USSR REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88T00799R000200030003-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 46
• Document Creation Date: December 27, 2016
• Document Release Date: January 24, 2012
• Sequence Number: 3
• Publication Date: April 1, 1985
• Content Type: REPORT

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V~ Intelligence 25X1
USSR Review
March-April 1985
&-aet
SOY UR 85-002X
April 1985
c'*y 568
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USSR Review
March-April 1985
The USSR Review is published by the Office of
Soviet Analysis. Comments and queries regarding the
articles are welcome.
Secret
SOV UR 85-002X
April 1985
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Contents
Soviet Arms Transfers to Perspective
the Third World
Arms transfers have been the USSR's main instrument for advanc-
ing its interests in the Third World as well as a major factor in
improving its foreign trade and hard currency positions. Moscow
currently faces challenges to the expansion of its export program
from increased competition, rising consumer expectations, and the
diminished ability of purchasers to pay. Moscow's lack of expertise
in marketing and servicing may also hamper its sales efforts in the
years ahead. But the Soviets' ability to sell and deliver equipment
rapidly and their willingness to extend generous terms will continue
to work to their advantage, and they will remain a major participant
in the world arms trade for the foreseeable future
Trends in Soviet Military Assistance to the Third World
The USSR has aggressively promoted its military assistance pro-
gram in the less developed countries for political and economic
gains. The program has been highly profitable for Moscow, earning
$5-6 billion annually in hard currency since the late 1970s. In-
creased competition from other arms exporters, the current outlook
for a stagnant or declining Third World arms market, and LDC
financial problems will hamper expansion of Soviet arms sales and
earnings.
The most tangible political benefit the Soviets have obtained from
Third World arms transfers has been entree to areas where they
previously had little or no presence. They have almost always been
able to establish a military advisory presence in the recipient state
and to develop a corps of Soviet-trained nationals, both officers and
soldiers. This provides opportunities for Soviet intelligence activities
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strong interest in maintaining ties to the USSR.
and, in many instances, has created a local constituency with a
Management of Arms Transfers to the Third World
weapons.
The highest levels of the party, government, and military are
involved in decisions on arms transfers because such decisions are an
integral part of Soviet foreign policy and may have important
consequences for domestic economic policy. Because of the need to
coordinate arms transfers with annual economic plans and to await
decisions from higher authorities at almost every level, the process is
usually lengthy and creates a measure of inflexibility in negotia-
tions. On the other hand, Politburo approval constitutes a national
commitment, making the Soviet Union a fairly dependable source of
new customers.
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The Hind is the Soviet entry in one of the most active sectors of the
international arms market-attack helicopters. It has sold well to
Moscow's traditional arms customers, but its operational shortcom-
ings could limit additional sales over the long term, particularly to
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cutting back net exports for hard currency.
In 1984 the USSR produced 12.23 million barrels per day of crude
oil and condensate-100,000 b/d less than in 1983. This decline (the
first since World War II) reflects a host of problems in the oilfields.
With production stagnant in West Siberia and falling in other
regions, 1985 could see a nationwide decline of 200,000 to 300,000
b/d. In that case, the USSR might be unable to satisfy domestic oil
requirements and maintain exports to Eastern Europe without
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The Soviet Tank Industry: Modernization for the 1990s 31 25X1
Over the past decade the Soviets have made sweeping changes in the
production methods of their tank industry to facilitate production of
tanks with increasingly expensive and complex components and
subassemblies. Overall production of tanks has declined, while the
industry's plant and equipment holdings have grown dramatically.
This modernization will enable the Soviets to produce increasingly
sophisticated and capable tanks more efficiently.
Educating the Agricultural Labor Force: 37
Winning the Battle But Losing the War?
Soviet agriculture is short of skilled workers. With the emphasis on
rapid mechanization and widespread use of more sophisticated
cropping and livestock-raising practices, the level of training and
skills of the work force must be raised and the better educated
workers must be retained on the farms. This will be difficult to
achieve because the incentives the regime is offering do not go far
enough to raise the average quality of the agricultural labor force.
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Soviet Arms Transfers
to the Third World
Perspective
For the past two decades, arms transfers have been the USSR's main
means of promoting its interests in the Third World. Initially designed to
strengthen the Soviet Union's political and military position, this program
also became, in the 1970s, a key factor in improving the USSR's foreign
trade position. It has served the Soviets well in both respects. Largely as a
result of security assistance, they have:
? Established and perpetuated relationships with many Third World states.
? Helped friendly regimes to survive.
? Gained access to air and naval facilities, thereby strengthening their
global position vis-a-vis the United States and enhancing their ability to
project force in most regions of the world.
? Increased pressure on the United States and its allies by bolstering the
confidence and capabilities of leftist, "anti-imperialist" regimes.
? Established a favorable trade balance with the non-Communist Third
World.'
? Earned hard currency (an estimated $5-6 billion annually).
? Made recipient states dependent on the USSR for compatible equipment,
spare parts, maintenance, repairs, and training.
? Expanded their military advisory and technical presence in recipient
states (to over 18,000 in 1984), thus increasing their ability to establish
contact with and penetrate local institutions.
? Created a ripple effect by which recipient states such as Cuba and Libya
become arms suppliers, enabling Moscow to distance itself from risky or
questionable ventures.
? Gained support for many of their positions in international forums.
Soviet-LDC trade figures do not include statistics for Soviet trade with Cuba and
Vietnam, which, as CEMA members, are considered part of the., socialist" community. The
amount of economic and military aid extended to these two countries (over $5 billion to
Cuba and almost $2 billion to Vietnam in 1983) obviously affects the USSR's current
account balance negatively.
Secret
SOV UR 85-002X
April 1985
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As an instrument of policy, security assistance has a number of important
advantages for the Soviets. Many Third World regimes face internal
instability and external pressure and are receptive to offers of military aid.
It thus offers an easy point of entry for establishing a relationship.
Secondly, the Soviets can compete successfully with the West in terms of
the quality and quantity of military equipment supplied, the speed of
delivery, and the extension of generous repayment terms; this is not the
case in most areas of civilian technology. In addition, military equipment is
a convenient commodity for Moscow. The Soviets can deliver obsolete
systems (being retired from their own forces) to lesser Third World clients,
particularly those to whom they are extending generous repayment terms.
And they can sell more sophisticated systems to more important clients,
either for hard currency or in exchange for geopolitical advantages.
Arms transfers have assumed a major role in the Soviet foreign trade
picture. In 1983 they accounted for 70 percent of all Soviet exports to the
developing world and made up over 20 percent of total hard currency
exports. While Moscow still makes concessionary arrangements with very
close and very poor clients, the focus of the Soviet program has shifted to
lucrative markets. In spite of the economic crisis in the Third World,
continuing Soviet sales and the accumulated debt of its customers suggest
that Moscow will continue to earn substantial income from its export
program into the 1990s
The article "Management of Arms Transfers to the Third World"
describes the prolonged, bureaucratic process by which decisions concern-
ing security assistance are made and implemented by the USSR. Because
the program has important implications for foreign policy, foreign trade,
and resource allocations, the highest party and government organs are
involved in determining its direction and size. The complex military and
civilian bureaucracy that oversees the negotiation and implementation of
the program is cumbersome, and Soviet industry lacks the sophistication in
marketing and servicing that its Western competitors possess. But the
Soviets are dependable and predictable arms suppliers and can, if need be,
respond rapidly to client needs.
In spite of its many advantages, military assistance is limited as an
instrument of policy. It is one dimensional in nature and often fails to
satisfy other aspects of the recipient country's needs. When political or
economic considerations become dominant, Moscow is far less able to
compete successfully with the West. Egypt in the early 1970s provides the
most striking example of this phenomenon. When Sadat decided to move
politically to resolve differences with Israel, he turned away from the
Soviet Union, which had no ability to help bring about a political solution.
Moscow currently faces similar tendencies in southern Africa, where the
United States has played a far more active role in the Angolan-South
African negotiations over Namibia than have the Soviets.
Secret 2
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The Soviets also have proved both unable and unwilling to provide the
economic assistance desperately needed in the Third World, and a number
of Soviet arms recipients currently are trying to maintain security ties to
the USSR while pursuing economic assistance in the West. Over the long
term, such countries may be more reluctant to become closely tied to either
East or West as they seek the advantages of dealing with both.
Military assistance has failed to give the Soviets the leverage they seek to 25X1
manipulate the behavior of their Third World clients. While they have
gained support from recipient states for policies that are mutually advanta-
geous or of secondary importance to those states, their efforts to use the
arms supply lever to advance their own policy objectives at their clients' ex-
pense generally have failed. The article examining Moscow's relations with
three different arms clients demonstrates this shortcoming. Iraq has been
one of Moscow's largest clients (almost $13 billion worth of arms), and
Moscow has benefited in terms of hard currency and regional presence.
But the USSR's numerous efforts to use arms supplies to gain policy
concessions from Iraq (for example, to ease pressure on Iraqi Communists,
cease attacks on Kurds, and stop the war with Iran) have failed and have 25X1
served primarily to exacerbate strains in the bilateral relationship. Similar-
ly, arms transfers to Guinea and Peru have provided Moscow entree to
each but have not bought it significant political influence in either
Moscow faces a number of constraints in its efforts to expand arms sales
and thus further advance its position in the Third World. The article
"Trends in Soviet Military Assistance to the Third World" suggests that
the value of identified accords may be showing a downward trend. There
are a number of factors involved in this trend. Some are cyclical (for
example, the normal period of consolidation after the signing of a major
contract) and some may prove transient (for example, the impact of the oil
glut). Others appear to be long term in nature, however, and could have an
impact on Moscow's ability to expand arms sales appreciably in coming
years. These include:
? The diminished ability of Third World clients, including important
purchasers, to pay for arms. Most developing countries are carrying
heavy debts, and even wealthier arms purchasers are facing problems of
overextension and debt. Moscow has been willing to renegotiate repay-
ment terms with valued clients but has proved hard-nosed in dealing with
others. The Soviets have been reluctant to make concessions even to
Libya, their largest arms purchaser (over $15 billion in arms contracts).
? Shifting needs and expectations of recipient states. Many clients have
become more demanding as they have had problems absorbing equip-
ment already received or have perceived difficulties absorbing more
systems. Some are unhappy with Soviet arms and seek better or more so-
phisticated equipment. Others want to diversify their arms sources for
political reasons.
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? Increased competition from the West and the Third World. Traditional
suppliers, including the United States, Western Europe, and China, have
been joined by new ones, such as Brazil, in aggressive and successful
marketing efforts. This has eaten into what might otherwise have proved
strong markets for Moscow.
In an effort to respond to rising demands and increased competition in
recent years, the Soviets have upgraded their own marketing efforts,
offering attractive packages and exporting some of their most sophisticated
weapon systems. They have, for example, agreed to sell India the MIG-29,
which is not yet fully integrated into the Warsaw Pact force structure. And
they have entered into licensing and coproduction agreements with New
Delhi on T-72 tanks and armored vehicles. These Soviet decisions almost
certainly were driven by the desire to prevent India's purchasing such
systems elsewhere.
The article "The Soviet Hind Helicopter: Prospects for Exports" assesses
Moscow's effort to market a sophisticated system that is not yet fully
integrated into its own force structure. Moscow has sold the Hind in its tra-
ditional markets, but has had difficulty breaking into new markets. This in-
ability reflects the USSR's lack of marketing expertise as well as concern
about military technology being compromised. The Soviets will have to
become more adept and flexible in both areas if they are to compete
effectively with sophisticated Western systems.
The Soviets will continue aggressive efforts to maintain and increase their
share of the Third World arms market in the years ahead. They will be
particularly accommodating in negotiations with hard currency customers
and countries they perceive as having geopolitical importance, but they will
continue to use security assistance as a means to advance their position
generally. Moscow almost certainly will be able to maintain an extensive
arms export program, but may not expand it significantly or return to the
hard currency bonanza enjoyed in the late 1970s. Continuing regional
tensions, the desire for additional systems by old clients, competitive Soviet
marketing of new and sophisticated systems, and a desire for diversification
by many states guarantee Moscow a significant share of the Third World
arms market.
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Trends in Soviet Military Assistance
to the Third World
Military assistance is by far Moscow's most important
foreign policy tool for gaining access to less developed
countries (LDCs). The Soviet security assistance pro-
gram was begun in the mid-1950s primarily as a
means of helping to establish a strong geopolitical
position vis-a-vis the West, especially the United
States. To this end, the Soviets made arms and other
materiel available to almost any LDC at low prices
and offered exceptionally generous repayment terms
characterized by grace periods, eight- to 10-year
repayment periods, and 2-percent interest rates.
Moreover, Moscow provided rapid delivery and free
training and maintenance services. By the mid- 1960s,
the annual value of the program had reached half a
billion dollars, concentrated mainly in Iraq, Syria,
Egypt, and Afghanistan.
