STRATEGIC STOCKPILING POLICY IN THE SOVIET BLOC

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01093A000500030006-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 17
• Document Creation Date: November 9, 2016
• Document Release Date: January 19, 1999
• Sequence Number: 6
• Publication Date: March 18, 1954
• Content Type: IR

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USO "FACIALS ?-`..
PROVISIONAL INTELLIGENCE REPORT
STRATEGIC STOCKPILING POLICY IN
THE SOVIET BLOC
CIA/RR PR-52
18 March 1954
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
! ($.,~ LS ONLY
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WARNING
This p aterial contains information affecting
the National Defense of the United States
within the. meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited.by law.
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PROVISIONAL INTELLIGENCE REPORT
STRATEGIC STOCKPILING POLICY IN THE SOVIET BLOC
CIA/RR PR-52
(ORR Project 10.118)
The data and conclusions contained in this report
do not necessarily represent the final position of
ORR and should be regarded as provisional only and
subject to revision. Comments and data which may
be available to the user are solicited.
Office of Research and Reports
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CONTENTS
Page
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Concept and Purpose of Strategic Stockpiling . . . . . . 1
a. Definition . . . . . . . . . . . . . . . . . . . 1
b. Concept . . . . . . . . . . . . . . . . . . . . . . . 3
2. Organization of the Stockpiling Effort . . . . . . . . . 4
a. Military . . . . . . . . . . 4
b. Economic . . . . . . . . . . 5
3. Operation of the Stockpiling Program . . . . . . . . . . 8
a. Priority . . . . . . . . . . . . . . . . . . . . . 8
b. Location . . . . . . . . . . . . . . . . . . . . . . 8
c. Withdrawals . . . . . . . . . . . . . . . . . . . . . 9
Appendix
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(ORR Project 10.118)
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STRATEGIC STOCKPILING POLICY IN THE SOVIET BLOC*
Summary
The USSR is operating a program of strategic stockpiling which
significantly increases its economic flexibility. Similar programs
have been established in Eastern Europe but are in a much less ad-
vanced stage. In the USSR, strategic stockpiles of considerable
magnitude have been created at great cost. These reserves serve to
reduce military vulnerability, to protect the economy from other
major disruptions, and to support plan fulfillment. In general,
they are intended to permit the government to take rapid, effective
action in domestic and international situations which threaten it or
afford opportunities to extend its power.
Soviet stockpiles are widely dispersed and are administered by a
specialized organization. This mechanism provides strict control
over stockpiles and insures that they will not be dissipated in non-
strategic uses. In addition, it provides a framework for regional
self-sufficiency in time of emergency.
1. Concept and Purpose of Strategic Stockpiling.
a. Definition.
Numerous categories of material stocks exist in the economies
of the Soviet Bloc, ranging from working inventories located at
individual plants or sales bases to the reserves held at special ware-
houses operated by a national stockpiling authority. The sum of all
these categories may be called national inventory, which breaks down
into two major groups: normal operating stocks and. strategic
stockpiles.
* The estimates and conclusions contained in this report represent
the best judgment of the responsible analyst as of 25 February 1954.
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Normal operating stocks are organized in an extensive :system
which includes plant, commercial, seasonal, and other types of
inventories. These stocks are of immense importance to a planned
economy because they are the major link in the system of material
flows which is crucial to the construction and fulfillment of plans.
They not only must provide for supply among all sectors of the
economy but also must be large enough to absorb the effects of
chronic production and transport failures and yet small enough to
keep at a minimum the amount of idle capital.
The practice in agriculture illustrates the extensive nature
of the system of normal stocks. Each kolkhoz must maintain three
funds in kind for special feeding, seed, and fodder, and each'is
reinforced by a corresponding insurance fund in kind. 1/* Sinni-
larly, stocks are formed at each stage of the distribution chain
from kolkhoz to consumer, including the Machine Tractor Station,
the procurement organization, the processing plant, and the trade
outlet. All these stocks are owned and disposed of by the lodal
storage agent, subject of course to the requirements of the plan
and the supervision of the economic control organs.
