USSR MONTHLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84T01083R000100080002-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 41
• Document Creation Date: December 22, 2016
• Document Release Date: August 3, 2011
• Sequence Number: 2
• Publication Date: August 1, 1983
• Content Type: REPORT

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Directorate of Secret
Intelligence
USSR Monthly Revie~
Seer
SOV UR 83-008X
August 1983
Co
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Intelligence
USSR Monthly Review
The USSR Monthly Review is published by the
Office of Soviet Analysis. Comments and ueries
regarding the articles are welcome.
Secret
SOV UR 83-008X
August 1983
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Contents
Soviet Agriculture Perspective
in Transition
Andropov's first year in power may coincide with the USSR's first
good harvest in five years-a piece of luck that would redound to his
political advantage and help establish him as an effective patron of
the Soviet consumer. How he turns luck into farm policy will in part
determine whether he can sustain this image and translate it into
gains in productivity, both in the farm sector and throughout the
economy. In this issue, we examine the instruments available to
Andropov (investment resources, foreign trade, and organizational
changes), the use he has made of them in his first year, and their po-
tential impact on Soviet agriculture and food availability.
The Food Program Under Andropov
Since coming to power, General Secretary Andropov has announced
no changes in the Food Program and has publicly supported major
elements of agricultural policy established before Brezhnev's death.
He appears to recognize that, if the program is to work, it requires
time and strong support by the leadership.
1983 Soviet Crop and Livestock Prospects: Best in Five Years
Barring a major deterioration in weather conditions, it now appears
that the USSR is headed for a grain crop of 210 million tons in
1983, the largest since the 1978 record of 237 million tons. The
outlook for nongrain crops and the crucial livestock sector is also
noticeably better than last year.
Secret
SOV UR 83-008X
August 1983
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Prospects for Soviet Grain Imports in the 1983/84 Marketing 9
YearF----]
Although its immediate grain import needs have been reduced
considerably, we believe that the USSR is likely to import 25-30
million tons during the 1983/84 marketing year, which began
1 July. With the successful conclusion of negotiations for a new US-
USSR Long-Term Trade Agreement, US exports to the USSR will
increase but will not regain their previous dominant position in the
Soviet grain market
Whither the Private Plot? L__1
Under a leadership that is predisposed to emphasize socialized
agriculture, Moscow is not likely to give the private agricultural
sector any more legal scope
The Soviet Food Supply in 1983: Improved but Still Tight
The leadership probably will not have to increase food prices, but
the informal system of rationing some foods will probably continue.
Meat availability (a key criterion in the Soviet citizen's measure of
his quality of life) will improve if substantial imports are main-
tained-and the regime will wish to ensure this, so as to claim
success for its Food Program
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Other Topics Soviet Consumer-Oriented Initiatives-Vague on Particulars 19
The Andropov leadership has shown increased concern for the
Soviet consumer through a variety of statements and measures
directed toward improving consumer well-being. However, the
regime has introduced no measures to bring about a rapid and
sustained improvement in Soviet living standards during the balance
of the current five-year plan (1981-85).
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Soviet Military Electronics Design and Manufacturing: Potential
Problems in the 1980s
The USSR's backwardness in the assimilation of automated design
and production technology is a major constraint on its ability to
mass-produce advanced military electronic systems. The Soviets are
trying to acquire this technology through legal and illegal means,
but they have a long way to go before they can match current
Western design and production capabilities.
The Soviets have expanded their military and security links with
Nicaragua, strengthened ties with Grenada, and welcomed Suri-
name as another revolutionary regime. These developments under-
score Moscow's broad strategic interest in undermining the US
position in the hemisphere. Nevertheless, the USSR probably does
not currently assign high priority to a dramatic expansion of its
military presence in the area and probably will continue incremen-
tally to expand its military activity there.
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Soviet Agriculture in Transition
Perspective I 25X1
Andropov's first year in power may coincide with the USSR's first good
harvest in five years-a piece of luck that would redound to his political
advantage and help establish him as an effective patron of the Soviet
consumer. How he turns luck into farm policy will in part determine
whether he can sustain this image and translate it into gains in productivi-
ty, both in the farm sector and throughout the economy. In this issue, we
examine the instruments available to Andropov (investment resources,
foreign trade, and organizational changes), the use he has made of them in
his first year, and their potential impact on Soviet agriculture and food
availability.
In November 1982 Andropov inherited a legacy of four consecutive years
of poor performance, a farm policy already beset by bureaucratic and
political discord, and a resource burden that was costing the USSR
annually more than one-fourth of its total investment, one-third of its hard
currency earnings, and large and growing subsidies to maintain stable
retail food prices. While there is little chance of reducing this burden in the
next few years, the regime may restructure it in the hope of achieving
greater returns. Since taking power, Andropov has (1) endorsed the
Brezhnev Food Program, with its emphasis on investing in sectors support-
ing agriculture, particularly farm machinery and food-processing equip-
ment; (2) actively promoted the Program's job contract wage system, which
ties remuneration more closely to productivity; and (3), through party
secretary for agriculture Gorbachev, lobbied for implementation of the
organizational aspects of the Program (see "The Food Program Under
Andropov"). Recognizing that rhetorical support alone would not be
enough to make the Program work, Andropov may have raised its priority
claim on selected resources to a par with (and possibly higher than) some
defense claims.
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Like previous Soviet leaders, Andropov would like to reduce the USSR's
.dependence on imports of Western grain and other foodstuffs. With a good
grain harvest, Moscow may not need to increase grain purchases this year,
but the regime knows that, barring a sustained string of good luck with the
weather, it must continue to import relatively large quantities of grain and
meat to support its livestock herds and satisfy the ever-rising demand for
quality foods. This is reflected in the provisions of its new Long-Term
Grain Agreement with the United States, despite the current world grain
surplus (see "Prospects for Soviet Grain Imports in the 1983/84 Marketing
Year").
Whether the Soviets can reduce meat imports depends in the long run on
the success of the Food Program and its impact on domestic livestock
raising. For the near term, meat will probably continue to bulk large in So-
viet agricultural imports, even though domestic production may reach a
record level this year.
The Andropov regime may also use the foreign trade instrument to bolster
its investment in farm machinery and equipment for the food-processing
industry. the USSR plans
to purchase large amounts of Western equipment for the consumer goods
and food-processing sectors and has budgeted $1.5 billion for such
purchases over the next few years.
Aside from the Food Program, the regime has given little indication of
impending changes in farm management and organization. Although
Andropov has called for careful study of innovations adopted in other
socialist countries (an apparent reference to the private agricultural sector
in Hungary), his strong commitment to socially owned agriculture may
somewhat reduce the support for private plots-as suggested in "Whither
the Private Plot."
A good performance by the farm sector this year will enable Andropov to
claim success for his farm policy and will reduce pressure on the regime to
pursue different (perhaps more radical) policy options. Nevertheless, the
key factors retarding long-run agricultural efficiency will remain (adminis-
tratively set prices, for example, and centralized planning and resource
allocation) and will continue to limit the productivity of Soviet farms.
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The Food Program
Under Andropov F
In May 1982 President Brezhnev announced a Food
Program designed to spur agricultural production and
to promote greater efficiency from the farm to the
retail shelf.' Since coming to power, Andropov has
publicly supported the central elements of the Brezh-
nev program. While accepting his predecessor's pre-
scription, Andropov appears to recognize that, if the
program is to work, it requires more time and strong
leadership support for its major initiatives.
Organizational Aspects
Between May and November 1982, few top leaders
gave much support to the controversial rayon agro-
industrial associations (RAPOs) stipulated by the
Food Program. A few weeks after Andropov came to
power, however, the regulations specifying the rights
and duties of RAPOs and their oblast counterparts
were published. Whether Andropov played an active
role in pushing the regulations through or simply
allowed them to appear when they were ready is not
known.
Although Andropov himself has had little to say about
the specifics of the reorganization, Mikhail Gorba-
chev, spokesman for agriculture, began active lobby-
ing for the structural reorganization proposed in the
Food Program soon after Brezhnev's death, taking a
stronger stand on the implementation of the May
1982 plenum's decisions. Gorbachev had previously
concentrated on agriculture's need for more machin-
ery, equipment, fertilizer, and advanced on-farm tech-
nology with little or no comment on RAPO proposals.
The RAPO is self-financing and includes all farms,
service agencies (for example, machinery. repair cen-
ters), and processing enterprises in a given district.
Although the Food Program made service organiza-
tions subordinate both to the RAPO and to the parent
ministry or state committee, few RAPOs acquired 25X1
sufficient authority to make service organizations
respond to the needs of farms.
Soviet press reports and Embassy conversations with
Soviet officials after the May 1982 plenum acknowl-
edged that the RAPOs were much resisted by the
ministries and state committees involved. One writer
observed that oblast service organizations were advis- 25X1
ing their rayon subdivisions to participate in RAPOs
without giving up traditional prerogatives. As a result,
lack of control over the service organizations that
supply equipment, repair services, agricultural chemi-
cals, and construction services severely limited the
effectiveness of the RAPOs. That preparation of the
tractor fleet for spring sowing was slower this year
than last is but one example of the lack of improve-25X1
ment in cooperation between farms and service orga-
nizations.
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The Andropov regime took steps in late July to merge
the interests of farms and service organizations by
issuing a decree that ties rewards for service organiza-
tions to growth in output and productivity on farms
that they serve. Because the decree does not alter the
dual subordination of service organizations, however,
management problems are likely to continue.
Resource Allocations
Both Andropov and Gorbachev have noted agricul-
ture's need for more machinery, agricultural chemi-
cals, and other goods. In April 1983 a new decree was
published, calling for increased production and deliv-
ery of agricultural machinery to farms in the period
1983-90. Press reports and comments by a Soviet
official suggest that current investment allocations
are being increased to finance these measures. =
' The Food Program called for administrative bodies at the national
and regional levels to coordinate the activities of farms, food-
processing enterprises, transport organizations, and the trade net-
work. At the same time, large investments were planned to upgrade
the system for handling, storing, and processing food and to
improve living conditions in the countryside. The Food Program
also raised farm wages and bonuses to foster higher output and
retention of younger, better educated workers on farms. F_
under both Brezhnev
other sectors.
and Andropov, some adjustments affecting resources
allocated to other sectors (including defense) were
made to keep the Food Program on track. It remains
unclear whether this has caused any significant dis-
placement of the priority assigned to defense and
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The Food Program has not yet led to a substantial
boost in deliveries of machinery to agriculture. Soviet
statistics confirm that in the first half of 1983 deliver-
ies of most major types of equipment were at or
slightly below previous peaks established for six-
month periods since 1980.
