DISSATISFACTIONS WITHIN CEMA

Created: 11/6/1957

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OA HISTORICAL REVIEW PROGRAM RELEASE AS SANITIZED

Chief,

mv ' 7

Chief,

BUbntertoa of"Ms.atiaf actions Within CEMA"

1.

2. Tha project ii diractad at uncovering and highlighting Satellite dlaaatiafaotione within the coordinated economic ays ten. Consequently, the projeat le sot ln anyalanced evaluation of Bloc econoaic coordination.

3> The paucity of information available on question three of tho requestor's statement of objectives (identification of individuals involved in the dissatisfactions) precluded Its treatment ln this study.

Preface

This report describes some of the disaatisfactions within the Soviet Oloe's Council for Katun! Economic Assistance (CZKA). o notalanced evaluation of oconooie coordination novas In tho Soviet Bloc, boccuoe it dealsh ths veahnssseo, not vlth the strengths ond successes of the system,

Proface

I Introduction

II MntnlstratiTo Controls m Planning Biaontiaf aotlon If la Trsdo

T Failure to Fulfill Export CoiBsitiaentJ u. Bole of Poland In the CEMA Bystea

Dissatisfactions vithln CEMA novo occurred from tine to time since its origin end continue intermittently to the present.* They include chiefly planning and trede problems, although financial, administratis, and even personnel discontents have occasionally heen noticeable. Dissatisfaction vlth the CEMA systes has existed not only in Satellite countries, but also within China (which Isormal member of thend vithln the Soviet government itself.

The leading cause af dissatlsfaction among CEMA cambers comes from the demands node by the organization on tha oountriea involved. Because CXKa requirea its members sometimes to disregard their ovn seonceric interests, nationalist sentiment has frequently arisen to combat tho CEMA program. What may be ndvantHgeous for the Bloc (in Sovietay not be edvsntageous for the individual members. Consequently, there ere examples of failure to abide by CEMA directives in production planning, reluctance to freely trade certain critical commodities, and price competition over con-Bloc markets.

The Soviet leaders, bovever, have persistently moved to combat Satellite reealcltronee In accepting economic coordination and Integration. They have not always been successful, but they have forced Satellite officials to overcome resistance to the CEMA system.

II. Admlnlfl trot lye Controls

CSMA members have shown reluctance to accept the ndminicti-ttlve controle

CEMA la ostensibly an International organisation formed by tbe USSR and the East European Satellites. Tor practical purposes, itoviet lna^mant for coordinating end Integrating the eceoamiea of the Soviet Bloc.

imposed on them by CSMA and by the USSR. hlnii ccerplained to Poland that

It did not like Soriet intervention in Sine-Poll oh trade negotiationo. The Poles replied thet theyTHero compelled to co-ordinate ell exports with CZMA nod admitted this meant. In foot, coordination withP,.

Orefbtti eeuurmtl artloa has stifled tha work of the CEMA Iron end Steel Comal ttes end its sUb-contslttees. Eventually, Satellite members of the Coecrittee vere forced to negotiate among theaoolvea without Informing the Russians, Dimply because of tbe deadening effect on oil productive activity on the part of the Comittee's secretariat and the Chairman's offlot. The Robalane finally called for suggestions from the Satellite delegations on how to eliminate the COzslttee'a bureaucratic delays. xj III.Planning PIssatlsfaction

Apart from simple coordination of eccmomio plana, CSMA has oa Its major planning objective assigning to each member country responsibility for producing specific goods for moot of If not the entire Bloo. BySMA had assigned to each country the development and productionumber of auch products, for example, alucuniUH In Hungary and coaloland.

PriorEMA forbade EUngsry to produce certain textile machinery. eportedly, Poland and Hungary had not aarried out tha production aaaignmemtB mods at the CEHA meeting of J/ Another report noteaeat Germany objected to CSXft osaignments for construe ting chemical Installations In other Satellites. If that continues, East Gorman chemical specialists believe that Increasing Satellite self-sufficiency In chemicals will end Boat Germany's monopoly -ithin tha Bloc, h/ /fter tbe Polish uprisingomilkQ Bervcd ootioe on tba USSR that his country will concentrate on developing its total productionulfill. ltaJ2MA assignments only if they are advantageous to the Polish- of its concentration

on heavy industry and place core stress on consume rv gooda.

Following from specialization per flflj eone Bntellitco have objected lo certain import* end exports an planned by CEMA. Shortly after CEMA was organised, it forced Poland to export coal end agricultural products to East Oormeny asBjiBBvla. to the detrs'ineot ofeconomy. This later proved to be one of the aaueos of the Poll ah revolt In6 Hungary was criticitedEMA meeting for importing ball beorlngs from Fmnoe and Belgium rather than from East Oemany. Hungary did not promise to stop thla practice, ho-ever. oland0 tons of beery steel plates, strip, end sheets frca Crachoelovakla. This request veareportedly causing considerable ill feeling among Polish officials. 6/ all CEMA meetingrsav inhe Soviet delegate Snbuixrr*floncountered opposition from Polish, Ccach and East Oeraan dalegates to the effect that demands for certain products and supplies from these countries could not be met. tudy commission on the problem vas established. 7/ TUVCSyu ^he USSR reportedly has interferedt Cernon plana to export tractors to ths other Satellites by attempting to dispose of surplus Soviet tractors through tho CEMA agreements. The Bloc countries supposedly prefer the East Oemon tractors. 8/