In the eyes of the Soviet leaders, however, the system of
normal operating stocks cannot be used to provide against all
contingencies. To enlarge this system to a level where it could
meet such emergencies as war, drought, major transport breakddwns,
or serious planning errors would endanger centralized control over
materials. This is true because it would entail putting largo
amounts of reserve stocks, far greater than those needed for normal
supply and expected bottlenecks, into the hands of economic units
which have a vested interest in hoarding and in consumption.
The USSR has superimposed upon this system, therefore,) a
second system of strategic stockpiles, which are owned by a
national stockpiling authority. These stockpiles, called state
reserves, may be located at plants, at distribution points, at
military or police units, or at state reserve bases. Despite these
and other diversities, however, strategic stockpiles are distin-
guished from normal operating stocks by one common characteristic --
the storage agent for these strategic stockpiles cannot release them
* Footnote references in arabic numerals are to sources listed in
the Appendix.
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for use without specific authorization from the state. More
positively, strategic stockpiles consist of unallocated resources
under the immediate control of the state.
It might be argued that, since in a Communist country all
resources are at the disposal of the state, the distinction between
strategic stockpiles and normal operating stocks is no more than
formal. But this argument ignores the institutional framework of
the Soviet Bloc economies and particularly the mechanics of the
planning process. Planning cannot foresee, let alone prevent, all
possible economic, military, and political crises -- indeed, it
sometimes contributes to them. Furthermore, the economic ministries
cannot be allowed to accumulate the stocks necessary to meet all
these crises, since this would undermine centralized control not only
over materials but also over economic units. On the other hand, the
USSR has discovered that attempts to change allocations, which in-
volve a continual revision of the material flows laid out in the
quarterly and annual plans, quickly destroy the advantages which the
state obtains from economic planning. The USSR, therefore, has
chosen to build up and maintain strategic stockpiles which can be
held inviolate or put into use upon specific occasion at the will
of the state.
b. Concept.
Thus defined, strategic stockpiles consist of a collection
of material resources immediately available to the state for use in
various types of emergencies. The classic Soviet statement of the
subject is Stalin's much-quoted assertion that "it is necessary that
the state have in its hands certain known reserves necessary to in-
sure the country against any kind of contingency (poor harvest), for
supplying industry, for supporting agriculture, for the development
of culture, and so on. Without reserves, life and work would not be
possible at the present time." 2/ Other Soviet writers state that
one of the contingencies which would call for the use of strategic
stockpiles is war, and this, of course, is the only occasion upon
which stockpiles of military end items could be used. In the case of
nonmilitary items, however, strategic stockpiles may be used in a
number of instances, including wartime disruption of the economy,
such natural calamities as droughts and floods, and economic inter-
ruptions due to planning failures, transport breakdowns,?and other
supply difficulties. Strategic stockpiles may also be used in time
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of political-crisis: the release of large amounts of food, clothing,
and other consumer goods from East German state reserves during the
June 1953 riots 3/ was entirely consistent with the Soviet concept
of strategic stockpiling.
These stockpiles are strategic, therefore, because they pro-
vide a large amount of economic and military resources which enable
the state to take rapid and effective action in any situation that
threatens its power or offers an opportunity to extend it. The
requirement that all releases must be approved by the center and the
creation of a national stockpiling authority to enforce this require-
ment assure that each proposed release will be judged against the
total strategic interest of the state, an interest which includes;
economic growth, military preparedness, and insurance against material
shortages.
2. Organization of the Stockpiling Effort.
a. Military. 4/
Stockpiling of material intended for military consumption is
carried out primarily by the armed services. In the Soviet system
the Ministry of Defense operates a wide network of regional depot
in all the military districts of the USSR. This stockpiling syst m
is under the general supervision of the Chief of the Rear Services,
but administration is carried out by the main administrations of the
combat branches, technical services, and rear services for whose use
the stockpiles are ultimately intended.
