USSR REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88T00799R000200130003-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 54
• Document Creation Date: December 23, 2016
• Document Release Date: January 11, 2012
• Sequence Number: 3
• Publication Date: December 1, 1986
• Content Type: REPORT

Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
t n Intelligence
eJY'l.v"Yj{~b~
I
USSR Review
In this issue:
Managing Change
rM
SOV UR 86-006X
December 1986
Copy 5 9 8
ILL
1-3 PIS
T ca
f
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Intelligence 25X1
USSR Review
The USSR Review is published by the Office of
Soviet Analysis. Comments and queries regarding the
articles are welcome.
Secret
SOV UR 86-006X
December 1986
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
25X1
Contents
Managing Change Perspective: Gorbachev's Program Builds Momentum
Despite stiff resistance from the bureaucracy, Gorbachev's
ambitious program for "restructuring" the Soviet system has gained
demonstrable momentum in Politburo decisions and government
legislation since the Soviet party congress.
Gorbachev's freedom to maneuver is constrained by the Politburo,
which must endorse all his policy initiatives and ultimately has the
power to remove him. Of the dozen full Politburo members, a
minority are probably loyal supporters, another minority old-guard
skeptics, and the central majority a mix of allies and independents
who must be persuaded on the merits of each issue. At this critical
juncture in consolidating his power, further progress on his agenda
probably depends on his ability to reshape the Politburo and make it
more responsive to his will.
Gorbachev's incremental approach to reform limits our ability to
predict how far he will be willing, or able, to push his ideas. If
pushed to their extremes, they would create a radically different
Soviet economy. The evidence thus far, however, suggests that his
efforts to improve the system will be something of a trial-and-error
process and that the dimensions of the reform ultimately will be
determined by a combination of the economic results he obtains and
his own political abilities.
5 25X1
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
secret
General Secretary Gorbachev has assigned a high priority to
restructuring the government, a task that he views as essential to the
success of his economic revitalization program. He has taken steps
to gain more effective control over the main direction of the
economy, while at the same time leaving more of the day-to-day
management to the local and enterprise levels. New interministerial
coordinating bodies have been established for key sectors of the
economy. The central bureaucracy is being reduced, and some
layers of management are being eliminated. These measures should
help the regime focus on broad economic tasks but will do little to
reduce the temptation for ministries to interfere in enterprise
management.
General Secretary Gorbachev has launched a far-reaching policy of
glasnost (openness) and cultural revitalization to counter the
attraction of "bourgeois" culture and Western propaganda, to
overcome widespread apathy and alienation, and to increase his own
freedom for maneuver in addressing the nation's problems. He is
meeting resistance from conservatives among media officials,
cultural figures, and midlevel bureaucrats, but so far there are no
signs of serious disagreement at the top level. Expanding the limits
of the permissible in culture and propaganda harbors major risks for
the regime and for Gorbachev personally. On the other hand, a
crackdown would risk killing the esprit Gorbachev wants to foster
and might lead to greater popular cynicism than existed before.
25X1
25X1
23 25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Secret
Gorbachev's Economic Program: Monitoring Progress
In its efforts to revitalize economic performance, the Soviet regime
has focused on improving the existing system and temporized on the
need for politically risky basic economic reforms. Soviet leaders,
however, cannot afford to await the full impact of current initiatives
before deciding on whether further changes are required. They are
likely to base their judgments on demonstrated progress in a few
critical areas. We have identified a number of "progress indicators"
with respect to four major themes of Gorbachev's economic strategy:
industrial modernization, economic efficiency, economic discipline,
and consumer welfare.
Other Topics The Dilemma of Moscow's Policy To Curtail
Illegal Private Activity
Moscow's latest crackdown on the second economy has created
confusion among officials and the populace and has increased
consumer frustration by making privately provided consumer goods
and services harder to obtain. New legislation on individual labor
activity attempts to clarify the situation by specifying what types of
activities may legally be pursued; however, it contains little that is
new.
Viewpoint Ligachev, Gorbachev, and the Configuration of Power
in the Current Soviet Leadership
Historically, the relationship between the number-two man in the
Soviet party leadership and the General Secretary has been marked
by tension and competition. Although Gorbachev's relationship to
his second secretary, Yegor Ligachev, is probably not as
antagonistic as that of his immediate predecessors, Ligachev
appears to be an independent political force, seeking to limit
Gorbachev's power.
31 25X1
25X1
25X1
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Secret
Managing Change
Perspective: Gorbachev's Program Builds Momentum 25X1
When the 27th Soviet Party Congress adjourned in March 1986, General
Secretary Gorbachev had already moved with unprecedented speed to
reshape the senior leadership, but his ability to translate personnel changes
into action on his domestic agenda remained uncertain. Since then, his
ambitious program for "restructuring" the Soviet system has gained
demonstrable momentum in Politburo decisions and government legisla-
tion. He clearly has encountered more resistance than he anticipated,
however, and that resistance is reflected in the kind of changes he has been
able to make in economic management-highly impressive when compared
to the accomplishments of his recent predecessors, but something less than
the "radical reform" he has said is needed to revitalize the economy (see
"Gorbachev's `Radical Reform': A Progress Report").
The pace of domestic policy initiatives has picked up noticeably since the
congress, and the regime has already taken initial steps to implement most
of Gorbachev's directives:
? To help shift the bureaucracy's focus from micromanagement to strategic
planning and coordination, central coordinating bodies have been estab-
lished to oversee the energy, construction, "social development," and
foreign trade sectors, in addition to those for agro-industry and machine
building announced before the congress (see "Restructuring the Govern-
ment Apparatus").
? In response to Gorbachev's criticism of the wage-leveling trend of the
Brezhnev years, a reform was enacted in August that is designed to
widen substantially the disparity in wages between workers who perform
well and those who do not.
1 Secret
SOV UR 86-006X
December 1986
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Secret
? Gorbachev's promise to provide greater scope for individual initiative has
already brought new legislation sanctioning a limited expansion of
business opportunities for individuals and small groups outside the state
sector, especially in consumer goods and services. An October decree
allows the formation of profit-sharing cooperatives to collect and sell
recycled materials, and a new law passed in November sanctions
moonlighting by individuals in a range of activities from cottage
industries to medical services.
? An ambitious five-year legislative program was announced in August. If
implemented, it will address most of the economic and social problem
areas Gorbachev has identified. The program includes specific target
deadlines designed to keep up the pressure for further action.
One of the most dramatic developments has been the new momentum 25X1
acquired by his glasnost (openness) policy, which is making the Soviet
cultural scene more lively than at any time since Khrushchev's cultural
"thaw" in the 1950s. Films, books, and plays are now being released that
deal explicitly with such sensitive issues as Stalin's crimes, and commenta-
tors are openly discussing contemporary problems, such as drug abuse, that
were once taboo (see "Gorbachev's New Directions in Propaganda and
Culture"). 25X1
Signs of progress on the issue he placed squarely at the center of his
agenda-economic performance-have further strengthened his position.
Industrial production as a whole is expected to grow faster this year than at
any other time since the mid-1970s, and agricultural output seems headed
for a recovery from its two-year slump.
Gorbachev also has established increased personal control over foreign
policy decision making during this period. He has largely succeeded in
putting his own foreign policy team in place and has vigorously pushed
policy initiatives that depart from previous Soviet diplomatic practice.
Signs of Resistance
Despite these successes, Gorbachev's own comments
indicate that he has run into more resistance
throughout the system than he initially anticipated. His frustration with
this resistance has been evident in his increasingly bitter public criticisms
of the party and government bureaucracies. The core of Gorbachev's
immediate problem is the vast party and government apparatus that has
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
successfully stifled previous efforts to change the system. At the lower
levels, Gorbachev has had considerable difficulty in making the regional
party organizations responsive to the demands of the center, thanks in part
to Brezhnev's lax personnel policies that allowed them to become virtually
independent fiefdoms.
Resistance from the bureaucracy is reflected in the economic reform
decrees that have been issued thus far, which have fallen short of the
"radical reform" Gorbachev has called for in his speeches. His reforms
have encountered resistance from ideological conservatives and foot-
dragging from government bureaucrats worried that the changes he
proposes will undermine their traditional privileges and status. Gorbachev's
efforts to restrain the growth of defense spending and modify Soviet
positions on security issues also have caused uneasiness
within the military.
25X1
25X1
one short-term effect of Gorbachev's reforms 25X1
has been to produce widespread confusion and disarray in the bureaucracy.
Many Soviet officials are finding it difficult to adjust to the 25X1
pressure from Gorbachev for improved performance while trying to follow
vague and often conflicting new instructions. 25X1
Such lower-level resistance will become even more significant if Gorba-
chev's ability to command a consensus at the top is in question. Gorbachev
still faces a Politburo composed of a few loyalists who support him on most
issues, a few opponents who tend to object to most of his ideas, and a group
in the middle whose members are persuaded one way or another on the
merits of the issue or on the basis of their perceived interests (see
"Gorbachev and the Politburo").
The problems Gorbachev is encountering are an inevitable response to the
changes he is attempting to impose on the system. They have not yet stalled
his program or diminished his determination to improve the system. He
acknowledges that he is facing a long-term task that could take "genera-
tions" to complete. But even his Soviet supporters are concerned that he
will need to show new gains against his opponents soon if he is to sustain
the momentum for change he has generated.
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Looking Ahead
Several developments over the next few months will provide clues to
Gorbachev's progress in dealing with the resistance:
? Adherence to published target dates for reform legislation and how
closely that legislation reflects his ideas. Those targets have been met so
far, and significant delays or the passage of legislation that lacks
substance would signal increased resistance.
? Trends in the reform debate. A resurgence of publications by conserva-
tive officials, who have been rendered largely silent by the current
political atmosphere, would suggest that Gorbachev's reforms are coming
under increased attack in the Politburo.
? The momentum of Gorbachev's glasnost campaign. A retreat from the
decision to deal more openly with sensitive issues would suggest a
strengthened position for the conservatives, who believe such openness
could undermine the regime's legitimacy, and would be a serious blow to
Gorbachev's effort to attack the root problems of the system.
? How vigorously Gorbachev's social policies are implemented. If his
antialcoholism measures eventually are ignored or significantly scaled
back, for example, the failure of that campaign could reflect an erosion of
his political strength.
Gorbachev also will need to demonstrate progress in meeting his goals of 25X1
modernizing Soviet industry, increasing economic efficiency and discipline,
and improving the quality, quantity, and variety of consumer goods and
services. Published Soviet economic data,
will help determine whether Gorbachev is 25X1
obtaining the kind of early positive returns in these areas that he will need
to sustain the current momentum of his economic program (see "Gorba-
chev's Economic Program: Monitoring Progress").
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Gorbachev and the Politburo
General Secretary Mikhail Gorbachev has made rap-
id progress consolidating power and appears to be in a
strong position, but, like other post-Stalin Soviet
leaders, he faces major constraints on his freedom to
maneuver. The most important of these come from
the Politburo, which must endorse all of his policy
initiatives and ultimately has the power to remove him
if he acts too independently. At present, few of its
members are politically beholden to Gorbachev, and
there can be little doubt that in many cases he must
Leadership Changes
Gorbachev has not yet made a number of leadership
changes that he surely wants. His protege Vsevolod
Murakhovskiy, head of the agro-industrial bureaucra-
cy since November 1985, is the only one of the three
first deputy chairmen of the Council of Ministers who
does not have at least a candidate seat on the
Politburo. Gorbachev's ally Boris Yel'tsin has not
attained the full Politburo membership enjoyed by his
predecessors as Moscow party boss.
bend to its collective will.
Although as its chairman the General Secretary has a
distinct advantage in influencing its decisions, the
Politburo operates collectively with each full member
having an equal vote. Unlike Brezhnev's Politburo,
which was packed with his cronies, Gorbachev's Polit-
buro is made up of mostly independent-minded lead-
ers who are likely to have their own agendas that
sometimes diverge from the party leader's agenda.
Few members are politically dependent on Gorba-
chev; so he must forge a consensus among them. A
number of comments by Politburo members suggest
that this is not always easy:
? At the 27th CPSU Congress Yegor Ligachev noted
the "frank exchange of opinions" that now takes
place in the Politburo, and Eduard Shevardnadze
stressed the "freedom to discuss all issues."
? Its decisions are argued vigorously.
Gorbachev mentioned "conflicts"
Regional Resistance
Regional leaders who are members of the Politburo
have shown a surprising degree of independence from
the center. Under Gorbachev this was dramatically
demonstrated by the difficulty he had ousting former
Moscow party boss Viktor Grishin (see inset). Similar-
ly, Gorbachev's success in removing Kazakh party
leader Dinmukhamed Kunayev from his republic post
was marred by severe political disturbances. And
Ukrainian party boss Vladimir Shcherbitskiy remains
in place despite Gorbachev's apparent efforts over the
past year to undermine him.
Leadership Differences
There have been persistent indications of differences
within the leadership over key issues. At the 27th
Party Congress there were signs of differences over
elite privileges. In May Gor-
bachev could not initially win approval for making the
details of the Chernobyl' nuclear accident public.
Over the past year there have been some hints of
dissatisfaction with Gorbachev's policy toward the
United States.
25X1
25X1
25X1
25X1
and "arguments" in the Politburo when he spoke to
a group of Soviet writers in June 1986.
The constraints imposed on Gorbachev by his Politbu-
ro colleagues have been evident in a number of areas.
Probably no member of the Politburo can be charac-
terized as totally supporting or opposing Gorbachev.
A small number of Politburo members may support
him out of personal loyalty on most issues-most
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Power and Its Limits:
The Grishin Affair
Gorbachev's struggle to remove Viktor Grishin illus-
trates the problem the General Secretary has in
exercising his power over Politburo members who
control large regional party organizations.
On 24 December 1985, Grishin was removed as chief
of the Moscow City Party Committee at an acrimoni-
ous city plenum. Several Soviet contacts of the US
Embassy in Moscow, some citing eyewitness infor-
mants, reported that there was a sharp conflict at the
plenum between Grishin and Gorbachev. Grishin ap-
parently defied Gorbachev's efforts to remove him
and mobilized his supporters to block Gorbachev's
candidate Boris Yel'tsin, forcing the latter to sum-
mon Gorbachev to help. Even after Gorbachev an-
nounced his backing for Yel'tsin, Grishin still got
chev later told a foreign Communist leader about his
"sharp confrontation" with Grishin, noting that be-
fore being removed Grishin had boasted that the
Moscow party organization would not repudiate his
leadership.
Although Gorbachev won an important victory-
removing a member of the Brezhnev old guard and
promoting a supporter in his stead-limits to Gorba-
chev's power were revealed. First, hundreds of party
members witnessed defiance of the General Secretary
instead of deferential obedience. Second, Gorbachev
found it not so simple to attack a Politburo member
on his own turf.
The latter point helps account for the prolonged
survival of old guard members Shcherbitskiy and
Kunayev. Ukrainian and Kazakh Central Committee
members, bound to those party leaders by longstand-
ing close ties, face removal themselves after the
leaders step down, and can be expected to put up stiff
resistance.
likely Shevardnadze and Lev Zaykov. At the other
end of the spectrum, the Brezhnev holdovers-Gro-
myko, Shcherbitskiy, and, for the time being, Kun-
ayev-have good reason to worry about Gorbachev's
assault on the old guard and are likely to be most
skeptical of Gorbachev's programs. The majority,
however, appear to be a mix of allies and indepen-
dents who must be persuaded on the merits of the
issues or on the basis of their perceived interests.