Moreover, sharply accelerated deliveries are not likely
this year. The limited data available on industrial
production in the first six months of 1983, further-
more, indicate that production of at least some types
of agricultural machinery is probably growing too
slowly to meet even the modest 1983 delivery targets.
Fertilizer deliveries, however, are up sharply com-
pared to previous six-month periods. Deliveries in the
first half of 1983 were 10 percent above those in the
first half of 1982 and 20 percent above those in the
second half of 1982. Unless the pace of production
falls off appreciably during the year, 1983 delivery
goals for fertilizer probably will be met.
Incentives
Andropov evidently realizes that reorganization and
increased investment in food production will provide
limited gains unless workers have better incentives,
particularly in the form of bonus wages, to operate
efficiently. To this end, he and Gorbachev have
actively promoted the collective contract system-an
aspect of the Food Program that received relatively
little attention before Brezhnev's death. In this sys-
tem, which has been used experimentally at least
since the 1960s, farm workers are rewarded according
to the size of the harvest rather than receiving hourly
or piecework rates.
Despite Andropov's campaign to increase its use, the
collective contract system-also referred to as the job
contract wage system-is spreading very slowly.' Ac-
cording to the Chairman of the Agricultural Workers
Union, less than 10 percent of the teams engaged in
crop production in 1982 switched to this method of
pay.
' In the collective contract system, the farm supplies machinery and
other inputs to a group of workers who agree to meet specific output
targets. Workers receive cash bonuses during the growing season
with a final settlement after the harvest depending on crop yields
and animal productivity. The goal is to eliminate piecework and
hourly wage rates that reward only the quantity of work done, not
The Soviet press reports that experimental use of the
system has resulted in higher crop yields and lower
production costs. These experiments also suggest that
there are large obstacles to successful widespread use.
Farms often do not supply inputs reliably. Many
workers lack the skill to manage crop production and
to use and maintain machinery properly. Moreover,
workers have had little incentive to form contract
teams in recent years because in poor crop years they
earn more under an hourly wage system.
Outlook
Although the Food Program offers long-run potential
for more efficient food production, implementation
probably will be slow:
? Benefits from reorganization cannot be fully real-
ized until differences between central ministries and
local authorities are resolved. Andropov must take
additional steps if this very slow process is to
accelerate.
? The badly needed investment programs planned to
improve rural infrastructure and to modernize in-
dustries producing machinery for food production
are by nature long-term projects. Even with strong
leadership support, they cannot be expected to show
immediate results.
? If average or better-than-average weather prevails
over the next few years, farm output probably will
increase at rates acceptable to the leadership. In this
case, the priority for stepped-up resource allocations
to agriculture could drop, slowing implementation
of the Food Program.
The greatest impediments to success of the Food
Program are the failure to allow farms to make those
decisions that should be made at the local level-such
as composition of output and planting and harvesting
schedules-and the Soviet system for remuneration of
farm managers, which provides little or no incentive
to be efficient in the use of resources. In general,
collective farm managers and state farm directors
attempt to maximize output with little regard for
prices, cost, and profits.
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1983 Soviet Crop and
Livestock Prospects:
Best in Five Years
Barring a major deterioration in weather conditions, it
now appears that the USSR is headed for a grain crop
of some 210 million tons in 1983, the fourth largest
ever and the best performance since the 1978 record
of 237 million tons. Moscow's target of 238 million
tons, however, is well beyond reach even with excel-
lent weather during the remainder of the crop season.
Good prospects for the major nongrain crops in the
Soviet Union-sunflowers, sugar beets, potatoes, veg-
etables, and cotton-suggest the outturn of these
crops will be above 1982 production and exceed the
average of recent years. We believe even with a crop
of 210 million tons Soviet grain imports during the
marketing year, which began on 1 July, will be in the
the weather pattern responsible for the sukhovey
broke on 4 June, our analysis of
meteorological data indicated that crop losses had
amounted to about 8 million tons. A shortfall in the
area sown to grain has also lowered this year's
potential crop size, in our judgment by some 2 million
tons. According to preliminary statistics on midyear
plan fulfillment, plantings this year totaled 122.5
million hectares, below the 124-million-hectare plan
and the smallest since 1972. This shortfall is partly
the result of weather problems in Siberia at the end of
the planting season, but it also reflects a continuing
Soviet effort to expand the amount of arable land
range of 25-30 million tons.
Recent Weather and Crop Conditions
Following four poor grain crops in a row, the USSR
finally appears headed for a good harvest in 1983.
Indeed, as of late July, crop prospects throughout
most of the Soviet Union are favorable. Alternating
periods of rainfall and sunshine have promoted plant
development and maintained soil moisture reserves at
adequate levels in most regions. On the basis of our
analysis of current weather patterns, we believe that
these conditions will continue through the end of
August. Analysis of LANDSAT
indicates that grain yields may reach record
levels in some areas.
with few exceptions, crops are in generally good
condition In
addition, deliveries of chemical fertilizers during the
first half of 1983 exceeded plan and were up 10
percent over the corresponding period last year, ac-
cording to official Soviet statistics. Given adequate
moisture, properly applied fertilizer is the most impor-
tant factor in raising Soviet crop yields.
There have been some problems, however. From late
May through early June, the southern Ukraine, the
lower Volga Valley, and the northern North Caucasus
were hit intermittently with hot, dry wind-referred
to by the Soviets as a sukhovey-reducing potential
yields of both winter and spring grains. By the time
lying fallow.
Outlookfor the 1983 Grain Crop-
Uncertainties Ahead
With normal weather for the rest of the season, we
believe that the 1983 Soviet grain crop will be about
210 million tons, only 10 million tons below our May
forecast.' The US Department of Agriculture current-
ly estimates this year's crop at 200 million tons.
With more than two months remaining in the crop
season, there is, however, still some uncertainty at-
tached to our estimate. We will be closely monitoring
the impact of future weather on potential crop size.
With excellent conditions for the rest of the year, a
crop perhaps as high as 215 million tons could result.
On the other hand, a 210-million-ton harvest is by no
means assured. Although not a problem at the present
time, excessive rainfall during the rest of the harvest
campaign-now approaching the halfway point-
could seriously hamper combining operations and lead
to sizable losses in both grain quantity and quality.
Moreover, a bout of hot, dry weather in the spring
grain regions east of the Ural Mountains during the
second half of August-as grain is ripening-would
probably cause kernel shrinkage, thereby lowering
potential yields.
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1976-80
1980
1981 b
1982 a
Forecast
Average
(estimate)
1983 d
Total
205.0
179.2
Wheat
99.7
90.2
98.2
81.0
83.0
87.5
Coarse grains e
95.1
81.4
80.7
68.0
73.0
108.6
Other r
10.2
7.6
10.2
9.0
9.0
13.9
a Soviet official statistics unless otherwise noted. Measured in
bunker weight, that is, gross output from the combine, which
includes excess moisture, unripe and damaged kernels, weed seeds,
and other trash. For comparison with US or other country grain
output, an average discount of 11 percent should be applied.
b Grain production in 1981 was unofficially reported at 158 million
tons. Grain figures by type represent our estimates.
c The 165-million-ton figure should be considered our best estimate
of last year's Soviet grain harvest, but one that is subject to error.
The maximum range of error in our grain crop estimate over the
previous four years was ? 8 percent, implying a crop in the range of
152-178 million tons. The US Department of Agriculture currently
estimates last year's crop at 180 million tons.
Outlook for the Nongrain Crops
With normal weather for the rest of the season, we
expect:
? A sunflower crop of 5.5-6.0 million tons.
? Sugar beet production in the range of 80-85 million
tons.
? A vegetable harvest of 28-30 million tons.
? A potato crop of 80-85 million tons.
? A cotton harvest of about 9.5-10 million tons.
If these forecasts Z hold, output of sunflowers, sugar
beets, and potatoes would be up for the second
straight year, vegetable production would match last
year's record crop, and the harvest of cotton would
return to a near-record level.
Factors Favoring Major Nongrain
Crop Production
The early onset of spring and favorable weather to
date are the primary factors favoring increased pro-
duction of nongrain crops this year. Sowing was
'Estimates are based on past production trends, daily meterological
data, local press articles, reports from US agricultural es,
and imagery from LANDSAT At
present, no crop models are use .
d CIA estimate. The USDA currently estimates this year's crop at
200 million tons.
e Coarse grains include barley, rye, oats, corn, and millet.
f Other grains include rice, pulses, and buckwheat.
completed well within the optimal time, decreasing
the likelihood that harvesting will be disrupted by
winter weather. For example, cotton production last
year was reduced because of cold, wet conditions
during harvest and many sugar beets and potatoes
were left frozen in the ground. Crop development this
year has been aided by generally good growing condi-
tions since planting. The late May/early June sukho-
vey in the southern European USSR, a principal
sunflower region, had a minimal effect on recently
germinated sunflowers. The increased availability of
chemical fertilizer this year has also boosted prospects
for nongrain crops.
Livestock Sector Improves
Midway through 1983, the outlook for the crucial
livestock sector is noticeably better than last year.
Meat production during the January-May period on
state and collective farms-roughly two-thirds of total
meat output-was almost 7 percent above the compa-
rable period last year and 6 percent above the 1978
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level when total meat production peaked at 15.5
million tons. This improvement is a reflection of the
record numbers of livestock on hand following an
unusually mild winter and earlier-than-normal access
to spring pasture. More important, the present herd
size has set the stage for substantial growth in total
meat production after four years of stagnation at
roughly 15.2 million tons. Indeed, output could reach
a new record of about 16 million tons this year if feed
supplies remain sufficient, grain imports reach 20
million tons, and the grain crop totals 210 million
tons.
