Com-
mittee (Gosplan) implied in a Soviet publication that
only 11 of the 15 comprehensive programs were fixed
enough to have been written into the 1981-85 plan
when it was approved last year. In a March 1982
article in the party's organizational journal, Gosplan
Chairman Baybakov referred to only 14 superpro-
grams, which suggests that one may already have
been dropped from the priorities list
Even the most widely touted target programs, more-
over, are still caught up in bureaucratic and method-
ological bottlenecks. Although the May 1982 plen~~jj
of the Central Committee finally approved the baSi
guidelines for the long-awaited food program, many
details have yet to be worked out. At the last Nov X1
ber plenum Brezhnev also criticized delays in deve
ing the program for reducing the use of manual la~X1
The West Siberian oil and gas complex, according to
Soviet academician A. G. Aganbegyan, still has "no
program" and is like "an army without a plan of
attack." The Baikal-Amur Mainline Railroad (BAM)
program is limping along, with only parts of it
6 Some of these programs like the construction of the Baikal-Amur
Mainline Railroad or the redevelopment of the RSFSR's noncher-
nozem soil zone, are not new. They existed as separate line items in
the 10th (1976-80) and apparently even the Ninth (1971-75) Five-
Year Plans, but they were not fully integrated with all sections of
the plans and frequently amounted to little more than the sum of
separate (and uncoordinated) branch and regional assignments
What is new about the 11th Plan is that the leadership has fornta~try~
drawn up a list of priority problems, fixed their number, and is
engaged in a comprehensive effort to program and fully include
them with all the requisite accommodations and resource adjust-
ments made throw hout the structure and content of the five-Y5X1
plan 25X1
Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
 Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
Confidential
Economic and Social Comprehensive
Target Programs for the 1980s a
Programs oriented to solving economywide problems
Food
Increased production of new consumer goods
Reduction of the use of manual labor
Conservation and rational utilization of raw
materials and energy
Extensive use of chemicals
Comprehensive use of minerals
Production of extremely scarce materials that
are largely imported
Programs dealing with specific priority sectors
Machine building
been strengthened by the creation of program-orient-
ed departments. At the February 1981 party congress
Brezhnev revealed that a commission on the West
Siberian oil and gas complex had recently been
formed under the USSR Council of Ministers Presidi-
um and that a companion interagency regional com-
mission (located in Tyumen') had been established
under Gosplan. He called these actions "steps in the
right direction" and phasized that "this work must
continue.'= 25X1
In July 1981 another commission was set up under the
Presidium for the conservation and rational use of
resources, and by decision of the recent May plenum a
similar commission has been created to oversee the
national food program and the "agro-industrial com-
plex." ' All three commissions, headed by deputy
Fuel and energy complex premiers, are analogous in scope and position to the
Transportation VPK, and a similar approach is likely for other target
Metallurgy programs 25X1
R
i
eg
onal crash development programs
Development of the West Siberian oil and gas complex
Construction of the Baikal-Amur Mainline Railroad (BAM)
and economic development of the BAM zone
Agricultural redevelopment of the RSFSR's nonchernozem
zone
a These programs are tentatively identified from various Soviet open-
source materials. Four of the target programs are major regional
development programs that focus largely on the establishment of
new resource (particularly energy) bases and giant industrial centers.
These programs are closely associated with the creation of so-callrA
territorial production complexes (TPKs)
included in the current plan. The draft of the trans-
portation program, according to the Soviet press, will
not be ready before the end of the year; a joint party-
government decree mandated that the program on the
use of chemicals be completed by mid-1983
Administrative Restructuring. To improve the effec-
tiveness of the administrative hierarchy, Soviet lead-
ers are creating special governmental commissions to
monitor target programs and formalizing leadership
roles that cut across departmental boundaries. The
authority of Gosplan in these target areas also has
Similar restructuring is taking place in some repub-
lics. The Ukraine, which has six target programs, has
established coordinating commissions under the
Council of Ministers for all of them, with a deputy
premier personally in charge of each. In Latvia, one
central coordinating commission (led by a deputy
chairman of the Council of Ministers) has been set up
and oversees all 12 of the republic's priority programs.