Military Agreements
In the early 1970s the Soviet quest for political and
military advantage over the West, while still preemi-
nent, was supplemented by a growing emphasis on
hard currency earnings from security assistance. The
newfound oil-based wealth of key customers in the
Middle East and North Africa led the Soviets to
charge these and some other LDCs higher prices for
military assistance-a policy they could enforce be-
cause Moscow's prices were below those for compar-
able Western support. At the same time, the USSR's
willingness to sell its most modern weapons set the
stage for full-scale competition with Western suppli-
ers in the lucrative Middle Eastern market. Continu-
ing tensions in that region, along with increasingly
active nationalist movements and revolutions in Sub-
Saharan Africa, bolstered the Soviet role, and Mos-
cow's generally rapid responses established a reputa-
tion for dependability. These circumstances,
accompanied by higher prices and the transfer of
complex weapons (sometimes before Eastern Europe
received them), propelled the USSR into second place
behind the United States in the global market in
1974-79, with agreements estimated at some $35
After reaching a yearly high of $14 billion in 1980,
the values of identified accords have averaged about
$9 billion annually (in current dollars), compared with
$6 billion between 1975 and 1979 (see table 1).
Despite the growth-probably about 35 percent in
constant terms-cyclical, political, and financial fac-
tors held down expansion of the Soviet program:
? The sizable agreements signed in 1980 by Algeria
and Libya largely obviated the need for new pur-
chases by these countries in the short term.
? The Soviets decided to withhold full support from
Iraq in 1980 after it initiated hostilities with Iran.
? Growing financial problems limited the ability of
LDCs, even well-off clients like Libya, to make
payments on Soviet military purchases.
? Western and Third World suppliers became more
competitive.
? Many clients tended to upgrade inventories only
selectively by acquiring follow-on support equip-
ment, rather than making wholesale replacements of
weapon systems.
Recent E orts To Increase Arms Sales
To help maintain its position in the Third World
market, Moscow has in recent years supplied more
advanced hardware, especially to the Middle East and
Sub-Saharan Africa. In 1983, for example, large
quantities of aircraft, tanks, and missiles were provid-
ed to Iraq. In the face of a rapidly deteriorating
security situation in Angola, Moscow, after several
refusals, provided Luanda with its first SA-8 surface-
to-air missiles and MI-24 helicopter gunships. A
similar circumstance in Mozambique finally led to
sizable aircraft deliveries to counter Western initia-
tives. The Soviets also have become more willing to
provide advanced systems to states not engaged in
hostilities. Their most impressive success has been in
India where, to head off an intense French sales
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M secret
Table 1
Soviet Military Assistance Agreements
With Non-Communist LDCs, 1975-84 a
Total
3,185
6,142
9,644
2,701
8,834
14,636
6,503
11,763
2,994
9,155
North Africa
534
0
4,650
770
68
11,400
0
472
3
0
Algeria
500
0
800
300
0
3,400
0
0
0
0
Libya
0
0
3,850
468
68
8,000
0
472
3
0
Other
34
0
0
2
0
0
0
NEGL
0
0
Sub-Saharan Africa
201
922
1,944
1,033
555
293
1,948
559
1,231
2,313
Angola
0
415
38
26
33
13
157
190
804
2,124
Ethiopia
0
250
1,100
750
0
126
1,700
10
0
39
Mozambique
24
131
41
0
141
0
0
212
400
0
Other
177
126
765
257
381
154
91
147
27
150
Europe
0
0
0
0
28
0
0
0
0
0
Spain
0
0
0
0
28
0
0
0
0
0
Latin America
70
337
251
0
200
111
253
132
221
112
Nicaragua
0
0
0
0
0
0
128
12
18
59
Peru
70
337
250
0
200
105
118
106
204
53
Other
0
0
1
0
0
6
7
13
0
0
Middle East
1,192
4,602
2,113
481
6,642
36
3,507
7,350
428
4,718
Iraq
32
4,043
56
41
2,297
11
58
3,003
113
2,241
South Yemen
100
6
100
405
864
10
NEGL
500
23
0
1,030
9
1,431
9
2,657
0
3,000
3,042
100
2,114
30
544
526
26
824
15
449
805
192
363
1,188
281
686
417
1,341
2,796
795
3,250
1,111
2,012
Afghanistan
181
9
25
303
1,098
373
230
282
342
101
India
1,007
268
649
95
243
2,423
539
2,968
769
1,911
Other
0
4
12
19
0
0
26
0
NEGL
? Due to rounding, numbers may not add to totals shown.
effort, they sold production technology for T-72 tanks
and armored vehicles. Even more important is a 1984
agreement with India for the purchase and assembly
of about 170 advanced MIG-29 fighter aircraft, val-
ued at over $1 billion.
The Soviets have capitalized on windfalls to acquire
new customers in the Third World. The reliance of
Nicaragua's Sandinistas on the Bloc and Cuba for
military materiel is predicated largely on ideology
(assistance began well before the July 1979 revolu-
tion), although attractive financial terms also are an
important factor. Jordan-in the wake of Israel's raid
on Iraq's nuclear facilities-turned to Moscow in
1981 for air defense equipment after failing to obtain
similar weapons from the United States. Kuwait's
$260 million deal in 1982 (the first with Moscow in
five years) reflected a renewed diversification effort,
despite opposition by Kuwaiti military officers.
Soviet aggressiveness, however, has not been global.
Libya, Moscow's largest alltime arms client with
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USSR: Exports to the LDCs, 1970-83
purchases of some $15 billion, wanted to buy addi-
tional advanced Soviet weapons last year, but report-
edly was refused for financial and political reasons.
And in several other cases, Moscow has pursued
additional sales but met with failure. For example,
Algeria has showed no inclination to reverse its policy
of shifting to purchases from Western suppliers, and
Egypt, recognizing US sensitivities, has kept its dis-
tance from Moscow despite persistent Soviet efforts.
Military Exports and Technical Services
The USSR's security assistance program has been the
major element in the expansion of Moscow's economic
ties to the LDCs (see graph). The value of Soviet
military exports to LDCs (including deliveries of
major weapon systems, spare parts, ordnance and
other support materials) rose from $1 billion in 1970
to a record of more than $9 billion in 1982 and
remained at about that level in 1983.' The hard
' These estimates are derived from Soviet trade statistics for the
purposes of estimating trade flows. They are generally higher than
the Intelligence Community's estimates of the value of observed
military deliveries. The main difference between these two esti-
mates is the valuation of follow-on supplies needed to maintain
LDC inventories of Soviet military equipment
currency portion of these exports totaled an estimated
$7 billion in 1983, ranking second only to oil in Soviet
hard currency exports. Exports of military supplies
accounted for over 20 percent of total hard currency
exports in 1983
million annually since the late 1970s
The Soviet military technical presence also has grown
rapidly. In 1984 more than 18,000 Soviet military
technicians and advisers were stationed in the LDCs,
compared with an annual average of 7,500 during
1970-75. This program focuses primarily on advisory,
technical servicing, and training functions in Africa
and the Middle East. Charges for advisory and tech-
nical services can be high, with concessions usually
made only for Moscow's poorest clients. These ser-
vices are estimated to have earned Moscow over $100
The Balance-of-Payments Perspective
The USSR's military trade and aid program is largely
responsible for Moscow's favorable balance-of-
payments position vis-a-vis the LDCs (see table 2).
Without the military exports, the USSR would have
run sizable deficits in its trade with the LDCs rather
than the surpluses its trade accounts show. Further-
more, credits have financed a smaller share of total
Soviet military exports than in the early 1970s.
Credits financed almost 80 percent of arms exports in
1970, but the share in 1979 was just over 20 percent.
The share increased to about 40 percent in 1982 and
almost 50 percent in 1983, largely because of Soviet
credits to Syria. In addition, repayments on military
credits offset a substantial share of credit drawings.
According to our calculations, the USSR has been
earning $6-8 billion annually from its military pro-
gram (see table 3). Of this amount, we believe that at
least $5-6 billion is paid for in hard currency or its
equivalent.' These revenues not only pay for Soviet
imports from the LDCs but also permit Moscow to
purchase machinery and equipment and other prod-
ucts from the developed West, where the USSR
generally runs a trade deficit.
' In recent years, the USSR has been accepting oil in lieu of cash
payments from Libya and Iraq, including some Saudi oil on Iraq's
account. This represents a second-best solution to Moscow, in that
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The USSR's financial support for its military exports
to the LDCs can best be described as realistic. While
generally expecting payment in cash or its equivalent
from its wealthier customers, Moscow probably does
not expect to conclude military sales agreements with
its poorer customers without offering concessionary
credits. Generally, the Soviets offer their clients 10-
year credit terms with interest rates of 2 to 4 percent
and a grace period of up to two years. These terms,
however, can vary considerably, depending on the
country purchasing the equipment and the type of
equipment being sold. More generous credit arrange-
ments have been extended to India and Afghanistan.
Under the terms of the Indo-Soviet military trade
agreement of 1980, for example, credits to India
carry 15-year repayment terms at 2- to 3 -percent
interest and a two-year grace period.
These easy credit arrangements apparently apply
only to sales of major weapon systems. For follow-on
support and resupply of spares, maintenance, and
ordnance, Moscow usually demands cash in advance
or at the time of delivery. It does not hesitate to
pressure even key client states like Libya, Syria,
Angola, and Mozambique to make the required
payments. According to a US Embassy source in
Maputo, for instance, half of Mozambique's aircraft
were grounded in late 1982 because of a lack of hard
currency to purchase the required spare parts.
In some cases, Moscow has been willing to adapt to
the financial circumstances of its customers. Afghani-
stan and Ethiopia, in particular, have received dis-
counts of 75 percent and 50 percent, respectively, off
the list prices. These discounts, which represent a
substantial grant element in Soviet military trade
with these clients, are valued at $1.6 billion for the
1975-82 period. Moreover, following the Syrian set-
back in Lebanon in the summer of 1982, Moscow
replaced Syrian losses on terms that included grants
and favorable credits
Moscow's military sales program has also generated a
sizable LDC debt to the USSR, estimated at almost
$18 billion at yearend 1983. This debt ensures that
LDC repayment obligations will remain considerable
through 1990. A sizable portion of this debt (perhaps
as much as 50 percent), however, is owed by countries
that may well be unable to make their payments on
schedule-for example, Ethiopia, South Yemen,
North Yemen, Tanzania, and Mozambique. The
USSR has already rescheduled the debt owed by
many of these countries.
The Domestic Economic Costs and Benefits
The domestic cost to Moscow of its military exports is
the resources used in their production. Until the early
1970s, much of the equipment that the USSR sold to
LDCs consisted of used items being retired from
Soviet military forces. The cost to Moscow was
represented by the resources necessary to overhaul,
adapt, and ship the arms. Since then, however, the
competition in the world arms market has led the
Soviets to export mostly new equipment. In recent
years sales have, on occasion, also included sophisti-
cated equipment that only recently had been intro-
duced into the USSR's military forces. The advanced
air defense system delivered to Syria and the MIG-
29s promised to India, for example, have not been
fully integrated into the Warsaw Pact forces.
The opportunity cost to the USSR of these exports
has also risen as the growth of Soviet machine-
building capacity has lagged behind the increase in
requirements for investment goods, consumer dura-
bles, and military hardware. When the growth rate of
military procurement for its own forces slowed after
1976, the continued growth in exports of military
hardware probably was thrown into especially sharp
relief.
Moreover, the Soviets face some security and logistic
problems when they instruct their clients in the use of
exported systems. The problems of translating and
sanitizing documentation have appeared to overwhelm
them at times. The Soviets can limit or deny access to
classified manuals by offering hands-on training to
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Table 2
USSR: Estimated Balance of Payments
With the LDCs, 1970-83
Current account balance
995
1,064
1,871
3,935
5,142
5,638
3,566
2,098
6,1%
5,942
Trade balance
735
509
1,221
3,025
4,082
4,443
2,406
898
4,636
4,372
Exports (f.o.b.)
1,975
4,598
4,878
7,121
8,267
9,186
10,070
11,525
13,763
13,940
Military
1,048
2,516
2,942
4,810
5,860
6,126
6,149
7,437
9,358
9,307
Imports (f.o.b.)
