VULNERABILITY OF THE SOVIET BLOC TO EXISTING AND TIGHTENED WESTERN ECONOMIC CONTROLS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01012A000500030013-1
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 97
• Document Creation Date: December 27, 2016
• Document Release Date: November 6, 2012
• Sequence Number: 13
• Publication Date: January 26, 1951
• Content Type: REPORT

Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
COPY NO. 44.4)4 ? SEC
VULNERABILITY OF THE SOVIET BLOC TO EXISTING AND TIGHTENED
WESTERN ECONOMIC CONTROLS
OIR Report No. 5447
January 26, 1951
This is an intelligence report; nothing in
it is to be construed as a statement of US
or Departmental policy or as a recommendation
of any given policy.
Cu&mani? Po.
ECViCV.f fais doomocnt tly lia3
Ual ?
00, i,To no 0.1na^o to cle'lcos
Li Z:.1
? L'CI;11
S
? E3
corta'-s viothing of- MA
Data Reviewer
0
.Division'of Research for the USSR and Eastern Europe
. OFFICE OF INTELLIGENCE RESEARCH.
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET
TABLE OF CONTENTS
. ?
- -
Summary Conclusions . ??.?????? ? ? e ? g ? e 0 ? ? ? ? ?
, .
Page
I.
The Soviet. B1oc asaWho'1e :0,4 . ? . 0 . ?.* 44
1
A.
Soviet B103 Dependence on Imports From the Outside World..
1
B.
Soviet B10.6 Vulnerability' to a Ban on Its Exports 4 ? ? 0
5
C.
Limitations of'Soviet Bloc Vulnerability . 0 . ? . . . ? ?
5
D.
Soviet Bloc Integration asa Hedge Against Western
Measures. . .6
0 /0.2*???? 00? ? ?00 000 * 0
'
II.
Deficit Commodities ????0000???.??..?0..
7
A.
Methods of DeteCting Deficits . .. ? ? ? ? . . ? ? .??
7
B.
Fuels and Power . . . .- ? . . : ; ?? * a 0 ? ? ? ? ? ?
8
1. Coal and Coal-Mining Equipment . . i,.. ? 0 ? ? . . . .
8
2. Petroleum and Petroleum Equipment ?. ?
9
3. Electric'Power and Power Plant Equipment . ? ? ? 44 0 .
12
C.
Metals and Metalluuical -Equipment . ,.. . ?. . . ?? ? . ? ? .
13
1. General Obsei:vations .on the Soviet Supply Position . .
13
2. Steel-..... '. . ? ?00 e00. ?eeeeeee ? ? .
15
3. Aluminum ' . * ?. .
16
4. Copper . . . .??....?...... *** 4 ? 4
17
5. Lead and Zinc . ..**4.;..?...... . . . .
18
6. Brass and Bronze . *** . . . ? ? 6
18
7._ Nickel . ? a, ? 0
19
8. Tin and Tin Plate . . 0.
000000000000 .
19
9. Metallurgical Equipment . .. . ? ? . . ? ? o
21
D.
Non44etallic'Minerals and Selected Manufactures .. . ? ? *
22
1. Industrial Diamonds, .. .. 6 ? ???? 0 ? 4 ? 40 ? ? .
2,3
.0 .0
2. Other Industrial Gemstones . * ? ? . a ? 0 0 ? ? 0 ? 4
24
3. Graphite and Electrodes . . .
24
4. Asbestos . . ? . . ? . ? **a?a0* 40 ??? ? ? ? *
25
5. Piezoelectric Quartz . .0. **** .,.?? ? e ? .
25
6. Mica ? ? ?ee. .. ? & ? * * 40.000.0 ? 40 ? ? ? 0 ? ? ?
26
E.
Chemicals' , . ....?. 0. . ? ? . * ? 4 ?. OP 4 a * ? 6 ?
28
1. The USSR .' ... 6 o, vOSe4?04,04?000 6
26
a. Basic Chemicals . . . . ? . ? . ? 0 ? . ? . ? .
26
b. Specialty itqms and Chemical End-Products . ? ?
27
2. The European Satellites. . . ? lb ? 0 0 ? ?? ?c ? .
28
,4> .11
F. ' Rubber and Rubber rroducts , ?4 0 '0
, ?????????.?
29
1. The Soviet SuPply Position . a ? ?? ? 4 ? ? ? ? .
29
2, The European Satellites. . . . 47 ? ? ' ? a
32
G.
Industrial Machinery and cluipment33
! lit * . ? is ?
1. Metalworking Machinq Tools . . ?....?.? 4 4 *
33
2. Abrasives - : .. . . . . . ***37
0 f 0 ID a ? ? 44 ? ?
3. Bearings . ? . ? . ? ? . a 0 0 4 0 . , ..0
a .10 .
39
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
SECRET
TABLE OF CONTENTS (continued)
H. Electronics and Precision Instruments . ? ? o ? 0 0 ?? ? ?
1. Electronics Equipment t . . t . t t . . . . 4 ? 4 0 ?
R., Precision Indtfurientg? 0-???????? ? ? ? ?? ?
I. .Transportation Equipment ? 0 ? ? ? ? ? ? ? ? a ? ? ? ?
1. - Railroad 'Equipment . . ? ?????? 0 ** ? . ?
2.: Wtomotive Equipment 00440000 0 6 ? ? 0 ? ? 0
J. Construction and Road-Building Machinery 4 ? ?
1, - The USSR . . . . . ? .? 0 0 0 ? ? 0 ? ? ? ?
Ke Agricultural Equipment ? . 0 . 4 0 0 ? el 4
1 ,The Soviet Supply- Situation . ? 0 ? 0 0 ? ** ?
L. Textiles and Cordage ? * 0 0 0 9
1, Cotton .- . ...' .
2 .11slool 0. ? ? 0
3. Cordage.Fibers
? 0 0 40 4 40 ? 4 ?-b-?4
0. 4' 0 * *******
? ? ?0 ? 0.0 ? ?? ? .0- 6 o
III. Surplus,Commodities-. 0
Aa General --Consequences of
IV.
?
* 0 ? ?
oo a ?
0, 0 ? OOOOO 4 b b 0 0
a Western Ban on-Imports From
the East ? 0 ' ? ' ? ? ?
B. Speoific Surplus Problems..,. 0 .
1, The USSR -0 ? ? . 0 '0 '0 40 00
2. .Eastern European Satellites'.
? o ? 0 ? ? 0 - ?
? ? ? .4, ?
? ? 4, '.*
4 ? ? ?? - ?
, .
? ? 04,0
?? ? ,? .0 ? 6
.6 ? ? ? 0 ? ?
.0 .0 0 .? ?" b
Technical '.. ? ? . ?
ii
Page
46
46
48
48
48
48
49
49
52
52
54
56
58
59
. 59
. 60
60
61
? ? ? . ? .62
. ? ? 62
Bloc. ? , 63
of
A. Availability af Technicalid:t6 the Soviet Bloc:
B. .1M-portance of ,Westeen'Technioal 'Aid to the Soviet
C. Adverse Effects =the SOViet Bloc of Curtailment
Technical-Aid-. 0 ? ? ? ? .? 4 ? s 0 0 ? ? ? ? ?
V. Transportation ?????????... . ???????????
A. Shipping . . . . . '. . ... : '0 ? ? ? ? ? ? ?
1. The Merchant Marine orthe'Soviet Bloc in 1951 .. .
2. Current Deploythett'of SoVietsBloc Fleets ? . ? ? ?
3. Ship.Charttring Supplements Soviet Bloc Maritirge.
. . . . ?
- -OperatiOns : : OO ..?4404444 4st40 4
64
? .66
? .66
? .66 ,
, 66
-.4, Areas for Potential U.S. Action . -.. . . . . t . 0 ?
B. Air Transport 0 .. : . . : . . . . .. 0-4. . . 4 . . ? . ? .
1. External-Air,Transport'of the Soviet Bloc ?... ? ?? ? ?
2* U.S. .Policy in the Aviation Field . ? . ? . ? ? ?-0-0
C. OverLand Transport (Rail 'arid ?MotOr) Dependencies of the
,
Sevi?e,t Dice ' 0 ." : .' : ." ? ; ? . ? . ,? ? ? ? ? 0 0 0 0
4 ? ?
VI. Money and- Financ.e? . . 0 0 0 .4 ? 0-0
A. Freezin&of:Diqui'd Assets' ? ? .? ? ? ?-.0
B. hefusal to. Buy Gold .. ? 6 0 6,-,? ?
,
,
SECRET
??"???????
o 0 ? ? 0 9 0
O 0:0 ? 0 6 0
67 .
68
68
68
,70
70
71
71
72
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET iii
VII. The Soviet
TABLE OF CONTENTS (continued)
Page
Sphere of Influence in the Far East . . . . .??
72
A.
Economic Integration of China with the Soviet Bloc . . ?
72
B.
Dependence of China on Non-Soviet Trade
73
C.
Areas of Vulnerability ? ? . 0 ? ? ?
75
1. Textiles-. ?..?? OOOOOOOO ..0.?...
75
2.
Chemicals ? ..? ? ?.. ..? ooe O. o ? ? ? ? ?
77
3.
Rubber and Rubber kroducts . . . ? . ? . . ? o yt ? ?
78
4.
Metals and Metal Manufactures 0?? .??????
79
5.
Cereals OO . OOOOOOO ? 0 ? 0 ? ? ?... . ?
80
6.
Petroleum Products . . . . . . Al a t. ? ? 40 a ? ? ii, et
80
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET,
'LIST OF TABLES:
? Page
1. Soviet Requirements and Supplies of Rubber 30
2. Estimated Exports of Anti-Friction Bearings to the USSR
From Selected European Countries, 1949 41
3. The European Satellitest Estimated 1950 Production and
Requirements For Anti-Friction Bearings 43
,
4. Satellite 'Imports of Anti-Friction Bearings From Selected
NonOrbit Countries During 1949 44
5. Percent of Soviet Bloc 1950 Requirements of Electronics
Equipment Filled 47
6. Major Sources of Soviet Bloc Cotton Imports 55
7. Major Wool Imports of the USSR and: the Eastern European
Orbit 57
8. Exports From the Soviet Bloc (Excluding China) to the West,
Annual'Eate, End of f950 and Beginning of 1951 . . 59
9. Soviet Bloc Merehant Fleet'As of Mid-l950. . ? ? . ? 66
10. Chines-6 Imports From'Countries 'Outside the'Soviet Bloc . 75
11. Chinese Supply and donsumption of RaW CottOn
12. Production and Imports of Selected Chemiceds in China
, (Excluding Formosa), 1947 77
13. Chinese Crude Rubber Imports 78
14 Manchurian Metallurgical Production, 1949-50.
I. SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET
OLR 5447 -
, WESTERN ECONOMIC CONTROLS
SUMMARY CONCLUSIONS
1. The rulers of the Soviet sphere have always had the deliberate policy
of reducing* to a minimum:theirerabilitY to 6utside economic pressures,
a. In the caseof.thajTSSR:!ItSeit,:eaCh,othe Five-Year Plans has
6: principal objective building upSoviet productive*
-?
OapacitY in deficient'areS,* eien at the cost of great wastage
?
of resources endenergieS
'APpreciable success 'has attended
these efforts, the USSR being today capable of meeting the bulk
of its 'oparating requirements in eyery major--area'Of"production
. ? ?
Where shortages of particular?comtodities continue to exist, a
?
?
systematic attempt has been made to .provide a cushion against an
interruption of outside supplies through.axtensive? Stockpiling:
" b. Soviet emphasis on self-sufficiency has been -extended to the
European orbit countries. Within certain areas of production,
the satellites are attempting to build up their own facilities.
In others, they are adapting themselves to a scheme of intra-
orbit division of labor. In both inStances, Moscow appears to
exercise decisive direction'and'COntrol.. Satellite dependence
on the Western world has been greatly reduced as compared with
pre-war, but it remains substantially greater than that of the
USSR itself.
c. The Chinese Communists have given every indication that they to
will follow a policy of enforced economic isolation from the
Western world, Despite, however, a strong Soviet desire and
.SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SCRET
vi.
an apparent Chinese willingness to integrate the Chinese economy
with that of the remainder of the orbit, factors of geography
and economic structure seriously restrict the degree to which
such integration can be effected in practice. On the other hand,
the predominantly primitive and rural nature of the Chinese
economy automatically limits Chinals dependence on the outside
world.
2. Despite strenuous efforts to develop self-sufficiency, the USSR and
its orbit are still dependent to an important degree on the West for
economic assistance:
a. The Soviet Union itself, end even more most of the European
satellites and China, are ?in relatively early stages of in-
dustrialization. Each has as a central goal the rapid expansion
of its facilities. For this, each has inadequate supplies of
capital, capital goods, managerial and engineering talents, highly
skilled labor, and know-how in general. All of them vitally need
from abroad industrial-equipment, especially high quality machines
and instruments, some vital raw materials and semi-finished goods,
"pilot plants" of all descriptions, and technological information.
As western assistance played a key role in Soviet economic pro-
gress to date, the ability of the USSR and its satellites to
develop in the future will be substantially affected by the con-
tinued availability of such assistance.
b. The Soviet Union and its satellites are immediately short of
a number of commodities that are necessary for the operation
of their economies at the current level. While substantial
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET
stockpiles of these commodities have been built up (probably
equaling in most cases at least a yearr.s requirements), the
relief that these would offer in case of an interruption of
imports would obviously be only temporPry.
c. The entire orbit constantly needs replacement parts for the vast
amount of assorted foreign equipment acquired in former years.
A large percentege of the inventory of industrial equipment in
the Soviet sphere is of foreign manufacture. For example, it is
estimated that approximately 35 percent of the machine tools in
oneretion in the USSR are western built. The bulk of this equip-
ment is now over five years old and is already beginning to
present serious meintenence problems because of the non-avail-
ability of sPare? parts end the difficulty encountered in manu-
facturing them in the USSR or the satellites. The problem is
further complicated because most of this equipment i5 of an
especially complex type, purposely obtained from abroad because
of Soviet inebility to produce it domestically. Thus, an esti-
mated 75 percent of Soviet ,specirlized machine tools are of
foreign make. The constantly growing spare parts problem is,
therefore, concentrated in the weakest and most important sector
of the Soviet-orbit industrial establishment.
3. The importance that the USSR and its setellites attach to the con-
tinuation of supplies from abroad is directly evidenced in a number of
ways.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET
a 'It'iS estiteted.thet%in 1950 the USSR and its satellites, in-
ciuding.China; ilialported.roughly .$1.7 billion Worth of goods
'froth. the outSide world.. It is true-that:this amount is less
than one-fifth of what the US imported in:1950 -(about $9 billion)
, .
and:that-in compatison with the aggregate national output of the
Soviet bloc it is little more then 1-percent. But included in
the total were virtually no consumers t goods. It consisted with
few exceptions of essential items, essential for military pre-
Peredness and for expansion of the industrial base of the eastern
countries.. It included, in particular, prototypes which embody.
Weetern technical improvements.
b. The USSR and its satellites .have shown great official sensitivity
'.over western export contrbl policies. Moreover, they have made
strenuous efforts to obtain items currently restricted on the sly.
Irregular 6ha Covert'eastward shipments have assumed large pro-
: .
portions and range from complicated third country deals, utilizing
-
freqUently the 'facilities of free ports., to smuggling in knapsacks.
Such'itportS-are.neCessarilyexwmsive because of circuitous hauls,
price gougingand middleman commissions and therefore are strong-
ly indicative of pressing SoViet and.Satellite'needs.
c.-DUring lend-lease 'negotiations. the- Soviet Government revealed
? an extensiVe need for'western?aommoditips, Particularly all. types
Of equipM.ent,.fot both cutrent -operations and future development.
Although the USSR was interested at that time to exaggerate its
needs, careful-screening of the basic data presented. at that
time shows significant shortages and bottlenecks.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET.
ix
4. The greatest impact on the Soviet-orbit economy, from the standpoint
of (a) current production and (b) development prospects, could be achieved
. through interruption of foreign supplies of the following specific
coMmoditios.
a. Maintenance of the existing level of production would be im-
paired by an embargo oft
Swedish iron ore an embargo would seriously lower satellite
steel output unless and until rebonversion to Soviet ores
were effected;..
Alloy steel, particularly tool and bearing steel, and alloying
metals, including nickel, but excluding manganese and
chrome; present supplies from the West relieve a. tight
situation in the bloc:
Tin -- imports from China alone do not appevr sufficient to
make up the blocts deficit;
Copper -- domestic Production cannot meet even minimum require-
ments.;
Industrial diamonds and gems..-- effective control would slow
down prccision tools output and might hamper the atomic
development program;
Piezo-electric quartz -- en embargo would lower the quality
of Soviet bloc radio sets and related equipment;
' Sulphur, pyrites, and sulphuric acid -- although domestic
production is large, rapidly growing requirements necessi-
tate imports at present;
Graphite, mica, Pebestos And their manufactures, but special
types only; local deposits are in some cases, qualitatively'
inadeouate, End processing facilities are limited;
Yetural rubber -- large recent imports have allowed Soviet
?stockpiles sufficient for one or two years, but otherwise
the bloc is completely dependent on outside sources;
Textiles fibres, especially long-stable cotton, apparel wool --
embargo would cause 10-15 percent decline in Soviet textile
output and very substantial decline in satellite output;
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET
Ball and roller bearings, including high?grade bearing steels
and parts -- present controls have little effect or are
evaded; chief sources are Sweden Switzerland, Italy,
Austria; embargo would have serious effect, especiallY on
satellite output, although stockpiles exist;
Electronic equipment, as well as materials and component parts --
present receipts from the West make a direct and substantial
contribution to the blocts wer potential which could not be
matched from internal resources for some years;
? Abrasives, especially critical grain sizes -- embargo would
impair present levels of output of bearings, precision in?
struments, military items, etc; chief sources; Norway and
other European countries;
Spare parts --? all types of replacement parts for equipment
previously acquired by the Soviet bloc in the West are '
essential for continued operation of the equipment. In the
cases where they can be reproduced within the bloc, a signi?
ficant drain on the blocts skilled labor and productive
capacity would result.
b. ,An embergo on the export of these commodities to the Soviet bloc
would substantially impair ability to raise production above
existing levels;
Equipment for petroleum exploration, drilling, and refining,
especially certain crucial components, such as drills -- .
strong. efforts to.obtain these through clandestine channels
attest to their tight supply throughout the bloc;
Power generating equipment. .and, in this connection, copper
- already listed in group .(a) above ?7 -embargo on present
shipments from the West would. limit expansion of power
-facilities;
Anti?friction bearing producing equipment -- coupled with an
embargo on bearings, this would hate repercussions on many vital
industries;
Machine tools (principally complex, specialized, automatic
types) -- with-no receipts from the West, the bloc would
? .hnve to reallocate engineering resources,. oyerwork existing
equipment, and for. a time, work with inferior tools;
Precision inStrumentS and testing equipment -- embargo would
substantially retard expansion in.a number of important
industries, would also hamper research;
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET
xi
Complete plants of all types, but especially chemical plants,
steel and aluminut mill's, and building materials plants --
these are required hot only to expand current production
but.more important for use as-Ipilot models :for copying.
Blast furnace equiPment and. electric furnaces; ?
Laboratory equipment -- one of the most essential needs.
Shipping, viz. ?? an embargo' on acquisition of new vessels
and chertering operations.
5. The USSR rnd its satellite's would be able to counter in part an
attempted western program of denial f the above commodities in several
ways;
a. A wides-oreed net of more or less covert trade channels has been
developed in recent years through which the Soviet bloc con?
tinues to obtain products on Western control lists. The volume
?of this trade is a measure of the partial ineffectiveness of
the existing prOgram and an indication of the difficulty that
would be encountered in enforcing any fUture programs. The
volume, however, could be reduced to a significant extent if
full cooperation of the major non?Soviet producers were secured
for a selective control program. Even with such cooperation,
some restricted items would, of course, still g t through,
especially those of small bulk or those with numerous and high?
ly competitive sources of Supply. The actual amount would in
large measure depend on whether such supplementary measures as
preclusive buying, black listing, and foreign :fUnds control
were systematiaally applied.
b. In those cases where it became impossible for the Soviet bloc
to ProdUre Vitally needed import through SUchmethods as these,
SECRET''
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
4
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
0 0
SECRET xii
compensating internal adjustments could in some cases be made,
? .1
-but not in all instances simultaneously. .The USSR would order
a. stricter control over the diStrihufidn:and, utilization of
*...-
criticaritems within and betweeh members,ofthe orbit. Labor;..
fabricating facilities, end materials would be reallocated in
an effort to produce the produCts? previously imported. Synthetics
and subStitutes:yould be utilized wherever possible. Such
measures, however, would only partially offset the damage' re-
suiting from Western trade restrietions The orbit, through
its planned economies, is operatinglinderra scheme of alloca-
tions which has already been .cte'6.1ded,As, the best possible
?
,
arrangement., Reallocation of labor.; materials, fabricating
facilities,. and .products is ho.taiwaysfeasible and when it
can be accomplished it is tite-tonsuming, .inefficient and gen-
.
erelly less satisfactory than the previously adopted program.
iew of the fact thRt Soviet plans have already provided for
an allocation of reSources givihg top priority to the develop-
ment f capacity for military production. and heavy industry as
Opposed to Oonsumerst goods, reallocation of priorities can
take place only within an already narrowed area. Any forced
change in the planned pattern of allocation would certainly
retard the general development of the economy and the potential
for war. ,.3eyOrDd this a, condition of scarcity is so general
throughout the Soviet sphere that.there is small cushion for
? .
^adjUstmenti particularly. if a number of 'commodities are in-
volved simultaneously.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET
6. It is therefore concluded that despite ..Soviet countermeasures
significant results could be achieved through a control program em?
compassing the commodities listed above and receiving the support of
at least the major western producers. It is estimated in particular
that such a program, if enforced with reasonable effectiveness would
have the following impect:
P. Dislocation would be produced in current production operations
and fulfillment of existing plans made difficult. In the USSR
and the European satellites, especially the latter, at the least
a lower standard of living would be forced on the people with a
resultant increase in popular di content ,nd an aggravation of
internal security problems. In view, however, of the repressive
power of the Soviet bloc
stability of the
various
seaurlty organizations, the political
regimes would notbe seriously jeopar?
dized. Soviet domination of its Eastern European satellites
would permit the USSR to assign itself priority on critical items
of mutual interest without weakening Soviet control. With re?
spect to Chine, eliminPtion of P substantial part of the $300--
.350 million of imports received in 1950 would have relatively
little over?all economic impact but would severely affect the
"modern sector" of the economy, which depends upon foreign trade
for axport markets and for capital goods and raw materials. This
!modern sector," utilizing the advantages of exchange offered
by world markets and the efficiencies of advanced technology,
is highly Productive, and a high proportion of its income re?
presents savings which can be diverted to finance current
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24 : CIA-RDP79R01012A000500030013-1
400 -
5.44t
aVLb
cm.r.mv
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
xiv
ET
government requirements. Although the "modern sector" pro-
bably accounts for only 10 to 15.percent of the national income,
the Chinese Communists planned in 1950 to finance through
revenues derived from it some three-fifths of 'their expenditures
in China proper and three-cuarters in Manchuria. The imposition
of Western economic sanctions may therefore--unless the Chinese
people can be forced to accept further direct taxation and de-.
privation?significantly affect the capacity of the Chinese
Communists to mobilize resources at current rates to meet ad-
ministrative and military reauirements.
b. The USSR, and. even more the European satellites and China, would
find it virtually impossible to carry out their plans for rapid,
balanced development of their economies. Such prospects as
they now have for reducing the present enormous gap between
their productive caPacity and that of the West would be decided-
ly reduced.
c. The Soviet bloc's potential to wage a prolonged war 6f attrition
would be considerably impaired.
d. The capability of the Soviet Union to conduct a general war
of limited duration would not be materially affected. The
military forces and the economy of the Soviet bloc are already
in such an advanced state of preparedness for war that Western
restrictive measures even if used in conjunction with military
measures would be unable, at this time, to stop any initial
Soviet military campaign.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
puREt
xv
e. There is little evidence, currently or historically, ?to
justify the expectations that internel economic difficulties
arising out of Western trade restrictions would force a
tactical chenge in the aggressive foreign policy of the USSR.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
9
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
C.)
