Tie Impact of Technological Transfer on the USSR
How docs the USSR assess its technological
What role and value does the USSR assign to the
acquisition of Western5
do these Soviet assessments differ from ours?
What are the reasons for the differences?
addition to assistance in overcoming technological
backwardness, in what other areas is the Soviet
government interested in expanding economic relations
FOREIGN ECONOMIC POLICY
far have the Soviets movedolicy of autarky
to full acceptance of an international division of
seeking new technology, in what areas is the United
States the sole or clearly the best supplier? Conversely.
to what degree can the USSR meet its objectives from
non-US Western sources?
important are economic considerations, particularly
technological transfer, in the general Soviet policy
what extent would the USSR sustain its current foreign
economic policy if detente faltered badly on other
rms control, the Middle East?
Soviet foreign policy considerationsreference
for US suppliers?
what extent do Soviet leaders view increased trade and
exchanges with the Westehicle for building Western
constituencies with vested interests in pressing for
greater accommodation to broader Soviet objectives?
IV. THE INTERNAL POLITICS OF THE MATTER
II. Is there any evidence that Brezhnev is out in front ofcolleagues in promoting trade with thewith the United States in particular?
strong ate the political forces opposed to increased
economic relations with the West and the United
there any indications of the development of important
vested interests in acquiring important new means of
technical and economic assistance from the
Brezhnev likely to encounter trouble from his colleagues
if the large deals with the United States fall through?
If so. what would be the likely political results?
V. THE DURABILITY OF CURRENT ECONOMIC POLICY
the Soviets view their present policyemporary
expedient which will be followed,ater phase, by
a return to greater independence?
problems is the USSR likely to encounter in importing
Western technology? Will the leadership adjust itsassimilation of new technology proves to be morethan expected?
has economic detente affected Soviet military capabilities?
What is the potential in this
VI. LONG-RUN EFFECTS
hat can be said about the effects of economic cooperation, especially big projects involving large numbers of Westerners and increased foreign travel for Soviets, on Soviet managerial
structures and procedures?
19. What can be said about very long-run socio-politicaleconomic cooperation-especially big projectsnumbers of Westerners and increased foreign
THE IMPACT OF TECHNOLOGICAL TRANSFER ON THE'USSR
-In any international commercial/or technologicalexchahge .'each pallyo benefit 'of-the exchangeoilircrarelations, the United States and the USSR- are- no exception. The chief economic benefit to the United States has: been the opening up of the Soviet marketrie"US eVriort 'surplus iri' trade"with' the USSR*"climbe'd"to about Silie Soviet market holds continuing promise.for US exports of machinery and grain, while the USSR may in time bccome.an important source of raw materials, for US industry.
The potential gains for the USSR in trading with the United States are well known: our equipment, technology, and know-how are greatly desired by the Soviets. Without US (or other Western) equipment and technology, the costs of producing some items would be higher: the lime involved in producing them would be longer, or the quality of the product or service resulting would be less
It is in thrs context that this paper examines,eries of questions and answers, the economic and political impact on the USSR of the burgeoning exchange with the United States and the West
Note: Prepared by OCT and OER for the MO for the USSR and Easterna.irf mienesihrs publication are welcomed Th-ythe Office of Economic Researel
1. How does the USSR assess its technological position?
In recent years, Soviet leaders have become aware that technical progress would have to be accelerated to recover the economic growth rates of. During, high rates of Soviet economic growth were generated by massive injections of labor and capital and respectable gains in productivity. As the postwar backlog of potential productivity gains' disappeared, the declining productivity of capital and the very slow growth in labor productivity have reduced economic growth to levels which the leadership considers too low. Brezhnev told the Supreme Soviet inituestion of achieving economic growth to an ever greater extent by increasing labor productivity and accelerating technical progress.
Soviet leaders seem to havehree-pronged attack to improve the USSR's technological position.
Attempts are being made to improve efficiency in domestic.
Western technology is lo be imported for relatively short-run improvements in the technological position of key sectors such as oilfield exploration, motor vehicle production, and computer production.
Technical cooperation agreements are being sought because they offer the USSR an opportunity to obtain long-term technological gains with minimum hard currency outlays.