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Prospects for Soviet
Grain Imports in the
1983/84 Marketing Year
With prospects for a much-improved domestic grain
crop after four consecutive poor harvests, Moscow's
immediate grain import needs have been reduced
considerably. We believe that the USSR is likely to
import 25-30 million tons during the 1983/84 market-
ing year (MY), which began 1 July, although the
actual level will depend primarily on Moscow's desire
to rebuild stocks and its hard currency position.
Although still large, this level of imports is lower than
the 1982/83 MY estimated imports of 33 million tons
and substantially below the 45 million tons imported
in the 1981/82 MY. With the successful conclusion of
negotiations for a new US-USSR Long-Term Trade
Agreement (LTA), US exports to the USSR will
increase but will not regain their previous dominant
position in the Soviet grain market.
The Need for Grain
With a grain crop of 210 million tons (our current
estimate), the USSR could be as much as 15-20
million tons short of the amount of grain we believe
necessary to maintain current levels of seed, food, and
industrial use and livestock herds, as well as to
achieve planned output targets for meat, milk, and
eggs. This estimate assumes that the mix of feed does
not change and that there is no change in carryover
stocks. To the extent that the share of grain included
in livestock rations declines-a shift noted in 1982 as
record quantities of forage crops such as haylage ' and
silage were harvested-this shortfall could be re-
duced. The anticipated increase in imports of soybean
meal probably will not decrease the need for grain. It
will, however, improve the nutritional balance of feed
rations, supplying much-needed protein, and thereby
improve efficiency, that is, product output per unit of
feed input.
Other Factors Influencing Imports
Although the current favorable crop prospects suggest
Moscow's need to import grain will be the lowest in
several years, the actual level of imports could be
higher than required by current needs. With large
world grain stocks and relatively low prices, the
USSR could use this opportunity to rebuild grain
reserves, badly drawn down after four consecutive
poor harvests, and to accelerate the pace for expand-
ing herds and meat output.
As indicated in the previous article, with about two
months remaining in the crop season, the size of this
year's grain crop is not yet assured. If the crop comes
in lower than we now estimate, Soviet grain import
needs would probably increase. Because the chief
need for grain is to support 'the livestock sector,
however, an increase in the availability of nongrain
feedstuffs over the 1982 level-currently the outlook
is favorable-would offset in part the grain shortfall
resulting from a smaller crop.
Offsetting Moscow's desire to rebuild its grain re-
serves are its attempts to maintain a sound financial
position. In part as a consequence of the USSR's
efforts to improve its hard currency balance-of-
payments position, grain imports during the 1982/83
MY were held to an estimated 33 million tons, well
below the amounts required to meet production goals
for meat and other livestock products. Such actions in
the face of hard currency stringencies are not unprec-
edented for the USSR. Despite the disastrous 1975
crop, hard currency shortages were in part responsible
for Moscow's failure to import the maximum amount
of grain its ports could handle during the 1975/76
MY. Larger imports could have prevented at least
some of the massive livestock slaughter that occurred.
Moscow's efforts to improve its financial situation
through increased exports-mainly oil-and re-
straints on its imports were quite successful in 1982;
its assets in Western banks rose to a record $10 billion
and its gross debt fell slightly. First-quarter 1983
trade data show some deterioration in Moscow's trade
Low-moisture silage made from grass and/or legumes
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position vis-a-vis its hard currency partners, with its
hard currency deficit increasing from $1.2 billion in
the same period last year to $2 billion but remaining
well below the $3.6 billion deficit in the first quarter
of 1981. Because of Moscow's strong financial posi-
tion at the beginning of the year, we do not believe
that this less-than-favorable trade trend or declining
world oil prices have as yet affected the USSR's
overall financial position.
the USSR in
early 1983 returned to paying cash for all its grain
purchases, although credit arrangements are appar-
ently still being put together for Moscow's use.
Grain Import Prospects
Given a comfortable financial position and a relatively
low grain import requirement, the USSR will proba-
bly think it prudent to import larger quantities of
grain than the minimum required. Other demands on
Moscow's hard currency resources, however, includ-
ing imports of other agricultural products, will act as
a constraint on Moscow's willingness to purchase
quantities of grain at or above the average of 35
million tons for the past four marketing years. We
anticipate, therefore, that grain imports will probably
be about 25-30 million tons during the 1983/84 MY,
provided there is no dramatic change in the grain crop
during the remainder of the crop season.
In early July, Moscow took the first steps in lining up
its grain imports for the current marketing year. The
Soviets have reportedly purchased up to 4 million tons
of wheat and barley from Canada, 500,000 to 750,000
tons of corn and sorghum from Argentina, and up to
800,000 tons of wheat from France. All of the grain is
scheduled for delivery during the first half of the
marketing year. In addition, Moscow has 2 million
tons of grain remaining from purchases made during
the previous marketing year that are scheduled for
delivery during July and September. The remainder
of Moscow's purchases will be made as necessary to
ensure a continuous flow of grain imports into the
USSR.
World Market Conditions
The Soviets will continue to benefit from a buyer's
market in world grain in the 1983/84 MY. Although
it is too early to predict grain output in major
exporting countries, large carryover stocks are expect-
ed to keep supplies abundant and prices weak. Only
the United States has officially put into effect plans to
limit production through its payment-in-kind and
acreage reduction program. US competitors have
announced ambitious production plans and export
policies. Total availability in the 1983/84 MY, how-
ever, will depend on weather, logistic problems, and
the amount of grain planted in the Southern hemi-
sphere this fall.
We believe that the major non-US exporters will
aggressively seek to expand sales to the USSR. Cana-
da will most likely continue to court Soviet grain
purchases by offering discount prices and govern-
ment-backed credits. The USSR has become an in-
creasingly important customer, supplanting the PRC
as Ottawa's primary importer. The Argentine Agri-
culture Secretary stated that his country hopes to
continue shipping at least 50 percent of its exports to
the Soviet Union, and Australian officials have stated
publicly that they plan to seek negotiations with
Moscow for a long-term accord.
Impact on US Sales
The general atmosphere of US-USSR relations may
continue to have a decided influence on US grain
exports to the USSR in the coming year. Last year's
cutback in grain imports from the United States was
driven in part by political considerations. Abundant
non-US grain supplies combined with a Soviet deci-
sion to reduce grain imports gave Moscow the oppor-
tunity to express its displeasure at US attempts to
restrict East-West trade by limiting grain imports
from the United States to 6.2 million tons, just over
the minimum commitment under the current LTA of
6 million tons.
With the successful conclusion of negotiations for a
new LTA, however, US grain exports will increase by
at least 2-3 million tons over last year's level.' The
2 Under the terms of the new LTA, which will commence 1 October
and extend for five years, the USSR is to purchase annually a
minimum of 9 million tons of corn and wheat in approximately
equal quantities. Up to 1 million tons of the minimum could be
satisfied by purchases of 500,000 tons of soybean and/or soybean
meal. A maximum of 12 million tons of wheat and corn can be
purchased without prior consultation.
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USSR: Grain Imports, Million tons
1978/79-1982/83a
1978/
79
1979/
80
1980/
81
1981/
82
1982/
83 b
Total
15.0
30.4
34.0
45.0
33.1
United States
11.1
15.2
8.0
15.4
6.2
Canada
2.1
3.4
6.8
9.2
9.3
Argentina
1.3
5.1
11.2
13.2
9.4
Australia
0.1
4.0
2.9
2.5
1.0
EC
0.2
0.9
1.5
2.7
4.3
Other
0.2
1.8
3.6
2.0
2.9
a 1 July-30 June.
b Estimated.
new agreement assures that the USSR will continue
to be a large market for US grain exports and opens
up the possibility of steady sales of US soybeans and
soybean meal. Moreover, the new grain agreement
will help restore in Moscow's eyes the image of the
United States as a reliable supplier, although politics
may well continue to be a factor influencing the
USSR's grain import decision. With guaranteed ac-
cess of up to 12 million tons of US grain, Soviet
traders would probably not hesitate to purchase more
than the 9-million-ton minimum if economic condi-
tions were favorable.
Nevertheless, any increase in US grain exports to the
USSR beyond the 9 million tons will be constrained
by Moscow's reduced grain import needs, its LTA
commitments with non-US exporters, and its desire to
maintain diversified sources of grain supply. Follow-
ing the partial US grain embargo in 1980, the Soviet
Union sought to diversify its source of grain imports
(see table). Long-term grain agreements were signed
with Canada, Argentina, and several smaller suppli-
ers, which now commit Moscow to purchase a mini-
mum of 10 million tons from these suppliers. In
addition, a protocol signed with France last year
reportedly guarantees the USSR another 1-3 million
tons of grain. The USSR also receives about 1 million
tons of grain annually from Hungary and Romania.
These commitments, which already account for
roughly half of estimated grain imports for the cur-
rent marketing year, will effectively prevent the
United States from regaining a dominant position in
the Soviet grain market. Only in years of large Soviet
needs and tight world supply will the USSR need to
turn to the United States for large quantities of grain.
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Whither the Private Plot?
The Andropov regime's strong commitment to socially
owned agriculture implies keeping the private-plot
system within its present legal limits. Indeed, should
the socialized sector make relatively good gains in the
near future, support for the private sector is likely to
dwindle.
Since the end of the Stalin era, policy support for
private agriculture-which accounts for about one-
fourth of all farm output-has followed an on-again,
off-again pattern.' When the socialized sector has
faltered, the leadership has relaxed restrictions on
private agriculture; and, when the socialized sector
has shown signs of recovery, Moscow has retreated
from campaigns to boost private output. While en-
dorsing the Brezhnev effort to encourage the private-
plot system, the present leadership is predisposed to
emphasize socialized agriculture. Recent policy pro-
nouncements indicate top-level reluctance to give the
private sector any more legal scope:
? In October 1982 Mikail Gorbachev, the powerful
party secretary in charge of agriculture, delineated
the present and future status of the private plot:
"The party proceeds on the basis that collective and
state farms, both at the present stage of socialist
construction and in the long term, remain the basic
form of agricultural production. At the same time it
is recognized as important to support the popula-
tion's personal plots. Our party regards these as an
integral component of socialized agriculture at the
present stage, a substantial reserve for supplement-
ing foodstocks, and an important condition of the
fuller utilization of manpower. But their potential
must not be overestimated."