SECRET
-.VULNERABILITY_OF TBE SOVIET BLOC TO EXISTING AND TIGHTENED
WESTERN ECONOMIC CONTROLS
I. THE SOVIET BLOC AS A WHOLE
This report attempts to. determineto what'extent the Soviet bloc is
vulnerable to economic warfare on the part Of the Western powers. FOr:work-
ing purposes the bloc includes the following countries! ,(l) the USSR,'
.(2) the Eastern European orbit of the USSR consisting of Poland, Eastern'
Germany, Czechoslovakia, Hungary, Rumania, Bulgaria, and Albania; (3) china
in the Far 'astern orbit of the Soviet Union. Korea, Outer mongolia?.and
certain Communiatcontrolled areas in Southeast Asia are omitted because of
their minor eclmomib significance and the absence 'of reliable data on them.
The countries outside the Soviet realm are frequently referred ta in this
study as uthe meat.'t
, Interference with imports and exports, with efforts to obtain foreign
technological information, with transportation links and financial relations
abroad is necessarily .harmful to the USSR and its sphere of influence. By
aystethaticallyexaMining the Soviet bloc's foreign economic relations, its
dependence on such contacts; and the effects of a more :6r less complete
blockade, itlis'pOssibleto:spot sensitive areaS; both geographical and
functional, : It need hardly be mentioned that statements on the Soviet bloc
economy are to a Very large extent based on estimates, Many of them tenuous,
and that there is no yardstick for measuring and comparing vulnerabilities.
-Even more.itpOrtant than the limitations of research on the countries behind
the Iron curtain are' the limitations of econothic'warfare itself. The first
part of this report assesses the vulnerability of the Soviet bloc in-general,
its encouraging as well as difficult aspects, from,the us point of view,
while the subsequent discussion points out specific Soviet bloc vulnerabilities
in the different fields of foreign economic relations.
Soviet Bloc Dependence on Imports from the Outside world
4 The core of the problem is the Soviet bloc's Vulnerability'to.Mestern
export -contrels. Measures in other fields are important chiefly 'insofar as
they affect the blOcts ability to import. Thus an embargo on imports from the
Soviet bloc or ,the freezing of its financial:asaets endangers the Eaatts
capacity to pay for its Own imports; severing transportation links prevents
the Soviet realm from receiving goods from abroad. The bloc is siensitive te
measure's against its imports because cl) its industrial establishment is
lagging behind that of the west and is being forced into rapid expansion,
and (2) because acre essential materials cannot be produced or are notbeing
produced in sufficient quantities 'within it's boundaries. ?
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
0 0
SECRET
2
The first reason is the more important one. With the exception of
Eastern Germany and the Czech lands, the Soviet bloc consists either of newly
industrialized or agricultural economies s Since practically everywhere indus-
tries are built up at a fast rate, the bloc as a whole is short of capital in
general, of papitalgoods in :particular, of managerial and engineering talents,
and of highly skilled labor's-All of these-countries:seeking to obtain from
abroad industrial equipment, especially high quality machines and instruments,
some vital raw materials and semifinished goodsi-and technological information.
All of them are after spare parts for the vast amount of assorted foreign
equipment acquired in former years and increasingly in need of repair..
Scarcity of raw materials is due only to a small extent to the parsimony
of nature. The Soviet bloc covers a large portion of the :glebe; and With the
exception of natural rubber, a few of the rare metals, and Certain gems, there
is no lack of natural resources s The main problem is to get them out of the
ground and process OP otherwise utilize them; thus it is hot the" deposits but
the skill arid' equipment that are wanting
As a resat of US controls and the unwillingn,ss of. American business
and labor to trade any longer with communist governments,. US exports to the
Soviet bloc have all but ceased? In 1947 commercial experts alone .(i.es,
eluding' lend-lease ?pipeline? and relief shipments) to the USSR, Poland,
Czechoslovakia, Hungary, Rumania, Bulgaria, and Albania amounted to $2075
million; during the first 10 months of l90 they dwindled to 426.1 million;
in the month of October they did not even reach the million dollar marks But
trade between:theSoviet bloc and the rest,of the world has remained fairly
stable in recent years;- 4 rough estimate for l90 ,shows that thp USSR'and'its
satellites, including China, managed to import about $14 billion worth of
goods from the -wrests
It is true that this amount is less than one-fifth of what the US . .
imported ($9 billion in 190) 'and.that in comparison with the aggregate national
output of the Soviet bloc, it is little more than 1 percents But with few
exceptions it consists of goods essential for military preparedness and for
the economic basis of military prepareolnesss Consumers' goods hardly figure
among the imports; the bulk consists of vital raw materials and semi-manufactured
goods such as metals and metal products, industrial diamonds arid abrasives,
important fibers, basic chemicals and rubber as well as all sorts of capital
goods, machinery, and equipment, both for. current use and for stockpiling
purposes,, Lack of statistical data prevents'a commooity-breakdown Of the_entire
Sovie bloc trade but in 1950 crude rubber imports alone amounted to about
$150 -ealion, raw cotton imports to $175 million, wool imports to $75 million,
if not more, and industrial machinery and transportation equipment 'to a minimum
of $200 million more information is available for Western Europe's 1949 exports
to the USSR and its Eastern .European orbits -These expOrts amounted to $750 .
million, thus representing almost :half of the Soviet bloc's entire imports, the
remainder consisting chiefly of raw materials purdhased in the Par.Eas?, and
other parts Of the worlds The major commodity groups within Western Europe's
exports are the following (in-millions of dollars):
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
467)
SECRET
Agricultural products
40.7
Textiles
97.2
Chemicals
54.1
Iron and 'teal products
57.8
Nonferrous metals and manuf.
42.7
Machinery
165.1
Transportation equipment
31.7
TheeffectiVeness of existing controls over exports to the Soviet bloc
and of-a Complete future embargo on such exports can be appraised in terms of
two objectives of economic warfare:
(1)-. reduce current levels of production in the Soviet blocj
(2) reduce or arrest the expansion of Eastern productive capacities.
The following survey groups commodities now being shipped to the East -- or
at least in demand by the Soviet blec --'aCcording to whether their embargo
would satisfy. objective (1) or (2).
(1) 'Embargo on the export of .these commodities to the Soviet bloc would
impair maintenance- of existing-levels of production within the Soviet bloc:
Iron ore: a Swedish embargo Would seriously lower satellite
- steel output until reconversion to Soviet ores was
effected.,
Steel: alloying metals, including. nickel but excluding man-
ganese and chrome. .
Tin:
Copper:
Industrial diamonds and gems (difficulty to enforce controls
should be noted)
Piezo-electric quartz
Sulphuri pyrites, and sulphuric acid
Graphite)
Mice. ) and manufactures thereof, but special types only
Asbestos),
Natural rubber, of which, however, substantial stockpiles exist
Textile fibers, especially long-staple cotton, apparel wool:
embargo would causo 10-15 oerceiat dno in Soviet texcile
output and very substantial decline in satellite output.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
(:)
SECRET?
4
Ball and roller bearings, including hi...el-grade-bearing steels.
and parts:4resent controls have little effect or are
evaded; chief sources are Sweden, Switzerland, Italyy
Austria; embargo would have ? serious effect, 'especially on
satellite ..output, although-st6dkpiles exist*
Electronic equipment, aS well as..materialsand c@mponent parts
for it; embargo would have direct effect on military potential.
'Abrasives, especially critical graim:sizes:?embargo might impair
present levels of output of bearings, precision instruments,
military itensl etc; chief sources are: Norway and other
European countries.
? Spare parts: numerous types of replacement parts for equipment
previously acquired by .the Soviet bloc in the lest are essen-
tial?for continued operation of the equipment. In the cases
where they can ba reproducedwithin, the bloc, a_significant
drain on the ,blocts skilled labor and productive capacity
may result* *
(2) Embargo on the export of these-, ccmModities to. the SoViet-bisc ?
would substantially impair ability to raise production above existing levels:
Equipment for petroleum-exploration, drilling, and refining,
especially certain crucial components, such as -drills.
power venerating equipment and, in this connection, copper,
already listed in group (1).
Anti-friction bearing producing equipment.
Machine tools (only complex, specialized, automatic types),
precision instruments: present controls probably ineffective:
embargo would substantially retard expansicn in a number
of important industries, would also hamper research
Shipping, viz. an embargo on acquisition of new vessels and
sn chartering operations
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
;J.
^
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
(:)
_SECRET 5
Be Soviet Bloc Vulnerability tb'a Ban oh Its Exports
?It was mentioned earlier that interference with Soviet bloc exports
would be effective chiefly as a way of cutting off the means to purchase abroad.
There would he no general crisis as, Say, in Brazil in case of a blockade of
its coffee exPQrtS, most of the Soviet bloc's export goods could be easily
diverted to domestic use; a reallocation oP resources would be nebessary in
only a few instance's? Thus grain which could not be sold abroad would be used
to increase livestock herds or Strategic -stocks) and-some acreage now under
grains might be employed for techniaal crops.- The obvious areas of possible
crises arc the Polish coal industry and various industries in Czechoslovakia
producing luxury and semi-luXury goods for export to the West. In these cases
some capital waste and temporary unemployment would be inevitable) but the
degree of vulnerability of the countries immediately affected is low, to say
nothing of the Soviet bloc as a wholes
Ce .Limitations. of Soviet Bloc Vulnerability
This leads to the liMits of Soviet blotvulnstability. The effective-
ness of economic warfare againSt-the?Soviet bloc is limited, first, because
the area is little exposed to Western ecOnomic action, and, second, because
it has forces of resistance and recuperation.
With respect to the first point, it Must be repeated that the Soviet
realm has a high degree of self-sufficiencyo Not Much more than 1 percent of
its gross national income dis derived from exchange with the -outside world, as
compared with 3 percent for the US and 18 percent for the UK0 moreover, part
of the -Soviet bloC trade is out of reach- of the US; it is carried on with.
countries which) for -political or other reasons,- are interested in continued
commercial relations with the USSR- and its retainerso Sweden and Iran are
examples of countries Which prefer to humor a dangerous neighbor by doing
business With him.. In addition a vast net of more or less covert trade
channels has developedin recent years through which- the Soviet bloc contrives
to obtain products which figure on Western control -lists? Such shipments are,
of course,-expensive because of circuitous hauls )-price gouging) and middleman
commissions, and it is known that Soviet and satellite leaders are greatly
annoyed by theadverse. effects of us policy on the terms of their ?tradeo In
this connection It must be pbinted out that ecOnomic warfare is also a costly
operation for the West and particularly for the us and that the relation
between effects on the East and ?cost to the west must be kept in mindo
Soviet power of resistanCeIs based on the following circumstances
(1) modern technolOgy is well adapted to finding substitutes, at
least for marginal purposds.
(2) In the course of a few years labor and capital can be reallocated
so as to alleviate critical shortages.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
(:)
SECRET 6
(3) In a socialist economy it is relatively easy to spread the
damage done by economic warfare over the economy as a whole* No private
firm will succumb under the weight of losses; workers temporarily idle con
easily be kept on the payrolls*
? (1). The gradual development of centralized planning for the Soviet .
bloc as a whole -means that deficits in one part of the. Soviet bloc are covered,
as far as possible, by surpluses available elsewhere and a more or less, common
strategy is applied to dealings with the outside world, In the long run the
integration of the satellites into the Soviet economy involves a new,. Moscow-
directed division of labor between the members of the Communist empire, This
aspect of the vulnerability problems requires separate consideration,
D, Soviet. B1,:,?c Integration as 'a Hedge Against Western measures
The effectiveness of western economic measures against. the Soviet bloc
depends to a considerable extant on the degree to which the bloc has been, Or
can be, effnctively integrated into a single economic unit and the flexibility
with which it can respond to changing circumstances, such as a western embarg.
-Flexibility of adjustment may be hampered by institutional obstacles, and
rigidities and, to some extent, by transportation bottlenecks* The limitations
in terms of general economic resources.are covered throughout this report.
feirly high degree of integration of the Soviet bloc (though not yet
with the newcomer, CoMmunist China), has already been achieved. Despite the
fact that the economies of the .Soviet Union and.its Eastern European satellites
are more. marked by similarities than by complementarity -- i.e., that their
commodity surpluses and deficits tend to cumulate rather than to -cffset each
other --.the soviet union and its European orbit, have achieved a fairly high
level of interchange of goods. The turnover of commercial trade between the
Soviet Union on the one side and. Poland, Czechoslovakia, Hungary, Ruamnial
and Bulgaria on the other rose to approximately the?equivalent of one and. one-
quarter billion dollars by 1949. The prewar volume of this trade was negligible,
Trade among the 'satellite countries mentioned. above was about $100 million in
1938 and reached almost $400 million in 1949 (current prices in both cases).
In addition', Eastern Germany is rapidly becoming a full-fledged trading member
of the Soviet bloc* outer Mongolia has ?bean an active trading partner of the
USSR for some 25 years now, and the .USSR is apparently obtaining the chief
.exportable surpluses of Manchuria0 Finally, reparations out of current produc-
tion (chiefly from Eastern Germany, but also from Rumania. and Hungary) and.
similar noncommercial receipts add to the commodity flow to the Soviet Union.
As a result, a fairly high degree of redistribution of commodity.usurplusesu ---
chiefly petroleum, coal, iron ore, certain nonferrous metals, raw cotton,
textile s, and industrial equipment. -- has been achieved, ? The far-reaching
current economic plans of'the satellites suggest that .to some extent they are
to share in the limited supplies of industrial equipment available within the,
bloc,
, 'SECRET'
Declassified
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
0
SECRET
7
This redistribution of supplies within.the bloc, resting ultimately
on the effective political control of the whole area by the Soviet union,
seems- to be the primary function of the se-called Council for ?Economic Mutual
Assistance (CEMA). 1/. In particular, MA. appears to coordinate national
economic plans, thonterchange of surpluses within the bloc, and -- by means
of a reported COmmitte.e for Trade with Capitalist Countries within the CEMA --
the sale and purchase of supplies 'in the lest as tell. Other coordinating
machinery may also exist.
the other hand, the presence of substantial institutional weaknesses
and rigidities within the Soviet bloc must be emphasized. These-include:
(1). The presence of about a. dozen.natiOnal units (not countingthe
constituent republic's of the 'USSR), each with its own government, bureaucracy,
and party structure.
(2) The rigidities inherent in the Soviet planned system, (new adopted
by the satellites), with its inflexible plans for each enterprise, with
minute and constraining prescriptions for econotic behavior, and with its top-
heavy centralized planning and inspection strucutresd
(3) The ? presence of -a perpetual lisellerst market", encouraging hoarding
of supplies and diminishing managerial energieSd
(4) General discouragement of individual initiative and of Willingness.
to accept individual responsibility, which iS inherent in the Soviet system of
rewards and punishmentsd
(.5) Disaffection from Soviet domination-in the satellite countries*
. It is believed thA these weaknesses and rigidities may appreciably
offset the organizational ains made by the Soviet bloc, such as the creation
of the CEMA,. and the advantage enjoyed by a totalitarian systemin speed of .
adjustment to changing circumstances* .
D7FICIT COMMODITIES
Ac Methods of Detecting Deficits
Mile obviously almost all goods are more or less scarce there are some
for which essential Soviet bloc requirements can ? be met only through imports
Requirements can be for current use as, well, as for normal or strategic stock-
piling! The Soviet bloc governments may, of course, deliberately decide or be
compelled to disregard even essential requirements. In such a case marginal .
requirements are likely to be sacrificed, but if management is bad, high prio- ?
rities may be neglected!
1/ China is the only major member of,the_Soviet bloc not belonging to the CEMA.
?
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 8
,
The' existenceof a commodity deficit can be detected by several methods:
(1) Computations of availabilities and requirements, possibly based
on reliable Soviet or satellite statements (in some cases data revealed during
the lend-lease negotiations are still profitably used.)
(2) Evidence of shortages of essential goods, even if the underlying
data for availabilities (output and inventory) and requirementsare not known.
(3) Actual imports overt or cov'ert. Imports by devious means, being
expensive and time consuming, are likely, to indicate pressing needs.
(4) Reported negotiations,. overt or covert, revealing Soviet and
satellite interest in Westerngoods.
Be Fuels and power
af the three major sources of the fuel and power supply .(coal, petroleum,
and electric ,power) of the Soviet bloc, only coalappears tcc be completely
invulnerable to restrictive trade measures by the nen-Soviet world. Oil
supplies, while adequate. to provide for a reasonable level of. peacetime economic
development and apparently sufficient to provide immediate military striking
power, would probably be scarce in. a large-scale war of long duration; further-
more, prospects for future quantitative and qualitative development of-prduc-
tion.and refining are limited by deficiencies in oil production and refining
equipment. Electric power generation is now at an all-time high, but failure
to install sufficient new generating equipment during the recent great expan-
sion of industrial electricity consumption affects both the present reliability
of the service and, the prospects for a future rise in Output.
1. Coal and coal-mining Equipment
a. The USSR,, Never en importer of coal from the West, the USSR is
now-producinT776F7Toal than everbefore, and about. 6 percent more by weight
than planned coal production was planned at 250 million metric tons for 1950,
and total-production in that year was actually about 265 million tons. -In .
case of development of local shortages, or temporary shortages of coking coal,
the USSR has at its disposal large resources of high quality coal from the -
polish -Silesian fields which could be used, as they have been while the Donbass
was being restored i to. provide ?coking coals for the Ukrainian metallurgical
and coke-chemicals industries.
The postwar restoration and further development of Soviet, coal produc-
tion have been accomplished in spite of a poor implementation of the governmentf
drive for inceasingmechanization?of mining and preparation processes and
higher labor productivity. on the other hand, there is little evidence that
the USSR has been interested in importing coal-mining machinery. The few pur-
chases and attempts to. obtain this type of foreign equipment since the war have
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
(:) (1.1.)
SECRET ""a 9
been largely limited to orders for Single,Maohines,,oleviously to ,serve as
prototypes for domstic manUfacture.?1/,IX..s4ohPrototypes are withheld,.
the coal mig industry.mill.dontinuTto.eonstitute. a drain.on Soviet man-
power, but this situation:didnotprnt:theUSSR during the last war from
increasing.00al production it those basins which were not occupied by the.
GerMans, and, apparently is" not now .a problem of great concern.:
b. The European Satellites.' Of, :the Eastern European satellites, only
-poland is 4 major producer and exporter of coal. In l919 Poland produced 74
million tons of eoal; 18 million tons were exported to,other countries in the
Soviet bloc and 11 million tons to western Europe. Toland expects shortly to
be able to export 12 to 15 million tons to the west.
Czechoslovakia is the only other substantial coal producer in the
European orbit, having produced 17 million tons in 1949, but it, along with
Eastern Germany and the other European satellitesude)pends on imports of coal.
Llmost all of these imports come from within the bloc.
Very little is known- about the production Or sUpply of coal mining
equipment-in the European orbit. Poland, where .domestic production of certain
types of coal mining machinery began only last year, is primarily dependent
on foreign sources for any improvement in the level of mechanization of its
coal mining industry.- Some of this equipment has been supplied by the USSR
and Czechoslovakia, but the amounts are small, and in 1950 most polish needs
were met from western European countries, principally the UK, Belgium, France,
Italy, and Sweden.
2. petroleum and petroleum Equipment'
a. The USSR. The Soviet Union is producing more crude oil than .
before the war and mere than had been planned. The 1940 output, the prewar
peak, was 31.1 million metric tons, plans for 1950 called for 35.4 million
tons, but -actual production was prebably 37 million tons. However, the goals
of the oil industry in the Fourth-Five-,year-Tlan (1946-50) were modest, taking
into account the long-standing shortages in oil-field equipMent and, in parti-
cular, the difficulties in restoring the important Baku fields after wartime ?
neglect.
By far the greatest increases in the postwar period have occurred in
the relatively new "Second Baku? fields in the Volga-Urals regionl.while the
old Transcaucasian center of Baku, with its large, fixed installation in
refining; pipeline, and tanker facilities, has neither regained Its prewar
level nor produced in accordance with its modest goals.
The obvious cause for this shift of production is the shortage and ? .
inadequate quality of oilfield equipment available for the difficult' jobof
restoring the rich Baku fields, which are suffering from the effectsboth'Of
forced exploitation in the 1930rs and complete neglect of many. operating wells
1/ For further details on Soviet manufacture and attempted imports of coal-
mining equipment) see DRE Information'Faper Nov EER-86, Annex A, November:ol,
1950, SECRET.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
(0\ (-)
SECRET 10
during the last war. production probleme.in the newer eastern fields are
apparcAltly less troublesome, and furthermor, the work of prospecting and
exploratory drilling during the Second world war was materially aided by the.
shipment of significant quantities of oil-field equipment from the US under
lend-lease. All typos of oil field equipment figured heavily in US shipments
to the USSR in the.firet years after the, war before the imposition of export
controls, and still figure heavily in trade agreements-with-orbit,countries,
such.apCzechoslovakial and also With Sweden. 1/ Furthermore, there have
been numerous attempts throughOUt the.past two-years to secure this type of
equipment from the United States through clandestine transit trade via c-nadal
the Netherlands, the UK, GeImany, Belgium, and Trieste.