1,240
4,089
3,657
4,096
4,185
4,743
7,664
10,627
9,127
9,568
Shipping
135
250
305
515
625
680
625
620
920
915
Technical services
25
120
145
175
225
285
295
300
350
300
Interest earnings
100
185
200
220
210
230
240
280
290
355
Military
45
120
130
150
140
155
160
195
195
255
Economic
55
65
70
70
70
75
80
85
95
100
Capital account balance
-645
-690
-740
-1,190
-1,225
-440
-1,065
-1,135
-2,885
-3,990-
Credit drawings
-1,165
-1,750
-1,930
-2,620
-2,665
-1,890
-2,605
-2,755
-4,660
-5,885
Military
-830
-1,305
-1,520
-2,125
-2,220
-1,320
-2,035
-2,085
-3,805
-4,985
Economic
-335
-445
-410
-495
-445
-570
-570
-670
-855
-900
Repayments
520
1,060
1,190
1,430
1,440
1,450
1,540
1,620
1,775
1,895
Military
300
715
820
940
920
1,040
1,120
1,175
1,310
1,395
Economic
220
345
370
490
520
410
420
445
465
500
Net balance b
350
374
1,131
2,745
3,917
5,198
2,501
%3
3,311
1,952
Hard currency
50
6
479
2,434
3,009
4,043
1,640
826
2,723
557
Soft currency
300
368
652
311
908
1,155
861
137
588
1,395
Outstanding debt
4,970
9,270
9,270
11,140
12,320
12,760
13,825
14,965
17,845
21,835
Military
2,530
6,345
6,345
8,230
9,530
9,810
10,725
11,635
14,130
17,720
Economic c
2,440
2,925
2,925
2,910
2,790
2,950
3,100
3,330
3,715
4,115
^ Preliminary.
b The net balance includes both net Soviet earnings and errors and
omissions in the methodology. The net hard currency balance is
probably a minimum value, with the net soft currency balance
including transactions settled in hard currency as well as most of
the errors and omissions.
c Value of economic debt has been adjusted to reflect the price
difference in the value of grain credits extended to India and
Bangladesh and the value of repayment of these credits made in
kind.
the client's personnel. This, however, produces other
problems. If the training is done overseas, the Soviets
make the instructors unavailable to their own defense
establishment. If they train foreign military personnel
along with their own at Soviet facilities, they may be
unable to restrict foreign access to information they
wish to convey to Soviet trainees.
end of the learning curve. The Soviets will have
amortized startup costs over the years, trained pro-
duction crews, and, presumably, worked out most of
the bugs in the system. Whether we view the effects of
the learning curve in terms of rubles saved or in-
creased production, they present a savings to the
Soviets that we believe is not automatically passed on 25X1
to the client. 25X1
The defense industrial sector does benefit, however,
from the export of older systems, which dominate the
export program. These systems can be, or have al-
ready been, produced relatively cheaply at the lower
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Table 3
USSR: Estimated Earnings From
Military Sales, 1970-83
Military exports (c.i.f.) a
1,153
2,768
3,236
5,291
6,446
6,739
6,764
8,181
10,294
10,238
Credits extended
-830
-1,305
-1,520
-2,125
-2,220
-1,320
-2,035
-2,085
-3,805
4,985
Repayment
345
835
950
1,090
1,060
1,195
1,280
1,370
1,505
1,650
Principal
300
715
820
940
920
1,040
1,120
1,175
1,310
1,395
Interest
45
120
130
150
140
155
160
195
195
255
Net earnings
668
2,298
2,666
4,256
5,286
6,614
6,009
7,466
7,994
6,903
Hard currency
177
1,459
1,710
3,353
4,261
5,508
4,875
5,970
6,213
5,060
Soft currency
491
839
956
903
1,025
1,106
1,134
1,496
1,781
1,843
a Converted from the f.o.b. value estimated from Soviet statistics to
a c.i.f. value using a UN standard coefficient of 10 percent.
Prospects
The prospect for substantial growth in Soviet military
exports is dim although some increases in sales are
possible. Several of Moscow's major arms clients have
sought to diversify their sources of arms. With greater
competition from other arms sellers and the current
outlook for a stagnant or declining Third World arms
market, an even more aggressive sales campaign will
be required to expand sales beyond the present level.
Moreover, financial problems facing most of the
USSR's major arms customers will further hamper
increased sales and earnings. Under these circum-
stances, Moscow will probably have to offer better
financial terms to LDC customers and agree to
reschedule some debt payments, thus reducing the
immediate economic payoff.
Soviet arms exports will, nevertheless, remain sizable
and will continue to be the dominant element in
Soviet-LDC relations. Even with LDC financial prob-
lems, arms exports will be an important earner of
hard currency for Moscow. With the larger and more
sophisticated LDC inventories of Soviet-built equip-
ment, the provision of spare parts, ordnance, follow-on
items, and services will play a larger role in the
USSR's military export programs.
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Soviet Arms Transfers
and Political Influence
In some cases, potential political payoff appears to
have been the primary motive in Soviet arms transfer
programs in the Third World. The most tangible
political benefit has been entree to areas where the
USSR had little or no presence before. Arms deals
have almost always been followed by the establish-
ment of a Soviet military advisory presence and the
development of a corps of Soviet-trained officers and
soldiers. This provides opportunities for Soviet intelli-
gence activities and, in many instances, has created a
local constituency with a strong interest in maintain-
ing ties to the USSR.
This article excludes such Third World countries as
Angola, Ethiopia, Vietnam, and Cuba, which enjoy a
special client relationship with the USSR. These
states are dependent on Soviet Bloc troops and/or
large-scale military and economic backing that goes
well beyond the arms transfers discussed here. Here
we deal with the much larger and more varied group
of nonclient arms recipients.
The Soviets have often reinforced their ties to non-
client states by manipulating the supply of equipment
and spare parts. That is, once initial arms deliveries
have been made, training and spare parts are doled
out sparingly, prolonging the recipient's dependence
on Moscow. When local complaints reach a high
enough level, Moscow will offer a new arms package,
followed by a new cycle of training and spares parts
rationing. Prosperous Third World countries may be
able to find alternative sources for some Soviet-made
equipment, but many cannot.
Even after the Soviet presence is established and a
certain degree of recipient dependence has developed,
Moscow's record in realizing political benefits has
been mixed:
? Arms recipients have echoed Soviet positions on
international issues, but this is almost always when
they hold that position in any case (for example,
Guinea's strong anticolonialist stand in the early
1960s) or are relatively unconcerned (as in the case
of Iraq's position on the invasion of Czechoslovakia).
Seldom have the Soviets been able to impose their
view when it conflicts with that of the recipient
country. Indeed, they have sometimes followed the
lead of their nonclient recipients or become em-
broiled in regional disputes.
? The Soviets have gained access to some air and
naval facilities, but it has usually been limited and
carefully controlled. Many military aid recipients
(including India, Madagascar, Congo, and Sey-
chelles) have refused Soviet requests for access.
? The Soviets have also found it difficult to gain
influence over domestic politics in nonclient recipi-
ent states. Even a leader with close military ties to
the Kremlin usually reacts strongly against per-
ceived interference in his country's internal affairs,
especially if he sees a challenge to his own position.
Some who have received the most Soviet aid have
been the harshest repressors of local Communist
parties. The leverage that Moscow can develop is
almost always restricted to specific military issues
like future arms procurement.
Given the fading appeal of Soviet-style socialism as a
development model, the Soviets' difficulties in build-
ing commercial ties, and their unwillingness to supply
purely economic aid, the transfer of arms is the
Kremlin's most effective instrument for developing
and sustaining a position in the Third World coun-
tries. Arms deals may not yield all of the benefits the
Soviets may be seeking in a particular state, but they
are usually the most effective instrument and often
the only one available.
Arms Transfer Relationships
With Key Regional Actors. States in this category-
probably the most important Soviet arms customers-
generally play important roles in their region and are
usually adjacent to and frequently at odds with pro-
Western countries. Many can pay for weapons in hard
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currency and thus are able to diversify their sources of
supply and put pressure on Moscow to be more
forthcoming with sophisticated equipment. Recipients
in this category include Libya, Algeria, Syria, India,
and Iraq.
Arms ties with these states have helped the Soviets to
expand their presence in strategically important re-
gions and to establish themselves as key players in
regional diplomacy. The Soviets have also used these
ties to broaden support for their positions on regional
and international issues, when there was no conflict
with the position of the recipient. India's support of
Moscow's call for a ban on space weapons is an
example.
Moscow frequently "needs" the states in this first
category and thus is reluctant to jeopardize its ties
with them by applying pressure on key issues. With
many of these governments, the arms relationship is
the only real link, and Moscow hesitates to tinker with
In some cases, recipient states have been a drag on
Soviet policy, and often they can make Moscow bid
against Western suppliers seeking to reenter that
particular arms market. There are other risks as well.
Soviet deliveries can fuel regional arms races, and
some recipients (the Syrians, for example) could be
emboldened to consider solving their foreign problems
by military action, in the belief that the Soviets would
have to back them up. From a Soviet standpoint,
however, the benefits of the arms transfer ties with
these potential clients probably outweigh the risks.
With Third World Socialists. There are a number of
Third World countries that are of little direct military
importance to the Soviets but have leaders who
profess to be fellow socialists, anti-imperialists, and
anticolonialists. Almost always unable to pay in full
for arms and training, these leaders usually want the
arms to protect themselves from or to placate key
domestic constituencies (military and security forces,
for example), as well as for meeting foreign threats.
Countries in this group include Zambia, Tanzania,
Congo, Seychelles, and Guinea.
To such regimes, Moscow offers weapons, support,
and training on terms that at first are favorable, even
concessionary. The equipment is usually unsophisti-
cated, but, in many cases, it soon constitutes the
recipient's entire arsenal. A relatively large Soviet
advisory presence is established, and nationals are
sent for military training in the USSR. Later, spare
parts are supplied on less generous terms, and the
recipient state finds that its military effectiveness
depends heavily on Soviet largess.
In most countries in this category, the Soviets have
established a substantial military and diplomatic pres-
ence to back up their arms transfer programs. In
many, they have been able to create a body of high-
ranking local military personnel who see that Soviet
arms supplies are vital to their livelihood and who
may exercise influence over future procurement deci-
sions.
Most of the recipients in this category also require
large amounts of economic aid, however, which Mos-
cow is unwilling to provide. Consequently, even the
most radical recipient states try to avoid alienating
Western aid donors by drawing too close to the
Soviets. Moreover, their leaders invariably have been
sensitive to perceived Soviet interference in their
internal affairs and careful to guard their nonaligned
status.
With Western-Oriented Nations. The third type of
arms transfer relationship encompasses countries that
usually are not sympathetic to the USSR, ideological-
ly or politically. They have generally turned to Mos-
cow to score a political point or for a particular
weapon system that they could not obtain, for political
or financial reasons, from the West. These countries
may or may not be in areas of immediate military
interest to the USSR, and they generally do not
receive state-of-the-art weapons. Countries in this
category include Peru, Kuwait, Jordan, and Nigeria.
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The Soviets usually respond to nations of this group
by offering the desired arms, training, and support on
good terms. They tend to try to prolong the relation-
ship by doling out spare parts over an extended period
Israel's defeat of the Arabs in the 1967 and 1973 wars
reinforced Iraq's dependence on the USSR. It also
enabled the Iraqis to acquire more sophisticated
weapon systems by exploiting Moscow's desire to
and occasionally offering new equipment.
In these cases, arms transfers have enabled Moscow
to build connections with Western-oriented military
establishments and to expand its presence in countries
otherwise reluctant to host large numbers of Soviets.
These recipient regimes, however, still receive most of
their arms and training from the West, and they
generally limit their ties with the USSR strictly to the
military and economic channels associated with the
arms relationship. The Soviets recognize that they
risk their relationship with states of this type if they
use it as a lever.
Case Studies
Iraq-A Key Regional Actor. The Iraqis who toppled
the monarchy and came to power in July 1958 quickly
turned to Moscow for arms no longer available from
Western governments unhappy with the vocal radical-
ism of the new regime. Since then, successive regimes
have signed more than 40 identified arms agreements
worth almost $13 billion. These have made Iraq one
of the top three Third World recipients of Soviet
arms-and an important source of hard currency for
the USSR1
The Iraqis' nationalism and strong anti-Communism
have always complicated the relationship. During the
Ba'thists' first brief reign in 1963, for example, they
executed several members of the Iraqi Communist
Party (CPI}-and observed Soviet arms deliveries
ceased, although it is possible that a few deliveries
continued. The Soviets did not, however, allow the
troubles of the CPI to become a major source of
tension. In 1966 they made Iraq the first Arab
country to receive supersonic aircraft by delivering
MIG-21s. This was probably an effort to court the
regime by offsetting French sales of Mirage III
fighters to Israel, and it illustrated a new pattern in
Soviet arms transfers to the Middle East: keeping a
potential client happy by providing sophisticated
arms.
demonstrate its credibility as an arms supplier.
The need for inexpensive military equipment to fight 25X1
the Iraqi Kurds and to offset Iran's military superior-
ity led Baghdad to sign a friendship and cooperation
treaty with Moscow in 1972 and accept two members
of the CPI in the cabinet in 1973. In 1973 Iraq also
granted the USSR contracts in oil development and
some access to the ports of Umm Qasr and Al Basrah
for ship replenishment.
In 1975 Baghdad began to use its cash from higher oil
prices to purchase military equipment from the West,
primarily from France. To restore his country's wan-
ing influence, Premier Kosygin visited Baghdad in
1976, and shortly thereafter Iraq signed a $4 billion
agreement for Soviet arms.