Some of the members of this group may find it in
their interest to keep Brezhnev holdovers in the
Politburo, thus increasing their own influence as the
critical swing votes in the center.
Loyalists
Lev Zaykov. All evidence indicates that party secre-
tary Zaykov, who is responsible for economic policy
generally and defense industry policy particularly, is a
loyal supporter of Gorbachev. He is the only full
member of the Politburo to have gotten all his central
leadership promotions under Gorbachev. Although
there are no past career ties between them, Gorbachev
oversaw his installation as Leningrad party chief in
June 1983. Gorbachev returned to Leningrad on an
inspection tour in May 1985 and praised Zaykov's
accomplishments. He was apparently impressed
enough with his performance to promote him to the
Secretariat two months later.
With his promotion to full Politburo membership in
March 1986, Zaykov became a political counter-
weight to the party's number-two man, Yegor Liga-
chev. Zaykov has publicly echoed Gorbachev's main
policy preferences. In a tour of Irkutsk last June, for
example, he declared that defense industries would
have to help the civilian sector to retool, and he said
that five-year-plan targets would have to be made
"tougher" and the deadlines for meeting them short-
ened.
Eduard Shevardnadze. More than any other Politbu-
ro member, Foreign Minister Shevardnadze appears
to rely on Gorbachev's protection and patronage, and
there is no question that he is a loyal supporter of the
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Secret
^ Became full members under Gorbachev,
but were candidate members before he
became General Secretary
Became full members under Andropov
^ Became full members under Brezhnev
Andrey Gromyko
Vladimir Shcherbitskiy
Dinmukhamed Kunayev
?, Kunayev was removed from his Kazakh post on 16 December
1986. His expected removal from the party Politburo, however,
must take place at a plenum of the CPSU Central Committee.
None had been convened as of the first week of January 1987.
USSR President
Ukrainian Party Chief
Former Kazakh Party Chiefa
General Secretary. Cut off from his home base of
Georgia and an interloper at the Ministry of Foreign
Affairs, Shevardnadze has no independent political
base. Before he became party leader, Gorbachev
regularly vacationed in Georgia, and Shevardnadze
has indicated to Western officials that he and Gorba-
chev have been friends for a long time.
By making Shevardnadze the Foreign Minister and a
full Politburo member in July 1985, Gorbachev also
gained a strong advocate for his domestic policy
agenda. Under Brezhnev, Shevardnadze was an out-
spoken advocate for domestic change and turned his
republic into a testing ground for economic, agricul-
tural, and management reforms, many of which are
now being promoted by the Gorbachev regime on a
national scale.
Allies and Independents
All the members of this group entered the Politburo
after Brezhnev's death. Although they probably share
a perception that the problems they inherited must be
addressed, there are indications that they may differ
on what needs to be done. As Ligachev, the leading
figure in this group, pointed out at the 27th Congress,
the Politburo is no longer willing to accept "delays
and procrastination" in addressing problems. Mem-
bers of this center group are likely to overcome
differences and rally behind Gorbachev when he
presents proposals they think will work, but they must
be convinced of the merits.
Yegor Ligachev. Ligachev became "second secretary"
of the party under Gorbachev and appears to support
him on many issues. As the number-two man in the
party, he is the most obvious potential alternative to
Gorbachev. If he were trying to challenge Gorbachev,
we would expect him to distance himself from the
more controversial aspects of Gorbachev's program.
Instead, in the key areas he oversees-cadres, ideolo-
gy, and culture-he appears to be on board.
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Secret
At the same time, some of Ligachev's remarks should
reassure conservatives. At a social science conference
in October he criticized Soviet writers for flirting with
religious themes and warned against allowing slander-
ers and demagogues to take advantage of the new
openness. In the October Revolution address, he
appeared to rule out proposals being advanced by
reformers to allow unemployment.
Nikolay Ryzhkov. Premier Ryzhkov appears to fully
support the steps taken so far in the economic sphere,
but in his public statements he has not gone as far as
Gorbachev in discussing further measures, suggesting
that he may be more cautious about more radical
economic reforms. As a former economic planner, he
may have an appreciation for the difficulties involved
in such a course. Although he achieved his current
position under Gorbachev, as head of the government
he has had an opportunity to build an independent
power base.
At the same time, Ryzhkov has played a key role in
Gorbachev's efforts to wrest control of the ministerial
bureaucracy from the old guard. After being appoint-
ed Premier in September 1985, he oversaw a massive
purge of the Council of Ministers, including nine of 12
deputy premiers, and 40 other officials of ministry
rank among the 90 ministries and state committees.
Ryzhkov's public rhetoric on ministry shortcomings is
often tougher than Gorbachev's. At the Supreme
Soviet session in June 1986, for example, he was
blunter than Gorbachev in attacking government offi-
cials for blocking change and spoke more forcefully on
the need for restructuring economic management.
Mikhail Solomentsev. Party Control Committee
Chairman Mikhail Solomentsev probably supports
Gorbachev on issues of party discipline and economic
reform, but he is not beholden to him, having obtained
his position under Andropov. Under Solomentsev's
charge, the Party Control Committee has been a
major weapon in Gorbachev's discipline campaign,
helping to bring the ministries and regional party
organizations into line. In August 1986, for example,
Solomentsev's committee took strong action to disci-
pline lagging ministries in the machine-building sec-
tor: two ministers were replaced shortly after the
publication of its findings on their shortcomings.
Solomentsev appears to have long seen the need to
break out of the Brezhnevian economic straitjacket.
One emigre claimed that under Brezhnev Soloment-
sev was frustrated by the inability to examine alterna-
tives during the planning process and once asked an
institute to draw up an alternate national economic
plan. At the 27th Congress, Solomentsev was the only
leader to declare that the Brezhnev leadership should
have seen the bankruptcy of its extensive economic
development as early as "the end of the 1960s," rather
than the late 1970s cited by Gorbachev. Nevertheless, 25X1
his age (73) and experience give him reason to sympa-
thize with the old guard on other issues.
Vitaliy Vorotnikov. RSFSR Premier Vitaliy Vorotni-
kov owes his present position to Andropov. Some
Soviet officials expected Vorotnikov to become pre-
mier when Tikhonov retired. He was also passed over
for the post of senior economic secretary that went to
Zaykov. That Vorotnikov was selected for neither of
these positions suggests that he is not as close to
Gorbachev as he was to Andropov.
Nevertheless, there have been no reports of friction
between him and Gorbachev. Before his elevation to
the central leadership, Vorotnikov spearheaded a
drive to clean up Krasnodar Kray, indicating that he
represents a break with Brezhnev-era toleration of
corruption and excessive privilege.
Chebrikov's elevation to full Politburo membership at
the first opportunity after Gorbachev came to power
may have been a reward for this support.
25X1
2bX1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Secret
Despite Chebrikov's apparent support, Gorbachev
may eventually want to put his own man in the
sensitive post of KGB chairman. There have been
several recent indications of possible friction between
the two. Two well-informed, third-country contacts of
the US Embassy in Moscow independently said re-
cently that Chebrikov and Gorbachev had become
opponents. One said that the source of disagreement
was Gorbachev's plans for economic reorganization,
which might weaken internal security controls. C
Chebrikov may be trans-
new policy directions. With each younger member
brought into the Politburo, their positions grow less
secure.
ferred to another post.
Geydar Aliyev. First Deputy Premier Aliyev may
have more in common with the Brezhnevite old guard
than with Gorbachev. One knowledgeable Soviet told
a Western embassy officer that Aliyev initially hung
back in the March 1985 Politburo discussions of
Chernenko's successor as party leader, supporting
Gorbachev only when he saw the discussion going in
his favor. Aliyev has kept a low profile since Gorba-
chev took over, not taking a strong stand on any policy
issue.
Although he was made a full Politburo member under
Andropov, his
promotion from Azerbaijan party boss to the central
leadership had been agreed on under Brezhnev. =
Aliyev made lavish gifts to the
Brezhnev family. Some contacts of the US Embassy
in Moscow assert that a Pravda article early this year
attacking sycophancy and fawning servility was aimed
at Aliyev and had been written on orders from
someone in Gorbachev's Secretariat.
Aliyev may be dropped from the
leadership. He was the only full Politburo member
who did not speak at the 27th Congress, and in recent
group appearances he has slipped in protocol ranking.
The Old Guard
Other than Gorbachev himself, Gromyko, Kunayev,
and Shcherbitskiy are the only remaining Politburo
members from the Brezhnev era. To them, Gorbachev
is a newcomer. Because they are what is left of the
Brezhnev leadership, they are more closely associated
with its policies and therefore less likely to support
Andrey Gromyko. President Gromyko apears to have
an ambivalent view of Gorbachev: on the one hand,
his speech nominating Gorbachev as party leader in
March 1985 indicated that he sees the need for a
vigorous national leader; on the other hand, his
remarks at the 27th Congress suggest he also sees a 25X1
danger in moving too fast. 25X1
25X1
Although Gromyko may generally back Gorbachev's
policies of openness and discipline, he has repeatedly
stressed the need for unity in the face of hostile forces
abroad and warned that the current bold exposures of
scandal may be viewed by the West as signs of
weakness. Under Andropov,
Gromyko objected
to wholesale revelations of corruption in high places
and was influential in slowing the replacement of
offending officials.
Gromyko also has reason to object to Gorbachev's
indirect criticism of his tenure as Foreign Minister.
His reputation was sullied by Gorbachev's attack on
the foreign policy apparatus at a closed party confer-
ence in May 1986.
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
As long as he remains in the leadership, Gromyko is 25X1
likely to be viewed as an elder statesman and a 25X1
rallying point for the old guard. His role as their
protector was dramatically underscored by official
lists indicating that former Politburo members
Tikhonov and Grishin now serve on Gromyko's staff.
Vladimir Shcherbitskiy. As the most obvious vestige
of Brezhnev's Dnepropetrovsk clique, Ukrainian party
boss Shcherbitskiy is a logical target for removal by
Gorbachev. Gorbachev 25X1
would like to remove him, and articles in the central
press have highlighted shortcomings in some of his
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Secret
subordinates and, thus, implicitly criticized his leader-
ship. But his methodical implementation of Ukrainian
economic and industrial programs that support the
main lines of Gorbachev's policies, plus his strong
leadership of that republic, make him a difficult
target. Soviet officials in Moscow have told the US
Embassy that Shcherbitskiy in fact has arrived at a
private understanding with Gorbachev on his contin-
ued tenure.
Nevertheless, Shcherbitskiy's public remarks suggest
he differs with Gorbachev on consumer price subsi-
dies, defense policy, and East-West relations. Further-
more, Shcherbitskiy's protection of his Ukrainian
party lieutenants has at times conveyed the impres-
sion of defiance. For example, he defended the Cher-
kassy Oblast party leader who had been criticized
directly by Gorbachev and later in Pravda for his
delay in reinstating a local official fired for using
innovative methods.
Dinmukhamed Kunayev. Kunayev's removal as Ka-
zakh First Secretary in December 1986 makes his
removal from the Politburo a foregone conclusion, but
at this writing he has not been officially removed from
the latter. Kunayev, like Shcherbitskiy, is a former
Brezhnev crony. He ran his republic as a personal
fiefdom for over 20 years, allowing the growth of
nepotism, laxity, and corruption. The long delay in
removing him-almost a year-after serious criticism
in the press demonstrates that he had a solid base of
support in the republic suggests that
his supporters instigated the riots that erupted when
he was removed.
Gorbachev has emerged as-the most forceful party
leader in over 20 years, but he is still at a critical
juncture in consolidating his power. Further progress
on his agenda probably depends on his ability to
reshape the Politburo and make it more responsive to
his will. There are a number of directions the leader-
ship situation could take:
? Gains by Gorbachev. Gorbachev will be working
hard to increase his power in the Politburo by
adding supporters and removing members who op-
pose him. If he succeeds in bringing Yel'tsin or some
junior members of the Secretariat like Anatoliy
Dobrynin, Georgiy Razumovskiy, or Aleksandr Ya-
kovlev into full Politburo membership, prospects for
pushing his agenda forward will improve.
? Curtailment of power. Gorbachev may be blocked in
his future efforts to change the Politburo more to his
liking, making it more difficult to advance his
agenda. If he does not achieve some results from his
policy initiatives over the next few years, Politburo
apprehensions and disagreements could increase,
resulting in curtailment of his authority, increased
collectivity in the leadership, and a slowdown or
diversion of his program. Bureaucratic resistance at
lower levels would increase if officials perceived
fluidity at the top.
? Outright removal. If Gorbachev insists on pushing
programs that are not producing results and are
beginning to create serious negative consequences,
such as economic disruptions, or if the openness and
criticism he advocates begin to reduce the regime's
ability to control society, Politburo members might
join together to remove him. We see no evidence,
however, that Politburo members currently look to
Ligachev or any other potential successor. For the
time being Gorbachev appears
"irreplaceable."
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Gorbachev's "Radical Reform":
A Progress Report
Taken together, the management reform decisions
issued since the party congress in March 1986 give
Soviet policy a strong push in directions that Gorba-
chev and reform-minded economists have recom-
mended. But they also reveal the magnitude and
complexity of the challenge Gorbachev faces and the
degree of political compromise required in what he
himself has described as a long, "step by step"
process.
Gorbachev's call for a "radical reform" of Soviet
economic management at the party congress marked
the first time such a dramatic remedy had been
prescribed by any Soviet official in recent years. In
the months since the congress, he has further escalat-
ed his rhetoric, comparing the reform to a "revolu-
tion" and describing it as a major turning point in
Soviet history. His strong commitment to reform also
is reflected in a changed political environment that
has turned economists whose ideas were once consid-
ered outside the mainstream into establishment
figures.
Precisely what Gorbachev means by "radical reform,"
however, remains unclear. He has described the goals
of his reform only in the broadest terms, calling it an
attempt to make the economy "function dynamically,
like a self-regulating system." Abel Aganbegyan, one
of his chief economic advisers, has used similar
language, telling Westerners that the reform will
eliminate the "dictatorship of the producer" and
make the economy more responsive to demand.F_
Such statements make the thrust of Gorbachev's
reform effort fairly straightforward but tell us little
about its intended dimensions. When combined with
his references to the primacy of centralized planning
and the continued adoption of taut plans, they leave
considerable ambiguities about how large a role mar-
ket forces might be allowed to play and how much
"self-regulation" is to be introduced. And Gorba-
chev's assertion that the reform is to be conducted "on
the march, as we go along" suggests that he himself
has not yet fully come to grips with such questions.
Gorbachev's Vision
Although Gorbachev has yet to present a detailed
blueprint for reform, he already has embraced many
of the reform economists' ideas and called for a
number of changes that, when pieced together, pro-
vide a clearer picture of the kind of reform he has in
mind. Briefly stated, the changes he has been advocat-
ing would:
? Streamline the central bureaucracy and shift its
focus from day-to-day management to strategic
planning and coordination.