.,Known soviet refining facilities appear to have more than adequate crude
oil throughout 'capacity :to process amounts of oil now being extracted, but a
groat deal of the equi;ment old and outmoded, and adequate facilities are
lacking for the processing of those PetroleuMfproducts the supply of which is
most critical 77 namelyhigh octane aviation gasoline and high-grade lubricat-
ing oils. Before the war,"the USSR:had none of the technologically advanced
refinery equipment that allows the use Of heavier fractions for making larger
quantities of -valuable lighter fractions --:namely catalytic crackings, alkyla-
tion; polymerization,,and'other such equipment. Under lend-lease, four Houdry
unite Were shipped from the United: State's, but two were incomplete and the -
other two were apparently :net in *Operation for some yaarsafter the war,
Durin?; the Second world war lend-lease imports of petroleum produAs
from the west made a significant contribution to Soviet petrpleum supply,
Such imports dwindled in the early postwar years and stopped almost completely
with the imposition of uS export controls in 1948. 2/ western shipmenWof
oil field equipment and advanOed refinery equipment-during the war WA'8 Of
great use, the former contributing significantly to the degree of success
achieved in exPanding oil output in the eastern fields-, and the latter giving
the refining :industry prototypes and. Workable units for catalytic cracking,
which otherwise might net havedeveloPed domeetically for many years. Present
export :controls on'petroleum products, as well as oil field andrefinery equip-
ment, cever most Of the items in Which the Soviet Union is to any degree
deficient, and so far as is known they have been largely effective except in
the case of .oil field equipment, some of. which may have reached the tiasR by way
of third countries. Yet the degree Of harm so far inflicted by these denials
does not appear to be impressive, mainly, Perhaps, because the benefits guarantc.
by the earlier shipments of e'quipment are, only now showing their full effect.
1/
For further detail pencerning Soviet imports and trade agreements involv-
ing oil, field equipment before, the imposition Of US export controls, see ?
01R-46890, The Significance of Imports from the west for the Soviet Economy
III Equipment for hepetroleum Industry; June 777-79737SECRET.
2/ see 01R-4689.2, The significance of Imports from the"West-for'the Soviet -
Economy: II. petroleum products, May 2, 194b, SECRET..
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
0
SECRET 11
There is?no'Way, short, of war, and: destructiOn? that the Soviet bloc
can.be denied a supPly.of petroleum products adequate for present peacetime
military development plus a certain, though undoubtedly less than optimum,.
surplus for military steekpiling; .nor is there any way that the Soviet union
can be denied its present,- albeit limited, resources for further development
of oil extraction and refining. What has already been done, and what can
still be done to a further degree, is to ,retard both military stockpiling and
? the qualitative iMprovement of the petro1771-17austry, in 'short to limit these
developments to the, tempo dictated by Soviet shortages and weaknesses.
b. The European satellites, Th Eastern European satellites produce
an ittlb tons of crude oil annually at the
present time, including both the production of Austrian fields Under Soviet
domination and the crude oil equivalent of products of the East German synthe-
tic oil industry. -The estimated 1950 output of the various countries, in
thousands of metric tonsl is as follows:
Rumania 4 ..
Austria . ?
East Germany
Hungary ? . ?
Poland ? ? ?
..
? 0-
?
?
?
4,200
?
?
?
?
?
?
.
1,300
?
?
0
?
?
?
.?
800 (synthetic)
?
?
500
?
.
?
200
Czechoslovakia ? ? . ? 4.
Total, :72100
So far as lis known; none of the satellite countries,imPorts bil:fromthe
and the only instance of Eastern European .supplies to areas outside the orbit''.
is in the case of:!aistria; whore :about one..7fifth of the prOduotion normally
goes to the western part of the country.
The four largest producers -- Rumania, Austria, Germany, And Hungary --
export petroleum products to other oartS of the orbit, principally the USSR
and the oil-deficit .countries Deland, ?czochosloVakiallgaria, and
Albania. Thus.orbit'needs. are apparentlY satisfied7byintra7orbit trade,'
although. in solteCasesat a Very.low.level. '
In general the orbit oil industries have the s=e problems as_the Soviet*
oil industry, viz., a prevailing shortage of oil field eqUipment and outmoded
refining facilities. The result is that increases in output in the main oil-
producing area, Rumania, occur very slowly, and the quality of refined products
available from the orbit is such that only a very minor contribution.can be made
by the orbit toward relieving the quantitative or qualitative deficiencies in
Soviet oil production. Exceptions to this general rule are :ustria And Eastern
Germany. In the case of Austria, attempts to obtain oil field equipment. from
outside the orbit have been more successful than in the. case of the other
countries, with the result that the production of 'Austrian fields increased from
about 900,000 tons in 1949 to 1.3 million tons in 1950* In the case of Eastern
Germany, the synthetic oil industry provides superior gasoline and fuel oils,
but net in large' enough quantities to have any great effect on the Soviet bloc's
deficiencies?
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 12
3, Electric 122112E...9.-P11.2211.9.112.12D-1EiRD2Di
a. The ussn. The Soviet Union, now manufactures all types of elec-
tric power generating and distribution apparatus required for central power
stations and networks, but apparently not in the quantities needed to imp-
lement fully its plans for expansion of electric power capacity and trans-
mission facilities. The program of new installations under the Fourth Five-
/ear Plan was badly underfulfilled, even allowing for the possibility of a
sizeable secret program of installations to provide power for atomic energy
development.
Electric power output in 1950 was almost 80 percent higher ?than before
the war, and more than had been planned for that year. The 1940 output had
been 48.3 billion kwh.; 1950 output, planned at 82 billion kwh., probably
reached 86787 billion. This output appears to have been sufficient to meet
industrial demands but not without strict allocations to civilians in some
areas and careful regulation of the peak loads in tethers. The reason for the
latter is that the amount of standby capacity planned for the power industry
at this time has not been -provided. In general,. the current leva of output
must be accomplished by working equipment at high rates and deferring main-
tenancel.in short, the very conditions,that existed before the war and which
postwar developments were intended,to Overcome. This situation increases
the probability of chronic breakdowns and has unfavorable implications for
the anticipated life of the equipment'and'henee'fOr future replacement needs.
Since the end of the war; the SoViet Union has sought, by one means
or another, to augment its own prOductidn'of poWei station equipment by re-
ceipts from abroad. Up to 1947; thd doMbined 'tdtal of Such receipts, ac-
quired through?dismantlings in Germany and Manchuria, reparations from East-
ern European countries, and trade with the US and UK, amounted to at least
3.7 million kw. in primary generating equipment, plus a great deal of trans-
forming and power station auxiliary equipment. 1/ At present, large amounts
of power equipment are still reaching the USSR through trade with Sweden, the
UK, Belgium, and 'Switzerland,,/ and perhaps from other Western European
countries. In addition, the USSR is obtaining this type of equipment from
1/ 01R-1785.71, SituaIi2pj22E2tIl.JSSR, June.26, 1946, SECRET; 01R-4322,
Re uirements and mply of Fuels and Power in the USSR 1946-1950, May 1,
1947 CONFIDENTIAL; OIR-46$9.8,.The%.Significance of. Imports from the'West
for the Soviet Economy: VIII, Electrical:EquipMent, January 28, 1949,
SECRET.
Z/ For citations, see DRE Information Paper No. EER-86, October 19, 1950,
SECRET.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 13
Eastern Germany and Czechoslovakia.
. .Present export control provisions agreed to by the Western powers do
.
not restrict shipment .of power plant equipment to the Soviet bloc, although
.quantitative -control has been proposed for generators, and prime movers 'of
5001ap, and over, .Since -the Soviet Union, aided by large receipts from 3_7
broad,has not been able to provide equipment for the kind. of electric power
supply envisaged by the'planners:of postwar development in 1945-46, it ap-
pears that considerable harm could be done by withholding shipments in the
future. For the most vital military programs which is,a large consumer Of
electric power ?.namely the atomid energy program .-- this would probably
not be allowed to have an-appreciable.effect. But whether the Soviet Union
could provide sufficient power for atomic energy development and at the-
pame time implement its planned industrial expansion in other less strate-
gic but also vital directions without continued Western shipment is doubt-
ful.
?b. The Eurooean Satellites,. The European satellites in 1949 pro,,..
duced a total of about 36 billion kilowatt hours of electric power, placing
their consumption, on a per capita basis, at a level somewhat higher than
that of the USSR in the same year (Soviet per capita consumption was about
364 kwh., that of the satellites about 405)Q
The Major satellite countries do not appear. to be suffering any
shortages of.power.for their industries at present. However, as both in-
dustrial output in general and electrification,ofindustry are scheduled for
large increases in the near termaome tightness in the supply of power may
be expeCted to arise because of the lack of adequate. quantities and types of
power equipment from'domestic sources. Power plantequipment is producedin
Czechoslovakia and Eastern Germany, 'but the latter is a.net importer of such
equipment and...Czechoplovakial although possibly.a net exporter, needs to
port specialized types. 'The only source for these import needs, as well as
the smaller Ones of other. satellite countries which. do not produce signifi-.
cant quantities of power plant equiptent, is the West. Thus, the satellite
problem with regard -be power plant equipment is approximately.the?same as
that of the USSR.
C. Metals and Metpllprg101 Equipment
1. General Observations on the Soviet Supplx_Epsition. Despite a
steald]y growing output, the supply of most metals in the USSR, including
imperts, is believed to be adequate for the planned development of essential
industries and for peacetime requirements of the army. Any additional mil-
itary allocations would beat the expense of essential industrial supplies or
minimum stockpiles.
Domestic production of ordinary steels and of aluminum is relatively
more adequate to meet existing and prospective needs than the output of any
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET
other strategic metal. In the case of most nonferrous metals and certain
types of special steels, the USSR must depend upon imports to supplement its
own output. This dependence appears to be greatest in the case of tin, but
extends also to copper, lead, zinc, tungsten, molybdenum, and bauxite) There
is little information on the Soviet supply of cobalt, mercury, and cadmium)
These metals are reportedly being smuggled into the USSR from the West. There
is even less information on other nonferrous metals.
It is believed that the USSR is able to satisfy its current import
needs in large measure, but not entirely, through receipts from other Soviet
bloc countries, with China and Korea delivering tin, tungstenland molybde-
num; Poland, lead and zinc; and Hungary, bauxite. Relatively small quanti-
ties of these metals are obtained in the West; however, Western sources
supply the USSR with its entire import needs for copper and unknown quantities
of ferroallrys and alloying metals. It is believed that Czechoslovakia may
be delivering to the USSR as much as 200,000 tons of high-grade alloy steels
per year. Until the impositionof US export controls, the USSR imported
from this country large quantities of pipes and tubing, wire and cable.
Czechoslovakia is now supplying some of these products while others are
being procured in Western Europe.
Any increase in the tempo of Soviet armaments production would create
shortages of various degrees of severity. Increased domestic output may not
be expected to fill this gap in the short run. Possibilities of covering
the shortages through substantially larger imports from the Soviet satellites
are limited, because of the unsettled conditions in the Par East and because
the USSR could not afford to push exploitation of its European satellites
to the point of seriously weakening their own economies. ?
The development of the economic and war potentials of the USSR would
probably be' retarded by a loss of supply sources for metals and metal products
outside the Soviet bloc. The ability, of the USSR .to assist in the industrial-
ization of the more backward satellites, and to keep the industries of the
technologically more advanced countries operating at full capacity, would also
be noticeably'reduced. In such an eventuality the USSR would give priority
to its own needs and its satellites would therefore be the first to suffer
the consequences.
Internally, the repercussions would be felt primarily in the machine-
building, electrical equipment, electronics, and oil industries, with second-
ary effects throughout the rest of the economy. Marginal consumers of metals
might find their allocations further reduced or entirely cut off. It is not
known to what extent, if any, Soviet programs for the development of atomic
energy and jet propulsion would be affected. In general, the USSR would be
able to adjust itself te the altered conditions of supply, but the rate of
its industrial progress would be retarded.
? SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
C. SECRET is
2. Steel
a, The USSR. In 1950 the USSR met its planned production goal of
25.4 million metric tons of crude steel and exceeded its gonl of 17.8 mil-
lion tons of rolled steel by about 700,000 tons. Total supply should there-
fore be adequate to satisfy requirements as originally planned in 1946, in-
cluding an estimated 3 million tons of crude steel for military end items.
It is reasonable to assume, however, that current allocations to the military
are greater than originally planned. The general stringency of the steel
supply will therefore continue. Since military requirements include a large
proportion of high-grade alloy steels, non-military'consumers may find such
steels particularly short.
Figures on output of alloy steel in the USSR have never been announced.
On the basis of data in the Soviet plan for 1941, a copy of which was cap-
tured in Germany, it is estimated that at least 1 million tons of alloy steel
(12girovanaya stall) were to be produced in that year. This level of output
may have been reached in the postwar period before 1948 (when Soviet steel
production regained the prewar level), since increased emphasis was put on
alloy steel production during and after the war. Assuming that damaged
facilities were restored by 1948 and that the equipment received under lend-
lease was then in operation, the USSR would have had a minimum capacity of
1.7 million tons in 1948. Since there has been considerable construction and
expansion of metallurgical plants in the past two years the present alloy
stel capacity is probably well over 2 million tons. A current output close
to this magnitude appears to be well within the capabilities of the Soviet
steel industry.
This quantity of alloy steel represents a somewhat higher proportion
of total steel output (viz. about 7.8 percent) than was planned in 1941,
when the USSR was gearing its economy for a full-scale war. Its domestic
alloy steel supply position should therefore be better than it was at the
outbreak of the Second World War. In addition to its domestic production,
the USSR is believed to be receiving as much as 200,000 tons of high-grade
alloy steels annually from Czechoslovakia. Stricter controls of Western
exports of such steels could not, therefore, prevent the USSR from carrying
out a fairly large armaments program; but they could reduce its ability to
meet both military and industrial requirements for alloy steel and thus
indirectly retard the growth of its military potential.
Available information is not specific enough to determine what alloy
steels are likely to be in shortest supply. It is probable that the supply
of alloys containing cobalt, molybdenum, and titanium is more stringent than
than that of steels alloyed with other metals more readily available to the
USSR, such as nickel and tungsten. It is also likely that the greater the
technical difficulties in producing an alloy (e.g., die steels for hot work),
the greater are the.chances that it is short in the Soviet Union.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET
16
In addition to alloy steels, the USSR seems to be in the market for
seamless pipes and tubing and for steel wire and cable, both of'which are
essential for the oil industry. Denial of these products to the USSR would
slow down the rate of expansion of oil output.
b. Eastern European Satellites. In 1950 the USSR and the satellites
are estimated to have prodaced about 32.5 million tons of crude steel, of
which 25.4 million tons were produced in the USSR and the remaining 7.1
million tons in Czechoslovakia (209), Poland (2.2), Hungary (0.9), Eastern
Germany (0.8), and Rumania (0.3). This output appears to have been in-
adequate to meet totnI bloc needs, as evidenced by imports of some 180,000
tons from Western sources into Eastern Germany, and further imports of un-
known magnitude into the bloc as a whole. Moreover, current production of
steel in Czechoslovakia and Poland depends in part upon imports of iron ores
from Sweden (about 1.7 million tons per year), and output of alloy steels in
these countries, and to some extent perhaps in the USSR, upon imports of all
types of ferroalloys from Western countries.
Expansion of existing steel mill capacity in the USSR and all the
major satellite countries is planned, in the long run, to make the bloc
independent of Western sources for finished steels, while a readjustment of
Czech and Polish steel mill technology,' coupled with expending ore output
in the USSR, is expected to eliminate the need for ore imports from the West.
Pending realization of these long-term goals, the Soviet bloc remains
vulnerable to a Western embargo on shipments of ore, ferroalloys, and finish-
ed steels. The damage which might be inflicted by such an embargo would
probably be greatest in the case of Czechoslovakia and Poland. Since the
superior Swedish iron ores are used by these countries in admixture with
local and Soviet ores, rather than being smelted by theMselves, production
of pig iron and, consequently, steel would decline far more than the supply
of ores. Judging from the experience of Soviet plants, it may take the steel
mills one or more years to adjust to the altered conditions of supply.
3. Aluminum
a. The USSR. The Soviet Union appears to be self-sufficient in
crude aluminum, and also in aluminum sheets, strips, and other forms. It
might encounter difficulties in the production of strategic aluminum foil,
although there is no direct evidence on this point.
Currently, the Soviet Union is the third largest producer of
aluminum in the world, ranking behind the United States and Canada. The
production goal for 1950 has been estimated at about 271,000 tons, of which
195,000 tons is primary aluminum and 76,000 tons secondary. 1949 production
is estimated at about 200,000 tons, or more than double the prewar peak.
The postwar gains in production have been facilitated by the receipt of
equipment from Germany and imports of bauxite ore from Hungary. While the
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET
17
USSR's deposits of aluMinum bearing ores are currently adequate, they are
not fully developed for exploitation; and -the large receipts of ore from
Hungary (EuropetS largest producer of.bauXite), which are rumored to have
been around 4009000 tons iD 1949, equivalent to 100,000 tens of refined
metal, serve to release badly needed manpower and equipment for other
purposes.
Requirements for aluminum in the USSR depend almost entirely on the
level of aircraft production, since other industrial uses are restricted and
the use of aluminum in consumers' goods is held down to the barest minimum.
During the Second World War the USSA, aided by substantial lend-lease
imports; consumed an average of 169,000 tons of aluminum per year, but found
this amount inadequate for optimal requirements. The present availability
is substantially above the wartime level, and appears to be adequate for
peacetime needs and some military stockpiling. On the other hand, the USSR
has imported small amounts of aluminum in postwar years from the Soviet Zone
of Germany and from Norway, and has been intreated in developing refining
facilities in Hungary. Although these imports are small, they suggest that
qualitative requirements might not be fully met by domestic aluminum pro-
duction. Imports of aluminum foil would allow the Soviet Union to circum-
vent the embargo on foil rolling equipment. An embargo on imports of other
forms of aluminum into the USSR might cause some difficulties in the re-
stricted cases where extremely fine metal and its products are required, but
would probably have little effect on over-all Soviet economic-military
capabilities.
AD. Enstern European satellites. About one-half of Czechoslovakia's
.1950 requirements' of 18,000 tons of aluminum came from the West, Otherwise
the satellites are not dependent on Western supplies of aluminum, owing to
Hungarian output and possibly Soviet exports as well.
40 .9.212D2r
a. The USSR. The domestic supply of copper is believed to'be
deficient to Meet the needs of all essential :Soviet oopaumers. Before the
outbreak of Korean' hostilities, Soviet Copper requirements in 1950 Were
estimated at about 325,000 tons, and domestic output between 250,000 and
300,000 tons. It is likely that.current.requirements are substantially,
larger than the earlier estimate.
For years the USSR depended Upon imports. of copper to ,supplement its
domestic output In the foUr.years 1937 to 1940 the USSR imported.a total of
.385,000 tons, or about four-fifths of its own production during this period,.
Copper. also played a large role.in:lend-lease aid during- the and, its
imports in.1944 reached an all-time 'Peak of abdut 131,200 tons. In the fol-
-lowing year imports declined to about-51,400 tons. Quantitative estimates.
for later years are unreliable.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
ciiJo.
SECRET
Current imports of copper are believdd to come primarily from Finland
and from Belgium, but the USSR is said to be seeking copper in all parts of
the world. A total of some 7,000 tons this year is reported to have passed
on its way East through Germany alone. Large transshipments Of copper, are
also reported through the port of Rotterdam.
With the exception of two types of copper products for direct military
application, there is no effective international control over shipments of
copper and copper products to the USSR or the Soviet bloc. A recommendation
has been made to the Coordinating Committee (COCOM) for Western export con-
trol for inclusion on the international embargo list of copper ores, refined
copper, and misdellaneous copper products, and less rigid control has been
recommended over shipments of semi-finished copper. It is believed that ap-
plication of the proposed controls would perceptibly reduce supplies of Cop-
per allocated to essential industries, and thus help retard the development.
of the Soviet economic and military potential.
b. The Satellites. The major satellite requirements for copper from
the Wept are those of Czechoslovakia, estimated at 34,000 tons per annum, or
some 60 percent of its total copper needs. Hungary's copper import require-
ments.are about 5,000 tons a year; though small, they supply the impcirtant.
Hungarian electrical machinery industry.
.5. Lead and Zinc
a. The USSR. Soviet production of lead and zinc, amounting to some
100,000 tons each in 1950, is believed insufficient to meet the country's
needs. Imports of some 37,000 tons of lead and 20,000 tons of zinc were re-
ceived in 1947, and total imports in 1950 may be significantly higher. The
main foreign source for lead and zinc for the USSR is Poland. Under pres-
sure, the- USSR might obtain large portions of the Polish output, and thus
cover its own increased requirements at the expense of its satellite. The
Western countries have not exported significant amounts of lead and zinc to
the Soviet Union since the termination of lend-lease.
b., Eastern European Satellites. The only major demand for lead and
zinc from the West by the ,satellites is that of Czechoslovakia, which may
have obtained 8,000 tons of lead and 10,000 tons of zinc from the West in
1950. However, vulnerability is uncertain because at least some of these
requirements might be obtained from Poland.
6. Brass and Bronze. Substantial imports by the Soviet Union during
the Second World War-756,000 tons), and smaller imports in the postwar pe-
riod, suggest that domestic production of brass and bronze is significantly
below requirements. Alloying facilities in the USSR are limited and it is
known that the Soviet Union has to import base stock for brass and bronze --
viz, copper, zinc, and tin. Part of the imports, however, originate in areas
under Soviet control.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 19
Denial of bronze and brass from the West may have some adverse ef-
fect on output of shells and cartridges, parts of naval vessels, bearings
and anti-friction alloys. Whether stricter controls would materially re-
duce Soviet war potential is impossible to 'determine. They would help to
make the supply of copper and tin more stringent and, indirectly, would eli-
minate one way in which the USSR might circumvent export controls on these
metals.
7. Nickel
a. The USSR. Nickel production in the USSR is now larger than before
the war because of the acquisition of the Finish Petsamo mines and expansion
of facilities elsehere. Whereas the country was shOrt of nickel before the
war, it is believed to be essentially self-sufficient for peacetite. needs
at present. lk)roover, the Soviet Union has-abundant supplies of chromium,
which in some cases may be substituted for nickel. However, the USSR may not
be-able to refine adequate quantities to the highest degree of purity, as evi-
denced by repeated efforts to import from Western Europe 99.9 percent pure .
nickel cathodes,
It is unlikely that the USSR has significant stockpiles of nickel; and
the current supply may not be large enough to support large-scale prepara-
tions for war. Thus while denial of nickel to the USSR from Western sources
would not significantly interfere with future peacetime development, it would
probably retardthegrowth of Soviet aggressive.strength.
b. Eastern European Satellites, Definite information on satellite
imports of.nierelis ZUMUng? aUnrorrovakia, the largest consumer, appar-;
ently requires -some 5,000 tons annually, its supplies may come chiefly from
the EaSt.
8.. Tin -and Tin Plate
a,0 The pssR. The Soviet Union is short- of tin. It cannot,econo-
. . .
mize its tin supply by substituting lead, which is possible in a few cases,
because the latter metal is also scarce. However,' A does have access to
Chinese. tin production and probably acquires some tin-through the European
satellites - either by forcing them to re-export tin metal or by obtaining
end-items ,containing tin, Short of a full-scale war4ethe USSR may be able
to meet its minimum requirements-in-this way; which implies some sacrifices.
on the part of the satellite countries and,-indirectly, on the part of the
less essential industrial consumers in the USSR but with increased require-
ments caused by ,stepped. up military productien the tin shortage is likely
to become acute, Prior to 1936) the amount. of tin produced in .the Soviet
Union was very small,. but reports of large. increases in subsequent years .
suggest that by 1945 production was about 6,500 tons,. Output in 1950 may be
as high as. 10,500 tons t Requirements for tin have always exceeded production.