This large arms agreement did not prevent a deterio-
ration in political relations. Iraq opposed Soviet and
Cuban involvement in Ethiopia in 1977 and the
Marxist coup in Afghanistan in 1978. Saddam
Husayn again cracked down on the CPI in 1978, and
the Soviet invasion of Afghanistan at the end of 1979
strengthened Iraqi suspicion of Moscow's intentions in
the region. Nevertheless, in 1979 Iraq and the USSR
concluded a $2 billion arms sales agreement.
In the early days of the Iran-Iraq war in 1980,
Moscow cut off direct arms shipments to both sides, 25X1
ostensibly claiming a neutral position. Because Soviet
arms deliveries to Iran had been negligible, the em-
bargo reflected Soviet opposition to Iraq's invasion as
well as efforts to curry favor with Iran.
This brought Soviet-Iraqi relations to a new low,
without producing closer ties in Tehran. Finding the
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embargo counterproductive, the Soviets lifted it in
1981 and eventually delivered arms worth over $1
billion to Iraq. A new $3 billion agreement was signed
in 1982 and another, for $2 billion, in 1984.
The war has prolonged Iraq's dependence on Soviet
arms, despite Baghdad's efforts to diversify. The
USSR still provides two-thirds of Baghdad's military
equipment-a relationship that may account for the
Iraqis' abstention from the UN votes on Afghanistan
beginning in 1983 and their silence on the downing of
the Korean airliner
The improvement in political relations notwithstand-
ing, Baghdad remembers Moscow's 1980-81 embar-
go, distrusts Soviet intentions, and is well aware of
Moscow's effort to cultivate Tehran; and Saddam
Husayn has not eased his repression of the CPI. Once
the war ends, Baghdad is likely to move to reduce its
dependence on Soviet arms. The renewal of diplomat-
ic relations with the United States in November 1984
indicated that Husayn intends to balance his ties with
the USSR somewhat.
In sum, Baghdad has exploited the Soviet desire to
maintain a position in the Gulf region more success-
fully than Moscow has exploited Iraqi military needs.
Iraq has generally been able to buy arms from the
USSR on terms more favorable than those usually
available in the West, without conceding its national
interests or independence. And Moscow has been
unable to bolster the CPI's influence in the Iraqi
Government.
As long as Iran remains adamantly anti-Soviet, Bagh-
dad probably will continue to receive Soviet weapons
on favorable terms, as the Soviets seek to preserve
their existing position. Even if the Soviets respond
positively to recent Iranian overtures to improve ties,
Moscow would probably try to protect its relationship
with Iraq through further arms deals.
Guinea-A Socialist Dependent. Arms transfers were
an important part of the rapid expansion of Soviet-
Guinean relations that occurred in 1959. Isolated
after France's precipitate withdrawal in 1958 and
intent on ending his country's dependence on the
Western economic system, Sekou Toure turned east-
ward for political, economic, and military support.
Soviet Premier Nikita Khrushchev saw that the provi-
sion of such support could be a means of undermining
the European powers in Africa, making socialism a
model for Third World development, and gaining
support for Soviet foreign policy positions in his
growing rivalry with China's Mao Tse-tung.
In March 1959 Czechoslovakia supplied about $1
million in small arms and armored cars, and in 1960
the USSR agreed to provide, on favorable terms, $8
million worth of artillery, radar, armored vehicles,
and fighter aircraft. The Soviets also brought Guin-
ean officers to the USSR for training and sent a
number of military advisers to Conakry. The military
side of the relationship, however, was overshadowed
during this period by political cooperation on African
and Third World issues, by trade, and by economic
aid; the Soviet Bloc offered almost $100 million in
credits between 1958 and 1962.
Both sides grew disillusioned, and ties cooled by late
1961. With justification, Toure accused the Soviets of
interfering in Guinea's internal affairs, and he ex-
pelled the Soviet Ambassador in December. Many
Guineans also complained about the unsuitability of
Soviet aid to local conditions and the often high-
handed behavior of Soviet advisers. In Moscow, opti-
mism about Guinea's prospects for building socialism
faded, and doubts about Toure's political reliability
grew when he applied to the World Bank and IMF for
economic aid. Soviet economic and military assistance
fell off sharply; but, because its military equipment
was almost entirely of Soviet origin, Conakry contin-
ued to depend on the USSR for spare parts and
training.
Bilateral relations improved in the mid-1960s, as
Toure consolidated his one-man control of Guinean
politics and his fear of internal and external threats
led him again to Moscow for military aid. The Soviets
responded in 1965 by providing $2 million in small
arms. In 1970 an attack on Conakry by Portuguese-
backed Guinean exiles reinforced Toure's fears, and
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Moscow sent a small naval patrol in response to his
appeal. That naval presence grew into the Soviet West
Africa patrol. In April 1971 the Soviets stepped up
arms shipments, providing coastal patrol boats, tanks,
MIG-17 fighters, and antiaircraft guns. In turn, they
gained access to Conakry's airport for naval recon-
naissance and military transport flights and to its
harbor for support of the naval patrol.
Relations cooled again in 1977. Toure's security fears
diminished, and he was becoming disenchanted by
Moscow's unwillingness to provide extensive economic
aid. He suspended Soviet reconnaissance flight access
rights and, over the next few years, cut back the
number of Soviet military advisers.
The US Embassy in Conakry reports that Moscow
responded by driving a hard bargain on spare parts,
demanding payment for items previously supplied on
concessionary terms. This was probably to indicate its
unhappiness with Toure's actions and to remind him
of his military dependence.
the Soviets tried to tie their continued provision
of maintenance and spare parts to renewal of access
for reconnaissance flights. Since that time, they have
occasionally offered new equipment that would keep
Guinea dependent and justify their requests for ex-
panded access to its air and naval facilities.
Soviet-Guinean relations were cool but correct
through the death of Toure in March 1984 and the
military coup that followed. Conakry has not acquired
any significant new equipment from Moscow since
1980, but it remains dependent on Soviet ammunition,
spare parts, training, and advisory support. The new
leaders have sought increased Western aid and invest-
ment and, according to State Department sources,
would like to reduce the Soviet military presence in
Guinea. However, they probably believe, on the basis
of their discussions with Washington and Paris, that
the West is unlikely to provide much new military aid
on favorable terms and that a continued military
relationship with the USSR is essential for the armed
forces.
In 1968 a coup replaced pro-Western President Fer-
nando Belaunde Terry with a junta of leftist army
officers. They nationalized US-owned businesses in
Peru, opened diplomatic relations with Communist
nations, and seized several US fishing boats in Lima's
claimed 200-nautical-mile territorial sea. In 1969
Washington suspended arms sales and military assis-
tance, and Lima expelled the US Military Advisory
Group.
The junta still faced a number of traditional security
concerns. Peru's periodic border clashes with Ecuador
and its irredentist designs on northern Chile kept
For their part, the Soviets will probably offer new
equipment occasionally, while providing enough spare
parts and training to ensure Conakry's continued
dependence. They may also renew their request for
reconnaissance flight access, but, as long as they
believe their present access rights are secure, they
probably will not devote many more military and
economic resources to Guinea
In sum, arms transfers helped Moscow get a foothold
in Guinea and enabled it to expand its role in 25X1
Guinea's military to the point that Conakry has no
realistic alternative to continuing that role. The arms
relationship enabled the Soviets to gain some access to
Guinean facilities but was not sufficient to prevent
Toure from reducing it. The Soviets have been unable
to establish significant leverage in Guinean political
and economic life. Toure jealously guarded his politi- 25X1
cal independence, and the new military government
has continued his policies of opening Guinea's econo-
my and moving it toward genuine nonalignment.
Peru: A Target of Opportunity. Through the early
1970s, Peru's armed forces were equipped with a 25X1
variety of US and European arms, and the United 25X1
States was Lima's primary source of military assis-
tance. Relations with the United States began to cool
as early as the mid-1960s, however, when Peru asked
for the relatively advanced F-5A fighter aircraft to
modernize its Air Force. For fear of upsetting the 25X1
military balance in the region, the United States 25X1
refused to sell them. This caused a strain in relations,
and the Air Force bought French Mirage 5's instead.
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defense a high priority. With US aid cut off, the
officers had to turn elsewhere to modernize their
forces.
While the Soviets undoubtedly were pleased by this
turn of events, they remained noncommittal until
1973. Then they stepped in with offers of quick
delivery of relatively sophisticated weapons at low
prices and on easy terms. Peru became the first South
American country to buy Soviet military equipment,
with the delivery in 1973 of five MI-8 Hip helicopters
and 35 T-55 tanks.
This marked the beginning of an expanding military
relationship. Soviet military sales to Peru through
1984 exceeded $1.5 billion. Equipment has included
fighters, helicopters, tanks, and surface-to-air mis-
siles, and the agreements have also involved spare
parts, training for Peruvian military personnel in the
USSR, and the presence of Soviet advisers and tech-
nicians in Peru. All the military sales have been for
credit, with virtually no downpayment, a mere 2- to 5-
percent interest, and the balance due in 10 to 20
years.
Peru now has so much Soviet equipment that it
depends heavily on Soviet spare parts and mainte-
nance to sustain vital sectors of its armed forces.
Nearly one-third of the Air Force's planes and about
two-thirds of the Army's tanks are Soviet made, and
both forces rely almost entirely on Soviet-supplied air
defense equipment. The US Embassy in Lima reports
that, because of this dependency, the Peruvian mili-
tary occasionally exerts pressure on the government to
maintain cordial relations with the USSR. The Navy
has thus far turned down Soviet offers, and it contin-
ues to rely on the West for equipment and training.
Moscow recognizes the value of its arms-linked ties.
The military has traditionally been the dominant
voice in determining who governs Peru, intervening
against civilian regimes it considers inept, ideological-
ly suspect, or threatening to its own institutional
interests. Since World War II the military has held
power itself four times (most recently from 1968 to
1980), for a total of 22 years.
Military aid to Peru has yielded some political and
economic benefits. Since 1971, for example, Moscow
has been allowed to use Peruvian ports for the logistic
support and maintenance of its 200 fishing vessels
operating off the coast of South America. More
important, Peru is a foothold in South America. The
Soviets in Lima have identified the Bolivian and
Argentine military attaches as priority targets for
cultivation. The US Embassy indicates that there are
350 Soviets in Peru-far more than are needed for
normal diplomatic relations-and that 150 of them
are military advisers.
On the other hand, Peru's armed forces have been
dissatisfied with Soviet logistic support for the equip-
ment provided. mainte-
nance is a serious problem because spare parts are
unavailable and repairs are slow. Aircraft reportedly
are unflyable for months while they await servicing.
Lima is trying-apparently with little success-to
reduce this dependence by replacing Soviet with
Peruvian technicians. It is also trying to diversify its
sources of military aid: last year it negotiated an
agreement with France for the purchase of 26 Mirage
2000 fighters. The poor state of the Peruvian econo-
my, however, probably will limit Lima's freedom of
maneuver.
Moscow gained its foothold in the Peruvian military
largely through attractive financing terms and prom-
ises of quick delivery, and it apparently is taking steps
to protect that foothold.
the USSR has agreed (in 1984) to refinance Lima's
military debt, is increasing its efforts to provide
equipment and training to all three services, and
probably will continue to offer attractive financing
terms. A new agreement signed last summer appar-
ently ensured the military that spare parts would be
forthcoming
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Management of Arms Transfers
to the Third World
Arms transfers to the Third World are instruments of
Soviet foreign and military policies and also have an
impact on the Soviet economy. They therefore con-
cern the highest levels of the party, government, and
military establishments. They include sales and grants
of arms and military equipment, supply of spare parts
and munitions, training and technical assistance, and,
recently, support for Third World arms industries. F_
Determining Policy
The Politburo establishes arms transfer policy and
reviews transfer proposals that have significant politi-
cal and strategic implications or that would have a
substantial impact on the Soviet economy. The Polit-
buro is advised by: the Ministry of Defense on the
military significance of the proposed transfer; the
Minister of Foreign Affairs and Foreign Trade' on
foreign policy implications; the Council of Ministers,
and particularly the Military-Industrial Commission
and State Planning Committee, on the economic
impact, especially for defense industries; and the
Commission for CEMA Affairs on coordination of
CEMA-wide deliveries. These organizations consider
whether to provide military assistance to a country,
the magnitude of the support, and what types of
weapons should be included. They also make recom-
mendations on various aspects of the terms of trade,
such as the amount of subsidy, timing of deliveries,
and terms of payment. If a military assistance agree-
ment is already in effect, the Ministry of Defense,
working with other government organizations, is given
latitude to interpret and administer policy for limited
be established in 1985.
cash sales or for unsophisticated equipment.
Major transfer proposals are considered when they 25X1
arise, but also are reviewed by the Politburo and
Council of Ministers in the annual and five-year
defense and economic plans. As a result of the long-
term commitment and advance planning, the Soviets
are a fairly reliable supplier of weapons. Some flexi-
bility to deal with unanticipated arms exports is built
into plans by establishing weapon reserves and main-
taining some excess production capacity. General
arms transfer commitments for the 1986-90 period
were considered in 1983, and delivery obligations will
Managing Arms Transfers
The General Staff's Tenth Main Directorate and the
State Committee for Foreign Economic Relations
(GKES) of the Council of Ministers share responsibil-
ity for the day-to-day management of arms transfers.