? Increase the authority and responsibility of industri-
al and agricultural enterprises.
? Improve workers' incentives.
? Increase the flexibility of prices.
? Expand the role of personal initiative in both the
state and private sectors.
Enacting the Reform
An impressive number of economic management deci-
sions have been issued since the party congress, and
almost all of them bear this Gorbachev imprint (see
inset). Few of these decisions go as far as the bold
ideas advanced in his speeches, however, suggesting
that he may have initially underestimated both the
complexity of the issues involved and the bureaucra-
cy's capacity for resistance to change.
Reorganizing the Bureaucracy. A cornerstone of Gor-
bachev's reform effort has been his attempt to reorga-
nize and streamline the central economic bureaucra-
cy. His insistence that this bureaucracy shift its focus
from day-to-day management to strategic planning
and coordination has been reflected in a number of
organizational changes since the congress. Central
coordinating bodies-in the form of bureaus, state
committees, and commissions-have been established
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
aCN Vt
Key Economic Management Decisions
Since the Soviet Party Congress
Establishment of a Fuel and Energy Bureau
under the Council of Ministers.
Instructions to speed up the conversion to a two-
tier management structure in all government
agencies.
Creation of a new State Committee for Computer
Technology and Information Science.
Decision to allow selected enterprises to engage
in "wholesale trade" in means of production.
Decree on improving the management of the
agro-industrial sector.
Changes in the management of consumer goods
production in light industry.
Decrees prescribing penalties for "unearned
income. "
Measures to increase supplies for individual gar-
den plots.
Management changes designed to improve the
quality of industrial output.
Decisions to expand the financial autonomy ex-
periments at enterprises in Sumy and Tolyatti to
encompass additional plants (July, August,
September).
Establishment of a new Ministry of Atomic
Engineering.
Reorganization of the construction sector.
Announcement of plans for new legislation during
1986-90, encompassing a broad range of activi-
ties from pricing to individual labor.
September Reorganization of foreign trade.
Reform of the wage structure.
Approval of the financial autonomy experiment
at the Kuban Agro-Industrial Combine and an
announcement that 14 similar combines are to be
established.
Establishment of a Social Development Bureau
under the Council of Ministers.
Regulations authorizing the formation of self-
financing cooperatives for the collection and uti-
lization of recycled material.
November Law on individual labor activity
to oversee ministries responsible for energy, construc-
tion, "social development," and foreign trade. Two
new organizations-the State Committee for Com-
puter Technology and Information Science and the
Ministry of Atomic Energy-also have been estab-
lished to perform work that previously had been
scattered among several different agencies.'
These moves all seem aimed at improving Moscow's 25X1
ability to coordinate activities in a given economic
sector, but they also have created yet another man-
agement layer and, unlike the earlier reorganization
of the agro-industrial sector, have done little to meet
Gorbachev's stated goal of paring the size of the
economic bureaucracy. The agro-industrial reorgani-
zation, which eliminated a number of ministries,
proved to be highly disruptive, and hopes for reducing
the size of the bureaucracy now appear to rest on the
completion of conversion to a "two-tier" management
structure advocated by Gorbachev. This step elimi-
nates the all-union industrial associations-the bu-
reaucratic layer between the ministries' higher man-
agement and the production enterprises.
Increasing Enterprise Autonomy. In his effort to 25X1
increase the authority and responsibility of industrial
enterprises, Gorbachev's most significant achievement
may turn out to be a new law, scheduled to be adopted
at the next session of the Supreme Soviet, that
codifies the enterprises' rights and gives them legal
protection from bureaucratic meddling. (It remains to
be seen, of course, how strictly the law's provisions
will be enforced.) Other measures are more limited in
their coverage. They give selected enterprises the
right to:
? Deal more directly with their suppliers, rather than
funneling their requirements through authorities in
Moscow.
? Trade directly with foreign firms.
? Base their production plans on trade orders from
customers.
' Two important organizational changes preceded the congress. The
Machine Building Bureau was established in October 1985 to
oversee the work of the ministries in that sector, and the State
Agro-Industrial Committee was created the following month by
merging the ministries and state committees responsible for agricul-
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
JOGI Vt
? Exercise greater financial autonomy and retain a
larger percentage of their profits.
that put an end to the state's confiscation of all farm
surpluses and established stable, relatively low pro-
25X1
25X1
Although these measures represent a significant step
toward increased enterprise autonomy, many of them
apply to only a small number of enterprises or contain
other restrictions that limit their impact:
? The decree allowing enterprises to acquire their
supplies through "wholesale trade" applies primari-
ly to enterprises of "nonproduction" ministries, like
the Ministry of Culture, and excludes most of those
in the industrial sector, where the supply problems
Gorbachev has complained about have been most
acute.
? Although 70 enterprises have been given the right to
engage directly in foreign trade, that right is limited
to "above-plan" production, and the enterprises can
keep part of the resulting revenues only if the
Foreign Trade Bank approves of their intended use
of the funds.
? The decree allowing enterprises to base their pro-
duction plans on orders from their customers applies
only to the light industry sector and is weakened by
its failure to allow enterprises to choose their own
suppliers and by the continued priority assigned to
centrally set targets.
? Only a limited number of enterprises will switch
next year to the kind of "complete financial autono-
my" now exercised by plants in Sumy and Tol'yatti,
and that autonomy will not include any price-setting
authority.'
Decentralizing Agricultural Authority. As part of his
effort to decentralize authority in the agricultural
sector, Gorbachev told the party congress that collec-
tive and state farms should be given greater control
over the sale of their above-plan production. He
conveyed the impression that a major reform on this
issue was in the works by calling it a contemporary
version of Lenin's "tax in kind"-a historic measure
'The Volga Automobile Plant in Tol'yatti is allowed to keep 52.5
percent of its profits, while the Frunze Machine-Building Produc-
tion Association in Sumy can keep 71 percent. Both have been
given discretionary authority in the allocation of their profits for
technological reequipment, incentives, and other purposes.F__
curement targets.
When the decree was published in March, its chief
decentralizing effect was to allow local officials to set
their own targets for produce intended for "local
supply" and to exchange food products with other
regions, instead of channeling their requests through
Moscow. Farms were also given the right to sell an
increased percentage of their planned production at
collective farm markets and through consumer coop-
eratives. The tax-in-kind symbolism was completely
absent from the language of the decree, however, and
there were no indications that the state's procurement
targets would be significantly lowered-a necessary
step for any major decentralization of production
controls.
Another step toward agricultural decentralization
came in September, when Gorbachev visited the
Kuban Agro-Industrial Combine-the site of a well-
known experiment in agricultural self-financing-to
give the experiment his personal endorsement.' His
visit was followed by Politburo approval of the experi-
ment and an announcement that 14 similar combines
would be formed. Here, too, however, the continua-
tion of high state procurement targets serves to limit
the discretionary authority that can be exercised by
such combines, even on an experimental basis. F_
Improving Workers' Incentives. Gorbachev's chief 25X1
accomplishment in the area of workers' incentives has
been the passage of a wage reform designed to reverse
the leveling trend of the Brezhnev years and create a
closer relationship between the workers' pay and the
amount and quality of work they produce. Although
this reform amounts to a pay increase for many
categories of workers, no state funds have been set
' The Kuban Agro-Industrial Combine includes all the farms and
supporting agencies in the Timashevskiy district of Krasnodar Kray
and is supposed to be self-supporting. After selling a designated
portion of its output to the state, the combine can sell the rest
through its own network of food stores at prices it sets itself.F_
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
secret
will depend on whether the enterprises can raise
productivity enough to finance these increases from
their own resources.
Increasing Price Flexibility. Although Gorbachev has
never suggested abandoning the system of adminis-
tered prices, he has called for more "flexible" prices
that reflect not only the costs of production but also
other factors such as social utility and demand. The
agro-industrial decree takes a modest step in that
direction by allowing republic officials to set their own
procurement prices for individual farm products, as
long as the total budget is not exceeded. The timidity
of this move and the fact that it has had no parallel in
remains a highly contentious issue.
pricing policy
Encouraging Personal Initiative. Gorbachev's en-
dorsements of family farms, individual garden plots,
and the broader use of cooperatives in consumer
services also have offered encouragement to those
economists who favor an expansion of personal initia-
tive. His promise to provide greater scope for individ-
ual initiative has already brought new legislation
sanctioning expanded business opportunities for indi-
viduals and small groups outside the state sector,
especially in consumer goods and services. An Octo-
ber decree allows the formation of profit-sharing
cooperatives to collect and sell recycled materials, and
a new law passed in November sanctions moonlight-
ing by individuals in a range of activities from cottage
industries to medical services. The impact of the
decree on cooperatives is limited, however, by its
emphasis on the "experimental" nature of the cooper-
atives and by restrictions on the categories of people
allowed to form them.' And it remains to be seen
whether the new law on individual labor activity can
undo the damage caused by earlier decrees on "un-
earned income" that have caused widespread confu-
sion about the legalities of certain activities and have
served to discourage individual initiative.
' These newly established cooperatives are to be composed primarily
of retired people, housewives, and students. Factory and office
Implementing the Reform
Many of these measures have proved even more
difficult to implement than they were to enact. Gorba-
chev's reorganization of the economic bureaucracy,
for example, has not gone smoothly. The dust has yet
to settle from the agro-industrial reorganization that
started nearly a year ago, and the foreign trade
bureaucracy is said to be in considerable disarray.
the Fuel and Energy
Bureau established in March still has no clear man-
date. And the State Planning Committee (Gosplan)
has been slow to restructure its work.
Gorbachev complained that Gosplan officials were
continuing to "do what they want to do" and seemed
to recognize "no general secretaries or central com-
mittees."
25X1
25X1
25X1
25X1
25X1
Gorbachev's effort to give enterprise managers great- 25X1
er autonomy apparently has been encountering resis-
tance not only from the expected quarters-the minis-
tries-but also from the enterprise managers
themselves.
complained that many enterprise directors were writ-
ing to the Central Committee to say: "We don't need
rights and independence. Leave everything the way it
was."
Conclusions: An Incremental Reform
Despite these problems, Gorbachev seems determined
to persevere, and a published list of future measures
now in the pipeline-from regulations governing Gos-
plan's operations to a revised pricing system-sug-
gests no scaling down of long-term objectives. His
economic advisers and other Soviet economists have
estimated that the "first phase" of the reform will not
be complete until 1990, and Gorbachev
it could take "genera-
tions" for the restructuring process to be completed.
With that kind of timetable, he probably regards the
measures adopted thus far as steps that lay the
necessary groundwork for more far-reaching change.
25X1
25X1
25X1
2bAi
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Secret
Gorbachev's announced plans to expand and put more
teeth in some of the decrees initially adopted (such as
those on wholesale trade and agro-industrial manage-
ment) clearly indicate that he views this reform as an
incremental process. Whether dictated by political
realities or his own uncertainties, such an approach
has both benefits and drawbacks:
? By moving at a gradual and deliberate pace, he can
avoid charges of recklessness and comparisons with
Khrushchev's "harebrained" schemes.
? On the other hand, this incremental approach may
cost him some of his reformist supporters and
produce only marginal near-term results, providing
more ammunition to the opposition.
This incrementalism also severely limits our ability to
predict how far Gorbachev will be willing, or able, to
push his ideas. If pushed to their extremes, they would
create a radically different Soviet economy. The
evidence thus far, however, suggests that his efforts to
improve the system will be something of a trial-and-
error process (he has openly predicted that "mistakes
will be made") and that the dimensions of the reform
ultimately will be determined by a combination of the
economic results he obtains and his own political
abilities.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Secret
Restructuring the Government
Apparatus
General Secretary Gorbachev has assigned a high
priority to restructuring the government, a task that
he views as essential to the success of his economic
revitalization program. He has singled out the minis-
terial bureaucracy-with its organization along nar-
row departmental lines and its addiction to detailed
management of the economy-as the main obstacle to
his plans to stimulate the kind of initiative that he
believes is needed to spur productivity, accelerate
growth, and make Soviet products competitive in the
world market.
Gorbachev's Strategy
Gorbachev's strategy is at once centralizing and de-
centralizing: he wants more effective central control
over the main directions of the economy, while leaving
more of the day-to-day management to lower levels
where it can be most effectively exercised. His pro-
gram includes the creation of superagencies answer-
ing directly to the Council of Ministers to oversee
complexes of related ministries, a major reduction in
the size of the ministerial apparatus, and a change in
the ministry's role from a supervisor of enterprise
operations to a scientific and technological center.
The expansion of enterprise autonomy and the estab-
lishment of new interministerial bodies are also in-
tended to free the State Planning Committee (Gos-
plan) from detailed planning and enable it to
concentrate on long-term strategic issues.
the regime intends to
take a differentiated approach to decentralizing deci-
sionmaking authority, with some sectors affected
more than others:
? Basic industries such as energy resources and the
extraction of raw materials will continue to be
subject to a high degree of centralized direction and
assigned production quotas.
? Enterprises of the machine-building and manufac-
turing branches are to be allowed considerably more
managerial and financial autonomy and assessed on
the basis of contract fulfillment, not gross output
indicators.
? Light industry, food, and other consumer-oriented
branches would be the most decentralized. Enter-
prises in this sector are to be allowed to shape their
own plans in response to consumer demands, and
some role for market forces permitted.
Gorbachev has also pushed the restructuring of man-
agement with an eye to political goals. It should
provide a useful tool for rooting out personnel wedded
to traditional ways of managing the economy and
replacing them with officials who are more open to
new approaches and more loyal to Gorbachev.
Carrying Out the Plan
As was the case with the last major effort to restruc-
ture the bureaucracy in 1965, the centralizing aspects
of Gorbachev's plan are being accomplished first. The
decentralizing measures remain mostly on the books.
Superministries headed by deputy chairmen of the
USSR Council of Ministers have been established for
a number of key sectors of the economy, including
machine building, agro-industry, construction, fuel
and energy, and foreign trade.
ed for the foreign trade sector.
The regime does not appear to have a standard
organizational model in mind for these overarching
bodies. State committees with broad planning and
managerial authority have been created for the agro-
industrial and construction sectors; bureaus with more
limited authority have been established for the ma-
chine-building and energy sectors; and a commission
that apparently serves as a policy-coordinating body
but has no managerial responsibilities has been creat-
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Secret
The reorganization has been under way for more than
a year and is far from complete. Gorbachev and his
allies have moved cautiously in carrying it out, proba-
bly to minimize confusion and the possibility of
conservative backlash. Gorbachev's repeated com-
plaints about the pace of change, and the limited
nature of some of the measures taken, strongly sug-
gest that bureaucratic foot-dragging has contributed
to the evident compromise and delay.
Agro-Industrial Sector. The agro-industrial reorgani-
zation, one of the first undertaken, still stands as the
most far reaching. A state agro-industrial committee,
Gosagroprom, was set up in November 1985, merging
five ministries, one state committee, and components
of two other ministries. A close Gorbachev associate
from Stavropol', Vsevolod Murakhovskiy, was ap-
pointed head of the state committee and also named a
first deputy premier. Within several months the ad-
ministrative apparatus had reportedly been reduced
by 47 percent; 250 main administrations and associa-
tions had been consolidated into 10 departments, each
with several scientific-production associations at-
tached. A similar reorganization was undertaken at
the regional levels, and greater responsibility for
planning and managing the local food supply is
scheduled to be transferred to local officials in 1987.
