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Contribution5 SALT Talking Paper for Secretary Kissinger
If SALT negotiations fail, the USSR is likely to lose the major economic dividends associatod with detente:
The Politburo may have toreat deal more on strategic programs with no assurance that it will be as well off militarily as it it today.
At the sameesurgence of military competition would block some of the channels of technology transfer that the USSR has managed to open in the past decade.
Without the confidence fostered by detente, US firms would not participate in the development of Soviet natural resources.
In its drive to match American strategic power, Soviet leaders have been able to keep tho growth of military outlays well within the boundsrowing economy. 4ho share of gross national product devoted to military programs declined appreciably. onsequence, the sizeable investment in strategic forces was digestediscernible impact on the civilian sector.
The evolution of military technology and theescalation in costs^however, are ever present threats to domesticor the USSR the advantage of SALT arrangements does not lie mainly in curbing deployments of weapons already developed. Instead, Soviet leaders must face the possibility that the United States willarch in the technological race. Indeed*ended to focus national competition inrena, where the Secided advantage. In the absenceALTany US administration would be under great pressure to develop and deploy new weapons systems, no matter how expensive they might be. The USSR could therefore be forced to increase military spending. The United States would easily have the advantagetepped-up competition in military spending. The US economy has tremendous unused productive capacity whereas the USSRtauto doubt the impact on the United States would bedditional inflation and occasional bottlenecksyet the impact on the USSR would be far more seriousan almost immediate setback to Soviet economic development.
Failure of SALT negotiations could also endanger the transfer of technology that has flourished under detente. The leadership knows that the Soviet economy is second rate in many respects. Believing that the shortcut to technologi cal progress lies in importing Western machinery and
technology, Moscow has bought more than S5 billion of Western machinery At the same time, the USSR hasa large network of agreements with Western countries for technical exchanges in areas of great interest to the Soviets. The most impressive growth in Soviet machinery trade and technical agreements in the last few years has been with the United States. Detente hasecisive role in these developments. The rise in purchases of Western machinery has been sustained by the willingness of Western governments to back iong-term low interest credits to the USSR andelaxation of export controls on some advanced technologies which the USSR does not possess.
The immediate effect of unconstrained arms competition would be to undermine the foundation of technology transfer from the United States to the USSR.
First of all, the bilateral government-to-government exchanges wouldead letter while activity under the agreement between Soviet agencies and US firms might cometandstill.
Export controls probably would be tightened on the high technology products and licenses
that the USSR is seeking from the United Statesespecially in the computer and electronics fields.
US export credits would also be sharply reduced. Withoutank support, US manufacturers would be less willing to supply the technology not subject to export controls. And in some casestruck manufacturing technology, petroleumand some chemical equipmontthe USSR would be unable to obtain equivalent technology in other countries.
Although Moscow could turn to Western Europe ond Japan, they too might be less willing to extend credits and moreto retain export controls if detente seemed to be fading away. On the other hand, success in SALT II almostwouldrowing volume of trade between the USSR and the West. Host of the .technology that Moscow wants would be for sale on favorable terms.
The sane conditions that would curb tho flow of Western technology to the USSR would dampen the prospects for'economic ties. Por example, the prospects for Western participation in the development of Siberian petroleum deposits and other Soviet natural resources dependragile web of The basis for the cooperative ventures favored by the Soviet leadership is an assurance that repayments to Western fims in the form of petroleum oil, gas, timber, coking coal and the like are not subject to interruption. US firms ond banks would be less likely to risk their
capital in long-term ventures of this kind in the chilly political climate likely toailure in arms limitation talks.
In addition, an erosion of detente would probably eliminate the United States as an emergency source ot grain to cushion tho effects of Soviet harvest failures. Moscow could buy enough grain in other countries for its needs in moderately bad years. In really bad years32 only the United States could supply the grain necessary to maintain Soviet livestock herds and sustain the consumer programs identified with the present leadership. Large US sales to the USSR seom out of the question unless good relations aro maintainod between Washington and Moscow.
Original document.
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