? In a Pravda article in February 1983 on the state of
agriculture in general, Gorbachev did not mention
the private sector.
'As much as one-third of the total amount of meat, milk, and
vegetables is produced in the private sector. Moreover, the ineffi-
ciency of the state-operated system for marketing perishable pro-
duce causes Soviet consumers to rely either on their own plots or on
direct purchases from private producers for a major share of their
quality vegetables, meat, dairy products, and other perishables. F_
? In a February 1983 article in the party's ideological
journal, Kommunist, Andropov ruled out the expan-
sion of any type of private ownership. "It is on the
basis of socialist ownership that a powerful economy
developing on a planned basis has been created in
our country. Both problems and difficulties arise.
Their origin may be different, but it is never
connected with the essence of public, collective
ownership, which has been firmly established and
has proved its advantages. On the contrary, a
considerable part of the shortcomings ... are caused
by deviations from the norms and requirements of
economic life, the keystone of which is the socialist
ownership of the means of production."
? In his speech to the party plenum this June, Andro-
pov criticized Soviet science for not providing "prac-
tical, socialist solutions" to the USSR's economic
problems, implying that pragmatic measures based
upon expanded private enterprise or ownership
would not be acceptable. (He also called for careful
study of the economic innovations adopted by other
socialist countries, thus leaving the door ajar for
some consideration of the measures that have al-
lowed the notably successful performance of the
private agricultural sector in Hungary.) F__1
Andropov is likely to continue some support for
private plots, particularly if socialized agriculture is
slow to improve. He probably realizes that socialized
agriculture will have considerable difficulty over the
next decade in simply meeting its goals-let alone
replacing private output-and he is not likely to
forget the four consecutive seriously below-plan per-
formances from agriculture (1979-82). On 18 April, in
a speech to regional party leaders, Andropov implied
that every rural family ought to raise livestock.
Assistance to private agriculture is a part of the
Brezhnev Food Program, which Andropov has en-
dorsed.
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The Andropov regime's apparent lack of enthusiasm
for expanding private agriculture has not gone unno-
ticed within the Soviet Union. In a speech at the
Georgian party central committee meeting on agricul-
ture this May, Georgian party leader Shevard-
nadzde-earlier the strongest proponent of private
agriculture among republic leaders-made no men-
tion of it. Thus, the climate of encouragement, so
important in inducing individuals to take the econom-
ic risks necessary to expand output, may be on the
wane
Recent Performance of Private Plots
Performance of the private agricultural sector has
improved marginally since the Brezhnev regime is-
sued a decree in January 1981 aimed at bolstering
private livestock production. It was issued following
two disappointing grain harvests and the resulting
stagnation in meat output, in hopes of inducing the
private farmer to produce and sell more of the meat
and milk products that were in continually short
supply.
Despite the emphasis on livestock, the increased pri-
vate output has come mostly in crops. Thus, the
increase does little to alleviate that major irritant for
the Soviet consumer-the shortage of livestock prod-
ucts. The outlook is a bit brighter, however: private
livestock herds have increased in the last two years
(see graph), as have the socially owned herds.)
Contract Livestock Raising
A novel feature of the 1981 decree was its provision
that a private farmer can raise unlimited amounts of
livestock as long as he agrees to sell the mature
animals back to the socialized farm. (Without such a
contract, he may legally hold only a few animals.) The
socialized farm sells young animals to a private
farmer, provides a specified amount of feed at a
specified price, and later buys the animals back at a
specified price per kilogram of weight gain. The farm
can then count these animals in its plan fulfillment.
The contract system does not appear to have spread
significantly, largely because farms are short of ani-
mal feed. In 1981, for example, private farmers
purchased 16.5 million young pigs from the state and
collective farms but only 216,000 came under the
contract system.'
USSR: Value of Privately Owned
Livestock
90 1960 65 70 75
Constant 1970 prices, end-of-year data.
Material Support for Private Plots
Because the small farmer produces very little animal
feed and has almost no direct access to seeds, fertiliz-
ers, and pesticides, he must get them from nearby
farms. The managers of socialized farms, chronically
under pressure to fulfill output plans with too few
resources, are generally reluctant to share. Most
feedstuffs are obtained as payment in kind, that is, as
part of wages for labor performed on the socialized
farm. Many private farmers steal feedstuffs or feed
their animals bread (officially held at an artificially
low price).
Although the 1981 decree and the 1982 Food Pro-
gram order farm managers to give greater weight to
payment in kind, so far we see very little change. The
socialized sector provided to private farmers 1 million
tons more coarse fodder in 1981 than in 1980 but
about 1.5 million tons less grain. The sale of mixed
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feed was about the same in both years-inadequate;
less than 3.5 million tons were sold to private farmers
in 1981, although they needed, according to one
Soviet estimate, some 17 million tons. The amount of
haylands turned over to private farmers for temporary
use also remained unchanged in 1980-81.
We cannot rule out the possibility that more pasture
land has been turned over to private use. The USSR
and union republic land codes have been revised to
allow long-term private use of pasturage to encourage
individuals to improve such land. In addition, in 1981-
82 better weather improved the yields from pastures
in many areas and probably benefited privately owned
cattle.
The 1981 decree also recognized the private sector's
dire need for more fertilizer, pesticides, seed, tools,
and especially small machinery. Here again, little has
been achieved since the 1981 decree, especially in the
area of expanded production of machinery and farm
implements:
? Although the "minitractor" is of greatest potential
use to the private producer (with the proper imple-
ments it can perform a wide variety of tasks), after
some 15 years of planning only in 1981 did one
factory finally produce a few hundred of them. In
1983, 500 are scheduled for production-little help
to the 34 million families engaged in private farm-
ing. The utility of even this minuscule output is
lessened by the fact that the factory is unable to
produce most of the implements designed to accom-
pany the tractor.
? Small hand-held mowing machines could also be
useful in harvesting grass in terrain not accessible to
large machinery-often the kind of hayland allocat-
ed to individuals for temporary use. This equipment
is produced in negligible quantities. Plans for pro-
ducing a better model (the present model is too
heavy) in 1981-82 fell by the wayside.
Despite the poor prospects for providing mechanical
tractive power to the private sector, individual owner-
ship of horses remains illegal in many areas of the
country.
Even simple implements are a problem: there are not
enough scythes, watering cans, shovels, carts, or prun-
ing shears. The Central Union of Cooperative Socie-
ties estimates that the annual demand for milk cans is
over 4 million, but it can provide only about 1 million.
Finally, fertilizers and pesticides are virtually unavail-
able; for example, a Soviet specialist has calculated
that in 1981 only 17 percent of the fertilizer necessary
for the private sector was provided. He concluded that
this factor, in combination with the intensive use of
private land holdings and the continual planting of the
same crops, will reduce the yields of private plots in
the near future
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The Soviet Food Supply
in 1983: Improved
but Still Tight
Shortages of some quality foods have eased this year,
reducing the pressure on the leadership to abandon
the longstanding policy of maintaining stable retail
food prices. Supplies have not increased sufficiently,
however, to permit the withdrawal of the informal
rationing system for several foods that developed in
1980-82. Furthermore, unless the leadership sustains
a fairly high level of imports, per capita consumption
of meat in 1983 will not increase above the 1982 level.
Because an increase in meat availability has been a
longstanding goal-and will help the leadership claim
success for the Food Program (announced in May
1982)-the Andropov regime is likely to keep meat
imports near recent high levels.
Developments Since the 1982 Harvest
So far this year, surveys of collective farm markets
(CFMs), where private farmers sell their surplus, and
of state stores have shown that most foodstuffs are
more plentiful than in the same period last year.
some of the
areas most hard hit in 1980-82 have begun to recuper-
ate. The increased availability of food is also reflected
in greater price stability in CFMs, where supply and
demand determine prices. In Moscow, for example,
according to our measures, average CFM prices for
the first four months of 1983 were slightly lower than
they had been in the same period last year.
The leadership has several reasons to feel relieved
about the 1983 food supply:
? Meat output is up this year, reflecting record num-
bers of animals-the result of a very mild winter
and earlier-than-usual access to spring pasture. If
meat production in 1983 is about 16 million tons-
as we believe likely-and imports approach last
year's near-record level, Soviet per capita intake
would increase by about 2 kilograms over the high
point of the late 1970s.
to increase their per capita intake of vegetables by 5
percent and fruit by 2 percent and kept supplies up
through last winter and this spring.
? Per capita consumption of milk and milk products
declined again last year despite slightly higher
production; milk output this year, however, has
shown a strong surge, and the consumer may well
regain most of the ground lost over the last two
years.
Imports will continue to play an important role this
year in contributing to consumption levels. In the past
three years increased imports of several foodstuffs-
particularly meat, butter, sugar, vegetable oil, and
fresh fruit-have enabled the leadership to sustain per
capita consumption in the face of problems in produc-
ing these items domestically.. Import data this year
suggest the leadership intends to maintain but not
increase the import levels of the recent past.
Less Near-Term Pressure To Raise Prices
A few months ago we observed some waffling in
Moscow on the longstanding commitment to hold
retail food prices steady. After four successive poor
performances from the agricultural sector, resulting
in a considerable buildup of excess purchasing power
in the hands of the public, the leadership seemed to be
preparing the populace for price hikes. In January
1983 a Pravda article on the waste of bread included
letters advocating higher bread prices, and a contribu-
tion to the same article by the first deputy minister of
the food industry lacked the usual promise to hold the
line on prices. In his well-publicized visit with Mos-
cow factory workers in late January, General Secre-
tary Andropov left the door open to price changes,
saying that "the path of rising prices ... does not suit
us as a general one, although it must be said, we do
have certain distortions and discrepancies in prices
and we must eliminate them." Indeed, that same
? In 1982 a record vegetable crop and record-match-
ing fruit crop, augmented by an unprecedented
amount of imported fresh fruit, enabled consumers
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month, the leadership tested the waters by raising
prices on some beverages and on two (already high-
priced) categories of meat cuts.
But the regime has held off more widespread changes
in food prices, probably gambling that a good year in
agriculture would mean more staples in the shops for
people to buy, and that this (combined with price
increases for a range of nonfood goods and services in
late 1981 and early 1983) would soak up enough
rubles to ease pressures on supplies of quality foods.