In the five year period 1936-40, the Soviet Union operated its economy on an
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 20
average annual supply of 11,040 tots of tin, of which about 10,000 tons were
imported. During the war requirements for tin were said to be 20,000 tons
per year, but they were not fully met. Requirements initially declined in
the postwar period, then began to *increase with the rebuilding of industry,
-'and are estimated to be about 15,000-17,500 tons for 1950. The latter es-
timate does not, however, allow for any unusual increase in requirements
occasioned by large-scale military production. If Soviet production.of mili-
tary end-items were stepped up to a level comparable to 1941-45, tin require-
ments would undoubtedly be at least 20,000 tons per year. The indicated
"peacetime" deficit is ,.therefore about 4,500-7,500 tons, while the "wartime"
deficit may be assumed to be not less than 10,000 tons per year.
It is believed that currently the USSR is barely able to make up its
tin deficit by imports. Known postwar imports have been smaller than pre-
war, but probably have been augmented by smuggling from Southeast Asia and
China. In 1946 a shipment of 2,857 tons of tin was made under the UNRRA pro-
gram to Belorussia and the Ukraine; imports in 1947 and 1948 were smaller,
but the USSR also bought babitt metal arid tin-plate from Western sources.'
Known shipments in 1949 to the USSR proper, from all countries except China,
were only 78 tons; for the first half of 1950 they were 1,865 tons.
Shipments of tin into the Soviet sphere in 1949 amounted to 4770 tons,
some of which may have been re-exported to the USSR at the expense of meet-
ing domestic requirements in the satellite countries. The largest potential
shipper to the USSR is China, where preWar production was 12,000-15,000 per
year. Current output, however, is no more than 4,000 tons. With the Com-
munists in power, the USSR is probably receiving virtually all of Chinas
output,. .IT so, the total supply available to.the'USSR would be close to
minimum Soviet requirements. Higher requirements probably could not be met
by large imports from China in the near term, since the restoration of Chinese
output to the prewar level would reEluire considerable investment and would
-take time. Consequently, tin is likely to be in short supply in the USSR and
perhaps critically short when war production is stepped up.
.While there is no direct information on the current production and es-
sential requirements of tin plate in the Soviet Union, available data suggest
that imports are not sufficient to eliminate the gap between domestic output
and total requirements.
This shortage is caused in Part by an insufficient supply of tin; it
has been maintained because imports of tin plate have been less than the USSR
desired. For example, the USSR insisted that tin plate be included in its-
trade-agreement with Great Britain in 1947, but actual shipments under this
agreement have been modest - only 2,827 tons in 1949.
The planned prodUction of tin plate for 1941 was 74,000 metric tons
but undoubtedly was not realized owing to the outbreak of war, in the course
of which important tin-plating facilities .in the Ukraine were destroyed. It
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET.. 21.
is possible that Soviet planned output ih-1950 may be as high. as 85,000 tons,
although; this. figure is highly speculative:- ?
The requirements for tin plate for preservatioh of food, meantime,
have increased, The Fourth Five-Year Plah calls for asubstantial" increase
Of canned goods in comparison with prewar. The Soviet press admits that large
amounts of food are spoiled instead of being preserved.
The cessation of-tin' plate imports into the .Soviet 'Union would serve -
to increase the already sevete tin shortage in the country and would prevent
the evasion of restrictions on tin imports by receipts of tin plate. The .
immediate.: effect of more Stringent control S would probably be felt by the
civilian economy, since military needs for packaging'and.food 'rations would
have highest priority.
- b. Eastern Etrohean Satellites. .AlICcations of tin to the satellites
by the Combined Tin Committee (CTC), nowdiAanded, were during the second
half of 1949. at, an annual rate of just over 6;000 long tons. Requirements
are taken to be higher than this amount, Gzechoslovak:.requirements alone
are estimated' at some 3,000 tons per annum, as against a, .CTC allocation of
1)600 tons (annual rate) in thelast half of 1949.
, 9. Meta1lui-101111 ?.
, a. Ittallarg_hp_Emalpmail. The use of high pressure blast in the.,
operation of blast furnaces is a recent development in the United States,
which is reported to increase the productivity of blast furnaces by 15 to 20
percent. It is also said to facilitate the utilization of loW...grade coke and
ores. The USSR does not yet use high pressure blast, which implies that its
furnaces are not yet equipped With pressure top elements.-, The castings re-
quired for pressure top equipment are very heavy but probably could be pro-
duced by Soviet engineering plants; however) the equipment also. requires spe-
cial steel alloys with a high melting point and elaborate control apparatus,
both of which are in great demand in the Soviet ,Union. Their tight supply
may retard the introduction of pressure :top equipment for some time to come.
Thus, imports of this equipment from the West would _help the Soviet Union to
increase its pig iron production considerably without-making extensive new
blast furnace installations.
6
b.' Rolling-millllaimmt. Soviet plants have been making rolling-
mill equipment since the early 19301s. Before the war domestic production
consisted mainly of extremely 'simple tes of equipment and in most prewar
years a sizeable percentage of the metallurgical industry's needs had to be
met by imports of the more specialized types of rolling-mill equipment.
During the war, Soviet heavy engineering plants were either captured by the
Germans or converted to military production, so that domestic output of rolling-
mill equipment declined drastically.
SECRET.
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
SECRET
22
The postwar recovery of this industry was very slow. Soviet planners
estimated that the steel industry would need 405,000 tons of new metallur-
gical equipment (most of which is thought to refer specifically to rolling-
mill equipment) in the five-year period 1946.500 It is estimated that dom-
estic sources will have produced only about 310,000 tons of such equipment in
this period, leaving a deficit of about 95,000 tons,
Part of this deficiency was compensated for in the immediate postwar
period by takings in Eastern Germany and Manchuria and by postwar shipments
from the US before the imposition of export controls. Known receipts of
rolling-mill equipment from abroad in the period 1946-50 totalled 78,000
tons, still leaving the Soviet steel industry some 171,000 tons short of its
anticipated requirements, There is, furthermore, the possibility that in
estimating requirements for this period, Soviet planners took account of re-
movals and intended that Soviet domestic industry would itself produce the
projected 405,000 tons of equipment. In that case, acquisitions of rolling-
mill equipment from all sources during this period would be even less ade-
quate for the requirements than the above calculations indicate.
As coi: 1ate,19480 Soviet sources were still referring to the necessity
?of designing and produsAut domestically many heary-duty specialized types of
rolling-mill equipmengMeretofore had not been designed or manufactured in the
USSR, These were specifica4yidentified as rail and structural steel mills,
wheel-rolling mills, tube mills, combination mills, 800 and 650 millimeter
heavy section mills, continuous billet mills* alternate light section mills,
tin-plate mills, and pipe-welding mills, It was further indicated that the
principal difficulty in manufacturing such equipment was in the standardi-
zation and supply of components for such diverse rolling-mill equipment,
specifically tables with self-contained electric drive, conveyor rollers
with group drive, large reducing gears, small and medium cylindrical and
worm reducers, gear casings of special sizes0 The East German engineering
industry, having been originally quite specialized in its rolling-mill equip-
ment production, is probably supplying some of this specialized equipment as
part of its reparations* but the amounts are not likely to be large enough to
satisfy Soviet needs completely? As the Soviet engineering industry im-
proves its designs and organization, there is no doubt that it can eventually
produce all types of rolling-mill equipment needed in a modern metallurgical
industry, but for the present, failure to produce or import sufficient quan-
tities of specialized rolling-mill equipment will have a continuing adverse
effect on the flexibility and diversity of the Soviet steel industry,
D, Nonmetallic Minerals and :Selected Manufactures
...mr?Mn..1.101.m.1.?????????916,
?
Few opportunities 'exist for retarding the development of the war potential
of the Soviet Union through further limitations on Imports of nonmetallic
minerals, for on the whole the country is richly endowed with this group of
raw materials. A case of clear-cut vulnerability of a limited scope! exitd
with respect to industrial diamonds and gemstones? Although the evidence
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET....
23.
is meager, it seems that there is also an opportunity to hamper the developr
,mott,pf the Soviet war potential by an embargo of piezoelectric quartz and
.ofeeveral_othertninerals.and'certain selected. manufactures involvingAhem4
is4ch as gr,aphite anodes and coolers, and.miba-lined insulators. The Soviet
.Union has'large accessible'and developed-deposits of the basic raW materials
in each of the above pasee,:but it might be short of particular.gradea-needed,
either for reasons of natural unavailability.or.Mining difficultiea0'or what
:ia more likely, because bottlenecks exist at the manufaCturing levels owing
to-lack'of skilled labor and "know hOW." ?
The vulnerability of the satellite countries, particuhrly those which
possess sizeable manufacturing industry, i.e., Czechoslovakia, Hungary, Poland,
and Eastern Germany With respect to non-metallic minerals, closely resembles
,that of the Soviet Union. They are vulnerable to an embargo on industrial
diamonds, and their development may be' hampered somewhat by an embargo on
asbestos, abrasives, graphite, mica, and 'strategic quartz9 in a raw Or2manu-
factured state.
l?Industrial Diamonds
a. The USSR. Industrial diamonds are critically needed in the Soviet
Unien and the more industrialized satellites. Production of industrial diamonds
beghn in 'the Soviet Union only a few years before the start pf the Second
World War 'and at present amounts to no more than a few thousand carats, where-
as ,requirements are estimated at 40,000-100,000 carats annually. None'.of the
satellites produces diamonds; they too must import their supply from the load-
producers of the world Brazil aid South Africa or through the principal dis-
tributors mainly in London, Amsterdam, and Brussels.
Since the end of the war the Soviet Union has impOrted dimnonds both
openly and covertly. In relation to estimated requirements, the purchases
appear to have been substantial. In 1949 the USSR boUght about 995,000 carats
from Belgium openly, but this amount was augmented by black market'acquisi-
,
tions elsewhere. In 1950 the known open purchases seamed..to have declined.
It cannot be ascertdned if a stockpile of any significant magnitude has been
acquired. Since the requirements of the Soviet. ecenamy are likely to expand
(despite Soviet progress in substituting carborundum grinding for diamonds, -
which is but one of the several uses), an embargo on dimnonds and instruments
containing them would ultimately slow downy the Soviot'production of precision
tools and instruments and hamper the expansion pf atomic energy developments.
? b. Eastern. European Satellites. Industrial diamond's are not pro-
duced in the satellite countries and are critically neecled by Czechoslovakia,
which has tried to bbtain than by covert and overt moans in Latin America.
Its requirements are estimated,to be about 20,000. carats per year;. the re-
quirements of Eastern Germany are not known, but.are-prebably in the same or-
der of magnitude. The requirements of other satellite countries are
_ .
'SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 24)sf.
negligible.
. 2. Other Industrial Gemstones. The Soviet Union appears to beshort of
other inCTUTETI7I-TE5757=TUFFnces and bearing While the Soviet Union
has a large variety of precious stones and gems in the Urals (e.g., emerald,
beryl, topaz, aquamarine, smoky quartz, tourmaline, etc?, - all of them much
softer than diamonds*or rubies), it sects to have no rubies or sapphires
which are needed for watch mechanisms, and little agate, used in analytical
balances. Moreover the USSR may be short of the highly skilled. labor needed
to prepare these gems for industrial use?
The Soviet Union has imported. artificia gems from Switzerland which in
some cases are cheaper than the natural stones. It has also imported bearings
and instruments containing such stones o The stoppage of these imports would
hamper the production of special gauges, chronometers, watches and balances,
dies, nozzles and other precision equipment,
3. Graphite and Electrodes.
_a0 The USSR?. The strategic importance of graphite arises from its
use,in production of crucibles .and electrodes. The Soviet Union has large
depoSite'of graphite, but its supply of strategic grades is unknown and the
workmanship in the extraction of pure graphite has been poor. Current
availability... of the raw materials for the production of natural graphite
electrodes is uncertain. The USSR has recently begun to manufacture artificial
graphite electrodes, but their nwnufacturing capacity seems to be small.
Up to 1938 the Soviet Union was obliged to supplement its supply of elec-
trodes by imports - about 4,000tons were imported in that year. During the
war about one half of the production capacity Was lost. The Soviet Union
received several million dollars worth of raw grThite, grqphite, carbon
brushes, and electrodes from the US under lend-lease. Currently the country
might have an electrode mass capacity of 175,000-200,000, tons. This might be
enough for the needs of the rapidly growing aluminum industry, but it is not
known if needs mf other industries can be met.
Imports of raw graphite of strategic grade have occurred since the end of
the war, Imports of graphite electrodes, anodes, and coolers have continued
up to the present time, but in relatively small amounts? In view of Soviet
plans to expand the production of aluminum and of electric power generally,
an embargo on startegic graphite, graphite brushes, electrodes, and similar
products may throw an additional burden on the plants producing these commo-
ditiese Any induced shortage of thee parts would, of coUrse, hamper the
growth of the war potential.
be The European satellitego The graphite requirements of Czecho-
slovakia (1,600 tons) and Hungar (small) are7nOt by,and large by:domestic.
produotion and imports from Ea9tern Germany, but Czechoslovakia also
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
-\
SECRET'
25.
imports anodes from the Western countries. Hungary appears to be importing
special purpose anodes from the West and Poland* Poland in turn is expected
to reeeive a few hundred tons of. raw amorphous graphite from France mad
Norway. Thus the satellites are barely able to meet mineral needs and stock-
piles seem to be small. Cessation of even the limited exports from the
Western countries would haveatoadverse effect on the bloc, if only by increae-
ing the burden on Eastern Germany and the Soviet Union.
4, Asbestos, The USSR has very large deposits of all grades of asbestos,
inbludinTET7 sTrategic grades (long fibre or textile grades) used to make
brake linings, belts, etc., The supply of non-strategic grades has been suf-
ficient'to permit exports. The limited development of textile grade asbestos
mining, by the start of the Second World War seOza to have made the Soviet
Union independent of imports*
Soviet production of asbestos textiles and linings, judging by small
amounts received under lend-lease., has been satisfactory; However, in recent
years the greatly increased number of motor vehicles, and possible dependency
of the satellites, might strain the existing facilities of the Soviet Union.
There is no record of sizeable postwar imports but 2,500 tons of asbestos
brake plates were shipped in May 1950 to Odessa from Italy, allegedly for
Bulgarian account, and the shipment may have remained in the Soviet Union.
In view of the greatly increased requirements of the Soviet bloc, and
still greater reeuirOm*Ats in the future, a restriction on shipments of asbes-
tos brake lining might hamper the development of the Soviet and satellite
.yai. potential by reducing the number of vehicles that may Safelybe'operated.
5. PiezOelectricartz. Pieezoelectric quartz iS needed for oscillators
for radio sets, especially those subjected to violent usage and dhanges
of temperature, e.g., in. airplanes.. Only two- countries in the world possees
commeridal deposits of strategic grade - Brazil and the Soviet UniOn. During
the last war the Soviet Union exported a small quantity of crystals (540,
pounds) to the United States, but in August 1950 Czech representatives in '
South America beggn to buy large quantities of quartz crystals for shipment
to their own country and allegedly for reshipment to the Soviet %lien.
The exact Position of the Soviet Union with respect to these crystals
is, therefore, difficult to determine. The extraction and grading of
quarti crystals requires carefully trained labor*. the USSR, despite natural
availability of the crystals, may not-be able to extract the amounts needed
to meet its awn greatly increased demands. The satellite countries are en-
tirely dependent on imports for their, supply Of piezoelectric quartz. The
Main Consuming countries are Eastern Gernmy and Ciechoslovakia, whoSe needs,
if partly met by the USSR, represent an additional drainon Soviet resources.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01612A000500030013-1
SECRET I 26
.,. A recent study estimates ? that the electrotechnical industry of the
entire Soviet bloc depends on ,external imports of piezoelectric quartz to
the extent of 50 percent of its requirements:. 'An embargo on the strategic
grades of quartz and its manufactures would hamper the development of the
War potential of?the.Soviet bloc by lowering the quality of radio sets and.
:related equipment .that can he built :Or by forcing the Soviet Union to allo-
cate scarce capital and. manpower ;to develop .:the of this mineral;..:'
Mica. Strategic mica iscurrently in demand all:over.the world.. The
requirements for this grade of tioa 'have remained 'at. high levels during the
past several years due. to the growth of theelectroniqs industry. The posti-
hle.vulnerability of the Soviet Union lies in the realm of the manufactured..
of mica rather than of the.raw material-. In a natural state the Soviet, Union
has very large deposits of strategic mica, which have-been exploited for:cen-
turies. The production of the superfine strategic grades is not ascertainable
(it has been-assessed,at 750 tons)..? 'Mica products were,itported under lend-
lease, and additional imports of manufactured midaTrom the United States in
the amount of 8,000-13,000 pounds per year took.glace in 1946 and 1947. In
19.49 Soviet agents were ordered to pUrchase strategic mica, wherever available,
The. roughly.estimated'requirementslor fine strategic mica for the
satellite countries are small* about. 125 tons. fOr Czechoslovakia mad smaller
amounts for Hungary and Poland. The satellite countries are consumers rather
than exporters of mica products and probably. 'depend'the Soviet Union and on
India -for their, supply of. the raw. material. 1611e. an embargd on 'strategic -
mica may-have. no adverse effect-on'theSoviet.bloc,:an embargo.on.its manufac-
tvres, such:aa?insulators would.probably.lower the:.,..lualiOr or re-strict the
production of military grade radio tubes, radar equipment, and other electriC
equipment. ,
Edi Chemicals?
1. The USSR
a. Basic chemicals: . The USSR has a well developed basic chemicals
industry, which has increased...condiderably.sincethe:war, - It is based on
local supplies of raw materials, in which the USSR is for the most part self-
sufficient, the major exception:being sulphut and pyrites, developed deposits
of which are as yet not sufficient for normal: requirements;
,
.
-Although the Soviet Union has very:extensivedeposits-of.sulphur and..
PYrites,-outplA seems to'be slightly, short of'ourrent:needs.',:Theproduction.
of sulphur in 1950 is'..-roughly aMsesded?at-saboutA.,?50,000 tons.. Due to the ;.
fact that some,ef thedepotitssareqocated-ln arid. mnd:undeveloped'parts-of
Central Asia; the' Soviet Union mayfindz.it difficult,t6 expand:its output.-
While occasional token exports of sulphur and pyrites to the satellite coun-
tries have occurred, the Soviet Union Was a small net importer of sulphur-
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24 : CIA-RDP79R01012A000500030013-1
SECRET 27
bearing raw materials during the years 1.947-49. In the last few Months Of'
1950 it imported about 10,000 tons of sulphur from Eastern Germany* which is
itself shert of this material. In addition, Soviet agents in Western coun-
tries tried to buy sulphur for the paper mills of Sakhalin. Both-oftheSe-
facts suggest a continuing and possibly increasing shortage :of this material.
Otherwise. the production -facilities for basic ,chemicals nitrio
acids, alkalies, chlorine, and calcium carbide) are adequate to provide, for
norMal, economic development. ' In case of war, however, the Soviet chemicals
industry would be hard-pressed to supply a. major War effort of long duration,
unless it could,count on occupying Western Europe and using the basic ? chemi-
cals production facilities of that area. Since basic chemicals do not gen-
erally lend themselves to stockviling for 'needs of more than two to four
weeks, the USSR cannot provide a reserve supply for heavy wartime demands; it
could, however, accumulate stocks- cf military end products which in'corpo'rate
basic chemicals.. ?
In the event of war, it is probable that the USSR could, by utilizing
for its war effort about 90 percent of the basic chemicals normally going
into the manufacture of consumers1 goods and fertilizers, carry on for at
least a year with no help from outside the Soviet bloc,. n,example Oaribe
,found in' the diversion of sulphuric and nitric acid from the. manufacture of
fertilizers to that of explosives'. Such diversion,'howev.atiHWOuld in time
reduce yeilds 'of' such important industrial crops, as cotton, sugar boots',' and
flaX.- Because of the-unsuitability of basic chemicals,for'stockpiling,' the
industry is particularly vulnerable to transportstion'bottleheeks,-Which -
could seriously disrupt the orderly flow of basic chemicals-tc'pracesSing and
consuming points In the case of gases.such as chlorine-and'amMenit, and to
a lesser degree in the case of liquids, the shortage af'tank'oars would accen-
tuate such difficulties.
b. Specialty items and chemical end-products4', With respect tO:less
? basic chemicalS;, and particularly tertain specialty-or key- chemicals and-
chemical,endproducts,. the USSR is in t less. favorable position than in. the
case of basic chemicals.- ?In connectienwith Soviet.requireffients.for such
chemicals, it must be noted that ability to improvise' or substitute' oven at a
saorifice of the quality of end products is an.iMpertant factor. Furthermore,
-compared with, the array of direct and indirect?military chemical products re-.
? quired by the US, those of the USSR are relatively simple, so-that its require-
ments both in-volume and kinds of special Chemicals, are correspondingly less.
Nevertheless,,, the repercussions of shortage of-thesecheMiCals upon diverse
sectors .of industrial and military potential?are-s6 farreaohing that the - ?
vulnerabilities suggested by these shortages Should not be overltoked.
For many of the specialty or key ?chemiCals,?the USSR depends on repar-
ations and .commercial exports from Eastern Germany aid'to a,lesber extent
from Czechoslovakia; for others it has shown a fairly-high degree of dependence
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 28,
on the West. In the case of those items subject to. export controls, it has
been obtaining Or attempting to obtain supplies from the West by s uch methods
as transhipments, Clandestine transactions (including smuggling from West
Germany), and other means,.
Among the special chemicals which, aCcording to Soviet imports and
import attempts, appear to be in particularly short supply in the Soviet Union
at present are tha:follewing: Freon, Teflon, and other plastics; azides;
chromic acid; antibiotics, sulfa drugs4 and Many other pharmaceuticals; rubber
chemicals and carbon black; benzol; .shellac; and chemical cellulose of nitrat-
ing grade, i.e., purified alpha cellulose from sulfite pulp and second cut of
cotton linters. There are also probably others in short supply that have not
as yet been revealed by intelligence sources, and it is certain, considering
the nature of -blue chemicals industry and the variety of end uses for basic
chemicals,. that still different shortages will develop from time to time.
Considerihg the impossibility of keepingabreast of precise current develop-
ments in the Soviet chemicals industry, the only reliable guide to such
shortages will continue to be whatever intelligence becomes available con-
cerning Soviet attempts to procure specific. items from the West.
2. The European'Satellites
?
?
?
a. Czechoslovakia and Poland. Czechoslovakia and Poland are able. to
produce their requirements of most basicchemicals, aid their.respective.
economic plans prchide for substantiel increases in output. However, along
with Eastern Germany, they depend principally on imported.pyrites and sulphur
as raw materials for the manufacture of Sulphuric acid.. Most of the pyrites
imports come from Italy, YUgoslavia,ad.Spain (largely through transit 'trade
via the UK, Cyprus, NorWay0 and Sweden). .