The delineation of responsibility is not entirely clear
to us in every case, but evidence suggests that the
Tenth Main Directorate has a more influential staff
role in establishing policy and preparing for negotia-
tions, and the GKES has a more prominent line 25X1
management responsibility for administering con-
'The Ministry of Foreign Trade handles the commercial sale and
shipment of general purpose equipment such as aircraft, helicop-
ters, and trucks that can be used or outfitted for military purposes.
These sales require resource commitment approval by the Politburo
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The Tenth Main Directorate of the General Staff
oversees the entire foreign military assistance pro-
gram. Its senior officers participate in general policy
discussions on major prospective agreements. They
are supported by staff analyses of the military, politi-
cal, and economic situation of the potential recipient
country. Directorate personnel prepare the annual and
five-year military aid plans, which become part of the
defense component of the national annual and five-
year plans
The Directorate oversees and monitors the delivery of
weapons and equipment and selects and trains foreign
nationals in Soviet military schools. It can also be-
come involved in the later stages and details of the
management of arms transfers, such as the delivery of
spare parts, financial arrangements, and supply prob-
lems. The Directorate is instrumental in providing
quick-reaction assistance and resupply, exemplified
by its role in supplying arms to India in 1971 and to
Egypt during the 1967 and 1973 Middle East wars.
The Tenth Main Directorate controls military assis-
tance groups in foreign countries, a vital mechanism
for influencing the client. These groups train clients in
the use and maintenance of weapons and equipment
and in a few cases also provide command and control
support. They include both military advisers and
military technical specialists:
? Military advisers work with the host country's
forces and advise on the deployment of military
equipment. In Afghanistan, Ethiopia, and Angola,
Soviet military advisers have become deeply in-
volved in guiding military operations.
equipment and training are complete.
? Military specialists train troops in the use and
maintenance of weapons and equipment. They gen-
erally return to the USSR after the transfer of
The State Committee for Foreign Economic Rela-
tions administers all Soviet economic and technical
assistance agreements-including military exports.
Two sections within the GKES handle all military
aid: the Chief Engineering Directorate (GIU) for
weapons and other military equipment, and the Chief
Technical Directorate (GTU) for military construc-
tion. These organizations negotiate and administer
contracts for training personnel in the operation of
equipment. They also handle supplemental purchase
contracts for additional equipment, spare parts, or
services.
Establishing Agreements
Establishing an arms transfer agreement is normally a
long, multistaged process. It usually takes a year to
complete negotiations and sign the contracts. The
need to await Politburo decisions at almost every
stage is the major source of delay. The Soviets then
require 12 to 24 months for production and delivery.
Thus, a prospective recipient of Soviet arms would
normally have to project requirements some three
years in advance. The Soviets do, however, speed the
entire process in special situations, for example, when
an important client country is engaged in a conflict
(see inset).
Exploratory Phase. After receiving a request from a
prospective foreign client or a proposal from the
Soviet leadership, the Tenth Main Directorate pre-
pares a Feasibility Report, which includes an exten-
sive military, political, and economic analysis of the
prospective recipient, including background on prior
military assistance provided, the extent of non-Soviet
military aid received, price data, and the customer's
repayment record. The GIU provides to the Tenth
Main Directorate all necessary financial information
and detailed contract data.
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Soviet Rapid Responses in Crisis Situations
Syria-1982
The Soviets substantially increased their military
commitment to Syria within seven months of Israel's
defeat of Soviet-equipped Syrian forces in Lebanon in
June 1982. They sent more SA-8 surface-to-air mis-
siles and introduced the SA-5 system, the most
advanced model of the MIG-23 interceptor, and
several hundred military advisers and technicians.
Ethiopia-1977
During the Ethiopian-Somali conflict, the USSR
initially supplied arms to both sides. As hostilities
increased during the summer of 1977, the USSR
began to lean toward the Ethiopian side. In mid-
October the Soviets ceased arms shipments to Soma-
lia. In late November 1977, a massive Soviet airlift of
arms to Ethiopia was launched. By early December
1977 approximately 400 Soviet military advisers
were in Ethiopia and another 900 or more were
scheduled to arrive. Throughout December and Janu-
ary, Soviet arms-including MIG-21s, trucks, tanks,
and small arms poured into Ethiopia. By March
1978 the rearmed Ethiopian forces had crushed the
Somali offensive. The speed and extent of Soviet and
Cuban military assistance was the decisive difference.
Negotiating Phase. The negotiation process usually
begins with a series of discussions primarily political
in nature. Depending on the country and circum-
stances, the discussions may include the top Soviet
leaders; frequently they are led by the Minister of
Defense. Often political conditions for any military
aid are set during these discussions. With the satisfac-
tory resolution of the political discussions, the client's
request is reviewed by the Politburo, and the USSR
agrees "in principle" to provide military aid to the
customer. The client in turn signs a purchase state-
ment affirming serious interest in obtaining assis-
tance
The Politburo forwards the initial agreements to the
Ministry of Defense, Ministry of Foreign Trade,
Military-Industrial Commission, Gosplan, and other
organizations to work out the details. The Politburo
reconsiders the proposal after these inputs are re-
ceived and an official Soviet position is developed.
Procedural negotiations at the working levels cover
the terms of the General Agreement, laying out the
nature of the assistance, administrative aspects of the
project, and the extent of credit. After the General
Agreement is approved in draft by the Politburo, the
customer is usually given only one or two days to
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The Project Requirements Document of the General
Agreement states what services and equipment are to
be offered by the USSR. The document is developed
from the feasibility report, the customer's request,
and field studies made by officers from the military
services involved in the aid project. The document is
assembled by the Tenth Main Directorate with a
minimum of civilian input and submitted via the
Minister of Defense to the Politburo for final approv- 25X1
al. The document then is presented to the client, who
is allowed 60 to 90 days for a written response.
Purchase Contracts. The actual purchase of weapons,
equipment, and services is covered by a separate 25X1
purchase contract, usually negotiated along with the
General Agreement or as a supplement to an existing
General Agreement.
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Contract Management. Once a General Agreement
has been signed, the Foreign Trade Bank (Vneshtorg-
bank) opens a special credit account for use only as
specified in the Agreement. For each contract, a
portion of the credit is set aside for spare parts and
ammunition; however, additional spare parts and
ammunition must be purchased through separate
contracts.
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Organization of Arms Production for Export
In many cases the Soviets have not exported weapon
systems until they have been in Soviet inventories
eight to 10 years. Although this practice is changing
and the percentage of new systems being exported has
been growing in the last 10 years, older weapons have
proved highly marketable to Third World countries.
Their relatively low cost and simplicity are compati-
ble with the resources, tactics, and support capabili-
ties of Third World military services.
The concentration on these older models for export
has influenced the organization and scheduling of
weapons production. Although most weapons for ex-
port are manufactured concurrently with domestic
production, the Soviets have serviced many export
obligations by dedicating entire production lines and
runs to the export variant. In extreme cases, the
demand has warranted temporarily dedicating all or
most of a plant to export production:
? The Omsk Tank Plant produced T-55s at least
until the late 1970s, long after Soviet forces began
receiving more modern systems.
? In the 1960s Moscow Airframe Plant 30 produced
MIG-21 s for export while preparing for production
of the MIG-23.
? Arsenyev Airframe Plant 116 currently exports
most of the SS-N-2 Styx cruise missiles it
produces.
? Rybinsk Shipyard 341 produces minor surface
combatants almost entirely for export, while other
shipyards produce the same vessels for Soviet cus-
tomers.
The GKES implements the purchase contract within
the terms of the General Agreement, overseeing the
relationship between foreign customers and Soviet
industrial ministries and plants and ensuring that
production meets delivery obligations (see inset). It
arranges for the assignment and transportation of
specialists to support aid contracts and for the trans-
fer of the client's personnel to the USSR for training.
GIU and GTU representatives are the liaison with the
client in all matters, negotiating supplements to exist-
ing contracts, conveying client complaints, and han-
dling any disciplinary problems that involve Soviet
specialists in the host country.
Producing for export at the end of a production run
facilitates scheduling and eliminates the need for
frequent changes in equipment, tooling, and material
supply to accommodate any differences in the design
of an export variant. It also extends the production
run, increasing the benefits of having mastered the
design and production process. Plant managers some-
times are allowed to use a portion of hard currency
earned to purchase foreign manufacturing equipment.
Staying competitive in Third World arms markets,
however, is complicating the export business for
Soviet defense industry. Countries like India are
demanding state-of-the-art hardware, such as the
MIG-29, requiring Soviet plants to produce concur-
rently for Soviet and foreign military services. Ex-
porting more sophisticated weapons also means es-
tablishing a more complex training and logistic
support pipeline. Some countries-again India is
preeminent-are purchasing licenses to produce Sovi-
et weapons. This obligates Soviet plants to transfer
and install equipment and tooling, train indigenous
managers and laborers, and provide ongoing material
support and technical consultation. Soviet industry
has little experience in nurturing Third World de-
fense industrial development. It is not clear to what
degree these more aggressive moves to provide a
broader array of arms transfer services will become a
part of Soviet international arms dealings.
Implications
The authority of the Tenth Main Directorate in
overseeing the arms transfer program enables the
military to exercise influence over a crucial dimension
of Soviet foreign policy, the national economy, and
particularly the defense industry. This directorate and
the GKES nevertheless share responsibilities, and
conflicts often arise between them. This could reflect
conflicts between policymakers who use the different
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organizations to support their positions on arms trans-
fers.
The Soviet process for implementing arms transfers
takes considerable time and can constrain both Soviet
and client flexibility to respond to fluctuating mili-
tary, political, or economic conditions. As previously
shown, the Soviets can and have responded rapidly
and flexibly in a number of cases, but quick responses
cause dislocations in defense industries and weapon
stockpiles. Overall, Soviet central planning and the
long leadtimes for production of arms exports work to
make the management of the arms transfer program
slow and deliberate.
On the other hand, Politburo approval constitutes a
national commitment, which makes the Soviets a
fairly dependable source of weapons. It allows them to
provide weapons, equipment, and training on a pre-
dictable schedule. It facilitates the manipulation of
sales and credit terms to break into new markets,
retain old ones, and promote client dependency. De-
pendency, in turn, affords the Soviets some latitude in
changing negotiated agreements without bringing
these changes to the clients' attention. A number of
clients contend that the Soviets exploit the entire
process, at least partly offsetting the advantage of a
quick and firm Soviet commitment.
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The Soviet Hind Helicopter:
Prospects for Exports
The MI-24 Hind helicopter is the Soviet entry in one
of the most active sectors of the international arms
market-attack helicopters. Third World countries
are seeking armed helicopters for antitank and anti-
personnel missions in conventional warfare and
counterinsurgency operations. Moscow has delivered
as many as 390 Hinds to 14 Third World countries
since 1978. The helicopter's operational shortcomings
could limit additional sales over the long term, partic-
ularly to new customers. Nonetheless, involvement of
Soviet customers in conventional conflicts and coun-
terinsurgencies plus favorable financial terms from
the USSR will ensure a substantial number of addi-
tional Hind sales, mostly to countries already possess-
ing the system.
Hind Missions and Capabilities
The MI-24 Hind (and its export model, the MI-25) is
a large attack helicopter about the size of the stan-
dard Soviet transport helicopter, the MI-8 Hip. It has
a higher airspeed than the Hip, armor for the cockpit
and other components, and formidable armament that
can include either a four-barrel 12.7-mm Gatling gun
or a fixed twin-barrel 23-mm cannon plus rockets,
bombs, and antitank guided missiles. Its ability to
deliver a high volume of gun and rocket fire makes it
a potent counterinsurgency weapon. The Hind differs
from Western attack helicopters in that it has a small
cargo- or troop-carrying bay that, along with its
rugged fuselage, large engines, and heavy armor and
ordnance, makes it the largest attack helicopter in the
world.
Hinds exported to the Third World are externally
similar to those provided to Soviet forces except that
they carry an older antitank guided missile and fire-
control system. A few of the advanced systems that
may be carried by Hinds in Soviet forces-for exam-
ple, low-light-level television for night operations-
almost certainly have not been exported. The Hind's
laser rangefinders probably have been exported, since
similar equipment is contained in other Soviet aircraft
sold outside the Warsaw Pact.
The Soviets have exported about 15 percent of the
Hinds they have built so far despite a competing
requirement for attack helicopters to fulfill three
missions within their own forces: escort and support of
heliborne or airmobile assault operations, close air
support for armor and mechanized infantry forces,
and operations in rugged and remote areas such as
along the Sino-Soviet border. The invasion of Afghan-
istan in 1979 gave the MI-24 an important counter-
insurgency mission as well.