The prices of some staple foods were last officially
raised in 1955, and those of meat and milk products in
1962. In mid-April, perhaps encouraged by- the rea-
sonably promising forecasts, Andropov strongly iden-
tified himself with the Food Program, which is aimed
at reducing the gap between the demand for and the
supply of quality foods-without resorting to higher
prices-by increasing the supply. The leadership is
well aware that the population is likely to view price
increases as infringing an implicit social contract-in
return for stable retail prices on essential goods, the
populace puts up with low wages. So far, Moscow has
preferred to deal with the effects of repressed inflation
rather than risk violent protest of the sort that food
price increases helped to provoke in 1962. The au-
thorities are mindful also of the role of food price
increases in kindling worker unrest in Poland
The improved outlook for consumption of quality
foods in 1983, however, merely postpones the problem
of prices. For several years, the demand for livestock
products generated by growth in disposable incomes
has grown faster than their supply. Assuming-as we
do-that consumer demand for meat rises at least
proportionally with income, if the regime wished to
eliminate only the increase in the supply-demand gap
that has occurred since 1975, it would have to provide
more than 70 kilograms of meat per capita this year.
This is the Food Program target for 1990-a long way
from the 1982 level of 57 kilograms and this year's
possible level of 59 to 60 kilograms (about half the
amount of meat that a US consumer eats).
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Other Topics
Soviet Consumer-Oriented
Initiatives-Vague
on Particulars
Despite the increased attention accorded to the con-
sumer in recent months, the Andropov regime has
introduced no measures to bring about a rapid and
sustained improvement in Soviet living standards dur-
ing the balance of the current five-year plan (1981-
85). Sharp changes in consumer welfare in any given
year are, of course, possible because of fluctuations in
agricultural output. But a sustained improvement in
living standards would require a swift and massive
redirection of resources that so far has not been
indicated in decrees and speeches promising better
times for the consumer. Any change in resource
allocations in favor of the consumer would be more
likely to occur in the 12th Five-Year Plan (1986-90)-
comments made by two Soviet foreign trade officials
suggest Moscow may be shaping future investment
plans to give priority to consumer-oriented industries.
Table 1
Growth of Soviet Per Capita
Consumption and Selected Components
The Setting
The regime's apparently heightened attention to con-
sumption comes at a time when growth in Soviet
living standards has virtually stagnated. Per capita
consumption declined by 0.7 percent in 1982, after an
increase of 1.1 percent in 1981.' Indeed, our estimate
of per capita consumption of soft goods, food, and
durables was lower in 1982 than in 1981 (table 1).F-
' The CIA index of Soviet consumption is corroborated by the
Soviet measure of growth in consumer welfare. In 1982, "real per
capita income"-a Soviet measure in constant prices of consump-
tion, excluding some services-rose by only 0.1 percent. Retail sales
in constant prices increased by only 0.3 percent, implying a per
capita decline of about 0.6 percent. Retail trade accounts for about
Total
3.0
1.1
-0.7
Food
2.1
-0.5
-1.0
Soft goods
3.7
1.9
-0.6
Durables
6.7
5.3
-3.5
Rhetorical Support
Although the need to boost consumer welfare was a
major theme at the June plenum, specific plans to
accelerate production of consumer goods and services
were not presented. Among other things, Andropov
promised better health care, a constant supply of
quality foodstuffs, higher quality consumer goods, and
improvements in housing conditions, including a self-
contained flat for every family. At the same time,
however, he made clear he was no supporter of
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unbridled "consumerism" when he called for develop-
ment of patterns of "reasonable consumption." 2 In-
deed, in his June plenum speech and in other com-
mentary, Andropov has maintained a cautionary tone
regarding improvement in consumer well-being,
stressing that increases in income must be more
closely linked to increases in labor productivity and
indicating that improvement in the standard of living
will be slow.
Legislative Support
A flurry of decrees aimed at improving the consum-
er's lot preceded the plenum, urging greater output
without specifying how increases are to be achieved.
With one exception, they make no mention of plans
being altered to allocate more resources to consump-
tion. The exception-the May party-state resolution
on improving consumer goods production-implies
that goals for production of consumer goods in 1983
have been raised and that the increased output is to
result from greater efficiency as well as "extra alloca-
tions of raw materials, supplies, and equipment." The
use of the phrase "extra allocations" is a departure
from earlier consumer goods decrees, which indicated
that such increases were to come from greater effi-
ciency alone. But the resolution did not specify the
quantity of these extra allocations, and subsequent
press commentary on the consumer goods resolution
has contained no references to them.
The other decrees deal with consumer services and
housing construction. A Central Committee Council
of Ministers resolution on developing "everyday"
consumer services (including laundry, dry cleaning,
personal care, and rental services as well as automo-
tive, housing, and other repair services) was published
in March. It calls for increased and improved consum-
er everyday services, especially in rural areas, but
does not raise plan targets or provide for additional
allocations of resources from the state. A Council of
3 Andropov specifically referred to the concept of living standards
which "encompasses a steady growth of the consciousness and
cultural level of the people, including their cultural standards in
everyday life and conduct and what I would call reasonable
consumption. Also encompassed in this concept is a good public
order, health, a rational diet, a high quality of public service.... It
also encompasses a morally and aesthetically adequate use of free
time. In short, everything which together is worth being summed up
as being civilized in line with socialist principles." It almost sounds
as if Andropov sees a higher living standard as dependent more on
Ministers resolution published in January instructed
service establishments to broaden their hours of oper-
ation to better meet the needs of workers. It also
urged factories to establish on-site service facilities
and retail outlets for their employees. The resolution
was intended to promote one of the key goals of the
discipline campaign-reduced absenteeism-by mak-
ing it easier for workers to shop before and after
normal working hours. In February, a Central Com-
mittee resolution on improving housing construction
harshly reprimanded various construction ministries
for failing to meet housing construction targets in the
past two years. The resolution calls for fulfillment of
existing plans but does not raise present targets.
The Andropov leadership is also continuing the cam-
paign initiated under Brezhnev to increase consumer
goods production in heavy industry. Although heavy
industry has long been responsible for production of
consumer articles, its enterprises are now being tasked
to produce a specified amount of consumer goods per
ruble of the enterprise's wage fund. The new measure
is intended to encourage enterprises to utilize "hidden
reserves"-leftover raw materials and idle capacity-
for production of consumer goods. If this requirement
is not met, the enterprise incentive fund is reduced; if
it is fulfilled or surpassed, the fund is increased. This
new link between remuneration and consumer goods
production does not relieve the enterprise of its obliga-
tion to meet its primary output targets and is thus
likely to provide only a limited stimulus to consumer
goods output. Moreover, it does nothing to improve
quality and encourage a product mix more in line with
consumer demand
Andropov has also emphasized his support for the
consumer by retaining the priority accorded to Brezh-
nev's Food Program, launched in May 1982 to im-
prove the production, processing, and marketing of
food products. Upgrading the Soviet diet was the
centerpiece of the Brezhnev consumer welfare policy.
Andropov has accepted the prescription for improve-
ment in agriculture as laid out by the Food Program
and has placed greater emphasis on the need to
increase efficiency. Judging by Soviet press reporting
on Politburo meetings, the leadership under Andropov
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has devoted more time to agriculture than any other
domestic issue. A recent party-state decree on increas-
ing production of agricultural machinery further un-
derlines the leadership's support for the Food Pro-
gram and the consumer. The new decree calls for
improved quality of agricultural machinery, increased
supply of spare parts, and better servicing of equip-
ment.
Organizational Support
Recent organizational changes in the Central Com-
mittee economic apparatus apparently reflect the
aspects of consumer goods production the regime has
chosen to stress. The Department of Light and Food
Industry and the Department of Agriculture have
been eliminated and replaced by the Department of
Light Industry and Consumer Goods and the Depart-
ment of Agriculture and Food Processing. The cre-
ation of the Department for Light Industry and
Consumer Goods may be connected with the cam-
paign to step up production of consumer goods in
heavy industry by concentrating control of soft goods
and consumer durables production in the same hands.
Transfer of responsibility for food processing to the
Department of Agriculture is probably designed to
promote more effective implementation of the Food
Program.
Deputy Minister of Foreign Trade V. N. Sushkov said
in April that the regime is emphasizing improvement
in light industry, food production, and consumer
durables. Sushkov also said that investment in the
light and food-processing industries will increase at
the expense of heavy industry such as chemicals.
According to Sushkov, the investment changes would
be reflected in "the five-year plan," probably a refer-
ence to the 12th. He stated, however, that the military
will be unaffected by the shift in investment priorities.
Sushkov also stated that "action" is already under
way in the food-processing and light industries but did
not specify whether he was referring to organizational
changes-such as the change in the Central Commit-
tee apparatus-or increased investment.
Table 2
Investment in Light and
Food-Processing Industries a
Investment (billion 4,415 4,262 4,315 4,420 4,600 25X1
rubles)
Share of industrial 10.9 10.0 9.5 9.7 9.9
investment (percent)
Recent comments made by another Soviet trade
official suggest heightened interest in imports of
machinery, plant, and equipment for production of
consumer goods. the
official in late June claimed that his organization had
$1.5 billion for the purchase of Western consumer
goods factories and machinery. The $1.5 billion could
represent a major increase in hard currency purchases
of this type of equipment, provided the funds were
spent b1985.
The size of the
deals and the negotiations required for such arrange-
ments indicate that the purchases are likely to be
concentrated in the next five-year plan
Long-Term Outlook
Sushkov's comments as well as the report on import
plans suggest that Moscow may be shaping invest-
ment plans for the 1986-90 period to give priority to
sectors directly serving the consumer. But Sushkov's
remarks must be viewed with caution. First, his access
to information regarding domestic investment plans is
not known. Secondly, he gave no figures on the
magnitude of the increase in investment allocations.
Since the share of industrial investment in the light
and food-processing industries was less than 10 per-
cent in 1980 (see table 2), even a large percentage
increase would not necessarily entail a substantial
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diversion of resources from other claimants. Further-
more, Sushkov's reference to more investment may
reflect the increased emphasis on the processing sec-
tors of the agro-industrial complex already projected
in the Food Program.
