GORBACHEV'S POLICY ON THE PRIVATE SECTOR: TWO STEPS FORWARD, ONE STEP BACKWARD

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90T00114R000800130001-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 27, 2016
• Document Release Date: February 9, 2012
• Sequence Number: 1
• Publication Date: April 1, 1987
• Content Type: MEMO

Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90TO0114R000800130001-6
25X1
Internal Distribution
1-DCI (7e47)
2-DDCI (7E47)
3-SA/DCI (7E47)
4-ED/DCI (7E47)
5-Executive Registry (7E47)
6-DDI (7E47)
7-Senior Review Panel (7B42)
8-12-OCPAS/IMD/CB (7G15)
13-NIO/USSR-EE 7E47)
14-C/DDO/SE (7E42)
15-DDO/SED(7E22)
16-C/DDO/PPS 7E22)
17-DDO/PPS (7E22)
18-C/NCD/PES (814 Key)
19-D/SOVA (4E58)
20-DD/SOVA (4E58)
21-EXO/SOVA (4E58)
22-C/SOVA/NIG (4E65)
23-C/SOVA/NIG/EPD (5E66)
24-C/SOVA/NIG/EPD/EP (5E66)
25-C/SOVA/NIG/EPD/IA (5E66)
26-C/SOVA/NIG/EPD/RM (5E66)
27-C/SOVA/NIG/EPD/FT (5E66)
28-C/SOVA/NIG/DPD (4E65)
29-C/SOVA/NIG/DPD/LP (4E65)
30-C/SOVA/NIG/DPD/BP (4E65)
31-C/SOVA/NIG/DPD/SI (5E66)
32-C/SOVA/NIG (5E25)
33-C/SOVA/SIG (4E 13)
34-C/SOVA/DEIG (5E46)
35-PDB Staff (7F30)
36-DD/NIC/AG (7E47)
37-C/ES/CIB (4E66)
38-C/FBIS/AG 1016 Key)
39 FBIS/USSR Division
40-C/ACIS (7D35)
41-C/CRES (3E63)
42-C/IPC (2F21)
43-D/LDA (1H19)
DATE ,/~//,~ 7 roc
DOC NO S- e4';4 /1 S7- 2o33X
OIR
P &PD
25X1
25X1
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90TO0114R000800130001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90T00114R000800130001-6 25X1
Central Intelligence Agency
Washington,D.C.20505
DIRECTORATE OF INTELLIGENCE
APRIL 1987
Gorbachev's Policy on the Private Sector:
Two Steps Forward, One Step Backward
Summary
Approval of a series of legislative initiatives since the 27th Party Congress last
March suggests that the Gorbachev regime is embarking on a cautious expansion of
opportunities for individual, family, and small group businesses in the USSR. This
new legislation has affirmed the legality of so-called "individual labor activity" and
fostered the establishment of member-run cooperatives. To ensure that labor is not
diverted from the state sector, the new measures limit participation to students,
homemakers, and pensioners. Despite these restrictions, the legislation constitutes
one of the regime's most controversial reform steps so far and reflects Gorbachev's
willingness to confront past economic orthodoxy in an effort to improve consumer
welfare.
Proponents of this legislation hope it can give a quick boost to the Soviet
consumer by expanding the range and improving the quality of available goods and
services. Many of them may also hope that creating a more favorable climate for
legal private businesses will induce private entrepreneurs currently operating
underground to come out into the open, and that this will enable the regime to
regulate the private sector more effectively.
The new laws were preceded by a decree on "unearned income,' aimed at
tightening law enforcement against operators in the illegal "second economy." Some
advocates of an expanded legal private sector see the crackdown on "unearned
This paper was prepared byl Ithe Office of Soviet
Analysis. Comments and questions may be directed to the Chief, National Issues Group,
SOVA M 87-200361X
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90T00114R000800130001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90TO0114R000800130001-6
income" as complementing the individual labor activity legislation. But some
conservative officials, perhaps including party secretary Ligachev, have tried to
use the "unearned income" decree to discourage private activity across the
board.
Any significant growth of legal private economic activity will be
impossible without leadership commitment. Yet Gorbachev and Zaykov are so
far the only Politburo members to voice strong public support for expansion of
the legal private sector. Unless Gorbachev is able to mobilize greater
leadership backing that results in increased incentives, including relatively low
tax rates and minimal state controls in such areas as prices, significant
increases in private activity are unlikely.