The gross inefficiencies existing in agriculture and the
clear advantages of decentralized management made
this sector a prime target for reform. Moreover,
Gorbachev's long and close identification with agri-
culture and his strong political authority in the area
probably made it possible for him to initiate changes
here that would have been difficult to sell in other
parts of the economy. Soviet spokesmen say that
agriculture will continue to lead the way in the
introduction of reforms.
Machine Building. The civilian machine-building sec-
tor-a sector critical to Gorbachev's attempt to mod-
ernize antiquated plant and equipment-was reorga-
nized at the same time. A new bureau overseeing the
sector was announced in late September 1985, but, in
contrast to the speed with which Gosagroprom was
formed, it was more than three months before the new
arrangement began to take shape. None of the 11
civilian machine-building ministries was abolished as
in the case of Gosagroprom, nor does the bureau
appear to have comparable managerial authority. The
bureau is empowered to distribute resources within
the machine-building sector but reportedly will not
have decisionmaking and planning responsibilities ex-
cept for major projects that individual ministries have
difficulty coordinating.
The newly appointed head of the bureau, Ivan Si-
layev, said in an interview last March that the bureau
would be small and organized along functional lines to
enable it to concentrate on ensuring a unified techno-
logical policy industrywide. A knowledgeable Soviet
economist, explaining why a "bureau" was chosen
rather than the Gosagroprom-type structure, stated
that the problem in machine building is not that there
are 11 ministries, but that the ministries do not
specialize. Too many are engaged in making basic
products and the bureau's job would reportedly be to
correct this.
Silayev also reported that the all-union industrial
associations-a level of management between the
ministries and enterprises that Gorbachev claims did
little more than generate paperwork-had been abol-
ished and the numerical strength of the management
apparatus reduced. Soviet economist Abel Aganbe-
gyan-a reputed adviser to Gorbachev-told Western
journalists in a July interview that there had been an
18-percent reduction in the machine-building bureau-
cracy.
Fuel and Energy. A Bureau for the Fuel and Energy
Complex was established in March 1986.
lit would have a trouble-
shooting role and that its main functions would be to
ensure effective coordination between ministries in
carrying out energy-sector projects. There has been
little mention of its activities 0 since. As
recently as last September, a Soviet economist
claimed that the bureau was still in the initial phase of
organization and its responsibilities had not yet been
decided.
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Construction. A reorganization of the construction
sector was unveiled in August, apparently after much
debate.
plans for reorganizing the construction
sector were undergoing the fourth draft. Gorbachev
later said there had been 10 different versions. The
reorganization marks the first serious attempt in more
than 20 years to introduce some order into the
management structure of this much criticized and
troubled sector. The existence of hundreds of irratio-
nally organized construction organizations has con-
tributed to perennial problems of duplication of effort,
poor project selection, wasted investment, and shoddy
quality.
The reorganization appears aimed at strengthening
centralized direction while allowing regional authori-
ties more control over local projects. Three existing
construction ministries were reorganized into region-
ally focused ministries-one for the Urals and west-
ern Siberia, one for the northern and western regions,
and one for the southern regions. The Ministry for
Construction in the Far East and Transbaikal Regions
was renamed the Ministry of Construction in the
Eastern Regions of the USSR. The regional ministries
apparently were created to reduce the number of
conflicting and overlapping agencies with which local
officials must deal. Four specialized construction min-
istries remained unchanged.
The role of the State Committee for Construction
Affairs (Gosstroy) was expanded to resemble that of
Gosagroprom. Previously,
JGosstroy had virtually no power and was ignored
by the construction ministries. Clear lines of responsi-
bilityhave been established, and now the
ministries will be reporting to the committee. Party
secretary Lev Zaykov emphasized the same point in a
recent Leningrad speech. The committee's decisions,
are "mandatory" for all participants in the
Foreign Trade. A reorganization of this sector in
August 1986 brought an end to the Ministry of
Foreign Trade's (MFT) long-held monopoly over all
foreign trade activities. The move reportedly was
strongly opposed by the ministry and came only after
months of heated debate. A state commission for
foreign trade was established under the Council of
Ministers. It is made up of the heads of the major
ministries and departments engaged in foreign trade
activities. The commission is to serve as a policy-
coordinating body and is chaired by recently appoint-
ed Deputy Premier Viktor Kamentsev.
At the same time, more than 20 ministries and 70
production enterprises have now been granted the
right-although one that is fairly limited-to engage
directly in foreign trade. To carry out this trade, they
will have foreign trade organizations placed under
their jurisdiction, many of which will be transferred
from the MFT. The ministry will retain its function of
trading in the most important raw materials and
foodstuffs and continue to oversee much of the foreign
trade activity.
Breaking the MFT's monoply over foreign trade is
tied to Soviet efforts to expand exports of manufac-
tured goods and force Soviet producers to be competi-
tive in the world market. In addition, it is designed to
improve the efficiency of importing Western technol-
ogy by giving end users more say in contract negotia-
tions. Under the current system, negotations are
drawn out and purchases often do not meet the
requirements of end users.
Social Development. In the most recent development,
the Council of Ministers established a Bureau for
Social Development in November 1986, headed by
First Deputy Premier and Politburo member Geydar
Aliyev. While there has been no formal announce-
ment of its responsibilites, Gosplan chief Nikolay
Talyzin implied in his November Supreme Soviet
speech that the bureau would have broad oversight
over the various ministries and institutes concerned
with consumer goods and services, health, education,
and social policy.
Only the Beginning
The reorganizations announced so far may mark only
the beginning of a more protracted and extensive
assault on the central ministries. There is evidently
substantial agreement within the top leadership on the
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
need for deep cuts. Some of Gorbachev's colleagues
may in fact be more zealous in wielding the ax than
he is-or at least that is the impression that he may
be trying to leave, perhaps because there has been a
storm of complaints from bureaucrats whose jobs are
individual ministries.
Gosplan overcome its "narrowly sectorial and depart-
mental approach" and allow it to concentrate on long-
term strategic planning. In the future, he said, Gos-
plan would assign targets and allocate resources to
each complex as a whole, while the responsibility for
detailed branch plans would be shifted to the leader-
ship of the complexes to be worked out with the
mode of operation
While Zaykov did not accuse Gosplan of outright
foot-dragging, Gorbachev's increasingly harsh attacks
last summer and fall clearly reflect enormous frustra-
tion with the committee's reluctance to change its
Gorbachev is reported to have referred to
Superagencies overseeing other major sectors of the
economy are evidently planned. Party secretary and
Politburo member Lev Zaykov, in a recent speech in
Leningrad, strongly implied that the regime was
considering extending the superministry structure
throughout the government. He mentioned four other
complexes in addition to the ones that already have
oversight bodies: metallurgy, chemical industry,
transportation, and communications.
Transportation. The transportation sector is a prime
target. It has frequently been mentioned by Soviet
officials as one of the sectors needing better coordina-
tion, along with agro-industrial and machine building,
next sector to be reorganized. Obviously there has
been a hitch. there is strong
opposition-led by the Ministry of Railways-to the
creation of a coordination body within the sector.
Gosplan. In his Leningrad speech, Zaykov also pro-
vided some information on plans for the reorganiza-
tion of Gosplan, a reorganization that is essential to
Gorbachev's overall strategy for restructuring the
management of the economy but which has been slow
in getting under way. Zaykov indicated that subdivi-
sions were being created in Gosplan for each econom-
ic complex along the same lines as the new interminis-
terial coordinating bodies. This, he said, would help
For them, there is no General Secretary, no Cen-
tral Committee. They do as they want. What they
like best is to sit in their offices and have people
come to them and ask for a million rubles, 20
tractors, or 40,000 whatevers.
factory managers.
Assessing the Results
It is too soon to judge with any certainty how well the
organizational restructuring will ultimately measure
up to the goals Gorbachev has set for it. Much still
remains to be put in place, and important decisions on
the functions and structure of some of the new
agencies are still to be made. Past efforts to curb the
power of the central bureaucracy have been short
lived. The ministries and other defenders of central-
ization demonstrated great tenacity in rebounding
from Nikita Khrushchev's 1957 attempt to replace
the central economic ministries with regional planning
and management councils and in frustrating Aleksey
Kosygin's 1965 effort to increase the autonomy of
In the short run, the process of reorganization, not
surprisingly, has produced reports of considerable
confusion and disarray. Gosagroprom, which has been
in operation the longest, still appears to be going
through a painful shakedown phase. Party secretary
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
bility for resolving questions
Such problems io osa-
for agriculture Viktor Nikonov complained in a jour-
nal article this summer that the functions of the new
departments in Gosagroprom and the duties of each
worker had not yet been clearly defined, resulting in a
lack of coordination and efficiency and an unwilling-
ness on the part of many specialists to accept responsi-
Presidium of the USSR
Council of Ministers
Date of Position
Appointment
25X1
25X1
groprom, even if only temporary, are likely to have
played into the hands of conservative bureaucrats,
helping to fortify arguments for caution and delay.
The reorganization has probably produced political
dividends for Gorbachev. It has helped him and his
su rterc ur a the ministerial bureaucracy and
- p g
became General Secretary.
miers-are new (see table). Only two of the 14
deputies are holdovers from the Brezhnev era, and
nine deputies have been named since Gorbachev
pP
bring in new people who the leadership believes will
be more competent and loyal managers. Nearly all the
officials brought in to head the new superministries-
most of them named simultaneously as deputy pre-
There has been an impressive reduction in the lower
ranks of the government bureaucracy as well. The
cuts here, however, have been unevenly distributed,
ranging from the 47-percent reduction claimed for
further personnel cuts in the government will be
machine-building sector.
Gosagroprom to the 18-percent cut reported for the
vigorously pursued.
of those released will attempt to circumvent the
It remains to be seen whether the overall reduction in
the government bureaucracy will ultimately reach the
scope that the leadership reportedly envisages. Many
Aliyev, Geydar A.
24 Nov 82
Chairman, Bureau
for Social
Development
Agro-Industrial
Committee
(Gosagroprom)
14 Oct 85
Chairman, State
Planning Committee
(Gosplan)
Antonov, Aleksey K.
19 Dec 85
Permanent
Representative to
CEMA
Batalin, Yuriy P.
21 Dec 85
Chairman, State
Construction
Committee
Kamentsev,
Vladimir M.
Chairman, State
Foreign Economic
Commission
Maslyukov, Yuriy D.
16 Nov 85
Chairman, Military-
Industrial
Commission (VPK)
Shcherbina, Boris Ye.
14 Jan 84
Chairman, Bureau
for the Fuel and
Energy Complex
Silayev, Ivan S.
3 Nov 85
Chairman, Bureau
for Machine
Building
Vedernikov,
Gennadiy G.
15 Nov 85
Chairman, State
Committee for
Material and
Technical Supply
(Gossnab)
25X1
25X1
2bAl
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Some streamlining of the bureaucratic structure has
also been achieved. One layer of management-the
all-union industrial associations-is being eliminated,
not just in machine-building ministries but through-
out the industrial ministries. The net gain achieved by
the elimination of this layer may be debatable, given
the simultaneous creation of a layer of oversight
bodies above the ministries. In addition, the functions
of the all-union industrial associations and many of its
personnel have in some cases simply been shifted to
the ministries. Only the Gosagroprom reorganization
appears to fully qualify as the kind of "radical"
restructuring that Gorbachev has called for.
As the new superministries begin to function more
smoothly and the reorganization takes shape, it could
well produce some of the hoped-for improvement in
interbranch coordination and assist central authorities
in getting a grip on broad economic tasks. Whether it
will ever produce the larger and more elusive goal-
redirecting the center away from detailed involvement
in day-to-day management and significantly expand-
ing enterprise authority-is another matter. Soviet
spokesmen contend that with fewer bureaucrats at the
center they will no longer be able to interfere in the
day-to-day running of the enterprises. The experience
of Gosagroprom, however, offers little encouragement
that the reorganization is producing such an effect in
the near term. Party secretary Nikonov, in his journal
article last summer, charged that the new committee
was continuing to decide questions that should be
resolved at the local level, just as the former ministries
had. Some economists are arguing that the only way
to prevent the branch ministries from doing this is to
abolish them, leaving only functional ministries and a
few broad intersectoral bodies.
Expanding the rights and responsibilities of enter-
prises, moreover, will require progress on other ele-
ments of Gorbachev's program that are likely to prove
just as controversial and disruptive as the bureaucrat-
ic restructuring:
? New legislation to strengthen enterprise legal rights,
due to be published for nationwide discussion soon,
will have to give enterprises an effective mechanism
for the redress of grievances against the ministries.
? The regime will have to make more use of economic
levers such as finance and credit, establish a flexible
price mechanism, and solve the problem of chronic
supply shortages if enterprises are to function effec-
tively in a less centrally structured environment.
Ultimately none of these measures may be sufficient
if the leadership continues to make contradictory
demands on the ministries, directing that they refrain
from micromanagement of enterprises while still hold-
ing them responsible for enterprise performance. Gor-
bachev himself will probably have to stake out a more
unambiguous position on ministerial responsibilities
than he has so far in order to save his reform program
from the same fate that befell its predecessors.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Gorbachev's New Directions in
Propaganda and Culture
Top Kremlin leaders have recognized for some time
that greater candor in the media and increased cultur-
al excellence are needed to make regime indoctrina-
tion more effective. Andropov initiated publication of
reports on Politburo meetings during his brief tenure,
and Chernenko talked about the need to discuss
regime shortcomings more frankly. Gorbachev, how-
ever, has promoted a much more systematic and far-
reaching implementation of a policy of glasnost (open-
ness) and cultural revitalization to counter the
attraction of "bourgeois" culture and Western propa-
ganda and to increase his own freedom for maneuver
in addressing the nation's problems. Publicly castigat-
ing Soviet propaganda as "stagnant" and much of the
culture as "dull," he has taken steps in less than two
years as General Secretary to loosen ideological con-
straints on cultural life, to replace most of the key
personnel in the bureaucracies controlling propaganda
and the arts, and to open up a limited discussion of
domestic problems in Soviet media.
Glasnost in the Media
Gorbachev has encouraged the media to engage in
investigative reporting and to solicit criticisms from
concerned citizens in order to provide more factual
accounts of "negative" domestic events and to pro-
mote more responsible discussion of social problems.
As a result, the Soviet public now receives much more
information than was previously provided by official
sources on such sensitive topics as crime, the black
market, and alcohol abuse. Official statistics for 1985
recently released by the Central Statistical Adminis-
tration included figures on the grain harvest for the
first time in five years and on infant mortality for the
first time in 12 years. Officials told US Embassy
officers that Gorbachev's policies of glasnost and
accelerating economic growth require the publication
of more data. censor-
ship practices have been changed: journalists can now
express opinions that do not reflect official views, and
editors are themselves completely responsible for what
they print without approval from external censoring
organizations.