Regional depots, specialized along commodity lines, existf or
rations and fodder, fuel and lubricants, weapons, ammunition, clothing,
motor vehicles, engineer supplies, armored equipment, and signal and
medical supplies and equipment. These depots may contain replacement
supplies as well as strategic reserves. The latter cannot be utilized
except by authorization of top-level command and are constantly ttirned
over to prevent deterioration.
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Stockpiling of materials intended for consumption by the
national economy is carried out in the USSR by two organizations:
the Main Administration of State Food Reserves and the Main Admin-
istration of State Material Reserves.** Both are attached directly
to the Council of Ministers of the USSR and therefore have a status
equal to that of the All-Union ministries. Through them the state
exerts that centralized, planned control which is essential to the
realization of the aims of the stockpiling program.
The Moscow headquarters of these organizations are set up
along functional lines and include administrations of two types --
those concerned with the accumulation, maintenance, and release of
stockpiles of particular commodity groups (such as grains, metals,
and fuels) and those concerned with administrative functions (such as
personnel, construction, and bookkeeping). 6/ In contrast, their field
offices are organized on the regional principle. The basic field
unit is the territorial administration (territorialnoye upravleniye),
which operates all phases of the stockpiling program in a given
region and is responsible directly to the Moscow office, being inde-
pendent of local authorities. These territorial administrations,
which cover the USSR, are important links in the policy of regional
self-sufficiency. Through them the USSR attempts to create a
pattern and level of stockpiles which. guarantee the uninterrupted
operation of all regional economies in any eventuality.
The strategic stockpiles controlled through the territorial
administrations include capital equipment, industrial materials,
and foodstuffs. 7/ They are divided into three categories. 8/ The
first includes reserves stockpiled at plants and warehouses of
economic ministries. These reserves are in addition to, and are
carefully differentiated from, the normal stocks and normal reserves
at these plants and are owned and strictly controlled by the appro-
priate food or material reserve agency. They consist of (1) planned
* It is possible that the agencies responsible for economic stock-
piling also maintain some reserves destined for military consumption.
** These organizations were formed in 1952 by splitting the former
Ministry of State Food and Material Reserves. It is possible that
they have been reunited in the general administrative consolidation
which followed Stalin's death. 5/
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amounts of the material inputs required under the normal production
plan of the enterprise and (2) planned amounts of its finished
products. They cannot be used by the enterprise,, which merely acts
as storage agent, without specific permission. from the state. The
size of, these stockpiles is geared to the production program of? the
enterprise. One Soviet defector has stated that input stockpiles
must be sufficient for from 1 to 6 months' production and that'
.output stockpiles must consist of 3 months' production. 9/ These
statements, however, are without confirmation.
The second category of stockpiles consists of reserves
held at specialized reserve bases owned and operated by the two
stockpiling agencies. These stockpiles are designed as a last line
of defense, to be used only after the depletion of all types of
normal inventories and the first category of strategic stockpiles
located at enterprises. They are intended to include all the
materials required to insure the uninterrupted operation of thq
regional economy when depletion of all other local sources has'
occurred. The defector cited above reports, again without con-
firmation, that these stockpiles are set at levels sufficient for
a supply of from 1 month to 1 year. 10/
The third category of stockpiles consists of mobilization
reserves. These stockpiles are located at enterprises but are not
designed to guarantee continuation of normal production. Instead,
they consist of the tools and equipment necessary to convert t1e
enterprise to the production program laid down in its mobilization
plan as well as the material inputs required to maintain that
production for a specified time period.' N.A. Voznesenskiy describes
the program as follows:
Prior to the Patriotic War ... the Soviet government
adopted as a precautionary measure the "mobilization
plan" with respect to ammunition for the second half
of 1941 and for 1942, aiming at wartime conversion.