Presidium commissions for the food program and
resource conservation along the lines of the new
bodies in Mosc eing formed 11the
union republics 25X1
Georgian party boss Eduard Shevardnad2e5iiAdvanc-
ing the administrative restructuring even further. As
early as last year, he established a republic commis-
sion with himself as chairman to oversee preparation
of the food program and, already in late January of
'The "agro-industrial complex" in Soviet parlance generally covers
the Ministry of Agriculture, the ministries providinEMKI to
agriculture (such as fertilizers, pesticides, machinery, mixed feed,
repair services, roads, storage, and transportation facilities), the
Ministry of Procurement, and the ministries managing the food
processing and milling industries. Organizationally, however, the
new Presidium Commission is defined more narrowly and excludes
Soviet ministries producing machinery for food production and the
USSR Ministry of Production of Mineral Fertilizers even though
proponents of the a ro-industrial complex concept had urged that
they be represented 25X1
 Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
this year, a republic interdepartmental coordinating
council under a deputy premier to oversee the agro-
industrial complex. In another institutional departure,
the Georgian Central Committee in mid-May decided
to set up a republic coordinating council on science
and technical progress that Shevardnadze also will
head with other members of the republic party bureau
(that is, the Georgian politburo) leading various work-
ing groups. At republic party meetings Shevardnadze
has suggested that these restructuring efforts may be
only a first step and possibly a backdoor approach to
more general administrative reform and greater party
control
The Party's Role in Target Programing
and Economic Management
The political pressure for target programing and
administrative reform is coming from the party be-
cause there are no appropriate government bodies that
can effectively handle these questions. As a regional
party first secretary explained in the September 1981
issue of Kommunist, "Someone must take the initia-
tive and assume responsibility." "By the logic of
things," he added, "the part committee must act as
such an organizing center.
The increasing party intervention in target program-
ing is being openly debated in the Politburo. Follow-
ing Brezhnev's lead, several top party officials have
emphasized in recent months the Party's strategic role
in target programs:
o In a Pravda article in August 1981, Grigoriy Roma-
nov noted that the Leningrad party oblast commit-
tee "unites and directs" all work in this area and
stressed that each program "must come under strict
party control."
At recent republic plenums and in press articles
Vladimir Shcherbitskiy and Shevardnadze have em-
phasized the supervisory responsibilities of republic
and oblast party secretaries for priority problems as
well as the need for government restructuring for
more effective management of target programs.
More importantly, Andrey Kirilenko argued in Kom-
munist in August 1981 on behalf of a greater party
role, observing that the imperatives of technical prog-
ress require more comprehensive program planning
and more active party intervention in modernizing the
economy; at two back-to-back party-government con-
ferences on problems in the nuclear power industry in
July 1981 and February 1982-sponsored by the
Central Committee and presided over by Kirilenko-
"stricter party control" was the r co mended solu-
tion for improving the situation 25X1
Konstantin Chernenko, on the other hand, appears to
be opposed to this view. In the September 1981 issue
of Kommunist, Chernenko accented the need for the
party to address the social problems of the technologi-
cal revolution and pressed for reducing its managZr1
role. Chernenko claimed that usurpation by party
officials of economic management functions "only
creates the appearance of strengthening the party's
role and, in fact, often does much harm." He insisted
that clearer delineation of functions, not substitution,
is required "so that everyone knows his own lines."
Citing Lenin, he also implied that a better distribution
of functions was needed even at the Central Commit-
tee. Chernenko repeated these points in February
1982 and again in April in articles in Voprosy istorii
KPSS and Kommunist
25X1
Shcherbitskiy and Shevardnadze have been more
equivocal. In general, they are "prointerventionist"
and support tighter party control over priorities and
the management bureaucracy, but they apparently
believe these goals can be accomplished by forms of
party intervention less direct than those Kirilenko
advocates and by less direct control from central party
organs. These two republic party leaders have even
echoed the Chernenko line that usurpation of econom-
ic management functions by party officials leads
inevitably to reduced managerial responsibility and
effectiveness. At republic party special plenums on
science and technology in April and May of this year,
on the other hand, they both, like Kirilenko, insisted
on the need for greater party intervention to break the
barriers of bureaucratic and technological conserva-
tism 25X1
The Central Committee plenum in November 1981
failed to resolve this issue. From his published re-
marks Brezhnev seems to have come down more on
the side of the pro interventionists stressing, "We have
Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
 Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
Confidential
a right to expect that party committees at all levels
will enhance appreciably their influence on economic
life." At the same time, he warned that influence was
not to be equated with petty supervision or substitu-
tion for economic and administrative organs. Pravda
has repeated these themes in its postplenum editorials,
along with the point that the drawing up of target
programs "is within the power of any party organiza-
tion." The editors of Kommunist have similarly em-
phasized that the target programing approach has
acquired "the force of a general party directive."