Gorbachev's widely publicized informal conversations
with citizens in streets and workplaces during his
visits to various areas of the USSR have given the
public a graphic impression of glasnost in action as he
calls local officials on the mat and hears the com-
plaints of the man in the street. There are many news
stories about incompetent and corrupt officials and
more extensive explanations of their malfeasance and
punishments. The media also are providing more
discussion of Soviet troop activity in Afghanistan and
live coverage of such events as a space launch. In
recent months Soviet television has carried several
programs that offered Western spokesmen the rare
opportunity to advance their viewpoints on interna-
tional affairs in some detail. The television program
International Panorama on 19 October-devoted to a
Soviet-West German roundtable on arms control-
featured substantial statements by editors and govern-
ment figures from both countries.
The Soviet media have become more informative with
respect to internal natural disasters and catastrophic
accidents since the Chernobyl' events. The regime's
inability to control information about the accident
may have heightened debate within the Politburo and
ultimately led the leadership to conclude that suppres-
sion of negative information is counterproductive. In
ensuing months the Soviet media have reported
promptly not only such incidents as the sinking of a
Soviet submarine in the Atlantic-an event indepen-
dently publicized in the West-but also a fatal bridge
collapse in Latvia, a serious fire with casualties at the
Russian Orthodox seminary at Zagorsk, and the
attempted hijacking of an Aeroflot plane near a
remote city in the Urals. None of the latter events
involved foreigners, nor was it likely that they would
become known in the West.
Certain themes that have for many years been taboo
in the Soviet media and never mentioned in public by
officials have quite suddenly become subjects of open
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
discussion and intense public concern. After years of
denying that a drug problem exists in the Soviet
Union, the regime has in recent months promoted a
press and television blitz on the horrors of drug abuse,
particularly as it affects Soviet youth. For example,
Moscow Komsomol in mid-April presented harrowing
portraits of young addicts, and Moscow television
aired a scheduled 90-minute live phone-in program on
25 October, concerning drug addiction in schools, that
featured questions from troubled parents and frank
answers from experts in medicine, psychology, and
law. At the end of the program, the moderator
commented that during the hour and a half, calls had
been received from 536 people from 39 cities and
towns.
The role of religion in Russian history and culture,
and its place in modern Soviet society, are now being
more openly-and sometimes positively-examined,
particularly in the arts. A number of recently released
books and films use religious symbolism quite openly
to depict a moral rectitude that is badly needed in a
corrupt and spiritually empty society. Several promi-
nent writers have been accused of "flirting with
religion" because their work contains a positive treat-
ment of religion and believers.
support is growing among artists and
intellectuals and in the bureaucracy for the ideas of
Russian nationalist writers who glorify traditional
institutions, including the Orthodox Church.
In a closely related development, there have been a
number of signs that the writing of the history of the
USSR is also under review: favorable references to
Lenin's New Economic Policy (NEP)-as a positive
move rather than a maligned necessary evil-have
appeared prominently in the press, and Gorbachev
himself mentioned Lenin's determination to push
NEP in a 31 July speech. A recent letter to Sovetska-
ya Rossiya from a historian and party member
demanded that Soviet historians of the October Revo-
lution stop writing "threadbare and inexpressive"
works that hedge sensitive questions and aid the
USSR's "ideological enemies."
The treatment of the emigration question has also
become more open and sophisticated. This fall the
play 40, Shalom Aleichem Street-revolving around
the split of a Jewish family of the 1970s over the
issue-began its second successful year on the Mos-
cow stage. Although the play clearly presents emigra-
tion as wrong and foolish, the choice is shown to be a
difficult and complex one, and Jewish characters are
portrayed in a positive manner. Even more striking
was the uncut and uncensored airing by Moscow
television on two occasions in September of a 1983
American documentary film concerning Jewish immi-
grants from the USSR in Brooklyn. The emigres'
confusing and often negative experiences have been
portrayed in Soviet media on a number of occasions,
but The Russians Are Here broke new ground by
showing many positive features of the United States.
Gorbachev's argument that problems, if denied, only
become worse was spelled out in a 24 September
Literaturnaya Gazeta article stating that "until re-
cently" the "lack of frankness" was one reason that
"Western propaganda" had been able to lure many
Soviets to emigrate.
A Cultural Renaissance
The cultural scene in the Soviet Union is now more
lively than at any time since Khrushchev's cultural
"thaw" during the height of de-Stalinization in the
1950s. The sense of deja vu is heightened by reis-
suance of works by leading liberal authors of that
period and the renewed public prominence of several
literary figures from those years-Yevgeniy Yevtu-
shenko, Andrey Voznesensky, and Bulat Okudz-
hava-who were long in political disfavor. A number
of Soviet journals are publishing excerpts from the
novel White Clothes written in the mid-1960s by
Vladimir Dudintsev, which exposes the charlatan
biologist Trofim Lysenko, a favorite of Stalin. Dudint-
sev's reemergence into the limelight is an important
signal because he played a major role in the 1950s
thaw. He has been linked with the new head of the
Central Committee's Culture Department, Yuriy
Voronov. Persistent campaigns by the liberal cultural
and intellectual communities have led to the rehabili-
tation of a number of controversial artists suppressed
by Stalin-notably the poets Anna Akhmatova and
Nikolay Gumilev-as well as publication of works by
more recent giants Boris Pasternak and Vladimir
Nabokov, whose writings have until now been avail-
able to Soviet readers only in samizdat.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Controversial Films, Books, and Plays
Released Under Gorbachev
Films
? Agonia-released after many years on the shelf.
Portrays the 1917 Revolution as a spontaneous
popular rebellion rather than a triumph of Bolshe-
vik organization. Striking for its tones of Russian
nationalism and even monarchism.
? Roadblock-made in 1971 but never before re-
leased. Depicts the persecution of a returning Soviet
partisan who had been forced to join the Nazis.
? Double Trap-a realistic crime drama that shows
the corruption of a group of Latvian youths and
includes pornography.
? Fouette-a complex psychological study of the
world of ballet that portrays a choreographer's
struggle against official censors and recalls Mik-
hail Bulgakov's controversial novel Master and
Margarita.
? Repentance-a stunning Georgian film, replete with
religious motifs, made in 1984 and recently pre-
miered for select audiences. The first Soviet film to
portray Stalin and Beria as responsible for the
purges of the 1930s. Production of the film was
reportedly supported by Shevardnadze, then party
chief in Georgia, and-according to film sources-
its lease was personally authorized by Ligachev.
? The New Appointment-a novel by Aleksandr Bek
(deceased) originally scheduled for publication in
1966. A thinly disguised portrayal of Stalin's lieu-
tenants that unmistakably asserts Stalin's primary
responsibility for the terror.
? The Children of the Arbat-Anatoly Rybakov's
novel about the year 1934 and the onset of the
purges. Written 20 years ago and scheduled for
publication next spring, it features Stalin as a
major character.
Theatre
? Silver Anniversary-a morality play that depicts a
corrupt party official, a muckraking journalist who
is fired for exposing a scandal, and other unsavory
functionaries. Attended by Gorbachev, Yel'tsin, Li-
gachev, and reportedly made mandatory viewing for
party congress delegates.
? Dictatorship of Conscience-a mock trial of Lenin
that exposes various tyrannical figures, drawn from
fiction and history, as having distorted socialist
principles by their brutality.
? Speak Out!-based on the 1950s writings of Valen-
tin Ovechkin (a popular writer on the rural scene
and a Khrushchev favorite). Calls for open discus-
sion of past party wrongdoings. The action takes
place in front of a gigantic statue of Stalin.
Literature
? Two-volume collected works of Boris Pasternak,
whose controversial novel, Doctor Zhivago, will
also be published in the "next couple of years,"
according to a Soviet writer.
? A collection of stories by the Village Writers, a
group of authors popular in the 1950s and 1960s
because of the forthright treatment of rural prob-
lems and overtones of traditional Russian national-
ism in their writings.
? Works of several important writers of the early
20th century who have been rehabilitated, including
Marina Tsvetaeva, Velimir Khlebnikov, and Mik-
hail Bulgakov.
? Brothers and Sisters-raises the specter of Stalin's
repressions against the backdrop of popular war-
time heroism and suffering.
? Sarcophogus-title alludes to the entombment of
the Chernobyl' reactor. A searing indictment of
incompetence and cowardice of some plant officials
and local authorities. Its appearance so soon after
the plant disaster suggests high-level support.
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Gorbachev's Goals ...
Gorbachev's reasons for moving toward glasnost in
propaganda and culture are pragmatic. He is using
frankness to marshal public opinion in support of
policy initiatives, combat widespread popular cyni-
cism and alienation from the system, raise citizens'
awareness, open up debate on economic reform, and
promote the "radical change" in attitudes essential to
economic progress. Gorbachev apparently also recog-
nizes that Soviet society is vulnerable to outside
influences, that Soviet artistic offerings must be inter-
esting if they are to compete with Western culture for
the Soviet audience, and that necessary technological
advances now make it impossible for central authori-
ties to control information flow within the country.
There are also political motivations in Gorbachev's
espousal of glasnost. Media exposes of corrupt and
incompetent officials and Gorbachev's well-publicized
personal jibes during walkabouts serve to pressure
foot-dragging midlevel officials to support his policy
initiatives. He may also expect that loosening controls
on artists and the media may favorably impress
foreign opinion.
... And Methods
Gorbachev appears to be relying on interrelated
changes in policy and personnel to achieve his goals
for franker discussion of tough issues and higher
quality cultural offerings. In addition to relaxing
ideological strictures and initiating measures to
increase media and artistic outspokenness, he pushed
forward an experimental reorganization of Soviet
theatres that moves control over repertoire and
finances from the center to individual theatre man-
agement. He has created new societies for music and
theatre, evidently to circumvent a reluctant bureau-
cracy. The regime has also established a new
"self-governed" Cultural Foundation, run on public
donations, to promote amateur, youth, and rural
institutions of the arts and preserve cultural and
historical monuments.
Gorbachev has replaced most key Brezhnev holdovers
in media, propaganda, and cultural bureaucracies.
New heads of the Central Committee Cultural and
Propaganda Departments and a new Minister of
Culture have been named. More liberal and outspo-
ken editors have been appointed to head 13 important
central newspapers and journals-including Kom-
munist, the party's major ideological journal, and
Novyy Mir, the country's most prestigious literary
journal. Since Gorbachev's accession to power, the
news agency Novosti, the Soviet Copyright Agency,
the State Committee for Television and Radio, and
the government publishing agency have all been given
new chiefs. And-in the first open debates since the
1930s at congresses of writers' and filmmakers'
unions-liberals took control of the union leaderships
and set up commissions to review all productions
bottled up by the censors. These shifts at the center of
the system have been reflected in a number of similar
personnel changes at republic and regional levels.
Resistance and Risks
There is ample evidence-in the Soviet press=
and in statements by Gorbachev
and his supporters-that glasnost is neither universal-
ly acclaimed nor practiced. At the highest level,
Gorbachev's principal supporters and spokesmen for
this policy are "second secretary" Yegor Ligachev,
Moscow party boss Boris Yel'tsin, and propaganda
secretary Aleksandr Yakovlev. Yel'tsin and Yakovlev
were promoted into the top leadership by Gorbachev,
and Ligachev was brought to Moscow, where he
worked under Gorbachev's supervision, by Andropov.
Yakovlev reportedly is a close Gorbachev adviser and
has played a key role in the large number of personnel
changes in the media. He recently told a conference of
cultural officials at the Central Committee that the
best weapon against the inroads of "mass culture"
from the West is better Soviet art. Yel'tsin acted as
Gorbachev's point man on the arts at the 27th CPSU
Congress in February 1986 and has continued in
Moscow a pattern of frank discussion that he set
earlier in his career.
Ligachev's position appears to be more complex. He
has forcefully articulated Gorbachev's cultural and
information policy at a series of conferences with
propaganda and media functionaries; reportedly has
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
17?. V.
vetted and approved many controversial plays and
films for public showing, including the stunning "Re-
pentance," a staged critique of Stalinism; and over-
seen the purge of propaganda personnel. On the other
hand, he has tempered his calls for glasnost with stiff
warnings to theatrical figures and media officials that
"criticism of negative phenomena" must be only of a
"creative, constructive nature," that radio and televi-
sion broadcasting must be "wholly political," and that
artistic works must feature the active Soviet hero, the
"real fighter" for the Soviet lifestyle. Soviet cultural
figures, he warns, must display "incomparably greater
and questioning of the system. Foot-dragging, muz-
zling of whistle-blowers, and various forms of sabo-
aggressiveness" in fighting "bourgeois ideology."
Although we have not seen signs of serious disagree-
ment about glasnost at the top level, the continued
presence of Andrey Gromyko and Vladimir Shcher-
bitsky, who are less than enthusiastic on the issue,
could in the future provide a focus for disaffected
informational and cultural elites and officials who
fear that Gorbachev's policies threaten their privi-
leged positions. KGB Chairman Viktor Chebrikov
may also have mixed feelings about this approach.
While he is probably allied with Gorbachev on most
political and economic questions, and was reportedly
one of only two Politburo members to support the
General Secretary's relatively frank information poli-
cy on Chernobyl', his functional responsibilities as
head of the secret police may make him wary of any
loosening of controls over the spread of unorthodox
ideas. In an article published in Kommunist (No. 9,
1985), Chebrikov came down hard on domestic critics
of the Soviet system as tools of foreign intelligence
services and failed even to mention Gorbachev's call
for constructive criticism.
Ideological and stylistic conservatives among media
officials, cultural figures, and midlevel bureaucrats
have recently become more devious in their resistance,
and their arguments are more muted. They insist that
more open discussion of social problems and official
shortcomings weakens popular confidence in the par-
ty, provides ammunition to foreign enemies, and
encourages deviant behavior among impressionable
youth-in short, it opens a Pandora's box of anarchy
tage evidently continue to plague Gorbachev.
The central media and regime spokesmen increasingly
are hitting out directly at local press and party
officials who flout the policy. A 12 November Pravda
editorial attacked "some leaders" who are "frightened
of the glare of publicity" and "some people" who
"still believe that criticism from below is incompatible
with strict order." It ridiculed "would-be criticism
from people who are only playing up to the restructur-
ing." The editorial also revealed the regime's concern
about the number of anonymous letters to higher 25X1
authorities smearing whistle-blowers and "strong lea-
ders" who have "introduced stricter responsibility."
There are complaints in the literary press that some
editors-and not just those in the provinces-are
overcautious in exercising their new authority and
continue to suppress anything that appears unortho-
dox. A Soviet poet recently wrote sardonically that all
references to "beer" and "wine" had been deleted
from his verses by an overzealous editor.
Expanding the limits of the permissible in culture and 25X1
propaganda harbors major risks for the regime and
for Gorbachev personally. Public airing of social
problems could stimulate a process of ferment within
the intelligentsia and criticism from below that could
get out of hand-as happened during Khrushchev's
"thaw" in the late 1950s. The breaching, in recent
weeks, of two extremely sensitive taboos-concerning
Stalin and religion-could, for example, lead to sym-
bolic questioning of the legitimacy of the Soviet
system. If the campaign goes too far, it could
strengthen the hand of Politburo hardliners and pro-
duce a swing back to more repressive policies. On the 25X1
other hand, a crackdown would risk killing the esprit
Gorbachev wants to foster and might lead to greater
popular cynicism than existed before.
