ECONOMIC INTELLIGENCE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP62S00231A000100110138-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: December 9, 2016
• Document Release Date: October 28, 1998
• Sequence Number: 138
• Content Type: REPORT

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Economic Intelligence
An adequate assessment of the complex and closely-interrelated
problems of the economies of the Sino-Soviet Bloc requires an inte-
grated approach to the research efforL Other components of the
intelligence community are not equipped to conduct Sov-Bloc economic
research on an over-all basis, nor are they charged with this responsi-
bility; their economic research efforts are oriented toward their
individual' departmental interests. By inter-agency agreement and
DCI directive the primary responsibility for economic research on
the Sino-Soviet Bloc now rests squarely in the Office of Research
and reports.
To carry out this responsibility, CtM must 'direct its inte113-
gene effort at all levels of the economy'and in varying degrees of
intensity. The aftermaths of the economic and political disruptions
in Eastern Europe in late 1956 clearly supported the continued focus
of attention by the Office in 1957 on the stability and cohesion of-
the Soviet and Satellite economies. Our analyses have emphasized
exploration-of the economic factors which could lead to increased
disturbances in the European Satellites in the coming years. Con-
siderable attention was also given to the substantial re-orientation
of international trade among Bloc members and between them and Free
World countries. To provide current appraisals of the continuing
unstable situation in this area, our research effort on Eastern
Europe, which had been augmented on a priority basis in 1956, was
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maintained at a high level in 1957.
The Office has. continued to intensify its economic research on
Communist China. We are engaged in a program of complementary and
interlocking research projects dealing with the Chir)eee economy.
? ? f
This program includes the study and evaluation of the Chinese
potential for industrial growth, and an evaluation of a1,1 available
information on the continued dependence of the Chinese Communists
on the technical. assistance, plant equipment, and. other capital
goods being furnished by the Soviet Union and the European Satellites.
The feasibility of new and ambitious Chinese Communist plan goals
is also under rigorous ^crutiny.
In 1957 this Office devoted an important pert of Its research
effort to analyh is of the implications of an increasing body of
evidence indicating a slaving down of the rate of economic growth
in the USSR. Even before the Soviet annoluncaments of the substitution
of a now 7-year plan -to replace the Sixth Five Year Plan and of the
modest long-range economic goals for 1972, ORR had provided policy-
makers with evidenca of a slowing down in, industrial growth.
Likewise, our analyseq of-economic administration in the USSR had
revealed the existence of serious difficulties - difficulties made
manifest by the sweeping industrial reorganization that took place
in Jhly.
In response to, and, indee4, in apticipation of, the dramatic
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evidence of Soviet capab=ai.ties in the guided missile field, ORR
regrouped its resources to provide for an intensive research program
on the economic aspects of Soviet missile programs. Similarly, the
research effort on Sov-Blo3 atomic energy activities substantially
increased. The stepped-up economic research program on missiles
and nuclear energy has already resulted in important contributions
to intelligence on these fields.
During the year Sino-Soviet Bloc countries intensified their
efforts to penetrate Free World undardeveloped countries through
large-scale trade and economic aid programs. ORR continues to
monitor developments in this field, and as a result has come to be
relied on by policy-making groups, such as the Committee for Fcreign
Economic Policy, to provide, in cooperation with the Department of
State, most of the intelligenca on the Soy-Bloc economic offensiv3.
Flow are the problems of the Soviet Bloc economies analyzed,
and how are the answers obtained by an integrated and coordinated
approach?- While Soviet announcements and recent statistical publi-
cations in certain non-strategic fields have been of some help, the
office must continue its intensive analysis of'fra nentary and
conflicting data obtained overtly and covertly from innumerable
sources -In order to develop the economic intelligence on the Sino_.
Soviet Bloc that is of national security impwrtan. , and is require)
both in production of National itellige-zc:e Estimat;2s and in a
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variety of special studies in response to other high priority requests.
Further, it provides guidanaa to the collection activities of CIA
and other agencies. -The complencity of the job demands the welding
together of all the various skills brought into the organisation.