of industry in the event of war. The mobilization
plan ... defined a program of industrial conversion,
especially for the machine-building industry, in
the event of an attack ... . The Soviet government'
took measures to prepare enterprises for a possible'
conversion of production in line with the mobiliza-
tion plan in the case of war. For this purpose,
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enterprises were.given assignments to work out
technological processes for ammunition produc-
tion with the equipment on hand, to prepare
tools and equipment for the production of mu-
nitions according to the mobilizational pro-
grams assigned to them, and to stockpile the
materials and semi-manufactures essential for
war production in the mobilization reserves of
enterprises. 11/
These mobilization reserves are owned and controlled by the
Main Administration of State Material Reserves, which works closely
on mobilization matters with the Mobilization Departments which
exist throughout the Soviet economy on the ministerial, main admin-
istration, and plant level.
The Soviet state has capitalized upon the existence of the
stockpiling agencies by adding to their functions a responsibility
which goes beyond the concept of strategic stockpiling agencies:
namely, the control of excess resources. The stockpiling agencies
perform this function in two types of instances. First, whenever
production of a given commodity exceeds the planned distribution,
"the question arises of increasing the initial allocation to state
reserves." 12/ Second, according to Voznesenskiy, state reserves
also play a role in the storage of seasonal stocks against the
disruptions of transport which occur in the winter months. 13
This problem of seasonal inventories is of particular importance
to industries located far from their suppliers and to industries in
which a large portion of annual consumption or production of a given
commodity occurs in a single season. It appears that in some cases
of overproduction and seasonal inventories resources which are
temporarily surplus may be put under the control of the stockpiling
agencies, which have no vested interest in consumption, in prefer-
ence to leaving them in the hands of distribution agencies or
consumers, either of whom would be likely to find a way to use them.
The organization of stockpiling efforts in the European
Satellites shows considerable variation. Central stockpiling
authorities on the ministerial level have been established in East
Germany, 14/ Rumania, 15/ and Bulgaria. 16/ Scattered information
exists concerning stockpiling activities in Poland, Czechoslovakia,
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Hungary, and Albania, but apparently operations are carried out by
individual economic ministries under a program coordinated at the
national planning level. Economic stockpiling in East Germany is
the responsibility of the State Secretariat for Administration of State
Reserves, formed from the State Administration for Material Procurement
in September 1952, and one report indicates the possible existence of a
second stockpiling authority for material destined for the army, the
police, and the Dienst fuer Deutschland. 17/ Rumania established
an Office of State Reserves at the end of 1950.
3. Operation of the Stockpiling Program.
a. Priority.
The stockpiling agencies have a high priority in the USSR.;
Far from representing the residual remaining after the satisfaction
of other requirements, stockpiling allocations are filled from the
first fruits of production. Soviet writers regard state reserves
not as a luxury to be enjoyed to the extent that the economy can
afford, but as a prime necessity. Thus E. Lokshin writes, in
Bol'shevik: "The increase of state reserves for a particular
type of product depends on the significance of that type of com-
modity for the economy and for the defense of the country, on
its scarcity (defitsitnost'), on the scale of production, on the
conditions of storage and on the time necessary to increase its pro-
duction in case of necessity." 18/ Defectors from all levels of
the Soviet economy confirm that stockpiling receives first-priority
assignment. 19/
It appears that a stockpiling priority policy of equal
sternness has not yet been applied in the European Satellites. Post-
ponement of reserve goals and unauthorized consumption of stockpiled
items are reported in East Germany, where the authority to effect
releases was transferred from the Cabinet to the Presidium in
December 1952 in an apparent effort to strengthen control. 20/ In
the other Satellites, positive information on stockpiling priorities
and vigorous enforcement of stockpiling allocations is lacking.
The establishment of the territorial administrations and the
location of stockpiles at points of consumption assure a wide dis-
persion of reserves in the USSR. Similarly, the central supply depots
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containing military stockpiles are scattered throughout the military
districts, the number in a single military district ranging from
15 to 50. The special bases, which are heavily guarded, are served
by railroad sidings and must be located at a minimum distance from
the main line so as to reduce their vulnerability. Thus the
strategic stockpiling system must be regarded as including the stock-
piling of millions of ton-kilometers.