Prospects
Gorbachev evidently believes that the policy of a
franker confrontation with "past mistakes" and con-
temporary social and economic problems is needed to
address and solve those shortcomings and to overcome
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
OVUM
widespread apathy and alienation, particularly among
the intelligentsia. He seems confident that he can
control the scope and process of glasnost and avoid
either a runaway intellectual ferment or a backlash by
rightwing officials that would cripple the momentum
and esprit he is trying to build.
Regime spokesmen have begun an attempt to articu-
late a balanced formula as guidance, but it is impre-
cise and ambiguous. For example, the new head of the
USSR Writers Union, Vladimir Karpov, told a TASS
correspondent that writers are no longer bound by
rules forbidding "certain themes" and that "we must
tell the truth" even if it is sad. "But," he added, "to
write only of shortcomings is incomplete truth." And
the handling of the highly controversial film Repen-
tance, about Stalin's terror, provides a graphic exam-
ple of Gorbachev's dilemma in trying to predict and
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
contain the impact of newly released works. Limited
screenings in Georgia and Moscow have sparked
highly emotional reactions, and since the film's direc-
tor distributed leaflets to cultural organizations an-
nouncing further showings, there have been rumors
that the Central Committee had decided to postpone
or perhaps to cancel the public opening and the
planned nationwide television showing. A showing in
Leningrad was canceled, reportedly at the direction of
the local KGB.
Gorbachev's dual goals of artistic creativity and polit-
ical reliability are irreconcilable, and managing the
process of glasnost will increasingly tax his political
skill. If, in the short run, he continues to resist
defining more precise limits as a way of giving himself
more room to maneuver, the demands and hopes of
liberal intellectuals will continue to escalate. In the
long run, he will ultimately have to set firm bounds to
prevent a conservative reaction within the leadership.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
1 3 V % . 1 ca
Gorbachev's Economic Program:
Monitoring Progress
General Secretary Gorbachev has made economic
revitalization the central focus of his regime. His
obvious dissatisfaction with existing economic condi-
tions and performance has led him to take a number
of initiatives to turn the situation around. The credi-
bility of Gorbachev and his regime will depend, in no
small measure, on the degree of success he and his
colleagues achieve in the economic arena. The regime
has focused its efforts on improvements within the
existing system while fostering a wider debate about
economic problems that could lead to more risky and
destabilizing systemic change should current initia-
tives fail. Monitoring economic performance and
leadership perceptions of and reactions to "progress"
is therefore central to our understanding of Soviet
political and economic dynamics.
Given the long leadtimes and, in some cases, short-
term disruptions associated with many of Gorbachev's
initiatives, the full effect of regime policies on eco-
nomic performance will not be manifest for several
years. The leadership, however, probably has neither
the time nor the patience to let the dynamics of
current initiatives play out fully before deciding on
their efficacy and sufficiency. More likely, its progno-
sis for effective modernization will be based over the
next two years on demonstrated progress in those
areas-such as machine building-viewed as critical
prerequisites to overall economic improvement. Re-
cent events make it clear that Gorbachev and his
lieutenants are closely watching-and taking action
on the basis of-even more preliminary returns.
Performance against major macroeconomic mea-
sures-national income, industrial production, labor
productivity-will be monitored closely by Soviet
leaders and planners, who will be quick to point to
increases in the growth rates of these variables as
indicators of success. But, because of their highly
aggregated nature, such measures are of limited
utility in short-run assessments of progress or prob-
lems in Gorbachev's economic programs. For exam-
ple, the upturn in many of these indicators this year is
due more to a surge in the quantity of goods and
services produced than to any increase in quality or
variety of production-the base on which successful
modernization will ultimately depend. Because
changes in quality and product variety are inherently
difficult to identify through shifts in aggregate eco-
nomic variables, it is necessary to look for additional
indicators that will give a clearer sense of how
enthusiastically Gorbachev's program is being re-
ceived, how well it is being implemented, and how it is
being modified. We have identified a number of
surrogate "progress indicators" with respect to the
following four major themes of Gorbachev's economic
strategy: industrial modernization, economic efficien-
cy, economic discipline, and consumer welfare. Al-
though performance in some of these indicators will
be known only after annual data are published, others
can be tracked more or less continuously.
Industrial Modernization
Gorbachev has made modernizing the economy one of
his top priorities with good reason. Unless substantial
quantities of high-quality, modern-technology equip-
ment are produced and assimilated, the gap between
Western and Soviet technology is likely to widen.
Equally important, the foundation for meaningful
improvements in the quality and efficiency of Soviet
industrial production will not materialize. The regime
appears well aware of this imperative and intends to
pursue modernization through actions to accelerate
the development and assimilation of new technology,
(that is, S&T progress) and through shifts in invest-
ment allocations.
Accelerating S& T Progress. The Soviets publish a
variety of information that will help us track progress
against specific modernization goals (see inset). Much
of this information is available only on an annual
basis, and then with roughly a six-month to one-year
lag. Moscow has begun to publish some new data
series on efficiency of metals and energy use, and on
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
use of modern production technologies, that appear to
stem directly from efforts to monitor progress in
modernization. Both Soviet and partner country trade
data will be useful in tracking the competitiveness of
Soviet manufactured goods exports in the world mar-
ket. Increased competitiveness of Soviet manufactures
would be a sure indicator of gains from moderniza-
tion. Measures of political pressure to speed up S&T
progress, such as turnover of key ministers and party
criticisms, are available on a more or less continuous
basis from the Soviet press. These latter indicators
will be particularly useful in suggesting the level of
tensions Gorbachev's policies and exhortations are
creating and regime "commitment" to keeping the
pressure on
Shifting Investment Allocations. Premier Ryzhkov, in
his speech to the party congress, stated that the new
element of investment policy in the 1986-90 Five-
Year Plan is its focus on promoting S&T progress.
The most evident indication of this is the 80-percent
increase in investment slated for the civilian machine-
building sector-"the complex where the achieve-
ments of scientific and technical progress material-
ize." This priority, however, implies greatly increased
tension among competing claimants for investment
resources, particularly given the rising needs of ener-
gy, transportation, the consumer sector, and the tradi-
tional heavy demands of defense.
Over the short term, we will be especially interested in
evidence of tensions and imbalances in the investment
plan that could lead to a reordering of priorities-
perhaps threatening the implementation of Gorba-
chev's modernization program (see inset, page 33).
Key indicators here will include trends in orders of
Western equipment; data from plan fulfillment re-
ports on investment and commissioning of new capaci-
ty, especially in sectors where bottlenecks could
emerge; foreign borrowing trends; and the rate of
military procurement for selected high-cost items.
Revisions in allocation policies will be evidenced by
changes in annual investment plans, leadership state-
ments, or shifts in imports. Finally, we will also be
tracking other elements of investment policy associat-
ed with modernization such as retirement rates and
the share of investment going to renovation.
Indicators of S&T Progress
Production trends of high-technology goods:
? Computers.
? Flexibile manufacturing systems.
? Robots.
Advances in basic industries. Share of-
? Electricity produced in nuclear power plants.
? Steel produced in basic oxygen and electric
furnaces.
Advances in transport technology. Share of.-
? Rail lines electrified.
? Truck freight hauled by diesels.
Labor savings due to new technology.
Production of goods that meet world standards, as
reflected in exports of manufactured goods.
Official statements concerning innovation progress;
party reprimands for laggards.
Meeting World Standards: Share of Machinery and
Equipment in Hard Currency Exports
Percent
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Investment plan tensions:
? Western machinery orders.
? Reports of sector bottlenecks; for example, ferrous
metals, railroads.
? Soviet demands for East European machinery.
? Gaps between machinery output and investment
plans.
? Procurement of military hardware.
Investment priority shifts:
? Investment flows by sector.
? Investment share of national income.
? Volume of machinery imports.
? Leadership statements.
Substituting new equipment for old:
? Annual retirement rates.
? Share of investment used for renovation.
? Fulfillment of plans for bringing new capital on
stream.
Economic Efficiency
The increasing scarcity of many of the basic resources
needed to support economic revitalization has led
Gorbachev to make improved economic efficiency one
of his major objectives. Publication of new Soviet data
on efficiency of energy and metals use suggests
increasing interest by Moscow in tracking efficiency
gains for these critical resources. For the most part,
data on the indicators listed in the inset on page 34
will appear only with a considerable lag.
A shift to a market-based system for rationing goods
and services might be the most effective step Moscow
could take to increase economic efficiency. As yet,
there is no indication the regime is even considering
such a radical move. The most important indicators
that such a step could be in the offing would be
references to markets, supply and demand, prices, and
the need for slack plans in the leadership's speeches.
References that appear in the party journals and
newspapers also would be indicative but would carry
less weight. Finally, references appearing in academic
journals would at a minimum indicate an expanded
arena for debate and perhaps represent the first
indications of increasing interest in considering a role
for markets.' References to raising prices of key
consumer goods subject to large excess demand, such
as bread, housing, and medical services, would also be
relevant although not necessarily a step toward mar-
kets.
Economic Discipline
Eliciting greater and more effective work effort from
the labor force is one of Gorbachev's key goals. He
already has taken major steps in this direction: the
antialcohol campaign, a number of major reorganiza-
tions, and numerous replacements of ministers and
other high-level economic managers. It is inherently
difficult to measure changes in the degree of labor
' Soviet officials have suggested that "more flexible" price-setting
mechanisms could be instituted or that enterprises could be given
greater freedom to negotiate with each other directly, especially in
the area of above-plan output. Such discussions also may indicate
an expanded arena for economic debate, but by stepping around the
notion of moving toward markets per se they probably carry little
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
aecrer
Indicators of Economic Efficiency
Ratio of unfinished construction to annual
fixed investment.
Ratio of inventories to final sales.
Trends in use of byproducts.
Factor productivity growth.
Feed/meat conversion ratios.
indec: 1970=100
120
100 1970 75 80
a Domestic energy use per unit of GNP.
discipline. The best indication would be changes in
labor productivity that cannot be attributed to other
factors, such as better equipment. However, because
such changes are very difficult to isolate, most of the
evidence indicating increased discipline must reflect
the input side of the equation-that is, the number
and range of policies taken to improve discipline and
the extent to which they are implemented (see inset,
page 35). For example, the intensity of the antialcohol
campaign can be measured by the trend in availability
of state-produced alcoholic beverages, and changes in
store hours for selling them. While the effect of this
campaign on labor productivity would be difficult to
quantify, we can monitor official statements and press
reports that comment on reduced drinking on the job,
the incidence of alcohol-related accidents, and worker
attitudes toward the campaign.
Consumer Welfare
Gorbachev's "wager on the strong" will unravel if he
fails to make demonstrable progress in improving the
quality, quantity, and variety of consumer goods and
services, especially for some key product groups. He
has called for a sharp increase in per capita consump-
tion, but this is only a summary indicator of consumer
welfare.' Measures that gauge improvements in the
supply of subcategories of consumption and their
distribution among socioeconomic groups are more
relevant, particularly in assessing the possible impact
of a given change in consumption on worker produc-
tivity. For example, food-especially meat-and
housing weigh most heavily in the Soviet consumer's
perception of his standard of living. Gains concentrat-
ed in these sectors might earn the regime more points
with the consumer than increases in other goods and
services.
Similarly, the distribution of scarce goods and services
to favor certain interest groups is in the regime's
interest. For example, consumer rationing schemes
that give priority to the most productive workers in
' Per capita consumption, as we define it, encompasses all household
expenditures on goods and services and government expenditures on
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Reduced alcohol consumption.
Firing or reprimands of ministers.
Sharp increases in labor productivity.
Increased managerial innovations improving
operating efficiency.
Increased party criticisms concerning plan discipline,
data falsification.
Ministries of Machine Building Criticized for Not Meeting
Delivery Goals, January-November, 1986
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Power Machine Building
?
?
Ileavy and Transport Machine Building
?
?
?
?
?
?
Electrical Equipment Industry
?
?
?
?
Chemical and Petroleum Machine Building
?
?
?
?
?
?
Machine Tool and Tool Building Industry
?
?
?
?
?
Instrument Making, Automation
Equipment, and Control Systems
Automotive Industry
?
Tractor and Agricultural Machine Building
Machine Building for Animal Husbandry
and Food Production
?
?
?
Construction, Road, and Municipal
Machine Building
Machine Building for Light and Food
Industrv and Household Appliances
?
?
?
the sectors crucial to modernization could raise mo-
rale and possibly productivity for key groups of
workers.
The usual Soviet rationing system of queues and
bribes to distribute valued consumer goods and ser-
vices is a source of frustration to much of the work
force. Although the political costs could be substan-
tial, increasing prices of selected consumer goods and
services, if accompanied by a greater role for private
producers, would relieve some of this frustration.
Other indicators of changes in consumer welfare that
can be readily monitored are shown in the inset on
page 36 and include:
? Meat availability per capita.
? Consumer good imports from the West and Eastern
Europe.
? Collective farm market prices.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
JCIf CI
Meat availability per capita.
New housing commissioned.
Grain and meat imports.
Other consumer goods imports.
Production trends of consumer goods and services.
Level of consumer complaints about quality.
Consumption fund share of national income.
Inflation as reflected in collective farm market price
trends.
Investment allocation to light and food industries and
agriculture.
Kilograms
60
Index of Meat Prices in Moscow Collective
Farm Markets
Indc.r: 1963-/00
300
0 1970
Impact on the Leadership
Gorbachev and his colleagues will also be closely
scrutinizing the data described above. Politically, it is
important that his strategy begin to show some posi-
tive early returns in order to sustain momentum in
implementing them. Economically, some gains are
needed to ease the resource tension created by the
industrial modernization program. The military, for
example, may grow increasingly restive if Gorba-
chev's program for modernization squeezes their
share of the resource pie without showing demonstra-
ble progress. The populace, whose expectations have
been raised by Gorbachev's rhetoric, may also become
restive and uncooperative if some tangible results are
not forthcoming.
Moscow realizes that the most salient indicators are
the macromeasures, but that even good performance
in these measures only implies partial success. For
example, while the nine-month plan fulfillment report
highlights the faster growth in a number of macroeco-
nomic variables in 1986, it also emphasizes that
targets for quality, product mix, and resource saving
were not met. The direction and magnitude of
changes in these latter indicators and others will play
a large role in shaping the perceptions of individual
interest groups (for example, consumers, economic
managers, and military leaders) and their support for
Gorbachev's economic program.