Soviet Motivations
The Soviets have evidently exported the Hind to
expand their arms relationships with the USSR's
traditional arms customers, some of which are among
Moscow's best sources of hard currency. This consid-
eration may have been particularly important in the
cases of Iraq and Syria, which continue to buy attack
helicopters of West European origin as well as Hinds.
An additional incentive in the case of Peru probably
was the desire to make Peru into a showcase of
advanced Soviet military hardware that would attract
other Latin American customers.
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Afghanistan
Vietnam
Most of the initial purchasers of the Hind apparently
sought it for use in conventional roles rather than in
counterinsurgencies or unconventional warfare. The
first three purchasers-Algeria, Iraq, and Libya-
deploy most of their Hinds opposite unfriendly neigh-
bors, although Libya has used small numbers in
Chad, and Iraq has used them against the Kurds.
India, Peru, South Yemen, Syria, and Vietnam also
purchased Hinds primarily for conventional warfare
against traditional enemies. Peru, to our knowledge,
has not used its Hinds in its counterinsurgency
against the Sendero Luminoso; and Vietnam, which
has had Hinds since 1980, only last year began to use
them in a limited way in Cambodia.
About 1979, Moscow also began exporting the Hind
to support counterinsurgency efforts. The Soviets
found themselves committed to helping suppress in-
surgencies in several client states, including Angola,
Ethiopia, Mozambique, Afghanistan, and, most re-
cently, Nicaragua. All of these countries are using
Hinds, or are likely to use them, primarily against
insurgents. In addition, Cuba probably uses its Hinds
primarily to train pilots that it sends to these coun-
tries. Moscow probably provided Hinds in these cases
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not only to nurture arms relationships but also to
support its objective of maintaining socialist regimes
in these countries. Several of these Hind recipients
have very little ability to pay for complex arms,
suggesting that in these cases Moscow believes the
political benefits outweigh the economic costs.
Combat Performance
The success of the Hind as an export will depend in
part on its combat record. It has seen heavy action in
Afghanistan and in the Iran-Iraq war and smaller
scale use in Angola, Ethiopia, Cambodia, and Chad.
These actions have revealed both strengths and weak-
nesses in the system.
The most commonly praised feature of the Hind is its
armament. The volume and precision of its fire have
reportedly made it the most feared weapon in Afghan-
istan.
The main problem with the Hind, according to Third
World observers, is its size, which makes it an easy
target for air defenses. It lacks the thin silhouette of
some Western helicopters, notably the Cobra. Al-
though the cockpit is well armored, there are large
areas on the aircraft, including parts of the cargo bay
and the tail boom, which are unprotected and which
contain vital hydraulic lines and control surfaces. In
Afghanistan the Hind's worst enemy has been the
heavy machinegun, especially when the helicopter
operates in valleys where rebel gunners can fire on it
from above. Afghan insurgents have also scored hits
with shoulder-launched SA-7s
The presence 25X1
size and weight), which reduces its ability to evade
ground defenses and to fight air-to-air engagements.
of even modest air defenses has forced Hinds to fly
higher and minimize their on-target time, reducing
their overall effectiveness. The Hind has also been
criticized for its lack of agility (a result of its large 25X1
Market Experience
The Hind has been sold mainly to customers that
traditionally have bought large numbers of helicopters
from the USSR. It has not proved successful in
opening new Third World markets for the Soviets. 25X1
countries more closely aligned with the West.(
Many countries that operate small numbers of Soviet
MI-8 Hips, like Congo, Guinea, Madagascar, Mali,
and Zambia, have not purchased the Hind, probably
because most of them do not need to counter insur-
gencies, are unable to pay, and are wary of the
Soviets-in part because of experiences in earlier
deals. For its part, Moscow may be unwilling to sell to
terms.
Mo-
zambique and Nicaragua, Hind recipients that had
not previously been important Soviet helicopter cus-
tomers, are special cases. Both are fighting for surviv-
al against insurgencies and are isolated from Western
suppliers-Nicaragua for political reasons and Mo-
zambique by an inability to afford Western payment
Moreover, the Hind lacks what is normally one of the
most attractive features of Soviet equipment-a low
price. In the case of large cargo helicopters, the Soviet
asking price for the MI-17 is about $2.8 million, while
Western manufacturers were recently asking over $6
million for somewhat smaller models. In the attack
helicopter market, however, the top of the Western
line, the US Cobra, is now being sold to Jordan for
$3.3 million and to Pakistan for $5.2 million each
(prices that probably exclude some avionics and arma-
ment)
Although such figures must be
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regarded as approximate, the Hind clearly does not
have a decisive price advantage over Western attack
helicopters. In addition, a country that cannot afford
an aircraft like the Cobra can turn to any of several
much smaller Western helicopters, which are cheaper
than the Hind and better in some ways, notably in
maneuverability. The main advantage of the Hind for
a poor country is that in a benign air defense environ-
ment it can be used for utility as well as attack
purposes.
Prospects
The Hind is likely to continue to help Moscow
reinforce arms supply relationships it has already
established. Some current Hind customers are likely
to make additional large purchases because the sys-
tem has an established place in their forces. The
Soviets also may offer attractive financial terms to
mitigate the noncompetitive price of the Hind. Others,
like Syria and Iraq, are showing increasing interest in
Western helicopters as combat weaknesses in the
Hind become apparent, but they will probably contin-
ue to buy some Hinds to maintain their fleets. So far,
however, the Hind has not proved attractive to coun-
tries that are not in some way already tied to the
Soviets.
The Soviets currently have in the late stages of
development two attack helicopters, the Havoc
(MI-28) and the Hokum (a Kamov product). Design
improvements, advances in key subsystems, and the
absence of a cargo bay should make them more
capable in attack missions than the multirole Hind.
Production rates for the new models, however, are
likely to be slower than for the Hind because of the
use of advanced technology and more exacting manu-
facturing procedures. We therefore expect the new
models to augment, rather than totally replace, the
Hind in Soviet forces. Moscow is likely to export one
or both of its new attack helicopters to preferred
customers within a few years of their entry into Soviet
service, as it has done recently with some other
advanced systems, but we expect the Hind to remain
the main Soviet export attack helicopter at least
through the end of this decade.
Implications
Moscow's experience with the Hind suggests that the
Soviets will have to overcome several problems if they
wish to retain or improve their position in the highly
competitive world arms market. The failure to sell the
Hind outside a select circle of traditional customers in
large part reflects Moscow's traditional lack of ag-
gressive marketing of military equipment. Unlike the
Soviet civil aircraft exporter, Aviaexport, which has
recently conducted demonstration flights of the AN-
32 transport aircraft in much of the Third World, the
military exporters (notably the Tenth Main Director-
ate) apparently wait for customers to come to it. This
probably results from Soviet reluctance to sell mili-
tary equipment to countries in which technical details
might be compromised. If Moscow persists in selling
advanced military equipment only to countries with
which it already has reliable political relations, how-
ever, it is unlikely to enlarge its circle of arms
customers much further. Such a policy would also
reduce Soviet ability to use arms sales to open the way
to political influence.
Even among its traditional arms customers, Moscow
will almost certainly find itself under increasing pres-
sure to provide even more recent technology. If Mos-
cow procrastinates on exporting new models, some
customers could be tempted by highly competitive
Western equipment. The Hind experience suggests
that Moscow can rise to this challenge, although the
expected lower production rates for newer Soviet
equipment may make the export decision more diffi-
cult in the late 1980s than in the 1970s. In addition,
the fact that Moscow still has not exported Hinds
with its latest missile or fire-control systems suggests
that it may try, at least initially, to withhold a few of
its most advanced subsystems from even its best
customers.
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Other Topics
Short-Term Outlook
Posting its first annual decline since World War II,
production of Soviet crude oil and gas condensate
slipped to 12.23 million barrels per day (b/d) in 1984.
The decline-by 100,000 b/d-from the rate in 1983
reflects a host of problems associated with the ad-
vanced age of most of the USSR's largest oilfields,
and it may continue. With West Siberian oil produc-
tion stagnant or possibly declining and output in other
regions falling, a nationwide decline of about 200,000
to 300,000 b/d is possible this year. If it occurs, the
Soviets might have to cut back their net exports for
hard currency if they are to satisfy domestic oil
requirements and maintain their exports to Eastern
Europe.
The Soviet leaders recently implemented a series of
personnel and administrative changes that reflect
distress over the oil industry's problems. A large
number of production managers in West Siberia were
fired, and Nikolay Mal'tsev was replaced as Petro-
leum Industry Minister by Vasiliy Dinkov, who as
Minister of the Gas Industry scored notable successes
in the rapid development of West Siberian natural gas
production. Vladimir Filanovskiy-Zenkov, chief of the
oil and gas section of the State Planning Committee
(Gosplan), will be Dinkov's new deputy. No new
combination of administrators, however, is likely to
restore growth in oil output.
Background
Soviet oil production soared for three decades-from
750,000 b/d in 1950 to a record 12.33 million b/d in
1983 (figure 1). The ready availability of oil in turn
prompted a massive conversion of Soviet industrial
facilities from coal to oil.
Figure 1
USSR: Oil Production, 1950-84
0 1950 55 60 65 70 75 80 84
The period was characterized by annual production
increments of generally increasing size until 1975,
after which growth tapered off (figure 2). Oil output
reached 12.03 million b/d in 1980 and inched up to
the 12.33 million b/d posted in 1983.
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Figure 2
USSR: Year-to-Year Change in
Oil Production, 1951-84
111111 1111111 I1111I 1111111 IIII
-200 1951 55 60 65 70 75 80 84
In 1984, production in West Siberia's Tyumen' Oblast
increased by only 140,000 b/d-about 200,000 b/d
less than the planned increment. This was too little to
cover the declines in oil output elsewhere in the
USSR, let alone provide for any net growth in oil
output nationwide. The overall result was the drop of
100,000 b/d.
High-Level Concern
The slowdown in the growth of Tyumen' production
and the region's below-plan performance in 1983 and
1984 caused consternation in Moscow and brought
West Siberian operations under high-level scrutiny. In
late 1983, leading officials from Gosplan, the oil
ministry, and the Communist Party mounted an on-
site investigation, according to the Soviet press. Early
in 1984 the depth of leadership concern was shown by
the assignment of a deputy oil minister as chief of oil
operations in Tyumen'. The continuing dissatisfaction
culminated in the firing of most of the managers of
the region's production associations late in the year
and the replacement of Mal'tsev in February 1985.
Several news articles indicate that, in an unprecedent-
ed move to improve efficiency, two major organiza-
tions that control oil operations in the European
USSR have been given responsibility for three West
Siberian production directorates.
In a parallel effort, the party apparatus is focusing on
mobilizing Tyumen' workers to meet oil and gas
production plans. Vladimir Dolgikh (candidate mem-
ber of the Politburo and party secretary concerned
with energy matters and Siberian development) has
cited poor management as a basic problem. Oil
officials, he said, had failed to foresee the growing
requirements for artificial lift and to provide for
adequate maintenance and logistic services. Dolgikh
attributed part of the failure to laxity on the part of
local party units and called upon party members to
coordinate their activities more effectively.
Problems in Tyumen'
The most serious technical problems affecting Tyu-
men' oil production are occurring in the production
associations that manage Samotlor and Federovo, two
of the largest oilfields in the USSR. Difficulties are
accumulating, especially those associated with water
injection systems and the sharply rising water content
of fluid recovered from producing wells. Samotlor's
pressure-maintenance and oil-gathering systems, for
example, have severe corrosion problems. The oil flow
lines leak, and the lines for the waterflood system are
so corroded that full pressure cannot be maintained.
With the average water-cut (the percentage of water
in the fluid produced from oil wells) estimated to
exceed 50 percent, oil production is declining at both
fields.
Bright expectations for a newly developed area north
of Fedorovo apparently have dimmed. Soviet press
articles cited serious production shortfalls and report-
ed that some newly drilled wells were not flowing.
Many wells at the Sutorminsk field have been
switched over to pumps far earlier than was envisaged
in the original development plan. If the reservoir
characteristics in nearby oil deposits resemble those at
Sutorminsk, oil extraction from the whole new area
may require more wells, equipment, manpower, and
time than the planners anticipated.
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What Went Wrong
The shortfall in West Siberian production can be
traced in part to overoptimism: the quality of the
newly exploited reserves has not met official expecta-
tions. Another factor is the failure of Soviet industry
to supply pumps and other oilfield equipment in
adequate quantity and quality. As a consequence,
Soviet planners and oil industry leaders are falling
behind in the race against rising investment and
manpower requirements.
Lower Well Flows
Last April a Pravda article commented that many
Soviet oil wells had stopped flowing naturally, and the
oil now had to be "extracted," literally-pulled out of
the ground. To do this, the article added, the produc-
tion associations had to have special equipment
(pumps, workover rigs, and tools) in amounts and
kinds that they were not receiving. The situation is
particularly serious in Tyumen', where some of the
new wells will not flow. Moreover, according to oil
industry officials and some Soviet geologists, recent
experience shows that the initial Soviet reserve esti-
mates for the Tyumen' oilfields were exaggerated and
the estimated recovery rates were too high.