The economist, the technical expert, the country and language special-
ist, all are vital parts.of the research team. AU need special
additional training, which is expenaizte and time consuming, but
absolutely necessary. _
Attention in, being given to the development of new techniques
of analysis in order to m& b9 meudaman use of the factual information
which is constantly flowing into the Office. Pursuing the successful
analytical approach developed in the past two years for making cost
estimates of Soviet military programs, an effort is now being msde
to extend this price and cost analysis to our estimates-of present
and future Soviet atomic energy developments. These costs will be
checked against the capability of the Soviet .economy to provide for
the facilities and new iaVestments indicated. These analyses take
the form of rigorous inspection of soviet cost and price r6latiotf-
ships as an important step toward the deturmination of the principal
areas of Soviet industrial strength and weakness. it is anticipated
that the results of these studies may make it possible Torus to
forecast production trends in the Soviet domestic economy and,
equally important, to forecast the. composition and dirootion of
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Soviet goods which may move into worla trade in c^.mpetition with
US and other Western production in Free World countries.
Concurrently with its comprehensive economic research, the
Office of Research and Reports evaluates and interprets current
economic developments within the Bloc countries viewed in their
relation to the Free World. A special staff, working in close
cooperation with the Office of Currant Intelligence and supported
by appropriate research components, prepares timely reports of those
developments for inclusion in the Agency's and intelligence
community's output of current intelligence. The same mechanism
is used in marshalling the full support of this Office behind the
National Indications Center and the IAC Watch Committee.
Other studies yielding highly factual information of broad
interest to the community are based on the
Soviet BISON aircraft (four-engine jet bombers)
- production of those aircraft in 1955, 1956, and 1957 t:)
25X1 134d
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be lower than previous estimates hold valid in the intelligence com-
munity. This conclusion 25X1B4d
was an impor giant
factor in a downward revision of the US estimate of Soviet air
strength.
Each of our economic research components periodically calls
upon a small panel of cleared consultants drawn from among top
executives in American industry. Through these panels, we obtain
an excellent independent check on the soundness of our estimates
and advice on Ways to simplify or economize in our research Procedures.
The annual economic research program of the Office, aimed as
it is at serving many different interests and purposes, is necessarily
complex. Past experience, now analyzed quantitative1thro
.Y ugh the
use of IBM methods, is depended on heavily in the quarterly progran;
reviews and in the development of new programs. Particular a.~.A.
is given to the Priority National Iutelligenca Objectives and to
such advice as our principal. consumers are abl
t7
e
o. prov2ae.concerning
their requirements in the months to come. Formulation of the program
begins with full provision for support tc the production of scheduled
and anticipated National Intelligence Estimates. Provision must al:;o
be made for scheduled contributions to the National :Intelligence
Surveys, where this Office has the responsibility fo economic sections
dealing with the Sino-Soviet Bloc. Similarly., certain aspects of our
work in support of other agencies a-r scheduled in response to
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-w1de . d&n c.tenciee in e.t~r:r5 x.;Z ?:: 1nt J i.r ge:a~ f .idd~-t . f'~.,
s?: ortU Lit. e1:tgence .Ctpm t t.tz:-- ; ? in dd it tf 7r., we Are
s.-
'? ;p:n.rlence that. *, substanrtjet:;. part.ton of oir ret areh t.^,?+
^r< . t.~, ~? fr,t: in -meeting 2 8>`, '' or em9rden-y" ro.*g11zw t,s t-, .,?~x
thiii we-y, not only the k lek; of :)RR and t.h+? t of CIA `~ykt
. Defense Intelligence Cottanittect (EDIC) tab
IahP.+d t rK ... v,,
`acs iti t~ai.e manner .that the Office of Reeea:th aid Report,
pr stet , the necessary intell:1.gem,t on, ccorvy:nit art,iv'Lt.le:.3 and
Of the countries within the Sind.-Soviet
bi.o~o
The 0TA also produces and ooordinatee intel:ligettca in tapp rt
,5, sconom .r. defensep. CP .sgra. , r^epree nts CIA oz t ),,4.
Defense Advisory C o m m t l tte" ? E AC) and c11: t.rs t Ve
that of either intelUgence. agiin*:i. *s contribute t?~ t,-.e
cf ":onnmt.c d ense activi ti. a ,
'time,; the 115u directive on pryrktin_t defenr rtt {r?~ ?~:tt,'t:ts a#4
- a orcemeat of co.n*.rols, CIA.. throlgg" ORR, has re9potlntbility r`t,
} . ,:vid rte. action agencies with t}?-f:^:1_1:arn; ?e on illegal trap u-t~'.
a=~ r tlher t~t"fort~s tic n3*~ctunvent r : L.,.,:,, The et3S? : ordin;,t;. -
.3,%1 vher rtitse providing this f.rtte ~: ' .,e :s?r