Implications and Prospects
Because of the infancy of most target programs and
the new organizational structures set up to monitor
them, their impact is uncertain. This approach to
economic management, nonetheless, might have im-
portant implications for economic policy, political
succession, administrative reform, military-civilian re-
lations, and Soviet foreign policy. Fundamentally, the
approach is politically unsettling for a broad array of
Soviet bureaucratic elites because it threatens to
undermine-and undo-basic organizational policies,
institutional relationships, and operating principles
that have regulated Soviet politics during much of the
Brezhnev era. At the same time, it imposes increased
demands on an already heavily burdened bureaucratic
establishment
Economic Policy and Planning
Special programs and greater party control are not
likely to be effective in solving the economy's major
long-term problems and chronic ills. These adminis-
trative approaches may create even greater imbal-
ances and bottlenecks and impede economic perform-
ance. They may prove, particularly if implemented
with force, to be new Khrushchev-style "harebrained
schemes." In a June speech in Krasnoyarsk, Party
Secretary Konstantin Chernenko implied that Brezh-
nev's food program already is meeting heavy behind-
the-scenes criticism when he emphasized that it was
not a "wild, abstract, and ineffective" plan of action.
At the same time, Kazakh party boss Dinmukhamed
Kunayev similarly denied there was anything "super-
natural or impracticable" about the program. Beyond
these difficulties, the programs themselves promise to
have a long gestation period, and their integration
with overall economic plans promises to take much
more time. Thus, they may prove to be "paper tigers"
rather than viable wa s of designing and managing
the future 25X1
The real impact of these target programs on Soviet
decisionmaking, if any, is likely to be felt in the next
five-year plan (1986-90) rather than in the current
one. In the interim, these programs no doubt are
chewing up a sizable amount of bureaucratic man-
hours. In terms of the planning cycle, the key deci-
sions and policy choices for the next plarilbe taken
in 1983 and 1984 despite present delays and bottle-
necks. By that time the major programs should be
well fleshed out, and they probably will weigh heavily
in economic plan deliberations. As recently demon-
strated by the food program, Brezhnev already is
trying to use this policy planning tool to lock the
leadership into a particular course of action and to
guarantee the investment resources needed for its
implementation, but whether this tactic will survive
succession politics is problematic.'
25X1
Bureaucratic Politics and Leadership Succession
Whatever their economic effect, however, the target
programs will probably have a great impact on bu-
reaucratic infighting and succession maneuvering.
The programs themselves are products of the Soviet
political process and reflect the mindsets ?IJ ruling
elite, its penchant for administrative approaches and
strong bureaucratic aversion to radical structural
reform. The programs create possibilities for new
political alliances and interest groupings that criss-
cross sectoral and regional lines. Bureaucratic compe-
tition among target programs also will probably build
as existing programs fight to maintain their priority
while other projects struggle to acquire target pro-
gram status. As overall responsibility for target pro-
grams is vested increasingly in the deputYj ifmen of
the Council of Ministers, friction could deve op
among them, as well as between the Council's Presidi-
um and the more traditionally oriented ministries.F-
' For an evaluation of the recently announced Food Program in
general and for a more elaborate discussion of the agro-industrial
complex, see forthcoming CIA Intelligence Assessment The Brezh-
nev Food Program. (u)
 Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
Even within the Politburo and Secretariat, some
members' prestige and political fortunes might be-
come increasingly wrapped up in the target programs
under their sectoral or territorial supervision, particu-
larly if they and their programs get caught up in the
struggle for power and policy after Brezhnev. Cher-
nenko has identified himself closely with the food
program while Mikhail Gorbachev, the Secretary for
Agriculture, will bear prime responsibility for its
implementation. Vladimir Dolgikh, the Secretary for
Heavy Industry and new candidate member of the
Politburo, appears to have general oversight of the
energy and conservation programs. Politburo candi-
date member and Russian Federation (RSFSR) Pre-
mier Mikhail Solomentsev would seem to have keen
interest in the fate of the program for agricultural
redevelopment of the RSFSR's nonchernozem soil
zone and the Siberian-based programsII
The political succession and the uncertainity it cre-
ates, on the other hand, might have a dampening
effect on the prospects for reform of economic man-
agement. No leader likely to succeed Brezhnev would
have, initially at least, the power to push through a
comprehensive reform program over the opposition of
entrenched bureaucratic interests.' In addition, be-
cause of the advanced age of the present ruling group,
Brezhnev's replacement may be only an interim suc-
cessor, and leadership turnover will probably acceler-
ate in the coming years-a factor that will complicate
further the problems of building a consensus on and
commitment to reform. Any major management re-
form, thus, will probably have to await the emergence
in the late 1980s of a somewhat younger group of
Politburo members who might be more receptive to
change and sensitive to deficiencies of the existing
system as well as the consolidation of the new party
leader's position. In this sense, succession may open
the way for reform but after a possibly lengthy
transition period.