The ma/or failing of, which the Soviets readily admit, is an inability to convert the results of basic research quickly and efficiently into usable technology for Soviet industry. This research-production gap is partly the result of poor organization that isolates researchers, designers, and customers. There isritical absence of incentives for industrial enterprises lo assimilate new technology as wellhortage of development facilities. Despite its shortcomings, theector isarge role in accelerating technological progress. Soviet leaders are now attempting to eliminate some of Ihesc shortcomings through reorganization of industrial management and other bureaucratic adjustments.
The USSR is aware that its technological position in basic scientific fields is considerably better than in. An official of-the Soviet Stale Committee for Science and Technology (SCST) noted, for example, that basic research in chemistry is excellent but chemical engineering skills are deficient. The same discrepancy applies to computers. Nevertheless, the Soviets portray their technological position in basic scientific fields as sufficiently good to make
long-term technical cooperation profitable both for the USSR and Western countries. Whereas they are not too forthcoming in just what they have to offer, they clearly hope to acquire the better engineering skills needed to convert research findings into usable technology for Soviet industry.
hat role and value does the USSR assign to the acquisition of Western technology?
Soviet leaders and top industrial managers believe that importing foreign technology will provide production capacityuch shorter time, and at less expense, than it would take to develop the technology in the domesticector. As Kosygin put it, "it is cheaper in the long run to import or license foreign processes than to try to reproduce them."
The Soviet approach is toey industry or process to leading world standards in one step, if possible. The USSR tries to obtain the most advanced technology in existence, but will turn to secondary sources if satisfactory contractual or financial arrangements can not be made with the preferred source.
Soviet policymakers place an especially high value on technical cooperation agreements with Weslcm firms. Not only do these agreements hold promise for long-term technology transfers, but they would also be much cheaper than large purchases of machinery and equipment. Furthermore, cooperation agreements are less damaging to Soviet pride than outright, one-way transfers of technology from the West to the. Patolichev recently expressed indignation at what he called "voices alleging 'that the Russians are pumping out advanced Western technology'" and went on to stress the mutual benefits of cooperation, citing licensing agreements under which West European countries have purchased Soviet technology.
Little evidence Is available concerning the value assigned to imports of technology for individual industrial sectors. In general, the priority accorded chemical technology in theave way to automotive technology in the. As automotive requirements are being met. chemical technology is gaining renewed importance, and the priority of computer technology appears to be rising. Soviet planners know that mastery of modern industrial process technology dependstrong computer capability. Furthermore, the USSR is anxious lo set up regional and nationwide computer networks to aid in planning and data gathering. The USSR is quite aware that massive transfers of Western technology are necessary if this is to be doneeasonable amount of time.
Recent imports of technology fall into four categories in terms of the capacity that they provide.
Many imports arc intended to give the USSR production capacity for goods that have not yet been mass produced in the USSR. For most of these products, the Sovietector has created prototypes, and foreign assistance is needed to implement mass production. Computers and electronics provide outstanding examples of this kind of transfer. Prioror example, the
USSR had no technology oi equipmentanufacture the printed circuit boards needed for computer production. The technology apparently was purchased from France, and the United States and Great Britain supplied the .necessarypray etchers, laminating presses, and numerically-controlled drilling machines. The USSR also imported US and UK computeis for which no Soviet counterparts existed.
Technology is imported to upgrade existing Soviet technologytate-of-the-art levels. Rather than install obsolete domestic foundry technology at the Kama truck plant, the USSR imported the design and equipmenttate-of-the-art automated foundry from the United States. Similarly. Soviet engine manufacturing technology was discarded in favor of modem, specialized US equipment that allows economical mass production of diescl engines for heavy trucks. Although the Soviet chemical industry has already benefited from imports of Western technology overt dozen years,3 the USSRS acetic acid plant thatrocess previously unavailable in the USSR.
Advanced Western technology is imported lo supplant Soviet-made equipment that does not meet requirements for quality or reliability. Imports of oscilloscopes and videotape recording equipment fall into this category, as do important kinds of oilfield and pipeline equipment. Technology imported for the manufacture of chemical products has allowed the USSR to upgrade the quality of intermediate products for synthetic fibers and plastics.