Shipments of pyrites to Eastern Europe (excluding the USSR) from
Western Europeah countries.rose from roughly 132,00.0tons-in.1947 to about
300,000 tons in 1949. (6aantitative'cOntrels on export's from the United States
were imposed in December 1950, partly to conserve the domestic supply in the
face of a world-wide shortage. .The.extensive vulnerability of the Eastern
European countries to the embargo 'on sulphur shipments is increased by the
fact that some of the sulphur shipped' 'from theSoviet.Union to Czechoslovakia
was found to be contaminated and.unusable in .the-Czech roasters. The.increas-
ed production in the Soviet Union, even if achieved, may not imMediately ease
the shortage In the satellite countries until processing difficulties have
been .solved. Western export controls on shipments of pyrites to Czechoslo-
vakia and Poland would very .seriously affect. their explosives, pulp and
paper, rayon, fertilizer, and other important industries.
As in the case of the USSR, Czechoslovakia and Poland are even more
dependent on Western sources for.speclial chemicals -than for basic chemicals.
They are still endeavoring to obtain supplies of rubber chemicals, carbon
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET
29
black, antibiotics, certain plastics, reagent chemicals, hexamethylene
tetramine (for the manufacture of the explosive RDX), strontium nitrate for
tracer bullets, sodium'azide, and quebracho extraot for tanning leathers.
'b. Soviet.Zone of Germany. Eastern Germany, although a large pro-
ducer of chemicals) is dependent to a large degree on certain raw materials
and special chemicals, mostly from Western Germany, but also from elsewhere
in the Soviet bloc and from Western'Europe, The USSR itself sUPplies Eastern
Germany with apatite for processing into phosphate fertilizers; Poland supplies
benzol? naphthalene, and toluol, and Czechoslovakia provides soda ash, but
there is also. some degree of dependende on Western Germany for the latter four
ohemicalso Other chemicals regUlarly imported from outside the bloc are:
pyrites, obtained mainly from Norway, Sweden; Yugoslavia, and Spain; soda ash,
from various Western European countrie6;, dyes, dye intermediates, and rubber
chemicals from Western Germany, and rayon grade of cellulose from Norway and
Sweden.
c. Hungary, Rumania, Bulgaria, and Albania. The chemicalS industries
of these countries are on the *hole 'so little developed that their requirements
for basic chemicals and special chemicals must be almost entirely met from the
outside. To the eXtent that they are, met from Soviet bloc resources; these .
countries therefore constitute a liability on the chemicals industries of other
Eastern European: countries.
F. Rubber and Rubber Products
1. The Soliiet Supply Position
a. Rubber. The USSR has the second largest synthetic rubber industry
in the world, producing at present between'220,000 and 270,000 Metric'tons per
year. Most :of this production (180,000 - 200,000 tons) consists of alcohol-
based divinyl (compikrablo to the UB..synthetic rubber, GR-S, also Ignown as
Buna-ST and the remainder .(40,000 - 60,000 tons) 'consists of savprdne, an
acetylene-based rubber comparable to US neoprene. This supply is regularly-
supplemonted, .by imports fram the synthetic rubber industry in the Soviet Zone
of Germany, amounting to about 7,000 tons .annually of Buna-S.
At the current level of .synthetic rubber availability, the USSR requires
about 75,000 90000 tons per year of natural rubber for admixtUre with
synthetic in tire manufacture and.for articles that must,be Made fram the,
natural product. For these vital needs, the USSR is virtually completely de-
pendent on outside sources, as Soviet attempts to grow rubber-bearing shrUbs
have so far yielded a very small output of natural rubber, estimated currently
at only 3,000 - 4,000 tons annually. Extraordinarily large purchases of "
natural rubber, consisting Mostly' of MalayanexpOrts and of-Te-exports from
the UK, and to some extent the Netherlands, have allowed the USSR.not Only to
meet its natural rubber requirements, but to stockpile sufficient natural
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 30.
rubber to,supply;normal requirements for at least one cnd possibly two
years even.if foreign sourCes of supply should be cut off. A,rough.balance
of Soviet requirements and evailabilities in the past four years follows.
,
Table a. SOVIET REQUIREMENTS AND SUPPLIES OF. RUBBER. ?
(In thousands of metric tons)
Synthelaic Natural ? Natural
. .Rubber ? ? Rubber .Rubber
Year Supply si Requirement la . Availability
(MinimuM)
. Natural.
.. Rubber
Surplus
(Minimum)
1947
)857100'
.128-33
46.
13-18
1948
142-167
11.
55-64
1949'
190-225
53-75
110
35!-.47
1950
227...267
7689
89 di
0-13
103-142
a2 Includes damestic.produotion and imports from Eastern.GerMany.
121 Ba,s64.on a ratio cg'.2,5:yerbent natural rubber to' total new rubber
sUpply, which, is calculated on the basis' of past
Soviet experience.
2/ Includes a minimum?estimate of imports, plus the mall domestic ?
production. . Imports are considered MinimuM because they take into
account'only recorded shipments-from Malaya and re-exports from UK.
_There have been persistent ruMors of unofficial:shipments,,further
:re-exports, (i.e.,.frah. the Netherlands) and.smugglin&operations, and
transit trade originating in.Indonesia and Thailand.. -These cannot
be substantiated at present, 'but it is likely that total imports
. from all sources are somewhat greatJr than shown here..
(32 Very provisional estiMate:b-Lsed on data supplied:through Yctober;
950' only. It is very likely that when all trade.reportsare.in,
Sovictimports for 1950 weuld-amount to at least 1.00,000 .tens.
SECRET ?
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 31,
Two factors suggest that the theoretical surplus is now at least
142,000 tons, and probably higher: (1) the natural rubber figures are
estimates of minimum availability and probably underrate imports because of
the indeterminable magnitude of transit and other roundabout trade, (2) in
general, while a range is given for ,Synthetic rubber'availability because
of uncertainty about the magnitude of Soviet synthetic rubber production,
more credence can be placed on the lower figure, which has the ?effect of
Making more plausible the lower figure for natural rubber requirements, and
.hence the higher figure for natural, rubber surplus.
? This Surplus. of natural rubber could .have been. stockpiled either in
cruda form or incorporated into superior rubber products. In:either-case .
its existence means. that the4ntrinsic absolute vulnerability of the USSR as
regards natural rubber cannot be. immediately exploited to.the fullest extent.
The unrestricted purchases. of natural rubber in the past three years have.
allowed the USSR to bridge one of the potentially most vulnerable gaps in
...its_.strategic supply position,. andp.by providing for future needs, have
. strengthened-the.Soviet military position.iMmeasurably.
.Control of ,legal shipments of natural rubber to the USSR, even if.
countered by.vigorous..Soviet attempts to obtain this commodity by smuggling,
would force the ,USSR to dip into_its.stockpile sooner than it intends..
Leaving aside the possibility of military conquest of rubber-producing areas,
this might cause theimmediateintroduction of conservation measures in the
use of natural rubber, with a consequent adverse effect on the quality and
longevity of rubber products, especially tires. The cumulative adverse ef-
fects would be considerable in the long runs and, barring unforeseen tech-
nological developments which would .permit satisfactory heavy tires to be
made completely of synthetic rukberl.the situation with regard to tires and
other industrial and military rubber products would eventually become. critical.
b. Tires and tubes._ In view.of the :rubber supply situation .in the
USSR,. it is. not surprising that postwar imports of tires have been negligible,
and that there have even been token exports of tires to satellite countries.
Production of tire casings and tubes of all sizes in the USSR in 1950 was
more??than :double the prewar peak.(7.9,,milliontires and tubes in l9501.cam-
pared with 3.9-millionin.1940). .The demand. as also at, at all-tame high
because of great growth in ,the motor vehicle inventory. :Thus .it is likely
that even with.the large rubbersupplies.and the greatly increased tire:out-
put, tires are still netin:abundant.supply, and.that Soviet motor vehicles
are still operated. to some: extent, as in.the past, by repaj,ri?pg,:ana.reOont
ditioning largenumber?of used tires rather than equipping. them with new
. Since rubber supplies .are abundant, such difficulties as still prevail
in the quantity and, quality of tire,production.can.be traced to the organi-
zation of the flow of materials to factories, procurement of modern equipment,
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 32.
and engineering and technical skills at the operating level. The adequacy
of the supply of tire-cord and of carbon 'black is also questionable. A com-
bination of these factors has, until .recently, created particular difficulty
in producing sufficient tires with a:crosssection exceeding 7 inches, espec-
ially those with high-ply ratingd is this type of tire which is now most
in demand, because it is used on the most important types of Soviet trucks of
postwar manufacture, as well as on a great many trucks of prewar manufacture
that are still in the operating.inventory and have replaQement needs.
It is very difficult to determine, as has beandlttopptdditntiahefEormu-
lation of existing'export controls on tires, reasonable cutoff points, in terms
'Of tire size and ply rating, above which stoppage of imports'from the West
would exploit a Soviet point of vulnerability. Strict control over shipments
of all: sizes of tires, coupled 'with both an embargo on tire-manufacturing
equipment, tire-cord, and carbon black, and control over shipments of natural
rubber as described abeve, would be the only really effective means of exploit-
ing this potential vulnerability in Soviet self-sufficiency. If those types
of tires thought to be useful only for passenger oars, light pickup trucks,
and agricultural machinery are shipped, this would enable the Soviet Union to
.circumvent to some.degree the effqct of controls on natural rubber. It would
also allow the Soviet Union to concentrate materials; engineering skill, and
,scarce production equipment on increasing the manufacture and improving the
quality of more strategic sizes of tires. .Imports of larger sizes would be
directly helpful in providing tires that last longer than domestic ones and
Would aid the USSR indirectly by providing prototypes for Soviet engineers to
test and study in their persistent efforts to improve the quality of large
sized domestic tires.
2. The European satellites. The requirements 'for natural rubber of those
of the ,European satellites which have domestic rubber goods industries (East
Germany and Czechoslovakia, and to a lesser extent, Poland and Hungary)-must,
like those Of the USSR, be.supplied entirely from outside the Soviet bloc.
Throughout the Postwar years these countries have received bY export from
Malaya and through re-export from the UK. and the Netherlands What appear to be
sufficient quantities2ofnatural rubber to: keep their fairly small industries
going. Synthetic rubber is produced in the orbit mainly in Eastern Germany,
where 1950 production Was about 40p000 tons; mainly Buna-S. There is also
said to be seme synthetic rubber production in Poland but details about this
industry are lacking. So.far as is known, synthetic rubber is not imported
into, any of the satellites from outside the bloc.
? Tire production in Eastern Germany in 1950 totalled about 450,000
units, of which perhaps half went to the USSR and the remainder to tli.e East
German economy. Czech tire production was close to 500,000 units in 1947, but
later data are lacking. There is no information concerning the production of
.tires elsewhere in the orbit.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
0
SECRET 33.
The quality of East German "tires has been severely criticized; this
may reflect an abnormally high percentage of synthetic production, as German
_receipts of natural rubber have been small. Czech tires, on the other hand,
are probably of somewhat better quality as the figures on imports of natural
and synthetic rubber seem to indicate that the Czech tires have a larger
percentage of natural rubber than tires produced elsewhere'in the orbit.
It is doubtful if any of the satellites have been able to stockpile.
natural rubber, so that stoppage of imports from outside the bloc might
effectively limit the total rubber supply of the satellite countries to the
40,000 tons of synthetic rubber produced in Eastern Germany, plus such in-
creases as might be feasible in this industry in Germany and perhaps in Poland.
Such a development would have adverse effects, particularly on the quality of
rubber products produced in the satellites. The USSR, also deprived of sources
for natural rubber, would have added to its own requirements, most of the satel-
lite requirements, so that the forced consumption of it natural rubber stock-
piles would necessarily proceed at a faster rate. Furthermore, the present
bonus which accrues to the USSR from its privilege of using satellite rubber
"manufacturing facilities to supply a small, but perhaps ?qut:.litatively imPor-
tant, part of Soviet domestic requirements, would be severely curtailed.
G. Industrial Machinery and Equipment
1. Metalworking Machine Tools
a. The USSR
i. General strategio supply. The machine tool category Covers.
'a wide range of metal cutting, forming and shaping machineS whieh are of basic
importance to Soviet industrial Strength and war potential'. Planned 1950
output, believed to be fulfilled, was'74,000 units,- Of which 12,500 were, ,
'specialized types. Although the present production and inventory of machine
fool's meets and probably .slightly exceeds -current quantitative requirements
for peacetime purposes, serious qualitative deficiencies centinae to exist.
which ;would be prolonged and aggravated by the increased restriction or cessa-
tion of all supplies from non-orbit -sources. Vulnerability is greatest in the
field of specialized and automatic. machine tools, which the USSR does not
possess in required quantities, has had continued difficulty in manufacturing,
and has imported in significant, numbers from the West. since the war. It is
extremely doubtful' that Soviet production of specialized types of machine tools
during the next three years will be sufficient for normal industrial require-
tents. ,It will definitely be below requirements fur a full-scale war. As a
result of Western-export controls, Soviet imports of.metalworking machinery'
from SOLiree8 OUtbide its orbit have been steadily decreasing. However,. their
direct use in the production of munitions and military equipment and' their use
as models of the.newest Western technical developments and designs means that
the stoppage of even this small but extremely valuable trickle will directly
retard over-all Soviet war potential. Over 90 percent of Soviet postwar
machine tools imports from the West have been advaaced specialized types.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 34.
? ii. Deficiencies of Soviet inventory and domestic output. A close
appraisal of the Soviet supply position for machine tools reveals four major
weaknesses. All of these would be directly prolonged and aggravated by in-
creased Western export controls, These Weaknesses are as follows:
(a) Shortage of specialized types. At the present time be-
tween 10 and 15 percent of total Soviet machine tool inventory of about
1,3000000 units consists of automatic, semi-automatic, special purpose and
aggregte types., Although this is the largest quantity of specialized machine
tools ever at the disposal Of Soviet industry -- the result of voluminous lend-
lease imports, reparations, seizures and forced draft, top priority output by
domestic industry during the last five years -- reliable evidence from a number
of different sources indicates thf,t it is not sufficient for current peacetime
industrial requirements, Production in the immediate future will not be in
quantities desired by Soviet planners for normal industrial expansion or a war
effort. The direct result of this shortage is lower qualitative and quantita-
tive production of a number of strategic industrial and military items. An
indirect result is the forced allocation of large quantities of skilled and
semi-skilled labor urgently needed in other industries.
(b) High percentage of foreignmade machinery in inventory.
An eStimated 35 percent of Soviet machine tool inventory is of foreign manu-
facture. The bulk of these units are now over five years old and are already
beginning to present serious maintenanceproblems because of the non-availabil-
ity of spare parts and difficulties encduntered in manufacturing them in the
USSR. The problem ,is further complicated because the great majority are
special purpose, aggregate and other complextypes, purposely obtained from
foreign sources because of Soviet inability to produce them domestically. In
fact, an estimated 75 percent of Soviet specialized'machine tools are of
?foreign make. Hence, this constuatly growing foreign-made sere parts problem
is concentrated in the weakest and most important sector of boviet inventory.
? (c) Improper maintenance and overwork. Huge production
schedules combined with insufficient equipment have considerably shortened the
normal use-expectancy of Soviet inventory. The extensive campaign for high-
? speed metal cutting which has been prevalent during the last two years has
been particularly detrimental to older machine tools not specifically designed
for high speeds and heavy loads. Periods between overhauls are excessively
long and repairs are often makeshift and inadequate. Direct consequences are
frequent breakdowns. ?
(d). Poor quality of domestic production. In comparison with
United States and European 'standards, Soviet machine tools are usually made of
inferior grades of steel, inferior castings-, anti-friction bearings) and other
component parts. The extremely high degrees of precision found: in specialized
tools produced by United States, Swiss, and other European manufacturers are
rarely attained. With one or two minor exceptions the USSR has produced no
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 35.
original designs or developments in the machine tool industry and practically
all of the machines produced domestically are copies of foreign models.
iii. Extent of imperts-from the West.. With the exception of
relatively small shipments from Czechoslovakia and Eastern Germany, the bulk
of Soviet postwar machine tool imports have consisted of specialized, high-
quality units from Western Europe and the United States. These imports have
been steadily decreasing11 because pf US export controls, parallel action by
some European nations and the high level of Competing dambnds for specialized
machine tools in the non-orbit countries themselves. Although Soviet machine
tool imports from non-orbit sources probably amount to lessthan 15 percent of
domestic production, their qualitative value is infinitely greater. Almost
without exception, the not much less than-$20 million worth of machine tools
shipped to the USSR .from Western Europe during 1949 and the slightly smaller
quantity 'shipped during 1950 consisted of items requiring special materials,
specialized engineering know-how, a high degree of skill in their manufacture,
and specialized manufacturing equipment.
Denied access to US manufacturers and faced with expanding export con-
trols by Western European nations, the USSR ,has increased tradingwith such
countries as Switzerland, Sweden, End Austria, which have instituted very few
export restrictions. Of much greater significance is the accelerated. tempo
of a wide variety of covert trading operations such as false export licenses,
transshipment through a third country, and outright smuggling. The great
expense, effort and risk required ere indicative of their highly strategic
value in Soviet industry.
.ivo Effects of increased Western restriotions or embargo. Increas-
ed restriction or embargo on Western exports of Machine tools to the USSR would
directly-retard butnot disrupt Soviet military and industrial potential in the
near term. iroduction of some Categories of industrial, transport,,and
mili-
tary equipment would fall below planned goals in proportion to Soviet depend-
ence on new imports of. specialized machine tools fram the Nest. A large number
of simple machine tools and skilled lab-or-and the limited.stock-of special
purpose units would continuo tobe retained for high-priority. military indus-
trial purposes.
1./ For example, the value Of US exports of metalworking machinery to the
USSR totaled $13,600,000 during the first six months of 1947 but dropped
to only $108,000 during the corresponding period in 1949. Exports during
1950 were negligible.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 36.
In the long term the inoreased.shortage of spare parts and inability
to produce certain complex Models previously obtained from the West could
create severe bottlenecks in the production of certain militarily strategic
items, -- for example, the_matufapturq? of precision gears for certain types
of ..aircraft. An additional long:term'reSult-wOUld be tbe gradtally increasing
gap between soviet and Western technological development and design.
(a) ,..1.21.1.1.q_-_t_a_Ea211Loalaapiof increased Western restric-
tions. Probable Soviet measures to counteract the stresses caused by denial.
of non-orbit supplies would include increased. production of simple machine
tools, and increased training and allocation of skilled labor to accomplish
production quotas. Greater, pressure would be exerted on the. European satel-
.1ites to increase production, primarily to enable them to meet.their own
requirements. Czechoslovakia and Eastern Germany.woulibe expected to supply
pertain advanced types formerly obtained from the West but it is very doubtful.
that desired quotas could be met. .fin all-out program to obtain units of
greatest scarcity?fram the West by illegal methods would be carried on through
'every possible channel.
- (b) Areas of maximum harm. Soviet supply and demand for
virtually-all categories of specialized Machine tools may be considered Uni-
formly vulnerable to increased restriction or embargo of non-orbit sources of
.supply. Their importance to' Soviet war potential and the probable impact of
prolonged,shortages-Oan.best be illustrated by the following .typical examples.
During the past five years the USSR has imported or attempted to import from
the West allof the machines cited -below.
? (1) Cam and crankshaft grinders. These machines grind
regular or irregular curved'(cams) to precise dimensions. The operation can
be done individually' or on a series of cams mounted on a shaft. .:The end prod-
ucts produced are major.components of all mechanized armament, including air
planes, submarines, rapid-fire mechanisms, and tanks.
automatic,
.(2) Multiple and single-spindle/lathes0. tll are high".
production-machines used for producing a finished component from raw stock,
a casting or a forging blank. They are indispensable in any 'arsenal or muni-
tions plant. During the Second World War these machines were prominent on the
list of machine tools in critically. short Supply.
(3) Honing and lapping machines. A honing or lapping
machine makes precise finishes with measurements expressed in millionths of an
inch. The operation is essential to the production of precision ball bearings
of all types, retractable airplane landing struts, high-speed airplane engines,
jet motors, and many other items essential for modern warfare.
(4) Large size planing machines. Used for planing or
"truing" flat surfaces; they are the only machines which can perform this
basic metal cutting operation on a number of items - e.g., beds for machine
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
CI
SECRET 37
tools, rail switch points, artillery gun Mount sections, and rocket
launching struts.
(5) Gear cutting, finiShing and testing machinery. All
machinery for precision gear-making requires the 'highest levels of 'technical-
skill and design. Its output.ranges from the small gears used in guns ighting
and firing mechanisms to large marine and power-generating gears of special
fOrm - such as spiral bevel, open and closed herring bone and double helix.
World production of some specialized types of these machines is centered in
only one or two companies in the US and Europe.
(6) Horizontal combination boring, drilling and mill-
ing machines. Capable of performing three different operations at the same
time, this machine can handle large and bulky objects yet is capable of cutting
,operation'h to within two-ten-thousandths of an inch. It is invaluable for
production of a wide range of industrial and military products.
b. Eastern European satellites. Satellite vulnerability to loss of
Western machine tool imports closely parallels the effects which would occur
in the USSR. Both satellite inventory and production are substantially below
mintmum requirements and are qualitatively weak with respect to adequate
supplies of precision, special purpose, aggregate, and automatic types. Total
1950 satellite output amounted to approximately 30,000 units, almost all of
which was manufactured by Czechoslovakia, Eastern Genmany$ and Poland. With
the exception of a small portion of Czechsoutput, virtually all of these were
simpler types and below Western standards of quality.
The effect of Western export restrictions on shipments of machine tools
to the satellites would be even more severe than the same action on the USSR.
A probable result would be'the allocation of the Scarcest types only for high-
priority, Soviet ordered military items.
2. Abrasives
a. The USSR
Oeneral'assessment. Increased restrictions or' embargo, on
Western-shipments of abrasives to the USSR would hamper-Soviet industrial-s
military potential but would not seriously disrupt it. Current annual Soviet
production:Of-abrasives is estimated ,at 400000 tons of crude and grain. This
compares with a peak wartime production in. the US and Canada of approximately.
290,000 tons annually.: Of the 40,000 tons produced in the USSR,- 10,000 tons
consist of natural corundum, and the remaining 30,000 of artificial abrasives
(produced in electric furnaces) -- fused aluminum oxide and silicon carbide.
-Production of aluminum oxide supplemented by imports from Eastern Germany
probably meets minimum domestic requirements, except for critical grain sizes
and white 'aluminum oxide. Domestic production of silicon carbide is not suffi-
"crent to meet minimum requirements.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 58,
The bulk of the abrasive material produced in the USSR enters into the
manufacture of bonded abrasives (grinding wheels, segments, sticks and hones)
and only a small amount is used for refractories. Although production of
grinding wheels may be quantitatively'adepuate, there is a qualitative deficit.
Certain types of precision grinding wheels are.either not manufactured or are
being produced only on an experimental basis'. There is evidence that the
Soviet, abrasives industry is incapable of manufacturing the. complete range of
types and sizes of grinding wheels required for the large number of foreign-
made grinding machines in the USSR.