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90TO0114R000800130001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90TO0114R000800130001-6
Introduction
The state sector of the Soviet economy has long been notorious for its inadequacy
in satisfying the demands of Soviet consumers. This inadequacy creates large and
potentially lucrative opportunities for private businessmen* willing to provide quality and
convenience Soviet consumers cannot get from the state sector. Although the Soviet
constitution of 1977 theoretically guarantees the right of citizens to engage in
self-employment for private gain (except for a specific list of proscribed activities), in
practice authorities have usually taken a hostile attitude toward these activities and the
constitution has provided private entrepreneurs scant protection against official
harrassment. Moreover, until now there have been virtually no legal sources of supply
from which private businessmen can obtain materials and equipment and any earnings
derived from legal private activities have been subject to a steeply progressive income
tax. Consequently, rather than attempt to cope with the obstacles to operating legally,
most individuals responding to the lure of opportunities in the consumer sector choose to
operate underground. Together these individuals constitute a large, unregulated "second
economy."
Controversial Proposals
Reform-minded Soviet economists have long proposed taking steps to facilitate the
expansion of private business by affirming the legality of self-employment and creating
new opportunities for groups of individuals to form profit-sharing cooperatives. They
point out that such arrangements have been adopted in Hungary and East Germany and
make a significant contribution to the consumer sector in those countries.
Reform economists argue that private business could better mobilize labor not
employed by the state such as homemakers, students, and pensioners, and expand the
supply of goods and services available to the population. They also argue that the
private sector could respond more rapidly and flexibly to consumers' demands for goods
and services of higher quality and greater variety than the state sector now provides.
Some have argued that the beneficial effects of expanding the private sector would spill
over into the state sector: Competition from private business would end the monopoly
situation that allows state enterprises to dictate the range, quality, and cost of services
available to Soviet consumers and force the state to do a better job of satisfying demand.
(Competition from the private sector, however, would not force an improvement in the
performance of state enterprises in the absence of effective penalties for poor
* The term "private business" is used in this memorandum to denote economic
operations organized and managed outside the traditional state sector of the Soviet
economy (although subject to state regulation), including individual and family-run
operations as well as the new type of cooperatives called for in recent Soviet legislation.
The new cooperatives are partnerships organized by groups of at least 3 individuals who
run the operation collectively and share the profits.
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90TO0114R000800130001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90T00114R000800130001-6
performance.) I 25X1
Some Soviet officials also observe that taking steps to encourage private
businessmen to operate legally would enable the regime better to regulate the private
sector. Proponents of this argument point out that a burgeoning "second" economy
already exists, but, since it operates underground, the regime is unable to control it
through taxation of incomes, controls on prices, and restrictions on time spent working in
jobs outside the state sector. As a consequence, these officials believe that the illegal
private sector in many cases hurts the consumer rather than benefits him; large-scale
theft and diversion of resources from state stores and enterprises lines the pockets of
underground entrepreneurs and the corrupt officials who assist them. ~~ 25X1
Proposals to affirm the legality of private activity and expand its role have evoked
strong opposition from officials and segments of the public concerned that undesirable
consequences will accompany any such moves. Many party traditionalists, who believe in
the Marxist principle that the party's monopoly of political power is based on monopoly of
economic power, fear that expansion of the private sector could ultimately undermine
political control. Those traditionalists fear that an expansion of legal private activity
would make it more difficult to regulate the private sector (rather than less difficult as
many reformers probably believe). As good socialists, party traditionalists believe that
state ownership represents a higher plane of economic organization, therefore any
expansion of the private sector is inherently regressive.
Thus, conservative officials publicly argue that expansion of the legal private sector
will create additional opportunities for individual enrichment that are incompatible with
egalitarian socialist principles. Many officials voice concern that theft of raw materials
and spare parts from state enterprises will increase because private businessmen have
few other sources of supply for those items. Managers of farms and factories fear that
the creation of potentially lucrative opportunities in the private sector will lure away their
workers. Ordinary citizens, in letters to the media and remarks made directly to
Gorbachev during his public walkabouts, have complained bitterly about high prices
charged by private repairmen and venders.