The machinery branch of heavy industry may be of
particular importance to improving the consumer's
lot. Several prominent Soviet officials and econo-
mists-for example, Minister of Agriculture and Po-
litburo member Mikhail Gorbachev and Abel Agen-
begyan and other economists from the Siberian
branch of the Academy of Sciences-have argued
that improvement in overall economic performance
critically depends on increased production of better
quality machinery. They have urged increased invest-
ment in machinery, a policy that could be consistent
with stepped-up investment in industries serving the
consumer. The key question is where will the resulting
machines end up. Sushkov's comments and the decree
on agricultural machinery suggest that a higher share
may go to the light and food-processing industries and
to agriculture.
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Secret
Soviet Military Electronics
Design and Manufacturing:
Potential Problems in the 1980s
This article analyzes shortcomings in Soviet electron-
ics manufacturing
Historically,
the prevalence of labor-intensive and manually con-
trolled manufacturing processes has constrained the
introduction of new technologies into Soviet military
systems. Beginning in the 1970s, however, the Soviets
initiated weapon system designs incorporating rela-
tively newer technology not compatible with older
manufacturing techniques. If they are to match com-
ing advances in Western weapon systems and meet
other military needs, the Soviets will have to place
even greater emphasis on incorporating advanced
materials and components into innovative designs.
They will have to rely increasingly on computer-aided
design and manufacturing to provide the accuracy
and control for high-rate production of advanced
systems
Background
Technical and economic assessments of Soviet land-
based radars, avionics, communications equipment,
and computers reveal a fairly consistent pattern of
conservative design and manufacturing procedures. In
general, the Soviets:
? Incorporate new electronics into their military sys-
tems only when older technologies can no longer
meet the requirements. This reduces design and
manufacturing risk, but it also limits system
performance.
? Use common components and circuit designs when-
ever possible, a practice that holds down the cost of
producing and maintaining military systems and
allows for the interchange of hardware within sys-
tems and among different systems.
? Emphasize only essential manufacturing proce-
dures-hardware finishing for aesthetic purposes is
deemphasized. The quality of workmanship is dic-
tated only by function or need.
? Achieve quality in microelectronics products by
high reject rates that are much higher than in the 25X1
US electronics industry.
? Are hindered by a lag in critical technologies such
as integrated circuits and computer memories. This
probably has slowed their development of multi-
function radars, digital signal processors, digital
communications equipment, and computers.
? Use outmoded manufacturing practices that con-
strain the introduction of new technologies into
system designs.
Future Systems
To cope with advances in Western systems, the
Soviets are having to adjust their design and produc- 25X1
tion practices. New Soviet systems are becoming more
complex, requiring a multitude of new design aids,
microelectronics production equipment, and numeri-
cally controlled machines. Examples of these new
systems and components are:
? The SA-10 SAM system, which incorporates phase
shifters, phase shifter controls, microelectronics,
special and general purpose computers, and digital
signal processors. These components could not be
produced with the traditional labor-intensive ap-
proaches used for previous SAM systems such as
the SA-5 and SA-6. Shortcomings in manufacturing
capability may be one of the reasons for the slow
deployment rate of the SA-10.
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? The MIG-31 lookdown air intercept (AI) radar,
which requires high-tolerance components with pre-
dictable performance over a wide range of severe
environmental conditions. Equipment used to pro-
duce the older Spin Scan and Jay Bird AI radars
are inadequate to produce the MIG-31 radar in
quantity.'
? The AA-9 air-to-air-missile, which uses Soviet
technology from the 1970s and requires manufac-
turing capabilities similar to that required for the
other systems mentioned. In particular, the missile's
Doppler-processing, semiactive radar requires preci-
sion machining and high-reliability electronics.
? The SS-NX-21 cruise missile, which may have a
terrain-matching update system. We believe the
Soviets had the necessary design and component
technology in the early and mid-1970s, but produc-
tion constraints such as those mentioned for the
SA-10 may slow deployment.
? The new A WA CS radar, which represents the high-
est level of Soviet airborne radar technology. Pro-
duction of the radar and associated communications
equipment presents a significant challenge to the
Soviets, and shortcomings in current manufacturing
capability could portend a slow development rate for
the AWACs.
To counter potential US systems now on the drawing
board or in advanced stages of development, future
Soviet systems will require even more automated,
high-precision, high-speed manufacturing equipment.
Some of the US systems impelling the Soviets to
improve their design and manufacturing processes
are:
? Advanced- Technology Fighter (A TF). The ATF will
use low-radar observable materials, vectored thrust,
composite materials, and advanced engines. New
Soviet design and manufacturing capabilities, devel-
opment of special materials, and years of research in
radar-related technologies will be required to
counter the ATF.
? Advanced Medium-Range Air-to-Air Missile
(AMRAAM). This missile is designed for use
against advanced fighters at altitudes up to 20,000
meters and at speeds up to Mach 2.5. The missile
also has an advanced lookdown/shootdown capabili-
ty. A US aircraft would be able to launch several of
these missiles before any current Soviet aircraft
could launch its first missile. The Soviets will be
hard pressed to develop successful counters to
AMRAAM. A combination of advanced aircraft
design, electronic countermeasures, and missiles
with faster reaction times will be required.
? Maneuverable reentry vehicle (MARV). The
MARV uses advanced homing sensors for pinpoint
targeting. A laser system with a very quick reaction
time may be the only defense. The mass-production
of such a laser would require a multitude of high-
technology manufacturing processes and equipment.
? High-Speed Antiradiation Missile (HARM). This
fast-reaction weapon is capable of engaging almost
all Soviet radars now deployed or in advanced stages
of development. The missile's software-controlled
processors reportedly can be reprogramed to engage
new threats without expensive hardware modifica-
tions. The Soviets lack a countermeasure and face
perhaps years of R&D to produce one.
? Pershing II. The Pershing's new inertial navigation
system and high-accuracy terminal guidance system
are a challenge to Soviet developers of antitactical
ballistic missiles.. For example, only the SA-X-12
SAM system currently under development is consid-
ered by CIA to have some capability against the
Pershing II in its terminal maneuver mode. Produc-
tion of this system in quantities sufficient to afford
some degree of protection against the Pershing II
would require a heavy commitment of scarce high-
technology manufacturing resources.
The design, development, and manufacture of coun-
terthreat systems to defend against these weapons
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present the Soviets with pressing needs for important
new technologies. The most important of these are:
? Precision machinery for mass-producing high-densi-
ty microelectronics including X-ray, E-beam, and
focused ion-beam lithography machines; mask-mak-
ing tools; crystal growth equipment; chemical-vapor
deposition hardware; and computerized timing and
control devices and wafer-handling equipment.
? High-quality materials for microelectronics produc-
tion including silicon, gallium arsenide, and
germanium.
? Design and manufacturing data for-as well as
samples of-electronics devices including micro-
processors, random-access memories, read-only
memories, logic gates, surface-acoustic waveform
devices, charge-coupled devices, traveling-wave
tubes, diodes, and radiofrequency solid-state de-
vices.
? Industrial machinery, processes, and controls
such as multiaxis numerically controlled machines,
computer-aided numerically controlled machines,
robotics, nondestructive inspection, and automatic
testing.
? Software for a wide range of applications. Without
a comparable development or acquisition of ad-
vanced software, the majority of these materials and
machinery would serve little purpose.
Implications
There was a consensus among those participating in
the contractor study that the obstacles to innovations
found in the Soviet defense industry will hinder
attempts by the USSR to overtake the West on a
broad technological front. Instead, the Soviets can be
expected to surge ahead in some technologies (lasers
and optics for example) simply because they have
chosen to place more emphasis on those areas than
has the West. Furthermore, the current massive injec-
tion of microelectronic and computer technology is
expected to give way to evolutionary refinements in
their applications.
The Soviets lag the West in all the generic areas
studied-by four to seven years in radar development,
by two to five years in communications, and by three
to seven years in computers.
Radar Development. The development of radars in
the USSR is directly influenced by the Soviet lag in
microelectronics, computer hardware and software,
and signal processors. The current lag of four to seven
years, depending on the type of radar, can be expected
to continue. Current examples:
? The Pechora early warning, ABM-related radar,
which represents the latest in large Soviet radar
developments, lags the US Pave Paws by approxi-
mately five to seven years in the transmitter module,
signal processor, and computer areas.
? The SA-10 SAM system, representing advanced 25X1
Soviet phased-array radar technology, lags the US
Patriot system by approximately six years in the
computer hardware/software and signal processor
? The lookdown Al radar associated with the MIG-31
lags the latest version of the F-14 Al radar by four
to six years. Currently an advanced programmable
signal processor is being added to the F-14 radar. It
is doubtful the Soviets will be able to mass-produce
such a signal processor for at least six years. The US
development of radars such as the Al radar for the
F-18 and "quiet" radars for stealth aircraft will
ensure a continued Soviet lag in this category for
several years to come.
Communications. The secure, spread-spectrum,
digital communications system used in the US
AWACS system is at least four years ahead of any
known Soviet system. Advanced components and
subsystems of the AWACS include minicomputers,
correllators, and solid-state devices used in the trans-
mitter. The Soviet penchant for extensive command,
control, and communications and the US intelligence
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collection efforts in this area will push the Soviet need
for modern secure communications. Unless the USSR
makes large advances in computers and microelec-
tronics, the gap will continue.
Computers. The current lag of three to seven years in
computers is due to a plethora of hardware and
software design and production problems and may get
worse. Moreover, in specialized military applications
such as the high-speed/capacity computers in ABM
early warning radars, the Soviets have experienced a
host of speed, capacity, and reliability problems and
may be even further behind.
Prospects
The inability of the Soviets to currently develop,
produce, and assimilate advanced production methods
has hindered their electronics industry. They have
made strenuous efforts to update their production
technology by indigenous means and by legal and
illegal acquisitions of manufacturing equipment. Al-
though they have been successful in getting advanced
production equipment from Japan and the West in
representative sample quantities, a large infusion of
equipment will be required to overcome the present
backwardness of the industry. While we are beginning
to see signs that the Soviets are taking steps to
overcome the lag, we project that it will be the early
1990s before they can match current Western design
and production capabilities, and by that time ad-
vancements in the West will result in some degree of
relative technological backwardness continuing in the
USSR.