Dependence on non-orbit sources cf.supply.??Soviet deficiencies
in abrasive have been emphasized by imports-and attempted imports of a_number
of different types during the postwar- years. 'Brief appraisals of dependence on
outside sources for. the major categories followe'
?
,(a) .Fused aluminum oxide. The USSR oah probably get along
without imports of aluminum oxide from the West. ?inoe the war this product.
has been imported from Czechoslovakia and Eastern Germany. Until 1949, ?70
percent of East german.prodUction was allocated to the USSR, but.that.figure
has now been reduced to between .25 and -30 percent.: This may mean. that 8oviet
production has increased sufficiently to handle the bulk of domestic require,-
mints. Nevertheless...the USSR_ has. atteMpted to import critical graiu.sizes.
of the regular' aluminum oxide ?from the West and the Soviet press has made
several references to the scarcity of white aluminum oxide,
(b) 'Silicon carbide. .17)roductiOn is insufficient for current'
demand. Power requirements for production are three-times those for?aluminum
oxide. DUring? 1949 the USSR requested:from Norway 1,000 tont of critical grain
sizes and Micro-grain powders, but was able to obtain only about 500 tons.
Cessation of Norwegian exports of this product to the. USSR v/ould seriously
affect .Soviet supply.
.(c)' Bonded abrasives. There is? a critical shortage in the
USSR of certain tpecialized,types of grinding wheels, particularly of rubber-.
bonded wheels for the manufaoture of bearings,' During 1949 the Soviets made
several unsuccessful attempts through clandestine channels to obtain over
50,000 rubber-bonded wheels from the US. Diamond-wheels,.used for grinding
tungsten carbide tools, are manufactured only in negligible qaantities.
Soviet industry hasp.however, developed a tubstitute?for.diamond wheelt., a new
process called "anode-mechanical grinding." This process may eventually
eliminate the need for diamond grinding wheels,
. Effects of increased.restrictions,or embargo.. The impact .
of increased restriction or eMbargo On Western exports Of abrasive ".materials
to the-USSR. would :be felt .directly in the metalworking, optical, and precision
instruments industries, thereby. affecting. a-wide.range of vital military and .
industrial equipment,. Soviet proiuction capacity and inventory' for the major-
ity of categories which. would be affected, such as bearings, range. finders.,
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A00050. 0030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 39.
predision gears and.valves,-isalready below requirements for normal peacetime
expansion. Under wartime conditions a. prolonged shortage of abrasives would.
sustain and probably.aggravate.these existing production deficits.
-
? b. Eastern Europeantellitep._ Czechoslovakia,. with:a,production of
approximately 6,000 metric tb6S,.-OfaluMinum oxide,A).nd Eastern Germany) with
10,000 tons annually, are the only significaht'satellite-producers-of abrasives?
.Both-countries export. abrasive grain and the finished grinding wheels to the
? USSR. :-Czechoslovalcia has a considerable business in grinding wheels, primarily
with the a.tellites but some alsowith'nonoriiit.countries. The quality of
Czech grinding wheels has been steadily deteriorating.. , -
There is ample evidence-of a critical shortage of abrasives in the
?s'atellite countries, -despite succesSful overt, and covert efforts of these
?
t. ,countries to obtainabrasive grain and'grinding.wheelsTrom Norway, Switzerland,
:Austria, :and the UK. The-satellites are durrentiy-attempting.to establish.an?
abrasives'industry butj.twill,probably-be at leaSt five.years-beforeits pro.L
duction facilities willbe, a?significant factor:in their'econemy..21 Until that
time an embargo on -Western supplies of abrasives would be extremely effective,? ;?
-3. Bearings ?
a. USSR. Current prOduCtion'of all types of. anti-friction.bearings
in the USSR is quantitatively and qualittively.belew ininimum'industrial re-
quirements. Underdonditionsaf normal:eConamic-expansion this deficit will
prob-ably continue through:theinext-three.orfoUr:years because- of the limited
capacity of the Beviet.behrings'insiwtry c.nd tne.high.rate of bearing repl.ace-
merit necessary fonSc'vict:,.machinery. Increased -restriction or....ambargo of non-
orbit sources of bearing supplies.3wuldAtherefoe; lic:Ve-animmediate gad long
term restrictive effect on the ? entire aotiet:industrial'structure., .
-
Weaknesses A generalreView ofthe:meaknesseS. and limitations
of the Soviet bearing .industry indicates the extentof Soviet vulnerability to
inbr'eased Western export-dOntrOlsT:
?
(1) Quantitative and qualitatiire limitations on capacity. The -
Soviet bearing industry has- been .sloW.to.develbp -and is. .poorly equipped. The:
-majority of the machinery in the-,eight prbducing plants' was gbtained. through
2.1 Hungary has begun canstruction of.a plant for mnelting.aluminum oxide,.
Poland .is buildingasilicOnycarbide plant, and Eastern Permany has .
recently begun the production of .silicon .carbide in small quantities..
_21 Estimated anti-friction bearing production for 1950 is 60 million units as
compared With estimated 1950 requirements of 85 million units. Total orbit-
' 1950 production (USSR and European satellites) is estimated at 66 million
units against total requirements of 111 million units.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
WRET
40
prewar imports, lend-lease, and postwar reparations. Mere than 8Q percent
is of prewar manufacture and is currently old and obsolete. -
?
(2) Shortage of high-quality raw materials. Although domestic'
production of bearing steels is adequate for simpler bearing types, there is '
a critical shortage of special, high-alloy,varietied necessary for precision
bearings. Swedish steel is used Wheileirr
;
(3) Lack of skilled labor and advaaeed technical know-how. The
chronic Soviet shortage of skilled laborp'combined with the extremely complex,
precision processes required for bearing manufacture, haii-e'caused the Soviet
bearing industry to lag far behind the high technological levels maintcined by
,its Western Counterparts.
(4) Poor quality and limited number of types. Soviet bearings
are generally recognized as being qualitctiyely inferior to those manufactured
in Western,E4rope and the US. in some instances Soviet authorities have re-
fused to accept equipment from the satellites which contained .Soviet-made
bearings: Indicative of the limited range,of bearing types manufactured by the
USSR Is the ;act that before the Second World War the upSR'marlufactured only
, one thousand different types of roller bearings while ip the West some 12,000
different types were available. A considerable ntimber'of,high-quality preci-
sion bearings are not produced at all in the USSR and foreign sources are relied
upon to supply such units. In the production of bearings for jet aircraft, for
example, the Soviet Union relies on non-orbit manufacture&types almost exclu
sively, the Swedish SKF plant being the principal supplier. '
ii. Extent of imports from the 'Pest. So-t imports from the West
since the war have continued at -a rate not far below prewar and wartime levels;
Before the war the USSR depended heavily' upon Aweden'and Germany for supplies
of precision bearings as well as large quantities of the simpler types. ?tiring
the war a very large share of requiraments'was 'supplied by the United States,
which shipped an estimeted 25 million unl-ts'o Imports from Sweden Were also
increased. 'Qfficial foreign trade statistics for postwar years provide ample
evidence that 'imports have declined relatively little in volume or quality.
During 1947 as much as 60 percent-of Swedents SKF output is estimated to have
gone to the USSR. The majority of legal 'shipments from geOern Europe have been
based on trade agreements. . Principal suppliers have been Swedens-Italy,
Austria?"and'Switzerland, with smaller shipments coming froP,the UK, France,
and Benelux, US experts have -dropped precipitous* from $1 million worth in
1947 to negligible. quantities during the last few Years! ,
The f011owin&table-givessate indicatiOn-athe approxImate volume of
' 'Western be ring e)cp.ortS: to the USSR -
SECRET
-
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24 : CIA-RDP79R01012A000500030013-1
SECRET
Table 2. ESTIMATED EXPORTS OF ANTI-FRICTION tEARINGS TO THE
USSR FROM SELECTED EUROPEell COUNTRIES. 1949
(In thousands of units)
Italy .... ..
Austria . ?
Sweden440
? 0 0
.vest Germany .
covert Shipments
TOTAL
0
0
.
0
?
0
?
0
?
?
?
0
?
?
?
0
.
0
?
.
?
?
?
.
.1,000
?
.
1,200
10
2,000
4,650
2
1
41
IV includes units from the UK, France,'Switierlandl Benelux, and
the US,
An additional source of supply and one which is extremely difficult to estimate
consists of reallocated Western shipments to the sate113tes, There is con-
sic 1:able evidence that the USSR vits the ultimate destination of the more thall
14 illion units estimated shipped to satellite addresses by non -orbi uppliers
'during 1949. Of probably even greater value to the Soret Union tho large
voln,la of these Western axports 2../ is their better-thP oviet-stvnlard quality
- and the high percentage of precision types,
Clandestine trade in' bearings between Western El-ope and the Soviet
orbit has grown to largascale proportions during the Tst five years, .Ship-
merits vary in size from carload lots to suitcase. loadL. Besides providing
further proof of the pressure of Soviet demand, these shipments serve as an
accurate barometer of the types and sizes most critically needed. 'Analysis of
a large number of reliable intelligence reports indicates' beyend doubt that
s,atellite illegal pUrases and impc:-ts are centrally direyted by Moscow. The
.-Specifications and characteristics a. the bearings involved in those :shipments
are frequently identical and indicate a-high priority being given to sizes
needed for tanksi aircraft, and other military itemS... The principal routes
are through Western Germany, Switzerland, Austria, and Italy.
/ Te51;ern shipments between 1945-50 may equal as much as cae-fifth
S'Naet output du-..-ing that period.
?
SECRET
Declassifiedand Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
' C '
.SECRET 42
Additional and undetermined increments of bearing supply from Western
sources reach the USSR through imports of bearing parts and in units already
installed in machinery imports. These hidden imports are most significant for .
the specialized types which they provide, and there has been evidence that
the USSR imports some machinery purely to secure the particular sizes of bear-
ings contained in them.
Effects of increased Vvestern restrictions or embargo. In-
creased or complete itholation of the USSR from Western supplies of anti-friction
bearings, high-grade bearing steels, and specialized bearing equipment would
have an immediate and prolonged restrictiVe effect on Soviet industrial output.
Although it is impossible .to estimate the precise degree of damage or restric-
tion which a bearing6 embargo would inour, Wis obvious that the effects would
be far-reaching and cumulative throughbut the economy -- for example, restric-
tion of output of certain types of machine tools might cut down output of
Diesel motors, delays'in Production of oil drilling equipment might reduce
planned fuel output Inability to obtainestern bearings would compelthe
more extensive use of inferior Soviet types in a wider range of industrial
equipment, with the resultant increased breakdowns and lower productivity. An
immediate and eXtramely import effect would be the interruption Of Soviet
military stockpiling programs and in the long term their probable diminution to
Meet urgentdemands formerly satisfied directly by Western imports.. In the
event of war the strains imposed by the absence of-Tigestern bearing supplies
would be-much greater, and.extreMely critical.shortages interdicting production
of essential militaryndindustrial itemS-ceuli only be avoided by the use of
foreign-made stockpile -supplies
iv. Ability to cushion impact of increased Western restrictions.'
The impact of a loss of Western imports would be .countered almost entirely by
resort to? stodkpiles There A.8-nc)SUbstitUte for anti-friction bearings.
Under some circumstances plain bearings will fUnCtion satisfactorily but they
cannot be used for replacements in equipment designed originally for anti,.
friction types. Assuming that the most extensive possible redesign of equip-
ment would be undertaken, it is doubtful that existing anti-friction bearing
requirements could be lowered by more than a few percent. Strict allocation
of the cream of domestic produotion to the most strategic industrial and mili-
tary users and renewed efforts to obtain critical bearings through clandestine
trade would be of limited value.
Although it is a.known fact that stockpiling has probably been going
on during the last several years, there is no available evidence concerning
size of these stocks. Vndoubtedly.they consist largely of the specialized
and precision types which the USSR is incapable of producing. It is virtually
impossible to determine whether Soviet imports of anti-friction bearings have
been in excess of normal requirements (because of the variance between planned
and real expansion), but the unique Soviet policy of giving strategic stock-
piling requirements priority over those of normal stock inventory makes it seem
probable that reserve quantities may by now be fairly large. Consequently,
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
SECRET 43'
although a estern embargo might have considerable effect on normal peacetime
industrial expansion, the hampering effect on the:military-induStrial pttentiol
under war conditions might be considerably eased, It seems obvious that the
power of Soviet bearing stockpiles to reduce vulnerability to Western embargoes
,depends directly on the length of time that Western East-bound bearings exports
are permitted to continue.
v. Area of. maximum harm. Although the entire anti-friction bear-
ings category is one in which the USSR is directly vulnerable .to -Western export
rest.rictions, the specialized and precision types mentioned above are outstand-
ing as items in. critically short supply. Required primarily by aircraft,
metallurgical, petroleum and machine tool industries, their chief producers are
Switzerland, Sweden, and Austria.
b. Eastern European satellites. The USSR is the only major producer
of anti-friction bearings witliI7177-77viut orbit. Totel satellite output of
approximately 6 million units yearly comes almc t entirely from Czechoslovakia
and Eastern Germany and is far below the minimum requirements of these two
countries alone. The bulk of even this negligible output is dependent upon
the import of bearing parts (steel balls, races, and other sections) from the
USSR or the ":ost so that in strict terms most satellite output must be classi-
fied as assembly rather than manufacture.
The following table indicates the inability of satellite'industry to
?meet its minimum bearing requirements without outside. help;
Table 3. THE EUROPEAN SATELLITES'. ESTIMATED 1,9',0 PRODUCTION
AND REWIREUENTS'FOR ANTIFRICTTON LARINGS
(In :millions of units)
Country .195p 9upit,
.19.50. Roluirements
" ? 3 t
Czechoslovakia
Eastern Germany
....
Rumania
?
Hungary
, , , ?
Poland
, ? .
Albania
AuStria (Soviet Zone)
'TOTAL
1.0 ?
? ? ?
4.5
.35
, .
0.0
'
0.0
0.0
?
0.0
5.85
? ? , 12.0
8.0
3,C
2.0
0 5
. , -
0?,5
--a
31.0
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 CIA-RDP79R01012A000500030013-1
) -o.
SECRET 44
Increased restrictions or embargo of Western anti-friction bearing .
shipments would severely limit satellite military and industrial potential.
During the entire postwar period deficit bearing supplies. hare beena critical
obstacle to every branch of satellite industry. All of the bearings problems
prevalent in Soviet industry shortage of specialized- and precision units,
limited range of sizes and' types, obsolete -and worn-out equipment, lack of
skilled labor and abnormally high .rates of replacement, -- are greatly inten-
sified in the satellite countries.
Satellite industry is totally dependent upon Moscow for -allocation of
anti-friction bearing supplies ,received from the usql1 and outside the orbit.
Likewisel Moscow determines what percentage of East German and Czech produc-
tion will be retained for their awn or other satellite needs. Consequently,
the intensity of satellite bearing -shortages depends directly on Soviet immed-
iate and long-term requirements. 4vailable evidence indicates that the USSR
has, supplied. only a negligible .quantity of bearings to satellite industry,
'barely enough to permit production of high-priority.military:and industrial
items designed solely for Soviet use.
Because of Soviet allocation of non,orbit_anti7friction beariAs ship-'
ments, it is extremely difficult to estimate exactly their importance in.
easing satellite 'bearings shortages. The following table shows estimated
exports from the i'est to the satellites during. 1949z .
Table-.4... SATELLITE IMPORTS OF ANTI-FRICTION BERINGS FROM
SELFOTED NON-ORBIT COUNTRIES DURING 1949
(In thousands of units)
Italy.? 4,000
????????....?????.
,i,ustria ..-3,600
? . ? ? ? . ? ? ? 999999 ?
Sweden . ? ? . ... ? ? ? 1,500
UK: 150
France ? 9 1 0 ? ? ? ? 0 ?'46 ? ? ? ? * 27Q
Switzerland . . f 999 0.? oo .11 **** . 230
US ? ? ?? ? . ? .0 ? ? ? ? ? 100
--
est Germany !. ? . 0- ******* .. * fl? 590
Illegal shipments of different origin ..?. 4,000
TOLL 14,440
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
?
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 45
Als has been the case with -legal shipments a great majority of the
units received by the satellites through clandestine channels may be presumed
to go directly to the USSR.
In view of the almost total dependence on foreign-made bearing supplies,
the denial of Western shipments to the satellite countries would undoubtedly
,have an immediate and severe effect on their industrial and military output.
Because of their "servnnt-master." relationship to the USSR, which is itself
Adependent on estern shipments, it see= inevitable that resaltant satellite
bearing shortages would be more severe than those of the Soviet Union. In the
_face of such bottlenecks almost all satellite output requiring precision or
high quality bearings would be that specifically designated by the USSR, the
necessary bearings being doled out from Soviet stockpiles. 44 long term effect
would be to increase the tendency of the satellites to become an economic
burden to the USSR, in this case-due to their constant need for specialized
and precision types essential for the maintenance of minimum industrial output
Taid transport requirements.
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET
H, Electronics and Precision Instruments.
46
? 1, Electronics Ecui)nent. The Soviet electronics industry is cur-ently
unable to meet minimum military production and research requirements. The
shortage is so great that allocation of electronics equipment for civilian or
ordinary industrial purposes is nermitted only in token quantities amounting
to roughly 10 percent of total output. Bolero, during, and after the Second
World War the USSR's- electronics industry received major contributions in
technology and facilities from Western nations. Available evidence indicates
that during postwar years the USSR has imported substantial quantities of
electronic nroducts and supplies from Western sources.
Slightly more than half of Soviet bloc manufacturing capacity is within
the USSR itself. The balanceis concentrated in Eastern Germany, the Soviet
Zone of Austria, Hungary, and Czechoslovakia. Despite local independence of
operations in the satellite countries, close coordination exists over the use
of all facilities in an attempt to fulfill top-nriority Soviet military re-
nuirenents. -Consequently in est mating production capabilities and vulnerar
bilitios to Western restrictions the entire orbit electronics industry must
be considered as an entity.
a. Weaknesses. The strategic importance of maintaining an adequate
inventory of electronic equipment and the necessity of keeping in step with
advanced technological developments of the West has led to. vigorous. efforts
to expand production facilities in the USSR, CzechoSlovakia, and Eastern
Germany. Soviet deficiencies in electronics, production are similar to Soviet
deficiencies in other highly technical branches of-indusry. At the present
time all are eased by Western imports they include:
i.-Extremely limited capaicity. This has :orced concentration
of production on only high priority military projects wnth the resultant
neglect of some basic electronics fields.
ii. Lack of advanced scientific nersonnel and technical information.
Every possible effort is made to accelerate and encourage research and de-
velopment. The living conditions Of scientific personnel are those of a
privileged class. Constant attempts are made to obtain information on
latest' Western achicveMents -- either through direct acquisition of data.
and prototype items or through espionage.
iii, Lack oLner-Lipni-iiithaynspecialized raw materials and
finished items. Soviet shortages of the essential components for electronics
production are reflected in imports from the West of such items as industrial
diamond dies and die stones, vacuum tubes, electrolytic copper wire bars, and
billets. At the same time plans to develop domestic production of these items
have been vigorously, but often unsuccessfully, pushed.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
0 0
47.
b. Irlorts from non-bloc sources. Soviet bloc postwar imports of
electronics equipment from the West provide a direct barometer of their
importance to domestic industry as well as those items which are in most
critically short supply. Since the types of products and equipment required
for electronics development are extensive in number and often consists of
items unrelated in kind, accurate figures on the total quantities of equip.
ment imported from the West are difficult to obtain. The following estimates
made during 1950 indicate Soviet bloc dependence on Western imports for -
specific items
Table 5. PERCENT OF SOVIET BLOC ? 1950 REQUIRE1ENTS
OF ELECTT1ONICS Ec,Tarm?iT.FILIED ? -
Itcrlis :Percent
?1,1c.rtz cr:istals
Industrial diamond dies and die stones
Nolybdenite
.High conductivity copper
Thin 7aper for eleccrical canacitators
Getters and cathodes for vacuum tubes
Vacuum tubes
ilolybdenum and tungsten wire and metal products
Electrical-grade steel
Small and medium size electric rotors
? 50
100
50
significant amounts
. 50'
25
10.
40
significant amounts
25
Although Soviet bloc imports of electronics equipment have been con-
siderably hampered by the imposition of LS export controls and parallel action
by some ''estern European nations, shipments from other luro, can su,pliers have
increased. Clandestine traffic in a wide variety of electronic raw materials
and finished products has decidedly increased.. A typical coT,bdity (much of
which is US equipment transhipped) is crystal diodes, a device used in certain
radar a -,lications and not developed or ranufn,ctured in the Soviet orbit.
c. Effects of incr=sed ';es ',ern rstricAons of e-barPo. Denial of
Western-manufactured electronics raw materials, ?parts, eqlipmentp technical
information and producing machinery 'Duld considerably hamper So ict bloc
electronics development and production. Because of the limited application?
Of the Soviet bloc electronics industry to civilian uses, this vulnerability
wouad be felt directly by the lilitary in such fields as radar, guided,
missiles,- radio, aircraft naviu,ational aids, and atomic onorgy. The expansion
of the Soviet electronics industry iTto sue fields would probably be greatly
slowed or completely halted.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SEC=
48
d. Ability to cushion imact of Western restrictions. Because of the
highly developed and specialized processes, equipment, and raw materials re-
quired for electronics manufacture, it would be extremely difficult to obtain
suitable substitutes. Increased efforts to attain self-sufficiency by larger
monetary appropriations, training programs, and diversions of high-priority
equipment would have little short term effect, particularly in view of the un-
limited attention which Soviet electronics development has already received.
2. Precision Instruments. Soviet bloc vulnerability to increased Wootern re-
strictions or embargo on shipments of electronics equipment is essentially the
same as for precision instruments. Although domestic production is sufficient
to permit some allocation for industrial uses, the entire Soviet bloc is
critically short of a number of specialized measuring, analytical, and control
instruments essential for a wide range of industrial and military demands.
Such basic instruments as spectographs, vacuum measuring gauges, pyrometers,
and oscilloscopes are not merely in short supply but in addition, those.pro-
duced domestically are qualitatively inferior to Western imports. As in the
electronics industry, the three primary producing countries -- the USSR9
Czechoslovakia, and Hungary -- lack one or more of the elements necessary for
high-standard, adequate output -- technical knowledge, proper grade materials,
or equipment used in production.
The USSR has had considerable success in circumventing postwar US export
controls on precision instruments by increasing orders placed with European
suppliers. Exports from Benelux, Sweden, Switzerland, and Austria have all
been significant during the past five years and have included primarily such
categories as electric indicating instruments, recording instruments and testing
apparatus, starting and controlling equipment, testing machines, industrial'
indicating, recording and control instruments, microscopes and laboratory
apparatus. Clandestine traffic hs also been substantial.