Finally, the USSR,ember of CEMA, remains sone-what Independent of the system of Bloc coordination. CEMA never rules contrary to the desires cf Soviet officials, nor does It assign to the USSR production or trade plansto the latter. The position of the USSR is lous in that it ls not

i*' Bow Deputy Chairman of tho USSR State Cceaalttee for Foreign Economic Relatione (formerly CUES).

bound tn any wny by CEMA prediction assignments. Tbe USSR hue purchased, pro-duoed and aold whatever It has wished vlth little ifoordination" vitb the other CEMA countries. IV. Competition ln Trade

One of tbe courcee of greateit dleaatiefactlon among members of CEKA la the pareletent element of competition among member countrlea In trade both within and outside of the Bloc. In the fall5 Poland and Ceochoelovokla undercut Boat German bids on trade with the Sear Cast. SMA seeting in

e

Chechoslovakia, Hungary, and Rumania complained of being undersold by East Germany end Poland on freight cars for Egypt. Ths prlcop offered by the East German tad Polosover then those of the other three Satellites. Consequently, Egypt bought the oars fron Bast Ooroony and Poland. 9j Alsoulgaria

"-Iss reportedly tried to convince

vas undercut in egg prices to Greece by Hungary and Rumania, thus forcing Bulgaria to lover her prices. In addition, East Germany lovered her price for telephone insulators to Greece to equal the Bulgarian price, fte contract was given to East Ooroany. XQj The Bulgarian Government intended to take theee matters to CEKfi. Still In the same year, Chechoslovakiaontract toridge across tho Bile because the HungariansigureEgyptian pounds) below the Cteeh prloe. Lateoviet offleiola criticised Eastor being "too liberal" ln Importing dairy products from Denmark end Holland in exchange for optical precision instruoente. The Soviet officials state!that because Boot Gshasanyimports and exports were too high in this connection, the latter did not fulfill its obligations to other Bloc countries.

the Egyptians of the Inability of^ Hungarian industry to nest tbe comraitaent.

to Fulfill Export Cocsltaenta

A cause of frequentat laf action arpng nenberr ofis trie disruption grovinp; out of the failnre of one country to neat itaort ecmlt-nents. Ths net affect has been to npaet tbe Inport-export plan of one or eore other menber countries*

ungarian light Industry plant frequently refined its plan because it did not receive raw Bsterlals fron tha USSR as Bchariulsd. lh/ As ofne Seat German plant waa overdue in deliveries of machine tculr and Betal goods to Csschoslovakla, rhaaanla, Hungary, Poland, and the USSR. 6 Caeoheelova>la defaulted in its oontraots to supply pipes and tubes to the USSR, Chins, and Ihmanla. Inast Osrnsny postponed the deliveryement faotory to Bulgaria until The Bulgarian Foreign Hlnistor, In vain, oOBplainad to the East Gernan Ministry of Trade that tha postponement wouldonsiderable lota to tha Bulgarian economy*

Soviet officials also criticised East Gemany in7 for -silvery delays of nachloe tools which held up plan fnlfilistent of other ers. In reply, the beat Oemans stated that CBiA'e decision to multiply Oaraony's automatic aaohinery construction by eight tines bore no relation to th* actual atoctc of rsw material available to its Industry.

of Poland In the CEhA System

The Polish uprising in6 added to tho dissatisfaction* already existent within tbe CEftA systen. Late inoland temporarily halted delivorles of coalchoslovaxia and East Oeraany. The Irradiate affect of this stoppage was to oreate confusion and partial disruption in the Csech and East Oeman ooononlea. It resulted in the eloolne down of two of Fix blast

-furnaces ot tha Furstenberg Canbtno in In another^ iron foundry oooAioe, five of aiz blast foroacaB were shot down. Tha orer all effecte o these events on the East German economy koto noted by the Chairman of the East Gorman Planning Commission. He stated, "Whan we lacfc metallnrKioal coke, the prodnctlon of rolled steel declinesj when rolled ateel is short, there is not enough for machine construction, building construction and transportation." The East Oenaan econon.lc plena nod to be altered to reflect tho lowered production and the drop In imports ond exports.

The nungarian feel crista, which began prior to the Hungarian revolution, stemasd in part froa the Polish failure to comply with its obligation to deliver coal and coke. It is also reported that, startinghe Polos withheld cosl from Hungary until tho latter fulfilled all export obligations to roland.

The long-range effects of the Polish uprising (in so far as they can be

ave been to partially dislocate and retard Sloe econccic coordination,

in

Poland baa achieved more independence with/the CEMA oy&tec. Reportedly, roland haa informed thsleast byCEMA decisions and aaeiennents will have no fores and effect on Poland without that country's spocific approval. Although Poland willart of CEMA and will continue frequently towith other swaber oountriea, her participation in Bloo economic coordination can be expected to be loos and less in the future.

Omuv, OSCL. EIAL. BB-3.

Original document.

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