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Soviet Interests and Options
in the Caribbean)
In the past year or so, the Soviets have expanded their
military and security links with Nicaragua, strength-
ened ties with Grenada, and welcomed Suriname as
another revolutionary regime. These developments
underscore Moscow's broad strategic interest in un-
dermining the US position in the hemisphere. The
ongoing airfield construction projects in Nicaragua
and particularly in Grenada will improve the two
countries' capability to support an increasing Soviet
military presence and Cuban interventionism in the
hemisphere. If port development programs material-
ize, Nicaragua and Grenada could also provide some
support to Soviet naval forces.
Although the USSR probably does not currently
assign high priority to a dramatic expansion of its
military presence in the Caribbean Basin, it will
probably continue incrementally to expand its limited
military activity there. Moreover, it might consider
limited use of Nicaragua and Grenada for periodic
deployments of maritime reconnaissance or ASW
patrol aircraft, such as the TU-95 Bear D or TU-142
Bear F, or for occasional visits by naval combatants.
Bilateral Ties
Nicaragua. The USSR's military and security role in
Nicaragua gradually expanded as it helped entrench
the pro-Soviet Sandinista regime. During the past
year, military and security relations became closer
and more publicized, and top Nicaraguan officials,
including Sandinista leader Daniel Ortega, Defense
Minister Humberto Ortega, and Interior Minister
Borge visited Moscow for consultations.
Moscow's current efforts to strengthen the Nicara-
guan military suggest a special interest in bolstering
Sandinista ability to cope with the insurgency. Recent
Soviet deliveries of armed MI-8 helicopters, AN-26
transport aircraft, trucks, and communications equip-
ment improve the mobility of the Sandinista forces
and their counterinsurgency capabilities.
During the past year, Moscow continued to encourage
its allies to support Nicaragua. Growing East Europe-
an military cooperation with the Sandinistas was
almost certainly undertaken at Soviet behest, and the
Soviets probably also encouraged Libya and other
countries to provide military assistance and training.
Soviet Objectives
Soviet policy toward the Caribbean region, in general,
is largely motivated by the competition with the
United States and the ideological commitment to
support leftist causes. Moscow's basic aim presumably
is to challenge US influence there by expanding its
own political, economic, and military ties in the region
and by promoting radical political change. To this
end, the Soviets have been gradually establishing
influence with the leftist regimes in Nicaragua and
Grenada in the hope they will act as conduits to other
revolutionary groups in the region and contribute to
the emergence of similarly oriented regimes. Moscow
anticipates that continuing instability in the region
will divert US attention and resources-including
military forces-from more distant problem areas and
undercut Washington's credibility in the eyes of its
hemispheric neighbors as well as other Third World
Grenada. The Soviets have steadily increased their
influence in Grenada since Maurice Bishop and his
New Jewel Movement took power in the March 1979
coup. This trend has been reflected in the past year by
the establishment of the Soviet diplomatic mission on
the island and in the growing number of high-level
Grenadian visitors to the USSR. During this period,
Prime Minister Bishop visited Moscow and met with
Premier Tikhonov last July. Bishop also stopped over
in Moscow last April en route to North Korea.
In the last year, the Soviets have agreed to increase
agricultural and technical assistance and have signed
new trade accords.
Soviet technicians have been sent to Grenada to help
countries]
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install a Soviet-supplied satellite communications sta-
tion. More recently, a small number of Soviet eco-
nomic advisers reportedly were posted to the island to
Suriname. In contrast, Moscow has been less active in
promoting ties with the leftist regime in Suriname, in
part because Moscow appears much less certain about
the extent of support for Army Commander Bouterse
or his staying power. The Soviets have welcomed
Suriname as another revolutionary government in the
Caribbean and no doubt see recent political develop-
ments as a setback to US influence there. They
opened a resident embassy in Paramaribo last year
and
have recently indicated an interest in expanding eco-
nomic relations, as long as it does not involve substan-
tial Soviet aid. Moscow apparently does not have any
military or security relationship with Bouterse nor has
it indicated an interest in acquiring military access.
Moscow's Geopolitical and Military Interests
In general Moscow has no present vital security
interest in the Caribbean region and has consequently
invested only limited resources there. Because the
region is remote from the USSR and important to US
security interests, Moscow has moved cautiously,
primarily relying on intermediaries while it keeps an
eye to US responses. It probably believes that Wash-
ington would react with force to any Soviet move to
establish a significant military presence in Nicaragua
or Grenada, especially if this posed a strategic threat
to the United States.
Increased Soviet Military Presence
The Soviets, however, probably are likely to continue
incrementally to expand their limited military activity
in ways that are unlikely to provoke the United
States. For example, they have long deployed TU-95
reconnaissance planes to Cuba and recently sent
TU-142 ASW aircraft, the first potential airborne
weapons carriers, there as well to monitor US strate-
There are a number of steps available to the Soviets to
improve either the military capabilities of their Carib-
bean clients or their own in the region. Many of these
options would be troublesome for the United States,
not only because they would increase Soviet influence
but also because they would force the United States to
factor them into its military contingency planning as
well as divert military resources to counter them. F_
The USSR could at least give the impression of
enhancing Cuba's security by modernizing and aug-
menting the Soviet brigade, whose main function
seems to be to symbolize the Soviet commitment to
Castro. They could also bolster the Cuban military
forces by providing such weapons as SA-5s, more
modern MIGs, and newer coastal defense systems.
cuting counterinsurgency efforts.
The Soviets will probably gradually expand their
military role in Nicaragua. For example, they could
increase the number of military and security advis-
ers-there are apparently about 100 there now-and
become more directly involved in planning and exe-
If Moscow becomes convinced that the Sandinistas
are securely enough in power to risk tying Soviet
prestige to them more directly, then it could lend
support by delivering weapons directly to Nicaragua
and by sending significant numbers of Soviet advisers
and technicians. Such weapons could include the kind
of air and naval defense systems that have been
supplied to Cuba. Under these circumstances, they
might even station a Soviet military unit in Nicaragua
to provide a symbolic security commitment to the
regime. The Soviets could also play a more active role
in providing military aid to Grenada and Suriname.
Potential Military Options
There are also things Moscow might do to demon-
strate growing Soviet involvement in the region and
complicate US defense planning. Such steps would
provide little military capability beyond that provided
by existing facilities in Cuba but could be undertaken
largely for political value.
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The USSR might increase port calls by its surface
combatants or attack submarines as a way of demon-
strating support and its right to deploy warships to the
area. The Soviets may think such deployments would
serve notice on Washington that the USSR has a
capability to operate in the region in wartime, and
might cause Washington to divert military resources
from other missions.
The Soviets have a small naval force in the Caribbe-
an, usually consisting of one or two research ships and
an auxiliary vessel mainly serving intelligence-gather-
ing purposes. Periodically, they deploy naval task
groups to show the flag, cruise in the Gulf of Mexico,
and exercise with the Cuban Navy-whose forces are
being upgraded. The most recent task group visits-
which typically consist of a guided-missile cruiser and
frigate-took place in April 1981 and November
1982 through January 1983.
Naval facilities in Nicaragua, Grenada, and Suri-
name are inadequate for providing major logistic
support for these combatants. The Soviets reportedly
have been surveying port development, for civilian
purposes, in two places-at Grenville in Grenada and
San Juan del Sur on the Pacific coast of Nicaragua.
Soviet warships generally are supported by their own
naval auxiliaries and do not require the use of local
naval facilities. They could, therefore, visit these
nations at any time for symbolic reasons. The Soviets
could improvise some logistic support by temporarily
deploying naval auxiliaries outside the local ports.
Auxiliaries used in this manner, however, can only
perform limited services. In the event that the Soviets
wanted to supplement their afloat logistics with land-
based support, as they do elsewhere, they would be
more likely to use existing Cuban facilities than to
upgrade the local facilities.
Soviet aircraft could also expand their use of existing
Caribbean fields. The completion of the Point Salines
airfield in Grenada will make it possible for TU-95
Soviet naval reconnaissance planes, which now oper-
ate periodically from Cuba, to expand their coverage
somewhat further into the South Atlantic. New air-
fields now being built in Nicaragua, and other im-
provements there, will also enable the USSR not only
to show the flag but to extend its military reach by
regular flights over the eastern Pacific (although it
has little military need for such activity). It could also
permanently deploy ASW aircraft or ASW naval
craft in Cuba that could be aimed at monitoring
training and transit areas of US Ohio-class SSBNs.
Moscow may calculate that such defensive deploy-
ments would not violate the US-Soviet understandings
regarding strategic weapons in Cuba.
Potential Strategic Deployments
These pro-Soviet nations in the Caribbean Basin
make it possible for the USSR to take extreme
measures-such as stationing strategic weapons
there-that would pose more substantial military
problems for the United States. Moscow is unlikely to
try to utilize them, however, as forward bases for
Soviet-controlled offensive weapon systems. Such de-
ployments would involve a major confrontation with
the United States, forcing Moscow to choose between
backing down in the face of superior US regional
conventional forces, escalating its response to a global
strategic level, or creating a low-risk diversion else-
where.
In addition, the Soviets would have to overcome
significant political and logistic constraints before
deploying strategic weapons. Although the USSR is
developing closer political relations with the regimes
in Nicaragua, Grenada, and Suriname, its caution in
dealing with them suggests that it is uncertain about
their staying power. Except for Cuba in 1962, the
Soviets have not deployed land-based nuclear weapons
outside the territories of their close allies, where both
stable regimes and stationed combat troops serve to
guarantee their security.