Embargo of Western supplies would directly hamper Soviet bloc production
of a wide variety of military and industrial items, some of which are highly
strategic. In some cases new production facilities for precision instruments
and other precision equipment would be curtailed and some plants would fail to
attain planned increases in production where such increases were predicated on
imports of Western equipment. '
I. Transmrtation Equipment
1. RailroadsEalipment, The Soviet position in respect to railroad trans-
portation equipment has improved considerably in the past two years and at
the present time there is no evidence of acute over-all shortage of the more
common items of rolling stock 'such as steam locomotives and all-purpose railroad
freight cars. At present the Soviet inventory of steam locomotives is
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
SECRET AC)
approximately 20 percent above the estimated prewar-nUmber,of 25,700 and the aver-
age unit is :Pore powerful; the inventory of freight ?cars .in terms of two-axle
units is up about 15 percent as compared with some 8151000 available in 1940.
Specialized equipment is generally in short supply, but this shortage is being
met by using standard types of steam locomotives, box'and flat cars.
While the railroad transportation equipment industry is capable of pro-
duciPg sufficient ,equipment to keep the railroads in position to meet the
present needs of the economy, military requirements are already forcing the
industry to divert part of its total capacity to production of war eouipment
and honc-. rreventing it from fulfilling previously sot goals. The diversion
has not yet had serious effects, but the increasing emphasis-on greater utili-
zation of available equ.ipment suggests that shortages- of axles, wheels, and
other ports are developing.
2, Automoblie collipment. The output of all purpose trucks of 1.5 to '3
ton capacity has more than doubled as compared with prewar. Though a large
proportion of the inventory is constantly unserviceable, there is no ovor-all
shortage of motor trucks.
The constcnt problem of shortage of replacement parts continues to prevent
the efficient utilization of equipment. This situation is caused in part by
insufficient production of replacement parts, as a result of concentrating all
available facilities on production of completed pieces of equipment; but
equally responsible for the shortage of parts where and when they are needed is
poor distribution and red tape connected with obtaining parts by the users.
To some extent this problem is relieved by production of parts by local work
shops and by cannibalizing, but on the whole the maintenance and condition of
equipment remains substandard. Denial by the West of more powerful vehicles
which may be used as prime movers for large artillery units, trailer cabs of
5-ton capacity and larger, and other specialized equipment of which Soviet
Union still produces very limited numbers, will serve to produce more immediate
adverse effects but only of very limited nature.
Jo Construction and Road-Building Machinery
1. The USSR
a. General supplypposition. About four years ago more than one-third
of the limited Soviet inventory of construction and road-building machinery ,
conslst)d of American supplies shipped during the war and in 1946. Their
value amountaed to about'4160 million. Another $40 million worth of equipment
had boon rem.oved from Soviet-occupied countries in Eastern Europe. The
remaining inventory, less than half of the total, was Soviet prewar machinery,
and after hard. wartime use with a minimum of maintenance and no replacements,
it was badly- worn and depleted.
SECRET-.
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
Piroqk
SECRET 50
After the Soviet Government took strong measures to increase domestic
production of construction and road-building equipment, it even established
a new ministry to supervise production of this type of equipment. Tho chief
emphas,is has been on excavators, which ire plannod'to constitute 66 percent
by value of all construction and road-building equIpment produced in the period
1946-50. By 1949 output of all construction equipment greatly exceeded that of
any previous year and seemed to be at a level that would assure the USSR of a
greater volume of equipment than had actually been planned. At the sam time,
the USSR pressed hard for imports of construction and road-building equipment,
and has' subsequently received -considerable amounts of it fron abroad.
In spite of this progress, reconstruction and the huge program for new
construction of prblic buildings, housing projects, prot facilities, canals,
and hydroelectric stations has all proceeded far more slowly than had been
anticipated, and Soviet road-building, always limited in scope, has made little
improvement. Construction projects have continued to absorb an excessive
amount of nanpwer, and as late as 1949 Soviet experts blamed the poor progress
of construction more upon an acute shortage of construction machinery of all
kinds than on the continuing, shortage of building materials and the poor
utilization of what equipment is on hand. Even if there is some improvement in
the atter respects, the USSR will continue to be dependent upon outside sources
of supply of construction and road-building equipment, particularly the heavier
and oore specialized types for any narked progress of construction work. Much of
the currently increasing 'domestic output will be offset by a high retirement
rate of foreign-made units 'as the result of a lack of spare parts, improver
maintenance, and excessive use.
if the USSR is forced by effective Western export controls to rely cm*
pletoly on domestic oroduction of this equiptent, the deficiencies in the Soviet
inventory would be )rolonged and the potential of the Soviet armed forces for
rapid constructign of oilitary installations, strategic roads, and airstrips,
would be limited to it present low level. The Soviet Union would have to
continue indefinitely employing large numbers of workers at occupations that
could more effectively be performed by mechanical mans. Such controls would
also prevent the diversion of certain domestic and satellite production
faciliti-s, which must now concentrate heavily on the manufacture of construction
and road-building machinery, to the output of other types of strategic industrial
equipment or of military end items, for which they are readily convertible.
?
b. SnegifiL2apes of machinery
i. Concrete mixers. The USSR can easily produce the smaller types
of concrete mixers but has difficulty in oupplying the larger capacity mixers
required on bulk concrete structures. Soviet sources have admitted that
concrate mixers now in use have insufficient capacities for such work as the
recantly.proposed Volga River dams.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 51
In 1946 and 1947 apProximately 100 small concrete mixes were imported
from the United States; no information is available on further imports.
Nmestic production of large mixers is probably hampered because of their
relative complexity and the shortage of large gear grinding- tools. Failure to
receive any .imports of large concrete mixers from Western countries will retard
work on which great value is apparently placed by Soviet leaders.
ii. Excavators and_pewor shovels. Before the war Soviet industry
mode s-ro nedium excavators (up to about 3.9 cubic yards capacity), and since
the war has stressed production of all types of excavators more than any other
category of construction equipment. Considerable success has been achieved, with
production of all excavators rising from about 400 units in 1946 to about 3,000
units in 1919, but at present the largest standard excavator made still has a
capacity of just under 4 cubic yards. It is reported that the Soviet Union
plans to ?prodilc? ha-o self-propelled dragline excavators with a capacity from
13-33 cubic yarda, a size most useful for planned large-scale construction
projects, but there is no record that any such gradiose plans have as yet been
carried out. Domestic production of cranes appears to be considerably behind tha
of oxcavators, and'domestic output appears to have been limited to smaller sizes,
with capacities of less than 30 tons.
Large shipments of US excavators and cranes during the war and in 1946747
probably accounted for a considrable part of the,Soviet inventory of all ek-
cavat rs and cranes in 1947, and ,may have been the only source of the heavier
types available to the USSR after the war. The Soviet Union pressed hard for
excavators during 1547 trar'e negotiations with Western European countries
and early .in 1948 also began receiving small capacity excavators manufactured
by the Skeda 110217S fn Czechoslovakia.
In 1947 excavators were singled out by a Soviet expert as constituting
the weakest corponent in a generally inadequate inventory of construction
equipnent, the corTlaints being that they wore outmoded, in bad reper, and
suffering from lace of spare parts and accessories. It is doubtful that even
the JArge upsurge in domestic production of 'excavators since 1947 has done much
to aLeliorato this situotion, particularly since the heavy types of excOators,
which would save the largest amount of time and labor on big construction ,pro-
jects, as well as the larger-capacity cranes, are still not being nanufactured
in Soviet plants':.. Cntrols on exports of heavy excavators .and cranes would
therefore exacerbate a long-standing deficiency.
,Rood-buildin maChinery Over-all priorities after the war
have not permitted the USSR to embark on the development and production of
equipnent on a scale comnensurate with its needs. The original
plans stipulated that road-building machinery should constitute only obout 16
percent by yalue of total 1946-50 production of construction and road-building
machinery. Although it was reported that 1948 production of road-building
SECRET -
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 52
equipment was many times above preWar, a Soviet expert characterized the equip-
ment on hand in early 1950,as inadequate both quantitatively and qualitatively.
Even though some imports have been received from the US and Western
Europe, atd some., road.machinery was probably produced by the Skoda Works in
Czechoslovakia, the USSR 'still needs to import substantial quantities of such
equipment from outside the, bloc before it can ,carry, out its plans for improving
its road system. On the whole Soviet road-building equipment is some 15-20 years
behind.. US technological developments,. Sam ?bulldozers are available, but their
use is not'widesrread, while simple Diesel asphalt rollers, imported: from
Belgium, are,reported to have created considerable excitement among the popu.
lation of Moscow.
, If rclirnce must be-placed solely on domestic production of road-building
machinery, the USS.Ti. will-not have the means for efficient construction of
modern roads 3n the foreseeable future. Denial of imports from the West will
prevent any significant improvements in the Soviet road network which, because
of its limited extent, affords little assistance to_the,hardaTressed railroad
sYster, and, because of its poor condition, has an adverse effect on the
longevity of Soviet-motor vehicles and tires.. -;
K. Agricultural
1.. The Soviet Sunply Position? This categery-iludes a 'ffdP' variety Of:
machine
machines .and implements, the need for and availability, of which :ary,greatly.
While the Soviet Union produces domestically all of its on such machjnesland p
in this sense, may be said to be invulnerable to Western economic warfare,
nevertheless considerable shortages exist at present, in the case of certain ?
types of machines and implements. _Inventories of usable tractors are, at bests
equal to their 1940 level, and those of combinesc are below that level; pro-
duction of plows, dulls, threshing machines', and cultivators was s-ccifically
mentioned-early in 1950 .as being behind plans. All types of haying machinery
are also'in,shortsupply, judging from difficulties encountered at haying time.
Failure, tofulfill.the.production plan for Diesel tractors and considerable
defects in theseproduced-came-in for criticism by the Minister of Agriculture
in mid-1950'..
-
In accordance with Plans ,to -increase mechanization of agriculture, con--
siderable-expansion is scheduled in numbers and types of machines. produccd..,
The goal is to construct and bring.. into serial production machinery for oper-
ations otherwise reouir4re a large labor input, e.g.pcotton picking, flax
pulling, potato and sugarbeet digging, and chopping of feed. .It appears that
much remains to be done in this respect, and many models have not passed the
experimental stage.. Soviet failure?to obtain samples of complex modern machinery
and pertinent technical information will retard the program, and may lead to
costly mistakes.'
?
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
?
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET.
53
From an operational standpoint, Soviet agricultural machinery is quite
vulnerable in that it is dependent upon large supplies of petroleum fuel and
lubricants. Fuel consumption by agriculture amounted, to 7 million metric
tons in 1940, about one fourth of that yearis total supply of refinod products.
Hence any measures that would bring about a more stringent oil situation would
affect tractor operations. While requirements for high-grade fuels ,are being
reduced by substitution-of Diesel and gas-generating engines, such savings
are likely to be more than offset by the increasing mechanization of farm
operations,
a. Tracters,,Tracters are absolutely,essential-te the functioning of
Soviet'agricUlture and th4s:to.the'food supply-oftheceuntry, since azpunber:'
of important'farm'oporationseare highly riechnizeda Tractors are also needed
for road-building and :forestry.
f,
At presen-,, the need for tractors is greater than before the war for a
number of reason, (1) there are fewer work horsesv(2) the farm labor force
is smaller and contains a larger percentage of women; (3) the work load is
greater due to acquisition of new territories and to the additional work in
connection with soil irprovement, shelterbelts, and similar projects. Futher-
more, for political and econonic reasons, the USSR exports tractors to its
orbit and elsewhere., Exports so far have not been large as compared with
current domestic production, but they are important because they furtner farm,
collectivi_-.tion in the Soviet orbit and enhance the USSR's prestige as an
ineustrial nation in such countries as Iran.
Production of tractors in 1950, though below plans ,-.nd*below the
1936 peak of 116,000 physical units, was about three times the 31,000 units
produced in 1940 and can thus be termed large. As a result of postwar pro-
duct 'on, chiefly during the last three years (1948-50), tho tractor inventory
is estimated to have been restored to approximately the 1940 lelel; the total
actua-ly avaiJable horsepower, though statistically higher than before theyar
(due to a greater share of large units), is uhlikely to be above prewar levels,
since some of they prewar tractors still on the books are too worn to be of much
use.
Because'of the decline of animal draft power, the total draft Power,
available to agriculture is lower than before the war, making for ,a le se favor!.
able ratio between acreages sbwn and total draft power than in 1940rhowever,
an improvement in this ratio can be expected in a year or two, provided no
fUrthe: plant facilities are diverted to tank production,
h. Combines. With 'respect to combines which, ncxt to tractors, are
the most important machinery used in Soviet agriculturo, an analysis of official
statements clearly indicates that postwar production nas fallen greatly behind
plans: total output during 1946-50 probably did not exceed 85,000-90,000 units
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET
54
as compared with 174,000 units planned. A favorable feature of the current.
output is the fact that self-propelled .combines are beginning to be produced in
sizeable number: During :the first nine months Of 1950, about half of all coml..
bines (16,000 u'its) received by agriculture wereof the self-propelled type.
The availability of such machines is freeing tractor power for other work, thus
indirectly increasing the -efficiency of the tractor inventory.
,
- The present combine inventory is probably- Still lower than at the end,
of 19L0 (182,000 umit61
1. Ea-1-,ci-- 7,-reopom Satellites. European satellites are not dependent upon
imports of agfacultur-al machinery from the West. Although the increasing trend
ti ard co1locUv1:7,ation in the satellites is bound to increase requirements.,
the latter ,are likely to be supplied 1)7 sources within the Soviet bloc. The
? Eastern Zone of Gemany and 'Czechoslovakia are dpparently net exporters, and
most satellite trade agreements with the USSR have specifically mentioned Soviet
deliveries of agricultural, machinery.
L. Textiles and.Cordaae
A Mestern:embarge on cotton and wool fiber exports to the USSR and
Eastorn,Eursope?would have relatively little effect iloon the economy of the
bloc as a whole. ,The inpact upon the USSR would no:L-1)e large in view of the
relatively ,small shire of Soviet imports compared w::'17(3estic cal,put. The
impact Would 10,e oonSiderably greater 'upon such indusUia-- satellites as Poland
and Czechoslovakia*. These countries ,have c wel1-deveLope0 ole industry of
lonr standing, but lack the broad domestic raw material ;cs2- the Soviet
Union possesses' Al embargo would definitely necessi?L= t osng down of
some textile plants() Some difficulties arc likely to le L;pulic,nced, principally
in the USSR, as a result of the loss of high-quality 'grades of both cotton and
wool, _Reduced supplies could be partially offset ,by increaJed domestic pro-
duction of synthetic fiberSs; particularly in Poland, Czechoslova/cia, and
Eastern Germany, and in an exprmsion in the numbers of sheep.
-
Military and industrial requirements would not be permitted to suffer from
reduced supplies from the West. The whole brunt of the reduction would have to
be borne by the civilian consumers. This diminution of civilian consuription,
woul(.3 start from an already low level in the USSR, as current per capita con-
sunption of textiles other than wool is below -even the low level obtaining
before the mnr,.
-
'ihe effect upon morale, particularly if combined with other shortages,
might be marked, particularly after a year of two. Nevertheless, the capacity of
the Soviet population to Put up with inadequate supplies of consumers' goods
should net be overlooked.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 55
1. Cotton. The USSR's current domestic supplies of cotton, on a per capita
basis, are below even the low prewar level due to the annexation of westerxv
territories which do not producb cotton. The statistical deficiency is further
increased by the relatively large requirements of the satellites, particularly
Czechoslovakia and Poland.
The USSR has been a net exporter of cotton since the -war. While im-
porting cotton, chiefly from Egypt and Pakistan, it has been exporting to its
European orbit a considerably larger quantity, some of which returns to the
USSR in the form of textile goods.
Imports by the Soviet bloc (excluding China) in 1948-49 are estimated
at 130,000 metric tons, or slightly less than one-fifth of that yearts con-
sumption, and at 120p000 metric tons in 1949-500 The bulk of these imports
went I-, the satellite countries, rather than? to the USSR. It is highly in-roh-
able that the ussa would attempt to supply from its own reduced resources the
deficit which would be created in the satellite countries by a cessation of
Western exports; in 1948-49 and 1949-50 exports to the satellites, expressed in
percent rsf current Soviet cotton production, would have amounted to 15 and 10
percent respectively. Soviet cotton imports amounted to 32000 in 1948-49 and
54,000 tons in 1949-50.ahd were 'thus 6 and 9 percent of domestic production in
those years. See Table
Table 6. ML30R SOURCES OF SOVIET BLOC (C-2,j IJLORTS
(In thousands of bales)
Exporting Satellites USSR
Country
Bro 11
Egypt
Mexico through
US Ports
Pakistan
Turkey
US
Total
194=49 ..,1249-50______12.4.8,=.42_1.2.4150
120.2
117.4 A/
13.2
10208 70.0
10??????101
6.0 1700
30,8 44.2 52.2
37.6 25.1 ,
136.5 104,8 1/ 25.6-
448.5 30701 147.8
4?????????
Total in 96.0
thevs.
in. tons
W Excludes Bulgaria, Hungary,
as "included in others."
16405
89.2
??????????
?00??????
Total
1948-42_1949-JP_
123 2 13.2
16704 267.4
6.0 17.0
83.0 133.4
37.6 25.1
162.1 104.8
253.8 596.3 560.9
65.8 31.6 54.3 127.7 120.1
and Rumania, which are listed by the source
W Excludes Bulgaria and Hungary; estimated total
134,000 bales.
including these two countries:
Source: Cotton Quarterly Statistical Bulletin, December 1950.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12:4 : CIA-RDP79R01012A000500030013-1
56
The cessation of imports, therefore, would not affect the countryfs economy,
particularly in view of the rising trend in dOmestic productioh. Elimina
tion of imports of high-quality cotton, however, would.have the effect of'
hampering, at least temporarily, production of commodities normally requir-
ing long'staple fiber.
2. Wool. As in the case of cotton, the loss of imports of wool into
the Soviet bloc would decidedly affect such satellite countries as Poland
and Czechoslovakia more than the Soviet Union itself, In fact, if FAO com-
putations Of postwar foreign trade are to be taken at their face value, it
would appear that the Soviet Union oxported presumably to its neighbors
at least as much wool as it imported in recent years. ?Nevertheless, there
is undoubtedlysome qualitative dependence on import trade in that better
types of apparel wool constituted the bulk of Soviet imports, but not of
exports;
Total itports from outside the Soviet bloc amounted to slightly over
100 million lbs. in 1948-49 and 95 million in 1949.=50, of which 50 and 60
million respectively were shipped directly to the satellites, chiefly Poland,
end Czechoslovakia. The Soviet Uhionls output of wool during the past two
years amounted to 315 and 325 million lbs. respectively; hence total imports
into the bloc were equivalent to 34 and 29 percent of the USSR's output. The
major sources of Soviet sphere supply are indicated in the following table.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
SPXRET 57
Table 7 ? 1400R 11001, nr-PRTS a Vt2 USSA t Ee57AN BUAOWAN
ORBIT
(In millions of pounds) a/
Exporting
Country
Satellites b/
USSR Total
1948-49 1949-50 1948-49 1949-50 1948-49-1949-50
Australia 18.1 35.5 42.0 ' 30.0 60.1 65.5
New Zealand ,2.8 2.8 11.6 4.0 14.4 6.8
Union of South Africa 1.3 1.3 neg. neg. 1.3 1.3
Argentina neg. 2.4 1.6 neg. ,1.6 2.4
United Kingdom c/ 27.9 10.9 0.8- ' 0.3 28.7 11.2
France d/ n.a. .7.4 n.a. neg. n.a. 7.4
_
Total 50.1 60.3 ' 56.0 34.3 106.1 94.6
China n.a. n.a. n.a. 33.0 e/ n.a. 3360
_
Total (including
China) n.a. n.a. n.a. 67.3 n.a. 127.6
n.a. Not available.
neg. Negligible.
a/ Actual weight roughly equivalent to greasy basis in the case of most
imports listed below.
b/ Bulgaria, Czechoslovakia, Hungary, Poland, Rumania, and Eastern Germany.
Cl British re-exportS in the calendar years 1948 and 1949.
d/ Wool tops.
e/ Estimate.
Source: Wool Intelligence, CommonWealth Economic Committee, June 1950.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 58
Foreign supplies of wool for the southeastern satellites (Hungary,
..Rumania,..and-Bulgaria) were uniMportanti'while their own production of wool .
(carpet-type) is relatively large.' Even if trade in finished or semi-finished
_products is included, imports were not large. The effect of any elimination
of import trade in this case, may therefore .be ignored.
As to Poland and Czechoslovakia, the situatiOn is quite different.
There, a well-developed manufacturing industry supplies the native population
with a much iarger.output and, in addition, produces for export both to the
East 'and the West.
?
In case of a stoppage of imports from the Nest, the Soviet Union --
even with continued imports from China and the MiddleEast.-- could not make
up more than a fraction of the bloc's deficit. A serious reduction of output
and employment iii the wool industry of both Poland and Czechoslovakia would
result.
Because of the situation indicated above,?the Soviet Union itself would
be .only moderately affected by a Western embargo, though the difficulties:
which Poland and Czechoslovakia mould face would, be-a matter of considerable
concern to the ? USSR. . The loss of imports into the USSR from countries other
than China mould probably amount to less than 15 percent of the total present
raw material supply for its, woolen 'industry. Such a loss would'be painful
for the civilian population, notably if military needs were to increase
further, but would not in itself engender serious difficulties.
:31 Cordage fibers. Hard fibers, such as jute and sisal, are net
produced domestically' in the USSR and-its European' satellites. Only 'small
amounts of jute are imported from India and Pakistan; no sisal is imported
at present, but attemptS-were made during 1950 to -secure large quantities from
Haiti for import into the USSR. Henequen, a hard fiber similar to sisal, is
imported from Mexico. Shipments to the USSR-amounted to 31,000 tons in 1948,
10,000 tons in-1949, and ,000' tons for part of the year 19501 as compared with.
an average annual import of 14,000 tons in late prewar years.
. . The hemp production of the USSR and its European 'satellites, is the
largest in the world. Even though this production is currently much lower
than .before the War, temp iS in adequate supply in the area. Together with.
other soft fibers (flax, kenaf, etc.) hemp has been widely used in the USSR
in .place ? of hard fibers.
Cessation of imports of hard fibers into the Soviet bloc-mould ?pro
bably,not have any disastrous effect on the industrial and military economy,
because ef.the substitutability of domestic fibers, but the past importS and
efforts to obtain more hard fibers indicates. that some importance is. attached,
to their use for special purposes, on naval vessels, in binder twine.for
agriculture,-btc..
SECRET.
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
( \
SECRET 59
III. SURPLUS COMMODITIES
A. General Consequences of a Nestern.Ban on mports from the East
The total value of exports from the USSR and its Eastern European .
,,,?
Satellites to the Western world comprised about $1,350 million in 1949, and
the current (1950-51) rate of exports is about the same ae shown in the table:-
be1owi:,
Table S. EXPORTS FROM THE SOVIET BLOC (E)CLUDING CHINA) TO THE NEST ANNUAL
RATE, END OF 1950 AND BEGINNING OF 1951
,(Rough order of magnitude in millions of dollars)
'Total exports 1,200- 1,400
of which:
Grains
Other foodstuffs
Timber and lumber
Coal 200
TUre .30 -
Manufactured 256
180
Somewhat over one percent ofthegrops output of_aemmodities and Services
in that area is thus being exported to the Nest,. It as Clear that, except
in certain narrow economic sectors and,geographical areas.; ?the cessation of
exports to the West cannot create a major economic probleth within this part .
of the. Soviet bloc. 1/
The prevailing sellers' market in virtually all major commodities in
the Soviet bloc assures that the cessation of exports would mean to a large
extent a more redirection of the same commodities to end-uses within the bloc.