Finally, technology is imported to expand existing capacity to remedy shortages. Much chemical equipment and technology is now being imported for this reason. The USSR is attempting to obtain US plants and equipment to manufacture larger quantities of intermediate products for plastics, fertilizers, and synthetic fibers. While these products are already mass produced and some are of adequate quality in the USSR, additional quantities are needed lo meet all requirements. Other examples of this kind of import arc French gas processing units purchased to supplement Soviet equipment and digital playback centers to locale oil and gas deposits The USSR also wants to install additional production lines in the automobile plant at Tolyatti.
ow do these Soviet assessments differ from ours? What are the reasons for the differences?
Western views of the Soviet technological position differ from the Soviets' own perception largely in degree.
The technological position of the USSR varies greatly from industry to industryesult of the system of priorities under which Soviet economic planning has been conducted. The USSR hasual economicilitary and civilian. Traditionally, the military sector has had priority allocations of high-quality manpower and materials, as well as protection from Party interference. Thus, the military sector has flourished and has achieved near technological parity with its US counterpart in the production of many types of weapons and space equipment. The civilian industrial sector, however, is plagued with backward technology, supply shortages, and management problems that do not appear to exist in the military sector, or at least not to the same degree.
We see the USSR as further behind and more dependent on the West for civilian technology than Soviet leaders openly admit. The basic industries whose output directly supports both military production and investmentteel, fuels, electric power, producers equipment, andave received sufficient priority so that their technology occasionally equals that of the West. But the bulk of Soviel output is produced with technology obsolescent by Western standards. Imports of technology in recent years have been heavily weighted in favor of machinery, equipment, and know-how to modernize these basic industries.
In industries producing consumer goods, the USSR is operatingechnological level far below Western standards. Greater recent concern by Soviet leaders with consumer welfare, however, has led to increased purchases of technology to improve the output of consumer goods. The USSR recently contracted to purchase two factories from the United States to produce tableware, for example.
We share the Soviet view that the technological gap is large and probably widening. Bur we are less sanguine than Soviet planners about the contribution that foreign technology will make to closing the gap. To the extent that Western technology continues to Jihaivc beyond the level of technology sold or embodied in the equipment exported to the USSR, the tap will persist. The long delays typically experiencedthe USSR in getting new technology on stream virtually assures that this will be. Kor example, the Kama truck plant is being furnished with some of the most modem equipment and processes available. Western observers believe, however, that the USSR will experience years of delay in trying to bring all of the equipment togetheruccessfully integrated operation. By that time, the trucks may well be obsolete by Western standards.
We expert Soviet imports of foreign technology to raise technological levels in key areas such as computers, electronics, oilfield exploration, and the like, but not toubstantial improvement in the general level of Soviet industrial productivity In fact, imports of technology may perpetuate disparities in the technological level of Soviet industry. Since diffusion of technology in the USSR is slow and uneven, the technological level of some sectors will improve while others will fall farther behind.
Management problems in the USSR that inhibit the diffusion and utilization of domestic technology will also work against assimilation of foreign technology. Soviet enterprise managers are still rewarded primarily for fulfilling output plans and arc unwilling to interrupt production to install new equipment, foreign or domestic. Management in theystem is also rewarded for fulfilling plans, not for developing usable technology or facilitating its wide dissemination. The USSR has been struggling for years with the need to improve incentives to solve these problems. But the leadership is inclined to linker with the administrative apparatus of the economy rather than tread on the ideologically unsure ground of reform with respect to material incentives (prices, wages, or profits).
Even if these problems could bend thisighe massive imports of technology and equipment needed for an across-the-board improvement in Soviet technology sufficient to dose the gap substantially would be extremely costly.
Nonetheless, the Soviets believe that imports of Western equipment and technology have made, arc making, and will make important contributions to the level of their technology and are therefore willing to pay substantial sums of foreign exchange and accumulate foreign debt to acquire Western equipment and technology. The Soviets probably do not think in terms of the contributions ofequipment and technology to overall growth. The questions asked more likely arc: what would imports of Western equipment and technology do for the output of large trucks or passenger cars? for the production of synthetic fibers or plastics? for the extraction of oil and gas? In other words, ir is the Soviet perception of the importance of Western technology and equipment In concrete instances that persuades the Soviets to press for increased trade and technology exchange with the West, and not Western analyses of the impact of such imports on overall Soviet economic growth.