When Soviet oil industry planners and managers
continue to use such estimates (which understate the
difficulty of reaching production goals) as a basis for
ordering equipment and allocating manpower, pro-
duction shortfalls are inevitable. The original plan-
ning error is then exacerbated by frequent failures in
equipment, electricity supply, and logistic support.
Rising Requirements for Investment and Manpower
Since 1980, high-ranking Gosplan officials have
pointed out the alarming decline in the average flow
of new wells-from 1,183 b/d in 1975 to 518 b/d in
1980 and an estimated 277 b/d in 1981-85. In late
1982, Oil Minister Mal'tsev illustrated the problem
by pointing out that, to achieve a 20,000-b/d increase
in oil production (allowing for normal depletion rates),
the USSR had drilled 265,000 meters of wells in 1970
and 866,000 meters in 1980, but would have to drill 7
million meters of wells in 1985.
Siberia have been in operation for 12 to 15 years.
Giant fields play a vital role in maintaining steady
growth in total output even though their production
slows down after a decade or so of exploitation. As oil
is extracted, the natural reservoir pressure declines,
reservoir permeability tends to decrease, and the
water-cut increases markedly. These changes speed
up the use of artificial lift, and pumps break down
more frequently because of corrosion and the buildup
of salts in the well bore.
Such conditions multiply the requirements for well
maintenance. Tyumen', however, reported a shortage
of 100 workover crews in 1984. Furthermore, in the
hostile Tyumen' environment each workover crew is
expected to maintain 55 to 85 wells scattered over
difficult terrain, whereas in the mild climate of Baku
a single crew looks after 29 wells. The lack of
appropriate maintenance in West Siberia results in
idle wells and lower production there.
ber 1984, according to Izvestiya, the administration's
investment allocation was reduced for unspecified
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Oil production planning is fraught with uncertainty 25X1
even under the best of circumstances. It appears,
however, that Soviet planners have repeatedly missed
windows of opportunity for timely and efficient acqui- 25X1
sition and use of equipment. A glaring example of
ineptitude was reported by Izvestiya last April. In
1980 the Tyumen' oil administration submitted a
1985 production goal of 6.8 million b/d, using this
figure as the basis for its equipment orders and
investment plans. Moscow raised the goal to 7.5-7.6
million b/d but did not allocate additional funds,
equipment, or manpower. On the contrary, in Decem-
reasons.
Outlook
Soviet oil output in 1985 probably will be well below
the planned 12.56 million b/d-it may not even
match the 12.23 million b/d posted in 1984. We base
this conclusion on the recent production record and on
Soviet media evidence of continuing difficulties. Daily
oil production in the first quarter of 1985 was 11.92
million barrels, a figure well below the planned level
and 300,000 b/d below the average production level 25X1
A fundamental factor underlying many of the oil
industry's production problems is the increasing age
of the oilfields. The dozen largest fields in West
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achieved in 1984. With oil production in the key West
Siberian region growing less rapidly-and possibly
flattening out or even declining-we estimate that a
further decline nationwide is possible this year. Ef-
forts to check the decline will become progressively
more costly in terms of manpower and investment
resources.
In the longer run, the USSR will have to reconsider
its Long-Term Energy Program, which postulates that
nationwide production of crude oil and gas condensate
will hold steady at a high level through the end of the
century. Given the situation in West Siberia, the
leaders may find that to carry out these plans they
would have to divert to the oil sector an unacceptably
large share of national investment.
Last year, Moscow was apparently able to raise
exports by increasing reexports of OPEC oil, trim-
ming domestic consumption, and drawing down do-
mestic stocks. If production shortfalls are larger in
1985, Moscow may be unable to satisfy domestic oil
requirements and maintain exports to Eastern Europe
without some cutbacks in net exports for hard curren-
cy. The Soviets have sold very little oil on the spot
market since January, and they suspended shipments
to many West European and Japanese customers in
February and March. Some exports were reported in
late March, but at a slightly lower level than a year
ago. Whether the Soviets will be able to maintain or
increase sales during the rest of the year is unclear at
this time
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The Soviet Tank Industry:
Modernization for the 1990s
The USSR, driven by the need to build tanks with
increasingly expensive and complex components and
subassemblies, has undertaken sweeping changes in
the production methods of its tank industry over the
past decade. Overall production of tanks has declined,
while the industry's plant and equipment holdings
have grown dramatically. This modernization will
enable the Soviets to produce increasingly sophisticat-
ed and capable tanks more efficiently.
The Postwar Tank Industry
After World War II, the Soviets produced a genera-
tion of medium battle tanks (the T-54, T-55, and
T-62) that were simple in design, easily manufac-
tured, rugged in operation, and that could be operated
by crewmen with limited mechanical training. Large-
scale manufacture of these tanks was facilitated by
the application of traditional Soviet manufacturing
practices, including the use of proven designs, stan-
dard, off-the-shelf components and subassemblies,
and standardized, labor-intensive fabrication meth-
ods. Institutional continuities in the industry also
contributed to the ability to manufacture tanks rapid-
ly and in large numbers. The tank industry has a
centralized executive structure, stable organizations
and research teams, and plants that have manufac-
tured tanks or related equipment for almost half a
century.
New tactical requirements and the development in the
mid-1950s of new tank technologies in the West
compelled the Soviets to introduce in the mid-1960s a
radically new tank-the T-64. However, the tank was
produced using manufacturing technology that was
little changed from that employed for the previous
generation, and various production problems were
encountered.
During the 1970s, two new tank models and at least
four variants were introduced, including the T-64A
and B, the T-72 and its variants, and the T-80. These
tanks variously incorporate laminated nonhomoge-
neous armor, advanced fire control, improved diesel
and gas turbine engines and power trains, variable-
height suspension systems, and equipment for the use
of armor-piercing ammunition and tank-fired guided
missiles-all substantial advances over 1960s-vintage 25X1
tanks. These more sophisticated components have led
to a marked growth in cost (see figure 1).
Modernization
The incorporation of these new components and sub-
systems, combined with growing unit costs and pro-
duction requirements, led the Soviets to modernize
manufacturing processes throughout the 1970s at 25X1
their three primary tank assembly plants-in Omsk,
Kharkov, and Nizhniy Tagil 2-as well as at numer-
ous component supplier plants.
The installation of automated equipment will facili-
tate the manufacture of higher quality components
and reduce costs. It will enable the Soviet tank
' The three main tank plants now operational are the Malyshev
Transport Machine Building Plant No. 75 at Kharkov, the October
Revolution Heavy Machine Building Plant No. 174 at Omsk, and
the Kaganovich Ural Railroad Car Plant No. 183 at Nizhniy Tagil.
The Lenin Tractor Plant in Chelyabinsk resumed limited produc-
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Figure 1
Estimated Procurement Costs for
Soviet Main Battle Tanks
0 Fire control Other
M Power pack
Note: The procurement costs expressed in this article are estimated in 1982
dollars and are not actual Soviet expenditures. Dollar cost estimates are
intended to represent what it would cost the United States to produce the
Soviet design using US production technology, input prices, and profit
margins. Dollar cost estimates cannot be used in isolation to draw
inferences about the relative effectiveness of Soviet equipment or the
industry to process materials that are harder to shape,
meet closer component tolerances, and decrease the
leadtime required to gear up for new tank programs.
The use of numerically controlled (NC) or computer-
aided numerically controlled (CNC) machine tools
drastically reduces materials handling, preparation
time, setups, machining time, and material consump-
tion (see table 1)
Such automated machine tools enable the manufac-
turer to perform metal-cutting or finishing operations
with great precision and speed even on complex
surfaces. A machining center, with its magazine of
several dozen automatically installed tools, can per-
form complex machining operations on the same
workpiece, which would otherwise be done on several
conventional machines. Thus, CNC machining cen-
ters with sensors, such as those bought from the
Italians, will enable the Soviet tank plants to do
contour milling on tank turrets in three dimensions or
to switch easily to continuous-path cutting and finish-
ing on the upper hull. Once a large enough array of
NC machine tools is integrated into production lines,
Soviet tank plants will be able to change over quickly
to machining parts for two or more tank models
simultaneously, or to shift quickly from one tank
program to another. This will also enhance Soviet
industrial mobilization potential in wartime, when
civilian production is shifted to defense at dual-use
plants.
Foreign Machine Tool Acquisitions
In the mid-1960s the Soviets also began to step up the
importation of precision industrial equipment from
the West for the tank industry. We have identified 20
Soviet acquisitions, including rotary forging equip-
ment for gun barrels; multiaxis CNC machine tools
capable of handling very large castings, such as tank
turrets; presses for the fabrication of steel plates and
other components; and foundry, mold line, and casting
shop equipment used in the manufacture of engine
cylinder block castings The imported
equipment has enabled the Soviets to fabricate com-
ponents more precisely, cheaply, and efficiently. The
tank industry will probably continue to install West-
ern equipment, given the lack of high-quality conven-
tional tools and the relative scarcity of advanced
manufacturing process technology in the USSR.
Expansion of Production Capacity
To accommodate the modern production equipment
and processes, the Soviets expanded and rebuilt their
main tank plant facilities. Soviet tank plants histori-
cally had undertaken new programs using renovated
facilities or additions to general purpose buildings of
standard design. In 1971, however, beginning with the
construction of a new final-assembly building at the
Kharkov tank plant, the Soviets augmented tradition-
al expansion with a new approach-designing build-
ings dedicated specifically to accommodate modern,
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Table 1
Savings in Machining Time a
Part Machined
Time Required With Conventional
Machine Tools
Time Required With NC
Machine Tools
Bracket
3 hrs. 46 min.
42 min.
Gear housing
13 hrs.
60 min.
Plate
1 hr. 16 min.
48 min.
Shaft
8 hrs.
36 min.
a The machining for this study was done in US plants, but the same
equipment could produce the same results anywhere.
Type of NC Machine Tool Used
Type of NC Machine Tool Used
machining center
machining center
drill press
lathe
special-purpose tooling and equipment. New produc-
tion buildings at Omsk and Kharkov now combine
under one roof administration and engineering, small-
parts production, the fabrication of large components,
finishing, and final assembly. These buildings also
enable the Soviets to use the new equipment properly,
providing, for example, the more vibration-free envi-
ronment required by automated precision machine
tools and the strong foundation needed for the em-
ployment of overhead cranes with twice the carrying
capacity of those used previously.
In addition to the growth of assembly facilities, there
has been an increase in the size of the outside supplier
network in the tank industry.
Tank production has not risen in step with the
expansion of facilities. We estimate that annual pro-
duction peaked at 4,500 tanks in 1969-primarily
because of large-scale serial production of the last of
the older generation tanks, the T-62, at Nizhniy
Tagil. Thereafter, total annual production fell, in part
because the Soviets introduced new and more complex
tanks. Even production of the T-72, the tank with the
greatest design inheritance, at Nizhniy Tagil during
1974-79 fell far short of the maximum annual output
reached for the T-62. Indeed, we estimate that total
annual output for all three major tank plants dropped
as low as 2,100 tanks in 1983 (see figure 2).
The large-scale changes caused by the construction of
modern facilities and the refurbishment of others
along with new methods of production and adminis-
tration undoubtedly contributed to the slowdown in
production. Even after new facilities and supplier
relationships are fully operational, however, the in-
volved fabrication and assembly requirements of com-
plex, modern tanks suggest that larger facilities will
be required to support the previous level of tank
assembly
Problems and Outlook
Despite the advances of the 1970s, the dissemination
of new technology has been slow, and the Soviet tank
industry continues to face problems in modernizing.
The industry is still having difficulty bringing equip-
ment up to Western standards and securing adequate
supplies of sophisticated components. For example, in
the 1970s, grinders, important in armored vehicle
production, were produced in the USSR in only one
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Figure 2
Production of Soviet Main
Battle Tanks, 1960-83
plant and in small numbers because of the shortage of
parts, such as spindles and precision bearings. Anoth-
er example involves gear-cutting machine tools, which
have not reached the quality of American Gleason
machines.
The Soviets also express concern over the slow pace of
production automation. Emigre sources indicate, for
example, that welding automation has gone very
slowly in the tank industry because of the reluctance
of some plant managers to undertake automation,
which is seen as too risky. Other reasons include:
? The belief that manual welding by skilled welders is
in some cases better than automated welding.
? The unwillingness of plant managers to install spe-
cific automated systems, including robots, until
these have been proved in the West.
? The absence of welding specialists with automation
or computer experience.
? The shortage of key components for automation,
including controls, microprocessors, and computers.
The tank industry also experienced problems in the
use of Soviet NC machine tools and automated
welding systems and other equipment-the result of a
lag in Soviet electronics, unsophisticated control sys-
tems, problems with hardware and hydraulics, and the
lack of qualified service personnel and programers.
We believe uneven progress and resistance to innova-
tion will impede Soviet efforts to modernize the
industry.
fully.