Meanwhile, Brezhnev's own efforts in recent months
to force administrative change and to try to prear-
range the succession in Chernenko's favor have
prompted political reaction and. bureaucratic resist-
ance that could subvert his program approach and
' Both the leading succession contenders at the moment-Cher-
nenko and newly appointed Secretary Yuriy r v-s igniti-
cantly lack experience in the economic area
Confidential
precipitate the succession struggle. At the same time,
Brezhnev's frail physical health, if not eroding politi-
cal authority, probably strengthens doubts among his
colleagues and the bureaucracy about his capacity to
carry out his policy designs and even possibly to
continue at the leadership helm. As cited earlier,
Soviet leadership statements indicate that differences
have emerged over the food program, complicating its
future and its managerial schemes. In the coming
months, preoccupation with the power struggle may
overshadow all other Politburo concerns 25 1
Administrative Restructuring and Economic Reform
These developments, moreover, appear to have shifted
the debate on economic reform. Until recently, Soviet
leaders sought to improve economic performance pri-
marily through further centralization of planning
rather than reorganization of management. Burea3t5X1
cratic restructuring was generally downplayed, we
believe partially in overreaction to Khrushchev's "ex-
cessive organizational itch" and arbitrary ways. Hav-
ing restored the system of centralized branch minis-
tries, abolished by Khrushchev, the leadership
adopted a conservative and cautious attitude toward
structural change. Over the past two years, however,
Brezhnev, who unlike Khrushchev did not generally
force radical organizational reforms on reluctant col-
leagues, has increasingly pushed the pace of adminis-
trative change along with the target program ap-
proach.I 25X1
This approach to planning and management suggests
possibly two alternative organizational paths for the
future. On the one hand, target programs are provid-
ing a vehicle for organizational change-albeit limit-
ed and ad hoc-in both the government and the party.
Restructuring is assuming the form of additional
bureaucratic layering and of special coordinating
commissions in both hierarchies rather than any
fundamental change in their formal administrativ5X1
structures. Although this may be a prolonged and
piecemeal process, and any significant breakthroughs
may not come until after the succession, the ground-
work for institutional change is being laid.
 Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
Confidential
On the other hand, the programs and new coordinat-
ing organs can be seen as bureaucratic devices for
limiting the scope of organizational change. They can
create the appearance of leadership action and struc-
tural change while avoiding substantive modifications
of the planning and management system. In short,
they may be used to finesse the problems of real
administrative reform. How they are used and abused
for political purposes will reflect the course of succes-
sion politics and the extent to which the programs
themselves become means of conducting the stru
for power by aspiring individuals and groups
Governmental Reorganization. Governmental restruc-
turing has centered on efforts to give the Presidium of
the Council of Ministers a more active role in man-
agement of the economic bureaucracy and to enable it
to function more effectively as an "Economic Bureau"
and court of appeal in interdepartmental disputes,
standing between Gosplan and the Politburo. The new
commissions provide potentially important leverage
points at the top of the administrative machinery
where leadership views and political pressure can be
brought to bear for purposes of improving problem
solving, overcoming bureaucratic squabbling, and
forcing interagency coordination in vital policy areas.
Because Presidium commissions often function de
facto as auxiliary agencies of the Politburo and-like
the VPK-may be overseen directly by the Party
Secretariat, these measures also appear aimed at
strengthening the effectiveness of the Politburo itself
and of the role of Central Party organs in the making
and management of economic policy
Although this approach is not new, changing political
conditions on top of the continuing economic slow-
down during the past two years have permitted inten-
sified restructuring efforts. Since the departure of
Aleksey Kosygin as premier at the end of 1980, his
successor, Brezhnev's associate Nikolay Tikhonov,
and a new team of deputy premiers have been seem-
ingly more willing and able to press Brezhnev's
supraministerial coordinating bodies. The three newly
created Presidium commissions under the Council of
Ministers, in fact, may be incipient forms of those
specialized supraministerial organs called for by
Brezhnev as early as the 1976 party congress and
subsequently at almost every major leadership forum.