The Regime's Response
Taken together, four policy initiatives since the party congress in March reveal the
outlines of the regime's complex response to the debate over the role of private business
in the Soviet economy. The initiatives contain a mixture of liberalization and regulation
that attempts a difficult balancing act--providing the benefits proponents claim while
avoiding the negative consequences opponents fear:
The Law on Self-Employment
The new law, approved by the Supreme Soviet in mid-November and scheduled to
take effect on 1 May, affirms the legality of self-employment ("individual labor activity" in
Soviet parlance) in a range of activities from handicrafts to medical service. Some
features of the law--the encouragement of contractual relationships with enterprises,
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90T00114R000800130001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90T00114R000800130001-6 25X1
measures to facilitate access to raw materials and tools--suggest an effort to give
private businessmen the wherewithal to operate. But authorities acknowledge that other
provisions of the law were designed to prevent diversion of labor from the state sector.
Participation is limited to housewives, students, pensioners, and state employees working
during their free time. Members of the immediate family may participate, but hiring of
outside labor is strictly forbidden.
The law contains other disincentives to full-time self-employment:
The new law makes no provisions for private pension plans or social insurance
coverage for the self-employed.
Workers comtemplating abandonment of the state sector in favor of
self-employment would lose sick leave, vacation, and disability benefits.
Persons other than pensioners, students, and housewives who chose to earn
their living from full-time self-employment rather than work in the state sector
would potentially risk prosecution under the state's "anti-parasite" laws, which
remain in effect.
The self-employment law also requires that individuals register with the state before
setting up shop and calls for a "progressive" tax on individuals' net income to prevent
"excessively high" incomes.
Regulations on Forming Cooperatives
Decrees approved by the USSR Council of Ministers in February create new
opportunities for groups of not less than three persons to form profit-sharing
cooperatives to engage in three types of business--consumer services, food service, or
production of consumer goods. Cooperatives may contract with state enterprises for
transportation and repair services. Cooperatives have the right to plan production, set
prices, and determine members' wages and work rules independently, according to the
decree. Participation in the cooperatives is subject to the same limitations applied to
self-employment. Cooperatives pay an income tax (rate unspecified) to the local
government and retain the remaining profits for production development, social insurance
funds, and wages.
The February decrees represent a step forward from regulations issued in October
that permitted the formation of cooperatives to recycle raw materials or produce
consumer goods from scrap. Those regulations were issued on an "experimental" basis
and their application extended only to limited areas of the USSR. The regulations specify
tax rates that would be phased in gradually, peaking after three years at 35 percent of the
cooperative's net income.
This measure announced 1 July 1986 was aimed at corruption by officials and
ordinary citizens and at theft and tax evasion frequently associated with underground
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90T00114R000800130001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90T00114R000800130001-6 25X1
private businesses. It set stiff penalties for failure to register businesses and pay taxes.
New inventory control procedures were also introduced at state enterprises to curtail
theft of materials and tools by workers moonlighting in the private sector. The law
provoked much debate about what should or should not be considered "unearned"
income. In some regions, party and law enforcement authorities interpreted this law as a
mandate for an across-the-board crackdown on private activity, driving such activity
further underground and reducing the availability of goods and services produced
privately.
Regulations on "Shabashniki"
These regulations issued on 15 May 1986 gave explicit legal sanction to itinerant
brigades of workers who hire themselves out to farms to perform construction or field
work. While the regulations end the ambiguous legal status of the brigades, they may
also make the work significantly less attractive by putting strict controls on operations
and limiting payment to rates paid for comparable work in the state sector.
The Difficulty of Balancing Objectives
In trying to encourage initiative but wrapping it in red tape, in offering the promise
of new opportunities for private business but also raising the specter of prosecution for
receiving "unearned" income, the Gorbachev regime appears to be pursuing a precarious
balancing act.
Traditionalists, wary of any steps that might challenge communist principles
and undercut party control of the economy, have almost certainly sought to
prevent any significant expansion of private business. At the same time, they
probably welcomed an opportunity to envigorate efforts to combat unearned
income and may have viewed the decree as a license to crack down on all
froms of private entrepreneurship.