Poor performance in indicators of economic perfor-
mance could be risky, both for Gorbachev's own
power and his economic program. This is not the only
possible outcome, however. Gorbachev could use lag-
ging performance as proof that more basic and perva-
sive changes are needed to make his program fully
effective. So far the changes he has called for in the
area of reorganization and management are meant to
improve the existing economic system. Even these
changes have been slowed by resistance from the
311438 12%
36
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
IYW%J Wt
massive and entrenched party and government bu-
reaucracy. Disappointing results from Gorbachev's
modernization program might well be the catalyst
that convinces economic and party managers that the
solution is not in scrapping Gorbachev or his program
but in implementing fundamental systemic reforms.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
acUrut
Other Topics
The Dilemma of Moscow's
Policy To Curtail Illegal
Private Activity
Gorbachev's campaign against "unearned incomes"
initiated this past summer-in part to curtail activity
in the second economy-is creating confusion among
officials and the populace and is increasing consumer
frustration.' The campaign calls for stricter enforce-
ment of state restrictions and regulations on the
private sector.
the campaign has driven some private-
sector activit further underground, raised prices of
some consumer goods and services, and reduced their
availability. The leadership-reluctant to allow a
decline in consumption levels-is concerned about
these results and is taking steps to resolve the dilem-
ma but so far has not come up with a solution.
New legislation on individual labor activity attempts
to clarify the situation by specifying what types of
activities may legally be pursued and under what
conditions. Moscow hopes the law will capture some
of the private activity heretofore undertaken illegally
as well as increase the supply of consumer goods and
' We define the second economy as all production and exchange
that meets both the following conditions: (a) being directly for
private gain; and (b) being knowingly in contravention of existing
law. Although a wide range of private activity is considered legal,
much of this activity actually takes place under illegal conditions
because participants fail to register or pay taxes or use materials
stolen from the state. This article argues that regime determination
to reduce such activity, the target of the "unearned incomes"
campaign, will place limits on legal private activity, despite state-
ments by Soviet officials that the campaign is not intended to curb
services that are legally available.' At the same time,
the law calls for strict state regulation of individual
labor activity through restrictions on participation,
taxes, licensing, and probably price controls, all of
which tend to constrain personal initiative. The essen-
tial dilemma that Moscow faces has not been re-
solved: the leadership wishes to rein in the second
economy but without reducing its contribution to the
supply of goods and services, goals that are to a large
extent mutually exclusive within the Soviet system.
The "Unearned Incomes" Campaign
The Council of Ministers and the Central Committee
issued resolutions and the Supreme Soviet approved
legislation on "unearned incomes" in late May. New
legislation that took effect on 1 July takes aim at
corruption such as bribery, embezzlement, and theft
and/or misuse of state property. It condemns activity
conducted for the purpose of obtaining "unearned
income," vaguely defined as income incommensurate
with the individual's labor contribution. The cam-
paign also targets "speculation"-the charging of
] While the new law makes clear that its major purposes are to
increase labor activity and encourage greater production of goods
and services, it also is meant to bring the second economy above
ground by encouraging participants to register with the state and
come under state regulation.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Secret
"unfair" prices that results in "unearned incomes."
Specific measures in the resolutions and the law that
affect private activity include:
? Closer monitoring of individual income by the state
in order to identify persons engaged in illegal activi-
ty. For example, citizens conducting transactions
worth more than 10,000 rubles must now submit to
state authorities declarations indicating their source
of income.
? Increased financial penalties for violation of laws on
taxation and licensing of private artisans and
craftsmen.
? More detailed accounting by state enterprises of
supplies used by them. This is to curtail theft of
state property by state personnel.
Soviet press reports suggest that the campaign has
made it harder for individuals operating in the private
sector-usually illegally-to conduct business. The
clampdown has reduced access to inputs that are often
stolen from the state-such as use of state vehicles-
and has in many localities created a climate in which
all economic activity outside the state sector is viewed
with suspicion. Press reports also indicate that the
crackdown has led, at least in some areas, to higher
prices and reduced supplies of foods in collective farm
markets (CFMs). For example:
? A July Pravda article noted that spot checks by
local militia at a CFM in Perm' frightened off a
number of vendors and that the few intrepid sales-
men remaining tripled their prices.
? In Krasnoyarsk, according to the same Pravda
article, police barred farmers from hauling their
produce to market, and, as a result, supplies there
were scanty.
? A July article in the Armenian party journal Kom-
munist complained that a clampdown on illegal
personal use of state vehicles had resulted in a
decline in availability of taxi services.
? Izvestiya in late August reported that in Kuybyshev
efforts to curb nonofficial use of state vehicles
included clamping down on gypsy cabbies who
transport peasants from farm to market.
? A September Pravda article described citizens' let-
ters expressing confusion over the goals and results
of the campaign. Some 49 people from Krasnodar
Kray complained that they had been charged with
making unearned income on their private plots.
Some received fines and others had their plot rights
taken from them, even a family that largely depend-
ed on the plot for its own food.
supplies in Tyumen' 25X1
Oblast CFMs were down because of restrictions of
the unearned incomes campaign that hamper trans-
port of produce from one area to another.
? A Soviet official during a Moscow radio interview in
November cited a letter from a pensioner who
wondered whether income earned on the side as a
photographer would be seen as unearned income.
Two other citizens were concerned that income from
sale of private-plot produce represented unearned
income.
The Dilemma
A July Pravda editorial blames local officials for
misinterpreting the new legislation and carrying the
campaign too far. In fact, however, the fault probably
lies with conflicting policies that reflect the ambiva-
lent nature of regime policy toward the second econo-
my (see figure). On the one hand, the leadership wants
to tighten control over resources needed for modern-
ization of the economy. The crackdown on unearned
incomes is, in part, an attempt to regain control over
state resources such as vehicles, materials, and labor
time that are often used for nonofficial purposes.
However, these resources are not wasted but make a
substantial contribution to production of various con-
sumer goods and services. Restrictions on the sources
of materials and transport needed by peasants to farm
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
secret
The Dilemma of Soviet Policy Toward the Private Sector
State materials, tools,
and transportation
Acquisition
generally illegal
Participation legal
under certain conditions
Soviet labor policy
Labor participation in the private sector is allowed as long as
-socialist" obligations are met first. Thus, moonlighting is
acceptable.
Catch 22
Required materials, transportation, and other resources are
generally not available for private-sector use except through
illegal acquisition horn the state sector.
Output of goods
and services
Private-sector
production activity
Bottom line
Any crackdown-such as the unearned incomes campaign-
that restricts the flow of resources to the private sector will
reduce the sector's output of goods and services even if labor
policy is liberalized.
their private plots, for example, have led to reduced
marketings in CFMs. The dilemma is that at a time of
slowing growth in consumption and increasing re-
source stringencies, the leadership is reluctant to
allow a decline in consumption levels that an attack
on the second economy involves.
The leadership's concern with some of the results of
the campaign suggests it is trying to come to grips
with the inherent contradiction in its policies that is
causing confusion among officials and the populace.
Solutions suggested in the press provide little practical
guidance. For example, a Pravda editorial empha-
sized that local officials must distinguish carefully
between the shady earnings of "speculators and mon-
ey grubbers" and the earnings of "honest toilers
engaging in auxiliary farming." How this is to be
done was not made clear. An August Izvestiya edito-
rial called for "legal norms defining the status of a
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Secret
citizen running a subsidiary plot." But it is doubtful
that establishment of more norms would prevent
officials from using the concept of "unearned in-
comes" to crack down on even officially sanctioned
private activity. Most important, such norms would
not solve the practical resource problems that peas-
ants face unless accompanied by greater access to
needed equipment, materials, and transportation.
Approval in late November of legislation regulating
individual work activity could be expected to clear up
some of the confusion brought on by the unearned
incomes campaign. It lists, for example, individual
activities that are considered legal as well as those
deemed against the law. The new legislation, however,
does not expand the range of activities that individ-
uals may legally engage in, with the exception of
private taxi services and the use of private homes for
boarding, which were previously considered illegal. As
in the past, republics are given the right to add to or
delete from the list of legal activities.
Like the unearned incomes legislation, the law makes
clear that individual labor activity must be conducted
under close state supervision. For example:
? All who work in the private sector must obtain
licenses and pay taxes on their income.
? The law restricts participation in private-sector ac-
tivity by limiting it to pensioners, housewives, stu-
dents, and moonlighters, and by forbidding the
hiring of labor.
? Between now and 1 May 1987, when the law comes
into force, detailed regulations concerning taxes and
prices are to be developed.
Thus, it is not clear whether even the individual labor
law clarifies the regime's position on private activity
either for the local authorities charged to regulate it
or for participants, who will have to wait for further
clarification of where the regime stands on the issue.
L _]the official interviewed over Moscow radio sug-
gested that the prices that individuals may charge for
their output will be determined by the state. The
judicial official said that the law will not allow
unjustifiably high earnings through "profiteering."
Overregulation has restricted private activity in the
past and could pose a threat to personal initiative now.
More vigorous enforcement of existing regulations on
taxation and licensing could, in fact, reduce private
activity or drive it further underground. A Soviet
official interviewed on Moscow radio said that the
penalties for repeat violations of the individual labor
law are two years in a labor camp or a fine up to 1,000
rubles.
Just as important, though, limited access to needed
materials, labor, and supplies will remain a key
constraint to any expansion of the private sector.
Enforcement of the unearned incomes campaign will
continue to limit individuals' access to supplies
through the second economy. While the leadership
continues to promise to provide more supplies through
legal channels, any actual shifts to the private sector
must compete with the resource needs of Gorbachev's
effort to modernize the economy, and the state sector
almost certainly will come out ahead.'
the law on individual labor
activity is designed to prevent an outflow of labor
from state employment.
Outlook
An easing of the currently high marginal tax rates on
privately earned income could encourage personal
initiative.
taxation and pricing of private individual
labor activity are being debated now. However, F
Gorbachev's comments in Krasnodar in September
suggest that the regime unrealistically still hopes to
pursue the crackdown on the second economy while
' The lack of willingness by the leadership to increase supplies to
individuals is illustrated by a Council of Ministers decree published
in October encouraging the formation of cooperative organizations
for small-scale production of consumer goods and services. The
decree emphasizes use of byproducts and scrap materials from state
enterprises rather than the provision of new materials. The regime
is hoping to make more efficient use of these secondary resources
25X1
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
somehow maintaining (and even increasing) the bene-
fits that flow from legal private activity. Touching on
the unearned incomes campaign, the General Secre-
tary stated:
We condemn the practice whereby certain people
act to the detriment of the interests of society and
all others by not participating in public affairs,
make no contribution to the work of enterprises,
the kolkhoz, or the sovkhoz and want to develop
their private ownership aspirations. At the same
time, we must support all who grow products by
their own labor activity and those who combine
work in social production and on their own plot.
With continuing mixed signals coming from the lead-
ership, all that may be achieved from Soviet measures
in this area is increased uncertainty, which-while
making second-economy participants more wary-
will also tend to restrict their production activity.
Clarification of the leadership's policy on the second
economy will be required for any expansion of legal
private activity.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Viewpoint
The views expressed in the following article are the
author's and do not necessarily represent a CIA
consensus.
Ligachev, Gorbachev, and the
Configuration of Power in the
Current Soviet Leadership
A central question of Soviet politics today is the
relation of the putative second secretary, Yegor Liga-
chev, to the General Secretary, Mikhail Gorbachev.'
Crudely put, is Ligachev basically Gorbachev's agent,
striving to carry out Gorbachev's program of renewal?
Or does Ligachev seek to limit Gorbachev's personal
power and to build a power base of his own?
First and Second Secretaries:
A Historical Perspective
Before examining Ligachev's circumstances and his
words and actions as they bear on these questions, it is
useful to consider the historical record of second
secretaries in relation to the top leader. Nikita Khru-
shchev, who by 1958 had established himself as the
effective ruler of the Soviet Union, had three second
secretaries: Aleksey Kirichenko, who was ousted from
the leadership in 1960; Frol Kozlov, who opposed
Khrushchev in 1963 and was soon replaced; and
Leonid Brezhnev, who conspired against Khrushchev
and succeeded in ousting him. The record of the East
European regimes modeled on the USSR is not very
different: among established leaders, that is, men
more powerful than Gorbachev is today, the second
secretary generally has either conspired against the
general secretary-for example, Erick Honecker (East
Germany), Eduard Gierek (Poland), Jari Hendryk
(Czechoslovakia), Todor Zhivkov (Bulgaria)-or been
replaced by him-for example, Franz Dahlem (East
Germany), Aleksandr Rankovich (Yugoslavia), Bela
Biszku (Hungary). Communist China's experience is
equally striking: Mao Zedong in turn removed Liu
Shaoqi and Lin Biao, both of whom had held posts
equivalent to that of second secretary and had been
designated heir
The recent experience of Soviet second secretaries
tends to prove the rule, for their relation to the
general secretary has been marked by turbulence.
Although Andrey Kirilenko loyally served Brezhnev
as second secretary, he lost Brezhnev's favor and was
replaced by Konstantin Chernenko. Chernenko in
turn was ousted as second secretary by Yuriy Andro-
pov, who on Brezhnev's death became General Secre-
tary. Under Andropov, Chernenko once again became
second secretary and survived in the post long enough
(15 months) to succeed Andropov. Gorbachev there-
upon became second secretary and, when Chernenko
died a year later, General Secretary. None of the
three second secretaries before Ligachev-Andropov,
Chernenko, and Gorbachev-was freely chosen by the
' "Second secretary" is not a formal, titled position, but reflects general secretary under whom he served, and their
putative power and authority that is usually conveyed deliberately
including protocol arrange- relations with him were marked by factional maneu-
to the interested public by various signs
,
ments. Most often the second secretary is responsible for organiza- vering and politicking.
tional questions, including cadres, and for ideology, and he may
have additional responsibilities in foreign and economic policy as
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Ov%I Vt
Gorbachev's Role in Ligachev's Career
Gorbachev's relationship to his second secretary prob-
ably is not as antagonistic as that of his immediate
predecessors. Nevertheless, Ligachev-an Andropov
protege-was not freely chosen by Gorbachev as
second secretary. A little over three years ago Liga-
chev was the party leader in Tomsk, a secondary
oblast far from Moscow. Why Ligachev was brought
to Moscow in 1983 to head the cadres department in
the Central Committee-a key position in effecting
personnel assignments and policy implementation-is
not clear. Although he had engaged in cadre work in
Moscow under Ivan Kapitonov in 1963 and 1964,
Ligachev did not benefit from Kapitonov's subsequent
rise. (Moreover, Kapitonov's career was in decline in
1983, so he was hardly in a position to choose his
replacement.) Kapitonov's former boss, Kirilenko,
head of the Bureau for the RSFSR in the first half of
the 1960s and evidently an unofficial adviser to
Andropov 20 years later, may have recommended
Ligachev. At a high point in Andropov's campaign
against corruption in Brezhnev's family, Ligachev
called attention, in Pravda, to every leader's responsi-
bility to set an example in suppressing violations of
party rules, suggesting he may have played a part in
the campaign. If so, Andropov, impressed by his
abilities, might have rewarded Ligachev by bringing
him to Moscow. In any case, Ligachev, raised from
relative obscurity to a powerful post under Andropov's
aegis, was promoted along with other Andropov prote-
cadres department. Gorbachev apparently lacked the
power, however, to make such an appointment. He
was stuck with Ligachev.
ges in December 1983 to the Secretariat.