The death of veteran party ideologue Mikhail Suslov
in January 1982 also removed from the Politburo and
Secretariat an important conservative and stabilizing
force who generally opposed economic reform and
institutional experimentation. 5X1
Party Reform. The target programing approach and
structural changes under way in the governmental
machinery raise the prospect of some organizational
adaptation in the party apparatus as well. Having
undone Khrushchev's institutional innovations and
restored the pre-1962 party structure, hLg5essors
have adopted as staunchly conservative a stance to-
ward organizational experimentation in the party as
they have in the government. Indeed, the formal party
statutes have not been modified at all by the past two
congresses, an absence of change unprecedented in
Soviet party history. Since party organization tradi-
tionally mirrors the governmental economic structure,
however, there will probably be pressure to realign
functional responsibilities so that the party apparatus
can police effectively the newly evolving system of
tar 1 rams and government coordinating bodies.
25X1
Some movement already is being made in this direc-
tion. A few oblast party committees have begun to set
up special offices or staffs to oversee key programs. In
line with the decisions of the May 1982 plenum,
agricultural departments are being established in
rural district party committees to monitor implemen-
tation of the food program and coordination within
the agro-industrial complex. In general,2l i*w
managerial approach and increased accent on party
control of economic administration suggest that a
regrouping, and possibly expansion, of the party appa-
ratus may be in the offing along with some organiza-
tional change. Such changes will be controversial,
however, and probably will be slow in coming and
perhaps largely cosmetic. 25X1
The recent changes at the Council of Ministers also
would seem to bear directly on the assignment of
responsibilities within the Politburo, the allocation of
tasks and organization of work within the Secretariat,
and the relations between central party organs and
Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
 Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
the highest levels of the Soviet Government. Although
we do not know what kinds of ad hoc adjustments
have been made with respect to these issues, some
organizational adaptation in the Party machinery
would seem to be on the agenda. At the same time,
whatever new structural designs are adopted, they will
necessarily become wrapped up with larger political
maneuvering and personal rivalries within the leader-
ship in the struggle for Brezhnev's mantle
Military-Civilian Relations
On another level, this approach could add a new
dimension to military-civilian industrial relations. In
the past, the military did not have to contend with any
civilian counterpart of the VPK. The creation of
commissions under the Council of Ministers for cer-
tain civilian programs and their endowment with
broad monitoring and coordinating responsibilities
like those of the VPK is a new wrinkle. These
commissions, nonetheless, are still largely experimen-
tal and untried structures with ill-defined powers and
an uncertain future. Until they gain real authority
and legitimacy through the experience of their useful-
ness, their effectiveness in overseeing their own pro-
grams remains problematic, and their ability to chal-
lenge the VPK or to extend their bureaucratic sway
over the operations of the defense industry is very
much in doubt
for nonpriority activities. While the battle over priori-
ties will grow more intense, the main struggle proba-
bly will not be between major military and major
civilian programs but is more likely to take place
within the civil sector. The real losers in this new
game are likely to be those civilian projects that fail to
win priority status. At the same time, it is possible
that these projects might include some organizations
that are third or fourth order suppliers or produce2s5X1
for the military. As a result, some defense programs
and defense industrial activities might be indirectly
affected by the new approaches. I 25X1
As yet, there is little evidence on how the Soviet
defense establishment actually stands on the new
planning and management approaches being used in
the civilian sphere. Articles in the military press
sometimes depict target programs as having "strate-
gic" or "security" significance, suggesting high-level
support, particularly for those programs oriented to
critical sectors like machine building, metallurgy, or
the fuel and energy complex. Here the armed forces
themselves have a strong vested interest in improving
Soviet economic performance and expanding produc-
tion and innovation capacity. Military opinion proba-
bly also favors gradual upgrading of the traditionally
neglected civilian industries that will provide broad,
infrastructural support for new weapon systems. 1&5x1
cent statements in the Soviet press by high-ranking
officers, including Defense Minister Dmitriy Ustinov
and particularly General Staff Chief Nikolay Ogar-
kov, reflect keen sensitivity to the prospects and
implications of intensified economic warfare with
Washington and, accordingly, to the need to overcome
existing vulnerabilities and weaknesses. Similarly, the
military high command probably is not totally imper-
vious to arguments that improvements in social condi-
tions, consumer welfare, and the overall health of the
economy will ultimately impact on Soviet defense
capabilities in the broadest sense. 25X1
Whether these new structures and programs become
merely minor irritants or major constraints on the
military-industrial complex remains to be seen. At the
May 1982 plenum, Brezhnev seemed to make special
assurances to the military that the food program
would not adversely impact on defense programs and
national security. Yet, to the extent the new ap-
proaches help the Soviets gain a better hold on their
critical civil sector problems, they may affect the
balance between defense and civilian priorities and
the ability of military program managers to carry out
their missions. Civilian target programs may begin to
compete with defense projects for increasingly scarce
resources and leadership attention.