Proponents of the new legislation on self-employment and cooperatives
probably viewed the unearned income decree as an essential complement to
those laws. By increasing penalties on underground private business activity,
the unearned income decree may provide an inducement for underground
entrepreneurs to begin to operate in compliance with the law. By thus
combining the carrot and the stick, proponents would argue, the regime will
gain control of a potentially lucrative source of revenue through the income
tax on private business, increase its ability to satisfy consumer demand
without major adjustments in resource allocation policy, and simultaneously
crack down on the growth of the "second" economy outside the regime's
ability to tax or otherwise control. This linkage was acknowledged by Leonid
Abalkin, director of the USSR Academy of Sciences Economics Institute, who
told Western journalists in November that the "unearned" income decree and
the self-employment law were originally slated to be introduced in tandem,
but that the former was released first because officials found it easier to agree
on what to forbid than on what to allow.
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90T00114R000800130001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90TO0114R000800130001-6
Within the leadership, Gorbachev has taken the lead in promoting self-employment
and cooperative activity while at the same time offering assurances that the socialized
economy will be preserved. During his speech to the party congress in February 1986,
Gorbachev endorsed the drafting of measures to crack down on unearned income. At the
same time, however, he warned that the measures should not "cast a shadow on those
who are receiving additional earnings through honest labor." In a July 1986 speech to
Khabarovsk party workers, he urged a search for new forms of "individual labor activity,"
but during a September tour of a village in the Krasnodar region he condemned those
who harbor "private ownership aspirations" and neglect their contributions to the state
sector. When asked in Latvia in February whether the USSR was not getting "too carried
away by the private sector," Gorbachev responded that "it only seems a private sector at
first sight." He went on to defend vigorously the expansion of cooperatives and the
legalization of self-employment opportunities, arguing that the "foundations" of the
socialized econom will remain intact, even if five to seven percent is "broken off" by
self-employment.
No other member of the Politburo has supported the self-employment and
cooperative legislation so vocally, indicating that Gorbachev may face skepticism--if not
direct opposition--on this matter. While Yegor Ligachev, Gorbachev's
second-in-command within the party, has been generally supportive of Gorbachev's
economic reforms, he may share some of the conservatives' concerns about the private
sector. In a June 1985 speech to the Central Committee Academy of Social Science, he
warned that there would be no "divergence toward private enterprise," and in an August
1986 article published in the journal Teatr, he asserted that "there is no question, nor will
there be, of a market econom
Conflicting Interpretations
This complex balancing of goals in the various laws regulating private business is
likely to perpetuate controversy and confusion. Commentary on the law on
self-employment reveals that officials and the public have differing--and sometimes
conflicting--interpretations about what the self-employment law does and does not
intend:
A Soviet press correspondent reported that both officials and individual
workers see the provisions for regulating income as a key element of the
legislation. Workers told her that those provisions are too strict, while officials
responsible for financial control complained that they are too lenient.
US Embassy Moscow reports that the new law is creating a stir among the
city's inhabitants, but for widely different reasons. A young doctor, who spoke
with embassy officials, reacted enthusiastically, saying he thought the law
would enable him to set up a private practice. Another Soviet cynically
dismissed the law as simply an effort to tax private activity already going on
underground.
25X1
25X1
7
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90TO0114R000800130001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90T00114R000800130001-6 25X1
-- Differing perceptions of the law's main goals are also evident at the official
level. Commenting on the law, some officials stress that it is intended first of
all to provide the public with more goods and services and accommodate
consumers' desires for quality and varied assortment. Others see the law's
foremost function as ivin the state the ability to control and tax existing,
underground activity. Imo g 25X1
The restrictive spirit of the unearned income law also has contributed to confusion
over the limits of private business. Some over-zealous local officials interpreted the law
as a mandate to harass vendors at collective farm markets and other private
businessmen. In an effort to counteract this interpretation of the law, top legal officials
appeared repeatedly in the media to warn that the decrees should not be applied to
citizens engaged in legal private business. At the same time, a debate broke out in the
press among officials and economists over the proper definition of the concept "unearned
income." Some argued that it should apply only to money derived from genuine
illegalities such as theft and bribe-taking. Others put forth a broad definition that
included gains from doing things the capitalist world would consider common business
practice, raising prices when demand exceeds supply, for example.
A Key Role for Local Authorities
As in the past, the new law on self-employment gives local authorities broad
prerogative to expand the law's provisions and accords them a key role in providing
material support for private business. This is consistent with Gorbachev's efforts to
decentralize economic decision-making, but the broad delegation of power to local
officials makes it likely that the law will be implemented with wide regional disparities.