During World War II, all withdrawals from Soviet strategic
stockpiles were made on the justification of the defense of the
country. As consequence, sources whose information dates from this
period regard state reserves as "untouchable" except in time of war.
On the other hand, more recent defectors report that the strategic
stockpiles stored at enterprises with which they were connected were
occasionally released and put into use upon permission from Moscow.
The former supply chief of the Kuntsevo Chrome Leather Factory, for
example, reporting the existence of an emergency stock of 450,000
square decimeters of the best chrome leather "which could be re-
leased only upon special orders from the minister," noted that with-
drawals were often authorized and that after such withdrawals "the
emergency stock was replenished as soon as possible." 21/ Another
Soviet defector has reported that mobilization reserves* within the
Ministry of the Merchant Fleet could be released upon guarantee of
repayment. 23/ Such releases implement the policy of using state
reserves to prevent economic disruption in time of peace.** The
requirement that permission be obtained from the center insures that
local releases shall not significantly reduce national reserves,
while the mandatory repayment of material loans is a further attempt
to combine flexibility and preparedness for war in the stockpiling
program.
* This source also lists the following items as being maintained in
"mobilization reserves" by this ministry: tugboats, steel ships, cut-
ters, weapons, nonferrous metals such as bronze and babbitt, special
treated steels, solid and liquid fuels and lubricants, navigational
and steering equipment, internal combustion engines and spare parts,
and clothing and uniforms. 22/
** It should be noted that the "refreshening" process, under which
old commodities are replaced by new stocks in the strategic stock-
piling program, provides a constant flow from stockpiles to the
national economy.
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r~oO, EVIDENTIAL
APPENDIX
SOURCES
Evaluations, following the classification entry and designated
"Eval.," have the following significance:
A - Completely reliable
Doc. - Documentary
B
- Usually reliable
1 - Confirmed by other sources
C
- Fairly reliable
2 - Probably true
D
- Not usually reliable
3 - Possibly true
E - Not reliable
4 - Doubtful
F - Cannot be judged
5 - Probably false
6 - Cannot be judged
"Documentary" refers to original documents of foreign governments
and organizations; copies or translations of such documents by a staff
officer; or information extracted from such documents by a staff
officer, all of which will carry the field evaluation "Documentary"
instead of a numerical grade.
Evaluations not otherwise designated are those appearing on the
cited document; those designated "RR" are by the author of this report.
No "RR" evaluation is given when the author agrees with the evaluation
on the cited document.
25X1A2g0030006-5
1.
2. J.V. Stalin, Sochineniye, Moscow, 1948, Vol. 8, p. 127. U.
3. Neues Deutschland, Party and Government Keep Their Work,"
27 Jun 1953 cited in State, HICOG, Berlin Despatch
(unnumbered, 1 Jul 1953. C.
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4. Army, Handbook on the Soviet and Satellite Armies, Part I.
"The Soviet Army," Mar 1953, p. 80. C-
5- Pravda, 9 Mar 1952. U.
6. CIA FDD Translation Rough Draft Report No. U 2549, 30 Oct L952.
C.
7. E. Lokshin, "Distribution of the Means of Production under
25X1A2g Socialism," Bol'shevik, No. 2, 1952, P. 36. U.
8.
9. Ibid.
10. Ibid.
11. N.A. Voznesenskiy, The Economy of the USSR during World Wad II,
Public Affairs Press, 1948, pp. 42-43- U-
12. Lokshin, op. cit., p. 44.
13. Voznesenskiy, op. cit., pp. 83-84.
14. CIA ORR Project bb1.1 (WP), Soviet and German Economic
25X1A2g5
Structures in East Germany, 28 Sep 1953. S, US OFFICIALS!ONLY.
15.
16. CIA, Current Intelligence Digest, 20 Feb 1953. S, US OFFICIALS
19.
17.
20.
21.
22.
23.
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SECRET
US OFFICIALS ONLY
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