This competition is likely to be more indirect than
explicit, however. By trying to stretch the priority
principle to cover critical civil sector problems, Soviet
leaders will necessarily reduce the resources available
At the same time, the new management approaches
probably instill apprehension in military circles. TR6X1
formerly unique position of the VPK and the absence
of civil economic counterparts at the apex of the
Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
 Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
Confidential
governmental structure reflected clearly the institu-
tionalization and legitimation of the priority of mili-
tary over civilian needs. Some members of the mili-
tary may fear that the recent institutional changes
could evolve over time to the detriment of the VPK
and of defense industrial activities. The military
establishment also may be concerned that the target
programs could take on broader dimensions during
the succession. Should the succession shape up so as to
give rise to a more open debate over investment policy,
the target programs might get caught up in the
struggle for power and disputes over resource alloca-
tion. Should they become vehicles for conducting
succession politics, the programs might come into
more explicit conflict with the defense establishment.
The particular way the target programs and new
coordinating structures evolve may also give some
signs about the state and direction of the allocation
debate and the broader tradeoffs between defense,
economic growth, and consumption
Foreign Dimensions
The leadership's sensitivity and desire to protect itself
from trade bans and technology embargoes seems to
have become a common thread through the target
programs as a whole. The list of programs was
initially compiled during the imposition of Western
economic sanctions against the USSR in reaction to
the Soviet invasion of Afghanistan and the declara-
tion of martial law in Poland. One of the original
programs singled out for this new priority status
reportedly focused on the development of certain
scarce but unspecified strategic goods that had been
major import items in the past-reflecting leadership
concern over Soviet vulnerability and dependence
exposed by the sanctions.
Brezhnev hammered on this theme at the May ple-
num on the food program. He cited the growing
dependence of the USSR on food imports as "a major
strategic concern," and he emphasized that a key aim
of the target program was to restrict food imports
from capitalist countries in order to "guarantee
against all eventualities." With the US grain embargo
10 Such goods might include high-quality speciality steels that make
up the second-largest Soviet import item next to grain. Tin,
tungsten, and molybdenum are strategic materials that might fall
within the framework of this program. Lar e-diameter pipe also
might be on such a critical target lis
in mind, Brezhnev declared, "The country cannot
depend on the whims of Western leaders who are
trying to use international economic relations as a
means of political pressure." And he added with
emphasis, "We have never put up with this nor are
we going to."0 25X1
Alongside the theme of reducing Soviet dependence
on Western states, increased stress is given to greater
reliance on cooperation with socialist countries, and to
integrating the target programs more closely with the
economic strategy for the 1980s of the Soviet-led
Council for Mutual Economic Assistance (CEMA).
Premier Tikhonov sounded this line in June at the
annual conference of CEMA country premiers in
Budapest by soliciting member participation in the
Soviet food program and calling for tighter Bloc
cohesion to counter Western policies of economic
warfare. The coming months are likely to see in-
creased Soviet pressure on the member !2$A1to
cooperate in common critical areas. In particular,
there will probably be even greater dovetailing of
Soviet target programs with the five long-term
CEMA cooperative target programs (energy, fuel and
raw materials, machine building, foodstuffs, industri-
al consumer goods and trans ortation) adopted at the
end of the 1970s1 25X1
On another level, the target programs reflect the
Soviets' apparently enhanced willingness to consider
the relevance of aspects of East European economic
experience to their own current and long-term policy
concerns. The food program in particular draws ex-
plicitly upon Hungarian and Bulgarian agricultural
practices. More broadly, however, a special commis-
sion has been created recently under thenAijiium of
the USSR Council of Ministers (headed by deputy
premier and Gosplan Chairman Baybakov) to study
the applicability of East European economic systems
to the USSR and to see if there are any lessons that
might offer some answers for its troubled economy.
The target programs provide a possible vehicle for
transferring selected aspects of East European eco-
nomic reforms to Soviet soil, a dimension that Soviet
economic reformers are increasingly likely to play up.
25X1
 Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9
(Confidential
Confidential
Approved For Release 2007/02/28: CIA-RDP83T00853R000100180008-9