This is to be expected since in virtually all major instances the exported
- 1/ The problem of cessation of Chinese exports is taken up under Part VII,
where a similar conclusion is reached.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
/-)
. SECRET 60
amounts are small fractions of :tale total supplies of:the Same commodities in
the bloc while the demand for VittualiY all comMedities is strong and is
increasing at a rapid pace. FUrthermore, a substantial part of the exports
from the East to theilVoPt.aroeitherLconsumer8' gbodse.g. Czech-manufactured.
_ . _
consumers' goodS, CZech-SUgar,-FoliSh-Mebts) or raw materials primarily for
consumers' goods productiory(grainflaX; raw furshops). The diversion of
these supplies to ipternalconsumption Within the bloc would have- beneficial.
effects on consumer morale, labor illeentives,and:Monetary stability. (Taxa?
tion of consumers' goods is by far the chief deflationary measure in all of:,'
these countries; e.g., retention of some 2 million tons of grain and its
diversion to internal consumptionwouId:bring additional net revenue of' some
3 billion rubles to the Soviet:treasuryi-or enough to Offset the inflationary
impact of adding some..350,0POpespri to the States-fpayroll.) In terms of
employment, the present strong pressure on the supply of nonagricultural labor
in these countries suggests that a fairly rapid re-employment of those dis-
placed by the cessation of exports to the West may be expected, albeit with
some loss of specialized skills. It must be also stressed that a consider-
able fraction of Easterh exports to the West orginates.with the peasant
economy, where the problem of employment does not arise in its ordinary form.
B. Specific Surplus Problems
1. The-USSR. The adjustments which would be required within the Soviet
economy in the event of:a discontinuation of exports :to theWest would be
minor for two main. reasons: (1) the proportion of exports of the principal
export commodities totheir total production is already small- -(except in the
case of some relatively minor commodities, such asfurs and some rare metals);
and (2) the resources available as a result of a ban on exports can be shifted
without great difficulty due to the Soviet Government's relatively tight con-
trol over its economy 'and to the general selleral-Marketfor:most resources.
Seen as a loss of foreign exchange (should some payments abroad still have
to be made), the curtailment of exports would not seriously inconvenience the
USSR as long as. it..can use its. largo stock of gold for payments abroad.
'The export of grain and flak from the USSR is not based on genuine ?
surpluses,- but rather is created for both political and econbmic reasons. ?
This conclusion seems particularly clear in the case of grainioecause of -
the current stress by the Soviet Government on increasing livestock production.
Moreover, at, the present rate Of development, grain production,it-approximate-
ly keeping pace?with the -growth of the population. Thu economy could probably
absorb grain .now being exported with little difficulty (human consumption,
animal fodder, stockpiling, or industrial use),.or- the abreagel.labor, and
other resources now devoted to grain production could be shifted to other
crops. Labor released could be also absorbed into industrial occupations
where demand persistently exceeds supply, although in this respect the-limita-
tions may be. the side of urban housing and worker-training facilities.
The same can be said in the case of flax.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24 CIA-RDP79R01012A000500030013-1
SECR1T 61
The curtailment of manganese and chrome .exports could quickly be
absorbed by temporary stockpiling until metallurgical capacity in the USSR
and in satellite countries catches up with the supply.of these metals. For
example, output of manganese in 1950 is estimated at approximately 3 million
metric tons, whereas steel consumption requirements (at the rate of 100
kilograms of manganese per metric ton.of.steel) equalled about 2.6 million
tons.'.'Zince production exceeded rcquirements.by only a little over 400,000
tons, this surplus could be utilized in the near future (something like a
year's time) at the present rate of expansion of steel capacity.
Timber apd lumber exports to the UK andWestern Europe have been in-
finitesimal relative to total production since the end of the last war... Sorli
difficulty would arise here, however, -as timber for export is produced in
areas remote from the main domestic consumption areas; thus some shift of .
labor, etc., might have to take place even if timber production were
curtailed.
.:?
2. Eastern European Satellites. In the event of cesSation of expert0
to the West the impact would be hardest on two major areas of the economies
'.'
of the satellite .countries of:E9.stern Europe, viz. Polish coal and Czech
manufactured product. :With respect to Pelish?coa.,tlie djuStrilent problem is
not deemed to: bejergreat.then.:seen in its -pspectiV.0: Poland now exp0:6a'
some 12 millioni0OnsHa.vear ;to-the.Nbstor abOUtl6'percent of
output. A sudden -66S.SatioftqfAhese:fe*rts. mightpaUpeTa"..certain cutback' '
in output, and hence some unemployMent:--14OnathOlas6?,,WitliPdIandls awn
coal consumption planned to rise by some P=':thil1io0Cns-perannum in thepUtl--
rent (1950-55) p'an perIod, and with total coal consumption of the Soviet. bloc
(excluding China) i6Creatig:.bysomp3bMIIiion ftons.a year, the problem _ - ? . ,
internal absorptOP',-.of'thevI2 millidn'teng,i6ftQoalqurren-4Y'.4xported to the
West eannot be regaro6,:at s.eT;j,-9 transpert0f6ndifficulties are
taken into account-. -
Czechoslovak manufacturing.maybe hit more seriously,. since the
industries involved (largely manufactured consumerst goods industries) still
-depend on 'estern markets to a large' extent,*.and,on.raw materials from!the
West (textile fibers, hides, chemicals, etc.). as well. -However, if the supply
of raw materials to these industries from the Nest is not seriously curtailed
and only their sales in the Nest are affeCtedi-the consumers! goods-hungry
East should provide substantial outlets for such products. The favorable
influence on incentives and monetary stability of such a reorientation to
internal markets has already been thentioned.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET
IV. TECHNICAL AID
A. Availability of Technical Aid to the ,Soviet Bloc
Broadly speaking, the Soviet bloc might obtain four types of technical
aid from the West either overtly or through various covert means. First, it
could procure prototypes for the purpose of study and imitation; second, it
could obtain technical information ,in a variety of forms 1/ such as publish-
ed literature on all branches -of technology, patents. and -licenses, and un-
published technical data from indtStrial concerns; third, it could purchase
technical know-haw through contracts with foreign manuficturersy consulting
engineers, etc.; finally, it,could-train its own personnel in foreign uni-
versities and factories.
None of these 'types ,of^teChnical aid is formally controlled in the
United States or Western Europel, except prototypes, of items on commodity
export control lists (e.g. the US' positive list, International List I).
Prototypes of many strategic commddities ire embargoed by the United States
and a few are also embargoed by most Western European countries; but thefl
Soviet bloc is not prevented from purchasing prototypes of items subject' only,
to quantitative control and it can, obtain prototypes of embargoed items in- -
directly through third .country deals. .
^?t,
,
Western European countries have not is ,yet attempted, to control the
other forms of technical aid' and the United States has done so only to a
limited degree and on an informal basis. Since November 1949 the United
States has had a voluntary program of pre-shipment control- of ejcporta of tech-
nical data that to/Ice/11 advanced technological deVelopments, know-how, protoi- ?
types, special installations, and military 'items which ,do not have a security -
classification; it has, also had ,a program for voluntary protection of unclas-
sified technical information disseminated within the country. While these:
measures make it somewhat. difficult for the Soviet bloc to obtain technical,
information, ? they do not apply to the exportation ofpublished technological
literature and technical information' genarally available to the trade Further-
more, American firms and individuals are not prohibited from exporting unpub-
lished technical data or providing know-how to the Soviet bloc"; they are only
advised exporting such data or know-how. In actual practice, no technical
assistance Contracts with Soviet or satellite principals have been negotiated
for several years and it is presumed that most of the attempts to procure tech-
nical data from US companies have been reported whenever there was any suspi-
-
? ?
.1/ In the present. contoxti : technical aid in the second' sense ?mentioned above.
? -excludes -classified information of a technical or scientific nature (e.g.
in the. field of atomic energy, munitions, etc.), . since the latter is
obviously, not under consideration in a discussion of vulnerability to
economic controls.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
SECRET 63
cion that the USSR would be the ultimate recipient of such i nformation. The
fact remains, however, that technical information and know-how are not con-
trolled to anywhere near the extent that strategic commodities are subject to
export control.
The availability of technical training for foreign nationals is only
indirectly related to the vulnerability-of the Soviet sphere to more stringent
economic controls, since such trainin is a means of obtaining better trained
future technicians rather than a form of technical aid that is more or less
immediately useful. Few, if any, citizens of Soviet bloc countries would be
permitted by their governments to study in America. Nevertheless, as far, as
the United States is concerned, individuals from the Soviet bloc who are not
denied a visa on security grounds could not be legally prevented from acquir-
ing advanced technical training at any accredited academic or industrial in-
stitution that was willing to accept them. As a general rule, there is even
less restriction on the availability- of technical training in Western Europe.
It is impossible to determine how much technical aid in the fOrm of pro-
totypes, technical information, and know-haw has been obtained by the Soviet
bloc in recent years. During 1948-50 there were.about 300 known instances of
attempts to get technical data from the United States, either along with some
strategic commodity or, in lieu thereOf;'probably-athenattempte?were made in
-Western Europe whicivare not known to the US Government. The Soviet Govern-
ment has had access to the patent's in the German Patent. Office in Berlin and,
cdf course, has been able to 'purchase virtually uraimited quantities Of publish-
ed technical information generally available in the Western _World. Hence, it
may be assumed that ,despite,PartieJ. Control of technidaI aid, the Soviet bloc
has received substantial _quantities ,of teohnital 'information in the past few
years. _ ?
B. Importance of Western:Technical Aid to the' Soviet Bloc:
. Any technical aid obtained from the West would be of potential value
to the Soviet bloc in the sense of providing it with knowledge and skill which
it might not otherwise have. Whether prototypes, technical information, and
know-how can be effectively used by the countries in the Soviet sphere, how-
ever, depends on the level of industrial and technological development pre-
vailing in the country concerned.
This fact cuts two ways. On the one hand, -Lae ?-;onditions which make
technical aid useful to the Soviet bloc countries also tend to make them less
dependent on foreign technology. On the other hand, the Soviet blocts tech-
nical and industrial resources are not on a par with those of the lest, so
that it would gain much by acquiring technical aid from abroad even though
it could eventually develop a comparable technology
. The USSR and the more advanced satellites certainly have enough com-
petent scientists, engineers, technicians, and skilled workers to profit by
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET. 64
the acquisition of Western technical aid; but the present technical resources
of these countries are deficient in several respects. In the first place,
the technical aid which they have toYeXtend:to,backward 'nations in the Soviet
sphere constitutes a drain on ther exiating pool of technicians. Second, the?
concentration of scientific and ehgineering talent on projects of direct or
indirect military significance-deprives many industries afthetechnicians
they require for other purposes. 'Thirditechnical personnel in.the USSR are
hurriedly trained in order to make the :number of engineers ;d technicians
commensurate with the requirements for rapid industrialization ,and postwar re-
construction;. as a result, Soviet technOzcal'personnel,tend to be less pro-
ficient in their specialities and less, able to provide gu4.4dane for new
trainees. Fourth, the industrial experience of the USSR has not been as varied
as that of Western countries, so/that:Soviet technicians have had less oppor-
tunity to acquire know-hew and develop engineering insight. Finally, the
political control of scientific research and development-tends to stifle the
ititiative of Soviet technidal personnel and to ohanneli2e.theiref,forts along
predetermined lines that may:not.be fruitful. . -
In view of these quantitative.andAualitativeAeficiancies i4n technical
resources, the Soviet bIodwould.probably-gain' most-by eiAaining Aervices
of experienced engineers: -Their knowt-how.Would enable the 'SoviAt Ocvernment
to make better use of the 'induptrial resources which.it!Icentrols,and to intro-
duce new techniques in .those industries which. heNe,been!developed4mthe USSR
relatively recently. It las,very lUely that fula-se,of'greign technical
assistance, if it were availablei would still .be'hampered byins4fficient
skilled workers and by political interference; but the principal obstacle to
technological progress in the Soviet sphere is the lack of a sufficient
number of technicians who can bridge ,the gap,between 4,wor1cing model and
quantity production, between a flow Cfiart of 66Me proceas-and the operat-
ing installation.
Judging. by-the number and persistence:.of:Soviet attempts to get techni-
cal data in recent years) the bloc's most?pressing::need for technical as-
sistance is in,the:fields of electronics) specialized metalworking machinery,
testing equipment, rubber prOducts, special chemicals, and petroleum refining..:
Needless to say, the published technological literature which the bloc has
procured or sought to procure would provide information that is applicable.
in practically all branches of industry, but the USSR and advanced satellite
countries undoubtedlypuse such information primarily in the fields just men-
tioned and in other.. industries that directly support military production..,,
C. Adverse Effects on the Soviet Bloc of Curtailment of Technical Aid
The adverse effect- of denying the bloc as much know-how as possible
would be to deprive it of one means.ofmeeting,its pressing, need for engineers.
The immediate value of engineering know-how, if it were received, is to
eliminate the "bugs' in industrial production (particularly in those industries
which have been built up with American equipment of advanced design, such as
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved ForRelease2012/12/24 : CIA-RDP79R01012A000500030013-1
SECRET 65
catalytic cracking) and to facilitate: the introduction of new techniques in
industries that are technologically backward in comparison with the West.
The immediate effect of denyingthebiO?his know-how would be., at worst, to
keep the "bugs" from being eliminated and to prevent the new techniques from
being introduced. This adverse consequence might very well be most serious
in precisely those industries Where Soviet engineers are having their great-
est trouble or where, because of the limited number. of 'competent technicians,
the technical difficulties have not been attacked,. much less solved. 7hether,
as a result, the USSR or any of its satellites would be any worse off than
they .already are is very debatable, since no technical assistance contracts _
with American firms have been consummated for several years and it is unlikely
that estern European engineers are offering their services to the Soviet bloc.
Hence, the vulnerability of the bloc in this area probably has been exploited
as much as it can be. .
Prototypes. and technical data may.be regarded as a substitute for know-
howl that is2 instead of procuring the services of experienced engineers, ene
gets working models or.operational information which may enable Soviet tech-
nicians to render the-services_that might be obtained directly from foreign
engineers. In this, sense, denying the bloc these other forms of technical
aid would reinforce the adverse effects Of denying them know-how, it may also
have the additional effect of retarding the bloc's technological development
in the long run, but it is worth noting in this connection that more stringent
control of technical information may accelerate the process of discOvery-in
these fields in which the Soviet Government concentrates its limited technical
resources.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
.
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
0
A. Shipping
SECRET
RANSPORTATION"
1. The Merchant Marine of the Soviet Bloc in 11. In consequence of
generous US lend-lease assistance and a stiff .reparations policy, the USSR
,emerged from the Second World War with a pool of seagoing merchant vessels
more than double in tonnage than that registered under the Soviet flag in
1940. Subsequent addition of P satellite empire in Eastern Europe and the
fall of China to the Communists establishes the Soviet bloc maritime re-
gistry in 1951 at some 622 vessel t totalling 2.1 million gross tons registered.
Table 9. SOVIET BLOC MERCHANT FLEET AS OF MID-1950
(1,000 gross tons and over)
Total Types of vessels
number Gross Combin-
of ships tonnage ation Freighters Tankers Misc.
Soviet bloc
622
2,163,250 .
95
449
31
7
USSP.
530
1,868,359,
86 .
409
30
5.
Eastern European
satellites
52
a94,891
9
40' '
.1
2
Communit 0111."
40 .
'100;000
?
Evidence,accuMulated over theK past year supports the assumption, how-
ever, that the addition of China to the bloc, and more recently, the pro-
longation of the Korean conflict, have increased substantially the tatks of
Soviet-controlled transport. In maritime transport, heightened priority
accorded the shipping program is reflected by (1) a gradual shifting of
geographic tonnage distribution to the Far Eastern theater, (2) a. heightened
emphasis on the merchant shipbuilding program PS reflected in trade agree-
ment negotiations with REP countries (51 ships with 64,479 GTR now under
construction); (3) accelerated. Soviet satellite efforts to purchase shipping
on the open-market; (4) rationalization, integration, and coordination of'the
maritime operations of the satellite countries; and finally (5) coordination
and accelerated activity on the international charter market, which at present
is believed to 'supplement the maritime operations of the Soviet-controlled
merchant fleet by more than 200 percent.
2. Current Deployment of Soviet Bloc Fleets. A. current survey suggests
rough distribution of the 500. odd vessels under Soviet flag with approxi-
mately.55 percent in Far Eastern waters and the remainder split between .
Baltic and White Sea operations in the northwest and the Black Sea, Mediter-
ranean, and Near East operations in the southwest. The principal trade
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
SECRET 67
routes for Soviet vessels, in order of importance are between (l)the Black
Sea end the Far East; (2) the Baltic and Western Europe; (3) ports within
the Baltic; and (4) the Bleck and Baltic Seas. The estimated 40 vessels
of the Chinese Communist flag are apparently engaged entirely in Chinese
coastal waters, with import-exp6rt tfade handled entirely by foreign ship-
ping. The 52 merchant ships of the Eastern European satellites, most of them
Polish, are engaged primarily in trade with Scandinevia, Western Europe,
and the Near East. Carriage to the Western Hemisphere or transit via the
Pane'ma Canal by vessels of the Soviet bloc has in the past year been reduced
to insignificant proportions. For example, the calling of Polish ships at
South American ports has virtually ceased and of the 13 cargoes of chrome
and manganese arriving in the US from ?the USSR during the first 10 months of
1950, only two were conveyed by Soviet flag vessels. It is perhaps notable
that more than one-fOurth of the Soviet merchant fleet (83 ships, 517,000
? Gross Pegistered Tons) are made.up of lend-lease vessels under clear title
td the US Government. Qualitatively, these lend-lease vessels pre of even
greater significance in the Soviet maritime picture as reflected by the in-
clinPtion to use n relatively heavier Proportion'of them on distant hauls
and in trade with the non-Communist world, despite the risk of US Government
action, which theoretically might be aimed at the repossession of this tonnage.
3. Ship Chartering Supplements Soviet Bloc Maritime Operations. As
previously indicated, it is Probable that the ective maritime operations of
the Soviet bloc fleet between the ports of the Communist and non-Communist
world (and to a lesser extent betWeen Soviet bloc ports) are supplemented
at any given time by approximately 200 percent chartered vessels. Thus, the
Soviet bloc is rather heavily dependent upon the shipping of the Western
world. A recent survey. Euggests the following 'pattern in deployment of
charter shipping engaged in commerce with the Soviet bloc (262 non-orbit
vessels engaged).' The British listed 41 vessels 4n this trade. The Scandi-
navian countries naturally are engaged heavily in Baltic traffic. An average
of 40 vessels of Greek or Panamanian registry are engaged in traffic with
Soviet bloc ports. Seventeen Panamanian ships, for example, are presently
servicing Chinese Communist ports in the Far East, and it is probable that
the PenpMa registry veils the Chinese ownership of some of these vessels,.
The survey failed to aisclose any charter traffic between 'the Black Sea and
the Far East, doubtless 2 consemence of the sensitive. nature of the car-
goes involved.
The Soviet bloc is undoubtedly e net spender on its international
transport account, primarily because of its dependency on foreign cher
bottoms in the fulfillment of its maritime transport plan. Current intelli-
gence, however, does not permit P calculation of the'annual cost of these
services to the bloc at large. This is primnrily a consequence of the secre-
cy of the Soviet operation itself, particularly since a majority of charters
Pi"C fiXed through third parties PS 2 matter of policy. Moreover, interna-
tional charter shipping is e highly competitive market permitting the Soviet
foreign trade monopoly' its usupl advantage of reducing costs to a minimum
through selection of competitive bidding.
SECRET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
Declassified and Approved For Release 2012/12/24 : CIA-RDP79R01012A000500030013-1
SECPET 68
? 4. Areas for Potential US Action. As an indication of the significance
of maritime tonnage to the :economy of the Soviet bloc, it is notable that
some . 2,500 additional freight cats per month , would be required to move the
tonnage currently carried overseas from the Soviet Port of Odessa to the Far
Eastern ports of the empire (eSsUrription: 60,000 tons from Odessa). Conse-
quently, US Government policy designed to curtail shipping available to the
Soviet _bloc holds the prospect of increasing substantially the stresses and
strains: of . the Soviet .bloc economy The The following appear as potentially
fruitful areas open for policy .consideration with the above ends in view:
(1) ReposSession :nutriation'..of the 83 US lena-lease vessels '
currently Opetated under the Soviet flag.
(2) Allied. government :agreements looking toward:
?-j
.InCreasing ..exchange information as to allied .merchant .
. . .
shipping .available to and :exploited ?by .the .Soviet . Improvement of field
intelligence. cPVeting Obhiiie.rcial and esPionage actiVity of Communists in this
field.
b., ICiart.a.iling the availbi1ity of shipping for -purchase or
charter to Soviet bloc .governments.or ,agent,s.
, AgreeMents. to.hej,ghtan Costs of .shipbuilding, resale, cherten-
servi.Ces ,end port and canal serVices to. Sovi.et .bloc government and agents.
ing
Formulation -of, a flexible program for. harassment
end slow-
. . .
. . . .
doithS? to 'interfere at appropriate times. and appropriate places. (Suez and.
Kiel ca.nals)s. With the inoVent of Soviet bloc .cargoes..
. .. ? . . , .
B. Air* Transport
. 1. External Air' TransPort 'Of the Soviet Bloc. C,;aanti tatively , the
Soviet bloc is. not heavily 'dependent in any economic. s,ense upon its aviation
operations and connections with the?outside world. Measured qualitatively,
and in other than purely cOmmerciel terms, the significance of-the operations
is undoubtedly greater... As can be, seen .in the. accompanying map, the Kremlin,
primarily through its .Czeclthoslova..k and. Polish. satellites, .maintains a net-
work' of air routes end connections serving the principal European countries, ;
plus-connection with. Iran and Afghanistan in the Middle. East. No connections'
are known to exist between; Communist China- and . other nations in the Far East.
-
Mest notable in 'connection with the Soviet-controlled aviation
activity is the facts:that a vigorous US:-British civil :aviation Policy vis-
aviS the USSR.:and itS:satellites in the postwar period.hez been successful
not .Only in containing the Kremlin's efforts te -extend its international nit
network, but in forcing the retrenchMent and cessation of a number of important
connections, mainly former Czech routes to the Near East and' most recently
to Rome and Zurich. Moreover, the effective npplidation of the US export
control program, which served .to prevent any substantial quantity of aircraft
SECPET
Declassified and Approved For Release 2012/12/24: CIA-RDP79R01012A000500030013-1
cei
co
Copenhagen
(NI
E)
.0_ adon Amsterdam
0 cc a Berlin
0
. .
-.0- us selsf .-