The three Caribbean countries also lack such basic
infrastructure as roads and support facilities to ac-
commodate land-based ballistic missiles such as the
SS-20, and their development would be a costly and
protracted task. Moreover, construction of a regular
SS-20 base with nine launcher garages would take at
least a year and would be quickly detected by satellite
surveillance. Furthermore, Moscow would have to
install air defense systems in these countries to protect
its military facilities from US attack. All of these
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considerations suggest that the USSR would turn to
Cuba if it again were to deploy strategic systems in
the hemisphere
The Soviets could deploy submarines equipped with
either strategic ballistic or cruise missiles to the
Caribbean, but the move would provide only a mar-
ginal military advantage since the SSBNs currently
based in the Northern Fleet and on patrol in the
North Atlantic are already capable of hitting targets
in the United States. Deployment to the Caribbean
would make the submarines considerably more vul-
nerable to the US ASW forces than they are in their
more secure North Atlantic operating areas. In addi-
tion, such a move would be inconsistent with evolving
Soviet SSBN doctrine, which emphasizes placing the
submarines equipped with longer range ballistic mis-
siles increasingly closer to the USSR for greater
security, protection, and control.
While augmenting the USSR's strategic posture, none
of these moves would significantly enhance the al-
ready large Soviet potential for attacking the United
States. They would be taken more with a view to
distract US attention and resources from areas of
more vital Soviet security concern. They might also be
conceived of as bargaining chips to seek the withdraw-
al of some US forces from areas close to the territory
of the USSR.
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Briefs
Imports of Agricultural Recently released Soviet trade data confirm that the USSR imported record
Commodities Continue quantities of sugar, vegetable oils, and soybean meal in calendar year (CY) 1982.
at High Levee The data also show that imports of grain, meat, soybeans, and butter remained
high, although below previous record levels. Falling world agricultural prices and a
moderate drop in the quantity of grain and meat imported allowed the USSR to
cut its total agricultural import bill by almost $2 billion, all from hard currency
sources of supply.
USSR: Imports of Agricultural Commodities a
Grain b (million tons) 23
27
30
43
39
Meat (thousand tons)
184
611
821
980
939
Raw sugar (thousand tons)
3,990
3,766
3,839
4,190
6,161
Refined sugar (thousand tons)
3
294
1,056
936
1,115
Vegetable oils (thousand tons)
167
199
357
604
866
Soybeans (thousand tons)
874
1,765
1,085
1,396
1,506
Soybean meal (thousand tons)
0
25
438
583
1,550
Butter (thousand tons)
39
174
249
215
151
Total agricultural imports
(million $)
10.1
13.6
17.4
20.9
19.2
Hard currency expendi-
tures (million $)
4.1
6.1
9.3
11.7
9.9
a Official Soviet trade data.
b Estimated from Western statistics on volume and prices and
selected Soviet data on trade with individual countries. Imports of
rice and flour are excluded.
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Current purchasing behavior indicates that last year's improved farm output and
even better prospects for this year are allowing Moscow to reduce purchases of
most commodities during 1983. Nevertheless, imports of most farm products,
which since 1980 have been running at 35 to 40 percent of total hard currency out-
lays, will continue to be substantial. Even with the prospect of garnering the best
crop in five years, grain imports may again surpass 35 million tons in CY 1983.
Meat imports-likely to be over 750,000 tons-taken together with a spurt in
domestic output will permit some improvement this year in per capita consump-
Concern Over Soviet Soviet demographers have become skeptical that measures adopted at the 26th
Birth Rate Party Congress in 1981 to stimulate the birth rate will prove effective. These
measures include one-year partially paid maternity leave and lump-sum grants for
first, second, and third births. Initially optimistic, the demographers are now
convinced that these financial incentives are too low-one explicitly admitted this
to an Embassy officer recently-and must be supplemented by other steps. They
are calling for additional economic incentives and are also urging improved
working conditions for mothers, sharing of household duties by parents, and a
reduction in the divorce rate. However, they seem doubtful that even a much more
ambitious pronatalist program will reverse unfavorable demographic trends.
Despite the rise in the share of the total population of women in the high fertility
age groups (20 to 34 years), the Soviet birth rate has been declining for several
years-from 24.9 births per 1,000 population in 1960 to 18.5 in 1981. Scholars at-
tribute the decrease to inadequate housing, shortages of child-care facilities,
increased female participation in the labor force, higher educational attainment,
improved pension benefits (obviating the need for support from children in old age),
fear of reduced income levels, and the effects of modernization and industrializa-
tion
New Law on Worker At its mid-June session the USSR Supreme Soviet approved a new law, to take ef-
Participation in fect 1 August, on participation of workers in the management of enterprises. The
Management law does not, however, give the workers any real power to improve their own
welfare or play an active managerial role. The party will remain firmly in control,
as indicated by the stipulations in Article 1 that workers' collectives must function
"under the leadership of the organizations of the CPSU" and "unswervingly
execute the party's decisions." The language of the law makes clear that workers
will play a passive role in such critical matters as formulating enterprise plans, se-
lecting managers, setting norms, and negotiating salaries. For example, they will
"propose the names of workers as candidates for bonuses," "discuss the state of la-
bor discipline," and "ratify the proposals of management and the trade unions on
the internal organization of work."
On balance the law's passage indicates that Andropov is continuing efforts
initiated by Brezhnev, largely in response to the labor turmoil in Poland in recent
years, to introduce cosmetic changes that create the appearance of enhanced
power for workers.
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Secret
Rail Performance, Railroad freight transportation in the first six months of 1983 improved markedly
January-June 1983 over the poor showing in the first half of 1982, particularly in hauling high-priority
25X1
goods such as industrial raw materials, metals, oil, chemicals, and timber products.
Freight turnover climbed to 1.8 trillion ton-kilometers, a 3.7-percent increase.
During the same period in 1982, turnover fell by 2.3 percent.
25X1
The chart shows that the improvement began during the fourth quarter of 1982
and continued into the first quarter of 1983. Unusually mild weather and the
shakeup in the Railroad Ministry probably contributed to the improved perform-
ance. The downturn in the second quarter of 1983, however, suggests that the rail
system is still in trouble. Freight car shortages and rolling stock maintenance
problems continue to plague the system as a whole and may slow growth in the sec-
ond half of the year. Nonetheless, the rise in railroad freight turnover by the year's
end could still reach 2.2 percent as called for by the 1983 Plan
USSR: Railroad Freight Turnover, by Quarter'
Five-year average annual rate of growth,
1978-82: 0.7 percent
-1
-2 II III IV I II
1982 1983
a Seasonally adjusted growth compared with five-year average.
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Soviet Ammonia The USSR has recently cut off or delayed ammonia exports to several Western
Exports Cut countries. After the first shipment to a Turkish-Kuwaiti fertilizer company under
a 1983 contract, the USSR refused to make further deliveries, forcing the firm to
close its plant. Shipments to Spanish customers (which account for half of Spain's
ammonia imports) have been either delayed or canceled without explanation. The
Soviets also have defaulted on supplies to Finland. During negotiations with a US
firm early this year, the Soviets initially pressed for an order of about 1 million
tons of ammonia but were unable to fulfill a contract for more than three-fourths
of a million tons. Citing "reasons beyond our control," they actually made no
deliveries during April-May 1983. Soviet
ammonia deliveries resumed without problems in early June. As of mid-July 1983,
however, the USSR remained 150,000 tons behind in its export of ammonia to the
US firm.
production problems including shortages of
spare parts and poor maintenance procedures, logistic problems, and diversion of
ammonia production to domestic use were the principal reasons for failure to meet
export requirements. domestic requirements were higher
than normal because the unusually mild winter advanced planting schedules
considerably.
The emphasis on the Food Program may have shifted priorities in fertilizer
allocation. The Soviets have historically shortchanged domestic fertilizer deliveries
in favor of exports
Transfer of Defense In a sharp departure from traditional practice, the Andropov regime has recently
Industry Managers to transferred and promoted a number of personnel with defense industrial back-
Nondefense Positions grounds to posts in the nondefense industrial sector as well as to party and state
managerial positions (see table). These moves indicate that the leadership recog-
nizes the management expertise available within the relatively effective defense
industrial sector and intends to rely on that expertise to help steer a course through
the present rough economic waters.
The transfer of Sergey Afanas'yev to become Minister of Heavy and Transport
Machine Building was the first such transfer of a defense industry minister in 26
years. Although the move may have had to do with the Ministry's major
involvement in the production of military equipment, it appears more a case of the
transfer of a proven manager to help out an ailing ministry crucial to both the ci-
vilian and defense sectors
The five new appointees in the party and state apparatus with defense industry
backgrounds all held important posts under Politburo member Dmitriy Ustinov
during the period 1941-57 when he was Minister of Armaments and later Minister
of Defense Industry. It is likely that these new appointments had Ustinov's
approval and probably his support. As the Soviet leadership seeks to improve
economic performance, it most likely will continue to look to the defense industries
to fill management positions throughout the economy.
25X1
25X1
25X1
25X1
L
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Soviet Defense Industry Managers Transferred
to Nondefense Positions, 1983
Sergey
Afanas'yev
Minister of General
Machine Building
Minister of Heavy and
Transport Machine
Building
Yegor Ligachev
Engineer-designer at
Chkalov Aircraft Plant;
Novosibirsk party work
Chief, Central Commit-
tee Organizational Party
Work Department
Nikolay Ryzhkov
General Director, Ural'-
mash Production Asso-
ciation; 1st Deputy Min-
ister of Heavy and
Transport Machine
Building
Chief, newly created
Central Committee Eco-
nomic Department
Nikolay
Slyun'kov
Director, Minsk Tractor
Plant; brief stint on
Minsk City Party
Committee
First Secretary Belorus-
sian Communist Party
Vitaliy
Vorotnikov
Early work at Kuyby-
shev Machine Building
Plant; party work
Candidate member
Politburo
Yakov Ryabov
Engineering and supervi-
sory work at the Sverd-
lovsk Turbo Engine Fac-
tory; party work in
Sverdlovsk; CPSU Sec-
retary for defense mat-
ters; 1st deputy chair-
man Gosplan
Chairman, State
Committee for Foreign
Relations (GKES)
The Minister of General
Machine Building is re-
sponsible for missile
production.
Most of Ligachev's party
positions entailed some
responsibility for defense
and heavy industry.
The Ural'mash associa-
tion, subordinate to the
Ministry of Heavy and
Transport Machine
Building, produces mili-
tary equipment.
Minsk Tractor Plant pro-
duces military vehicles
as well as tractors.
Vorotnikov's party work
included supervising lo-
cal and regional defense
industrial affairs.
At Gosplan, Ryabov was
believed responsible for
general economic
planning.
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