The expansion of the vendor network in the tank
industry has brought additional problems. Frequently,
suppliers do not meet production quotas, and, from
time to time, parts and materials required at the main
tank plants are in short supply. The maintenance of
quality control over vendor parts also poses a problem.
Sometimes vendors themselves struggle with upgrad-
ing their own production processes and cannot meet
production schedules or quality requirements success-
The upgraded, concentrated tank assembly backed by
a large network of specialized component manufac-
turers should produce savings that will partly offset
rising costs. We believe that plant modernization will
continue into the 1990s, based in part on acquisition
of Western equipment. The versatility and production
flexibilities inherent in the new facilities and equip-
ment should afford greater possibilities for converting
existing plants and lines to support new programs,
rather than constructing entirely new dedicated facili-
ties. Thus, the heavy initial outlays generated in
modernizing the industry in the 1970s and 1980s may
enable the USSR to save considerably in the 1990s on
costs for equipment, floorspace, process time, and
labor.
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 Secret
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Educating the Agricultural
Labor Force: Winning the Battle
But Losing the War?
Soviet agriculture has traditionally been short of
skilled workers, and the problem has worsened in the
1980s. With the emphasis on rapid mechanization and
widespread use of more sophisticated cropping and
livestock-raising practices, the level of training and
skills of the work force must be raised. But the quality
of education in rural areas continues to suffer from ill-
equipped schools, outdated training equipment, and
underpaid and undertrained teachers. The low pres-
tige of agricultural occupations in turn makes it hard
to attract qualified students.
Retaining better educated workers on the farms has
proved to be even more difficult. Skilled workers are
especially dissatisfied with living and working condi-
tions in rural areas. The regime is offering various
incentives such as lump-sum financial grants and
interest-free housing construction loans to make agri-
cultural employment more attractive. Thus far, how-
ever, the improvements do not go far enough to
substantially raise the average quality of the agricul-
tural labor force.'
Background
The shortage of skilled labor is reflected in the annual
influx of mechanics and other skilled workers from
industry and other sectors, mostly during the harvest-
ing season of July through mid-October. Moreover,
the number of machinery operators has not kept pace
with the growth of machinery and equipment on
farms, so that industrial enterprises frequently "loan"
farms mechanics and other skilled workers on a year-
round basis. These measures provide a critical substi-
tute source of skilled workers but lead to work
disruption in nonagricultural sectors and a more-than-
usual indifference to machinery maintenance and
harvesting losses.
The gap in educational attainment between urban and
rural workers has narrowed considerably since 1970
and will narrow even further as the older, less well-
educated generation dies off. Still, according to the
' There are about 25 million workers employed in socialized
agriculture-12 million on state farms and 13 million on collective
farms. During the period 1950 to 1983, agricultural employment
declined from 46 percent to 19 percent of total socialized employ-
Table I
USSR: Educational Attainment
of the Labor Force
Level of Education
Urban
Rural
1970
1979
1970
1979
Less than secondary
and primary b
51.1
36.2
63.6
54.7
a Includes incomplete higher, specialized secondary, and general
secondary education. The data are taken from published census
results on the highest level of education attained by all those who
were employed at the time of the census.
b Excludes less than primary.
1979 census, 70 percent of collective farmers had not
completed secondary education, and more than one-
third of those classified as engineers and technicians
in agriculture did not have formal technical training.
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The Quality of Rural Education
Soviet authorities frequently complain about the low
quality of all levels of education in rural areas. Rural
general education has been shortchanged on re-
sources; schools are generally small and staffed with
poorly trained faculty. Some schools do not offer even
certain basic courses because of the shortage of
trained staff. Farm officials also criticize the quality 25X1
of the training of rural vocational-technical school
graduates, citing ill-equipped schools, outdated train-
ing equipment, and poorly qualified teachers.
Vocational-Technical Schools
Vocational-technical schools, which train students for
skilled blue-collar trades, supply about half of agricul-
ture's demand for new workers. During 1981-85,
vocational-technical schools will graduate 13 million
workers, of whom about 3 million will be trained in
rural schools for agriculture. Of the latter, 1.1 million
will be assigned to work in Siberia, the Far East, and
the Non-Black Soil Zone (NBSZ).
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Although some rural areas have an adequate number
of schools, there are many regions where the lack of
schools is a serious problem. Yet, despite an apparent
priority for school construction, the Ministry of Rural
Construction is behind schedule in school commission-
ings. School construction in some Siberian regions, for
example, has not increased even though funding has
been allocated. Rural vocational-technical schools are
operating in only 70 percent of rural rayons in the
USSR. Because of the shortage of schools, rural youth
have enrolled in those urban vocational schools which
have had difficulty recruiting urban students. In
1983, about half of the students admitted to urban
vocational-technical schools in Lithuania came from
rural areas.
Teacher Shortage
Teachers are in short supply at all school grades
because of the general unattractiveness of rural life.
Teachers are among the lowest paid workers in the
USSR and often have to teach subjects that are
outside their areas of specialization. This dilutes the
quality of rural education and reinforces teacher
reluctance to accept positions in the countryside.
Many graduates of teachers colleges, particularly
those assigned to Siberia or the Far East, either do not
report for their assignments or begin making plans to
leave soon after they arrive. The teachers' negative
attitude toward the countryside also encourages mi-
gration among rural young people.
The problem is self-perpetuating; poor-quality train-
ing puts rural youngsters at a disadvantage when
competing for admission to higher schools, even to
higher agricultural schools. This is especially true in
Central Asia where many children attend school for
only half the year because of agricultural require-
ments. Special preparatory departments have been
organized at higher schools to prepare rural students
for college work.
Rural vocational-technical schools also find it hard to
attract students because of the low prestige of agricul-
tural occupations and widespread criticism of the
training. In the Baltic republics, about 30 percent of
rural eighth-grade graduates enroll in rural vocational
schools, while in Central Asia the share is only 10
percent. Farm managers are reluctant to release
young people for training because of the three-year
absence from work and the risk that they will not
return after graduation. Education officials accuse
farm managers of indifference, claiming they fail to
stimulate interest in agricultural occupations either
through career counseling or by giving newly trained
workers appropriate work and equipment.
Retaining Skilled Workers on the Farm
In 1982 General Secretary Brezhnev indicated that
less than half of all trained agricultural specialists are
employed on state or collective farms. About 35 to 40
percent of the higher and specialized secondary school
graduates who are directed to farms either do not
report for their assignments or leave shortly there-
after-largely because of dissatisfaction with working
and living conditions in rural areas.
Very few of those trained to operate farm machinery
actually end up doing so. For example, about 4.4
million farm machinery operators were trained in
vocational-technical schools or on farms during. 1981-
83, but the total number of operators working in
agriculture increased by only 56,000 during that
period (table 2). Between 1965 and 1980, the tractor
pool in agriculture increased by 58 percent, but the
number of tractor and combine operators increased by
only 35 percent.
Some agricultural specialists are dissatisfied because
they are not working at the jobs for which they were
trained. For example, a survey taken among Central
Asian agricultural specialists suggests the degree to
which workers are used ineffectively:
Share of Specialists Surveyed Performing
Work Outside Their Job Description
Collective
Farms
State
Farms
Perform functions not connected
with official duties
81
Perform work of subordinates
79
66
Perform low-level paper work
80
53
Coordinate production activities
not in official duties
62
48
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Table 2 Thousand operators
USSR: Farm Machinery Operators
Number Working
in Agriculture'
Number
Graduated b
1979
4,429
1,442
1980
4,461
32
1,488
1981
4,494
33
1,474
1982
4,499
5
1,460
1983
4,550
51
1,473
1984
4,592
42
NA
a Includes tractor machinists, tractor drivers, and combine opera-
tors as of April.
b Includes those trained in vocational-technical schools for work in
agriculture and directly on collective and state farms and other
agricultural enterprises.
Rural vocational-technical schools have been criti-
cized for neglecting specialties in short supply-such
as animal husbandry, construction, and repair and
technical servicing of machinery. Meanwhile, three-
quarters of those enrolled in such schools are trained
as farm machinery operators, even though most of
them take jobs in other fields.
It has been especially difficult to keep females on
farms because of their dissatisfaction with employ-
ment opportunities. Women comprise a substantial
portion of technical agricultural specialists: 30 per-
cent of agronomists, more than 50 percent of livestock
specialists, and 40 percent of veterinary personnel.
But they are greatly underrepresented in line-
management positions. Only 1.6 percent of state farm
directors and 2 percent of collective farm chairpersons
are females, proportions which have remained un-
changed since the mid-1950s.
Females in agriculture are employed primarily in
unappealing manual jobs involving livestock and crop-
work-areas that have had low priority in terms of
mechanization. With the emphasis on training farm
machinery operators, educational and employment
opportunities for females are better in urban areas,
and young females are more likely to migrate than
A recent graduate with a milkmaid certificate
says, "And don't beg me, I'm leaving for the city
regardless.'
Narodnoye
obrazovaniye,
June 1984
males. Currently, females comprise 28 percent of total
enrollment in vocational schools in Moldavia, but only
7 percent of enrollment in rural schools. The share of
female enrollment in rural schools in the RSFSR is
about 10 percent.
Another obstacle to retaining skilled workers is the
practice of admitting urban students to higher insti-
tutes in rural areas to fill enrollment quotas. These
students enroll in higher agricultural schools merely
to complete higher education, never intending to work
on farms. Urban students have also been recruited to
fill places in the lower level rural vocational-technical
schools, but most return to the city for jobs with
higher pay.
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Turnover is particularly high among machinery oper-
ators who cite the farms' shortcomings in providing
workers with adequate housing and equipment in good
repair. An additional inducement for experienced
operators to migrate is their preference for the regular
working hours of a factory schedule. Other reasons for
dissatisfaction include the uneven work schedule,
nonregulated time off, and shoddy equipment repair
service. In addition to the trained workers who leave
for jobs in urban areas, many skilled workers take
nonagricultural jobs in rural areas.
New Incentives
The regime is trying new measures to attract young
people into agricultural training and, after gradua-
tion, to convince them to stay on farms. In 1982,
several agricultural schools were among about 40
higher education schools excluded from the policy of
ending draft deferments for education. Graduates of
higher and specialized secondary schools in the fields
of agronomy and animal husbandry will receive three
years of free housing upon accepting a farm job. In
addition, 50 percent of the passenger cars and 30
percent of the motorcycles designated for sale in rural
areas are to be earmarked for priority sale to young
professionals with agricultural training.
Similar incentives are being offered to agricultural
specialists who will transfer from off-farm adminis-
trative positions to employment directly on the farm.
According to Mikhail Gorbachev, then the party
secretary in charge of agriculture, the abolition of
many of the trusts and specialized agricultural associ-
ations announced in January 1983 would shift special-
ists from administrative work back to "practical
work" on the farms. As part of this plan, about 8,000
people were transferred in early 1983, including 4,600
in the RSFSR, 1,200 in the Ukraine, 450 in Kazakh-
stan, and 400 in Belorussia.
Current plans call for expanding and improving train-
ing and incentives for vocational-technical students in
rural areas as well. General secondary school gradu-
ates with animal husbandry training who enroll in
rural vocational-technical schools will receive monthly
stipends of 96 to 104 rubles. Also, state farm and
other agricultural enterprises will pay rural vocational
school graduates who accept employment in agricul-
ture lump-sum grants of 500 rubles (equivalent to
about 30 percent of their first year's pay). Rural youth
will be given preference for admission to these schools,
and special efforts will be made to recruit more
females. The quota for females will be set at one-third
of total enrollment, and training in nonagricultural
occupations in rural areas will be expanded to keep
young females from migrating to urban areas.
In 1981 the admissions policy in higher schools was
changed to provide for noncompetitive admission to
the correspondence (home-study) division for rural
students sponsored by farms. Plans call for increasing
the share of students enrolled in these part-time
programs in higher agricultural schools from the
current level of 46 percent. Educators readily admit
the qualitative drawbacks of part-time education, but
they believe that workers sponsored by their farms for
training in the home-study programs will be more
likely to continue working on those farms once they
have completed their education.
The authorities recognize the importance of improv-
ing rural living conditions in retaining younger work-
ers, in particular, in farm jobs. They have increased 25X1
salaries and rural homebuilding and are making
headway in improving consumer services, medical
care, transportation, and cultural facilities.
The prospects for raising the quality of rural educa-
tion are uncertain at best. The regime has upgraded
the plant, the staff, and the curriculum of rural
schools. The scheduled increase in teacher salaries
this year should make the profession more attractive
to young people. More schools are being opened in
rural areas, and enrollment in rural general education
schools with extended day programs has risen sharply.
However, as long as the policy of keeping rural
children out of school for weeks at a time to help with
the harvest persists, the commitment to improvement
will be limited. Moreover, even if rural education does
improve, the problems of retaining skilled workers will
not be solved. The incentives the regime is offering to
make agricultural employment more attractive are
not very strong, particularly since the regime has
neither the will nor the resources to bring about a
substantial improvement in rural living standards, at
least in the short run.
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aecret
Secret
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