Prerogatives and responsibilities given to local authorities by the new measures include:
--Responsibility for assisting individual and cooperative business in finding
sources of supply, tools, and transportation and in selling their products.
Authority to permit individuals and cooperatives to engage in additional types
of business beyond those specified in the self-employment law. Officials in
the Baltic republics have already begun limited experiments with family
restaurants, even though the law does not cover restaurants.
Authority to add to the list of illegal types of business beyond those specified
in the new law if it is deemed that their exercise "contradicts society's
interest."
-- Power to cut red tape to facilitate the formation of new private businesses.
Local officials may waive registration requirements for types of activities they
designate.
Supporters of an expanded private sector hope that the self-employment law will
put an end to the excesses inspired by the "unearned" income decree. Soviet press
commentary indicates, however, that the predominant approach by local authorities is to
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90T00114R000800130001-6 _
 Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90T00114R000800130001-6 25X1
prohibit rather than encourage private business, particularly in the Russian Republic.
Indeed, economist Abalkin told journalists that he thought that individually-run business
would not make much headway in the Russian Republic, where there is no strong
tradition of such activity and public opinion is predominantly hostile to it. (Cooperatives,
he noted, might do better.) Abalkin went on to say that individually-run businesses will
find a more hospitable climate in other areas such as the Baltic Region and the Georgian
Republic. 25X1
Economic Hurdles Ahead
Major questions concerning the balance of incentive and regulation remain to be
resolved before the law on self-employment goes into effect on 1 May 1987. The law
provides for a "progressive" tax on the incomes of the self-employed. Commentary
suggests that new rates will be established somewhere between the 13 percent rate
applied to incomes of workers in the state sectors and the current maximum rate of 65
percent on income from private business. Officials also must decide whether private
businessmen will be permitted to set their own prices or will have their prices tied to
prices charged by state enterprises. F__1 25X1
Soviet economists realize that the resolution of these two issues will greatly affect
the law's ability to promote an expansion of legal private business. High tax rates and
strict price regulation would discourage underground businessmen from going legal. If
the stricter penalties for illegal operation contained in the "unearned" income decrees and
the self-employment law are vigorously applied by law enforcement authorities, many
underground entrepreneurs may simply choose to go out of business.
Arrangements for providing facilities, supplies, transportation, and equipment to
individual and cooperative businesses are another potential shortcoming in the new
legislation. The Soviet economy has long been plagued by chronic. and notorious
shortages of these items. The new self-employment legislation encourages individuals to
sign contracts with state enterprises for supplies. The state enterprise may have little
incentive to provide supplies to individuals on contract, however, given the primacy of
meeting state plans for production and sales to other state enterprises, especially if
supplying individuals or cooperatives would jeopardize its own ability to meet plans and
earn bonuses. Most of the burden of outfitting private business is placed on local
government and supply agencies, who likely have neither the will nor the means to meet
those needs. Officials and journalists are already predicting that these arrangements will
prove inadequate.
The regime is making an effort to address the supply problem. The new
cooperatives set up to recycle waste and produce consumer goods from scrap, could
provide a creative solution to the supply problem, and an effective one given the
extraordinary waste of materials in the state economy. In addition, party and government
decrees published on 15 December establish penalties for enterprises holding above norm
stocks and authorize them to sell any surplus items to other enterprises, cooperatives, or
individuals. The decree instructs supply agencies to set up brokerage services to
facititate the sale of surplus materials and and equipment.
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90T00114R000800130001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90TO0114R000800130001-6 25X1
Pressure to Go Farther
The fate of private business in the USSR may ultimately depend on the performance
of the state sectors that produce consumer goods and provide services. The Consumer
Goods and Services Program announced in late 1985, for example, sets ambitious targets
for increased output of goods and services by the state sector. If is doubtful, however,
that the investment resources needed to meet the program's goals will be made available
given the regime's commitments to defense and the demands of the modernization
program in heavy industry. Under such conditions, the leadership may become more
willing to push for an expansion of the private sector as a way to improve consumer
welfare without requiring a diversion of investment resources and enhance prospects for
meeting its commitments to the consumer.