Ligachev's elevation to full member of the Politburo
occurred after Gorbachev had become General Secre-
tary in April 1985, but Gorbachev's involvement in
this promotion is unclear. By then Ligachev had
played a key role in numerous appointments and had
helped indoctrinate rising regional leaders who had
been rotated to Moscow for training, enabling him to
establish an independent power base. Ligachev evi-
dently was not Gorbachev's preferred choice as senior
secretary for cadres. Had he possessed the power, he
would have done well to emulate Andropov, choosing
from among regional party secretaries a protege who
would be dependent upon him. A suitable candidate,
for example, might have been Georgiy Razumovskiy,
party first secretary in Krasnodar, who later replaced
Ligachev in the subordinate position of head of the
That Ligachev rapidly acquired substantial power and
authority, hence early recognition as the second secre-
tary, suggests that he may have been supported by
other top leaders with the object of limiting Gorba-
chev's power. For a few months, in fact, Ligachev was
the only other senior secretary besides Gorbachev. To
avert the emergence of a duarchy, Gorbachev subse-
quently succeeded in diluting Ligachev's power by
making party secretary Lev Zaykov a full Politburo
member, hence a third senior secretary.' Subsequently
Gorbachev further strengthened his position in the
Secretariat by appointing a number of junior secretar-
ies (Aleksandra Biryukova, Anatoliy Dobrynin, Va-
dim Medvedev, Viktor Nikonov, Georgiy Razumovs-
kiy, and Aleksandr Yakovlev) and ousting Brezhnev's
old associates, Konstantin Rusakov and Boris Pono-
marev. At present, Gorbachev clearly exerts substan-
tial influence in the Secretariat, but Ligachev remains
responsible for cadres, ideology, and aspects of foreign
and economic policy; roughly half the Central Com-
mittee's departments work in areas in which he is
directly engaged. Ligachev's capacity to obstruct Gor-
bachev's programs, were he so inclined, is substantial.
Importance of a Reliable Second Secretary
Gorbachev's interest in having a close adherent man-
age the Secretariat stems from his ambitious program
to reform the Soviet system even before he has fully
consolidated his power. In their first years in office,
Khrushchev and Brezhnev (like Stalin in the 1920s)
concentrated on winning control of the party appara-
tus, and especially the Secretariat, before involving
themselves deeply in a broad range of policy ques-
tions. Brezhnev, for example, in the first eight years of
l Gorbachev and Grigoriy Romanov had also for a short time been
the only two senior secretaries, a situation that ended in July 1985
with Romanov's retirement. Thus a pattern is discernible. To the
two existing senior secretaries, the general secretary and the second
secretary (in 1985, Gorbachev and Romanov; in 1986, Gorbachev
and Ligachev), a third is added (in 1985, Ligachev; in 1986,
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
secret
his tenure, worked in the party's headquarters Central
Committee building, not in the Kremlin. Gorbachev,
on the other hand, has focused on the country's
problems, which for too long had been allowed to
deepen and multiply. He is attempting to change
Soviet foreign policy, economic administration, and
social policy before he has won control of the party
machine. Moreover, he is making severe demands on
party and government officials.
These weighty demands have met with resistance.
Malcontents in the party apparatus make up a constit-
uency to whom an ambitious leader can appeal, and
who in any case may actively solicit his support. As
Gorbachev becomes increasingly active in diplomacy,
he must leave Moscow and rely on the second secre-
tary to chair meetings of the Politburo and Secretari-
at. In such circumstances, it is crucial that Gorba-
chev's second secretary can be relied on to run the
Secretariat and the party apparatus on Gorbachev's
behalf while he concentrates on the elaboration and
refinement of policy and the remaking of the bureau-
cracy and society.
Is Ligachev a Reliable Supporter of Gorbachev?
What manner of man is Ligachev? In his two decades
in Tomsk, Ligachev's responsibilities were limited to
running a second-rank province,' and he was not
directly involved in the making of national policy.
(Gorbachev had the advantage of sitting in the Polit-
buro after 1979, where he could at least listen to
policy debates and read the relevant documents.)
Unless Ligachev's mind is characterized by unusual
breadth and imagination, the habits of thought incul-
cated by long party work may have left him skeptical
of radical changes in Soviet institutions.` In his long
career he has displayed a willingness to support
unconventional ideas on occasion, but has done so
' Ligachev as Tomsk's first secretary had to wait 10 years to
become a full Central Committee member, a status normally held
by first secretaries in Russian oblasts.
' It should be noted, however, that Ligachev had responsible
contacts with intellectuals and scientists at the founding of Aka-
demgorodok in the mid-1950s and was actively engaged with
cautiously, reticently. A Soviet reviewer of his writ-
ings once accused him of practicing esoteric
communication:
In Ye. Ligachev's small book you will not find
any contradiction to that which is new. He is not
against it. But he is not speaking out strongly in
favor of it, either.... Among the tasks of
centralized planning he fails to mention the
direct distribution of production and sale of
output in the products list. And he did so
correctly! On the basis of this detail an attentive
and knowledgeable reader will understand what
the author's position is but the unknowledge-
able reader will not notice anything.'
This mode of expressing himself, assuming he still
practices it 20 years later, suggests that it would be a
mistake to limit our perception of Ligachev's views to
what he says explicitly. He may signal his disagree-
ments with Gorbachev softly, by esoteric communica-
tions, so that one may learn of them only by being "an
attentive and knowledgeable reader."
Having been rescued from Tomsk, Ligachev experi-
enced a meteoric rise over the last three years that
brings to mind that of the Bolsheviks in 1917. To what
does he now aspire? Did he still harbor hopes of
reaching the centers of power in Moscow while he
languished in Tomsk at age 62? Having become the
second most powerful leader in the USSR at age 64,
how far does he intend to impose his will on events?
These are crucial questions on which direct evidence
is lacking. Judged by his actions, however, Ligachev's
ambitions are not narrowly constrained by advanced
age. Despite repeated injunctions, voiced by him and
others in the top leadership, that personal relations
must not influence cadre appointments, he has pro-
moted numerous former colleagues, including Alek-
sandr Mel'nikov, formerly his Tomsk deputy.
' Emphasis added. Review by 0. Latsis of a book by Ligachev,
Ekonomika, politika, printsipy upravleniya (Economics, Politics,
Principals of Administration), in Novyy Mir, No. 10, 1965, 253-
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Secret
Gorbachev may have found his 65-year-old subordi-
nate acceptable as the second secretary since they
hold many views in common. They were united in the
campaign to remove Brezhnev's close lieutenants,
including Viktor Grishin and Nikolay Tikhonov, and
in the effort to oust Romanov. (Ligachev benefited
directly from the removal of Romanov, gaining re-
sponsibility for the powerful Administrative Organs
Department. Its head, Nikolay Savinkin, is among the
few Brezhnev-era department heads who have not yet
been replaced, perhaps because the major Politburo
figures have had difficulty in agreeing on a candi-
date.) Ligachev, even more than Gorbachev, is some-
thing of an ,ascetic and a moralizer, determined to
fight alcoholism and corruption. Both see the need to
modernize Soviet industry, and to improve manage-
ment by increasing enterprise autonomy and strength-
ening the planning machinery. They agree on the need
to eliminate corrupt, alcoholic, and incompetent offi-
cials. They agree that the Soviet system has deterio-
rated and are determined to reverse the country's
downward course. They also agree on a broad pro-
gram of action to accomplish all this.
But there are significant differences as well. Gorba-
chev seems determined to root out inefficiency at
almost any cost and to remove officials who are not
wholehearted supporters of his reforms. Ligachev, on
the other hand, sees a need to preserve the morale of
the party apparatus and seems to be cultivating the
good will of its healthy elements. At the 27th Party
Congress, Ligachev evidently defended the party ap-
paratus's performance and privileges against sweeping
criticism by Gorbachev's protege, Boris Yel'tsin, and
by letters published in Pravda. In a sense, Ligachev
may have inherited from Chernenko the party appara-
tus, or a portion of it, as his personal base of power.
(Ligachev not only survived Chernenko's short period
in office, but may have benefited from it.) Ligachev
does not seem as committed as Gorbachev to replac-
ing incumbents with younger cadres. In his speeches,
Ligachev has appeared less sanguine about US-Soviet
relations, more convinced of the need for increased
defense spending. He has at times seemed somewhat
skeptical of Gorbachev's optimistic growth targets
and may have opted for more realistic ones. His
commitment to Gorbachev's strategy of incremental
radical reform of the economy may depend on its
producing substantial successes early.
While Ligachev is not an opponent or rival of Gorba-
chev and has acknowledged his position of authority,
he has sought to limit Gorbachev's power. He has
specifically called for collective leadership in the
Politburo and Secretariat, while Gorbachev has large-
ly avoided the term. Moreover, a number of develop-
ments adverse to Gorbachev's interests seem most
readily explained by Ligachev's involvement. Some
provincial followers of Brezhnev, such as Vladimir
Shcherbitskiy and, until recently, Dinmukhamed
Kunayev, have managed to hold on to important posts
despite repeated Moscow rumors that they were about
to be purged, which suggests that they have found
defenders in the leadership. Ligachev appears to have
established factional alignments with particular re-
gional leaders, Shcherbitskiy in the Ukraine and
Kunayev in Kazakhstan, and perhaps with new party
leaders in the Central Asian republics who have
replaced Brezhnev's men purged for corruption.
Meanwhile, Gorbachev has not been accorded the
offices and ritualistic acknowledgement of authority
that Brezhnev, Andropov, and Chernenko received
and that were becoming institutionalized as attributes
of the general secretary. He has not been chosen
chairman of the Presidium of the Supreme Soviet, nor
has anyone identified him in the central press as
chairman of the Defense Council. He is rarely called
head of the Politburo, as his predecessors were. While
these omissions have been rationalized by Gorba-
chev's partisans as due to a "cult of modesty," his
failure to receive these trappings of authority neces-
sarily raises a question as to the extent of his power.
Ligachev, the strong advocate of collective leadership
in the top party organs, may well have had a role in
denying them to Gorbachev.
While Ligachev has accumulated considerable power
in the party apparatus, his influence is circumscribed
in important ways. As noted, his power in the Secre-
tariat is limited by that of Gorbachev (to the extent he
finds time to be active in the Secretariat's affairs), and
by the presence of Gorbachev's proteges among the
junior secretaries and department chiefs. Moreover,
he clearly is not in a position to command the entire
regional apparatus, but must rely on alliances (for
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
secret
example, in the Ukraine) and persuasion to effect his
will. The Moscow party organization under Boris
Yel'tsin is outside his control, and his relationship
with the party leader in Leningrad, Yuriy Solov'yev,
is unclear. He has elevated several figures from
Tomsk to important positions, but the Tomsk party
organization itself came under attack in the central
press before the 27th Party Congress.'
While the configuration of forces in the Secretariat
leaves Gorbachev dependent on Ligachev for the
implementation of his policies, this need not imply
that Ligachev is in a position to challenge Gorbachev
for the post of general secretary. Gorbachev's impres-
sive display of political strength at the time of the
Chernenko succession and subsequently in bringing
about major changes in the Politburo and Secretariat
and in gaining the adoption of major new programs
underlines the danger of underestimating his sources
of power. Just as Ligachev may have inherited the
support of elements of the party apparatus from
Chernenko, Gorbachev appears to have inherited from
Andropov the support of the KGB. Moreover, Liga-
chev's colleagues may see him as an apparatchik, a
technician, rather than a statesman capable of devel-
oping a program to solve the country's deep problems.
Hence they might be reluctant to abort the programs
that are now under way. By this reading of the
current political situation, then, Ligachev appears to
be an uncertain ally in realizing Gorbachev's highly
ambitious policies, even a potential obstacle to them,
but not a rival for supreme power.
But what if Gorbachev should falter? While Gorba-
chev clearly played a key role in bringing down
Romanov, Tikhonov, and Grishin, this was the work
not of an individual but of a faction, the faction that
Andropov had created in his struggle against Brezh-
nev and in his brief tenure as general secretary. Its
key members included: Gorbachev, a successful appa-
ratchik, who subsequently gained much added
strength from Andropov's support; Ligachev, a rela-
tively unsuccessful apparatchik who was suddenly
raised from obscurity by Andropov to manage the
renewal of the party apparatus; Nikolay Ryzhkov and
Yel'tsin, two former Sverdlovsk managers and subse-
quently central administrators whom Andropov
brought into the party apparatus at a high level to
improve the economy; Vitaliy Vorotnikov, a victim of
the Brezhnev-Chernenko faction whom Andropov re-
called from abroad to help clean up corruption;
Andrey Gromyko, who deserted Brezhnev for Andro-
pov; and Viktor Chebrikov, a career party official
whom Brezhnev brought into the KGB to keep an eye
on Andropov, but who was instead co-opted by Andro-
pov and made KGB head.
While all of these men benefited from Andropov's
patronage, their backgrounds differ widely and the
faction's cohesion is questionable. Ligachev has the
strongest independent power base and represents a
potential pole of attraction for Gorbachev's oppo-
nents. Ryzhkov, although he served three years in the
party Secretariat, appears to be a technocrat assigned
to administer the economy as head of the government.
Ryzhkov's commitment to economic reform seems
lukewarm, and his loyalty to Gorbachev may be
subject to erosion. (In Soviet history at least four
government heads turned against the party leader:
Aleksey Rykov, Georgiy Malenkov, Nikolay Bulga-
nin, and Aleksey Kosygin.) Yel'tsin currently seems
closest to Gorbachev politically, but his impatience to
push through economic and party reforms could an-
tagonize party apparatchiks on whom Gorbachev
depends to implement his program. Moreover,
Yel' tsin's emphasis on collective leadership could
ultimately bring him into conflict with Gorbachev.
Vorotnikov, head of the government of the RSFSR,
earlier appeared slated for higher things, but he was
overleaped in turn by Ryzhkov, Yel'tsin, and Zaykov.
(Zaykov is a client of Gorbachev, who raised him from
obscurity in Leningrad.) The KGB head, Chebrikov,
currently appears to be a strong supporter of Gorba-
chev's interests. Inasmuch as both Khrushchev and
Brezhnev fell victim to the political defection of their
respective KGB chiefs (Vladimir Semichastny and
Andropov), Chebrikov's loyalty to Gorbachev could be
crucial for Gorbachev's extended tenure in office.
Gromyko's rise to the defense of the party apparatus
at the 27th Party Congress suggests that, if he is not
already aligned with Ligachev, he might readily
become so if the leadership became more factiona-
lized. Other figures who might influence the outcome
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Secret
of a future crisis are Shcherbitskiy, party boss in the
Ukraine, and Mikhail Solomentsev, head of the Party
Control Commission, each of whom might ally him-
self with Ligachev in a confrontation with Gorbachev.
Gorbachev assuredly has reason to fear the formation
of a faction centered on Ligachev and involving
powerful elements.' If Gorbachev's program encoun-
ters serious setbacks, they could readily give rise to
turbulence in Soviet politics, perhaps leading Liga-
chev to challenge Gorbachev's power.
' The reduced political weight of the military establishment at
present, and Gorbachev's evident slighting of its interests, could be
remedied in the near term perhaps only by its alliance with a
faction headed by Ligachev. Evidence of the formation of such an
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4
Secret
Secret
Declassified in Part - Sanitized Copy Approved for Release 2012/05/14: CIA-RDP88T00799R000200130003-4