Some economists and officials clearly wanted the leadership to go farther to
encourage legal private business now. Geliy Shmelev, section chief at the Economics of
the World Socialist System Institute, called for granting paid vacation, sick leave,
pensions, and other benefits to private workers. During the Supreme Soviet debate on
the self-employment law, a regional party leader argued that more should be done to
give private sector workers the same status and prestige as state workers.
Economist Abalkin told journalists in 1986 that he sees the new regulations allowing
formation of cooperatives as potentially the most effective element of Gorbachev's private
sector policies. Abalkin ventured a guess that while, in his view, individually-run
businesses might account for only about 4 percent of national income in ten years,
cooperatives could account for as much as 10 to 12 percent.
Cooperatives are seen as ideologically superior to individually-run businesses and
more in harmony with Russian traditions. Gorbachev may put increasing emphasis on
cooperatives to minimize ideological resistance to an expanded private sector. Legislation
already passed gives cooperatives priority over individual and family business in
allocation of facilities and supplies.
The success of these new initiatives in the private sector will depend to a large
degree on how they are received and carried out by officials and the public. Key
developments to watch include:
Media coverage and commentary on the new laws--A focus on negative
consequences of the new legislation such as private business charging high
prices or stealing materials from the state would strengthen the hand of
opponents who wish to limit or even repeal the new measures. Alternatively,
sympathetic publicity for the new legislation and coverage of obstacles that
may be preventing the expansion of private business would indicate high level
support and might create pressure to relieve those problems. To some extent,
media coverage on the new legislation has already taken the latter track.
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90TO0114R000800130001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90TO0114R000800130001-6
Declarations of high-level support--Gorbachev and other top leaders will
probably have to be less cautious and more strongly supportive of the new
measures to encourage local authorities to implement them and to push for
solutions to economic obstacles that stand in the way of their success.
Resolution of tax and price regulation questions--These decisions will be a
key indication of how far the regime intends to go to encourage the expansion
of private business. Effective encouragement of private business will require
the regime to set tax rates much lower than the current 65 percent maximum
and give private businessmen broad freedom to set their own prices.
11
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP96TO0114R000800130001-6
 Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90TO0114R000800130001-6
44-Fritz Ermarth
Special Assistant to the President
Senior Director, European and Soviet Affairs
National Security Council (368 EOB)
45-Col. Tyrus W. Cobb
Director, East-West Section
European and Soviet Affairs
National Security Council (373 EOB)
46-Paula J. Dobriansky
European and Soviet Affairs
National Security Council (368 EOB)
47-Barry Kostinsky
Chief, Soviet Economic Studies Branch
Center for International Research
Bureau of Census
Department of State
48-Andrew W. Marshall
Director, Net Assessment
Department of Defense
50-Dr. Donald Goldstein
Principal Director
International Economics, Trade, and Security Policy
Department of Defense (4C76 Pentagon)
52-Robert H. Baraz
Director, Office of Analysis for the Soviet Union
and Eastern Europe
Bureau of Intelligence and Research
Department of State (4758 State)
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90TO0114R000800130001-6 _
 Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90T00114R000800130001-6
53-John Danylyk
Chief, Communist Economic Relations Division
Bureau of Intelligence and Research
Department of State (8662 State)
54-Louis Sell
Bilateral Desk
Bureau of European and Canadian Affairs
Department of State (4223 State)
55-Robert W. Clark
Deputy Director (Economic Affairs)
Office of Soviet Union Affairs
Bureau of European and Canadian Affairs
Department of State (4223 State)
56-Ralph Lindstrom
Director, Office of Economic Analysis
Bureau of Intelligence and Research
Department of State (8722 State)
57-Don Graves
Chief, Soviet Internal Affairs Division
Bureau of Intelligence and Research
Department of State
58-Jack Brougher, Jr.
Chief, USSR Division
Office of Eastern Europe and Soviet Affairs
Department of Commerce (6854 Main Commerce)
59-Susanne Lotarski
Director, Office of Eastern Europe and Soviet Affairs
Department of Commerce (3410 Main Commerce)
60-Byron L. Jackson
Director, Office of Intelligence Liason
Department of Commerce (6854 Main Commerce)
61-Douglas R. Mulholland
Special Assistant to the Secretary (National Security)
Department of the Treasury (4324 Main Treasury)
Declassified in Part - Sanitized Copy Approved for Release 2012/09/10: CIA-RDP90T00114R000800130001-6