Additionally, because thestablishment is notosition to provide the equipment, technology, and know-how that the leadership believes is required to achieve planned goals, there is no real alternative to Western suppliers. Until the Soviet leaders find ways to overcome the shortcomings of theector, reliance on the West for advanced equipment and technology will persist.
n addition to assistance in overcoming technological backwardness, in what other areas is the Soviet government interested in expanding economic relations with the West?
Traditionally the Soviets have traded with the West to acquire advanced equipment and technology as well as commodities in short supply, such as the large purchases of grainillion) and againhe function of exports has been to generate enough foreign exchange to pay for imports. BecausehTonic shortfall in exports, the USSR has had to finance some imports by Western credits and by sales of gold.
The additional areas in which the USSR is now interested reflect these traditional Soviet aims.
The USSR needs more Western capital than has been made available through normal long-term credits to enable the USSR to tap basic resources and undertake large industrial projects.
The USSR recognizes the need for advanced management techniques to introduce greater efficiency in the Soviet economy and has been seeking them in the West.
The Soviets aie pushing export expansion more than in the past in order to finance increased imports and. presumably, to reduce their heavy dependence on increasingly expensive Western financing.
A major hoped-for benefit from expanded economic relations with the West has been the infusion of substantial foreign capital, plant, and equipment in support of Soviel Investment programs. The planned rapid development of Siberian resources, for example, depends on the USSR's ability lo obtain unprecedented amounis of foreign capital. The USSR is discussing several development projects with the West which in total wouldillionillion in Western plant and equipment during the next several years. Total Soviet debt to the West, in contrast, currently stands at less than S4 billion. Energy-related projects would be particularly expensive, with the natural gas development in Yakutsk and Project North Star each involving at least S2 billion lo S3 billionive-year period. The Soviets have also recently approached the Japanese for some S3 billion in loans to cover the constructionecond Trans-Siberian rail line which would be used to transport crude oil for export to Japan. Other projects relating to coal, timber, and copper would require several billion dollars.
The USSR also hopes that increased relations with the West will allow it to Itenefit from Western management expertise. Moscow is particularly aware of the need to upgrade management techniques and has taken several steps to draw upon Western knowledge in this field. Selected Soviet officials, for example, may soon
sludy business management in US institutions. In addition, Soviet managers and industry officials have had an opportunity to discuss management problems with Western businessmen and observe the benefits derived from the application of various Western management techniques. In some instances, the USSR has enlisted the assistance of Westernhe Arthur Anderson accounting firm of the United States, forirect attempt to upgrade the quality of Soviet industrial management and control. In other efforts to improve production and sales, the USSR has sought Western training in computer applications Similarly, the USSR greatly desires US assistance in the management of large agricultural complexes, especially for livestock and poultry.
Over the long term, increased Soviet imports of Western technology and equipment must be supported by an increase in Soviet exports to the Westesult, exportarticularly of manufacturedey Soviet goal in expanded economic relations with the West. The USSR has expanded efforts to establish outlets in the West, often in partnership with Western businessmen. The Soviets have also engaged Western firms to research potential markets for Soviet products, or to assist In marketing and production design through agreements such as the one signed3 with Raymond Loewy.
ow far have the Soviets movedolicy oi autarky to full acceptance O* an international division of labor?
Soviet Minister of Foreign Trade I'.nolichcv wrote in Pravda in3 that "rapid technical progress cannot be accomplished without the broad use of world achievements in individual branches of production and without, the mutual exchange of theseithout the active development of the international division ofhe statement, taken at face value,ar cry from the often proclaimed Soviet goal of economicefore World War II, to combat "capitalistnd after World War II, toelf-contained socialist alternative to the capitalist economic world.
Almost from the very beginning of the Soviet state, economic planners in the USSR believed that selective trade with the more technically advanced countries of the West should be used to achieve economic self-sufficiency more rapidly. The temporary upsurge in trade with the West in theas in fact so designed.
After World War II. Stalin tried to adapt the self-sufficiency concept to the Communist countriesroup, with the aim ofloc which would no longer have to trade with the West. Trade with the West declined until Stalin's death, and indeed did not increase substantially until Khrushchev decided in thehat Soviet plan goals could not be met without Western help. The table below shows that the share of trade with the West increased when the Soviet leadership expressed special interest in thisfter Khrushchev's pronouncements on trade, and again when trade with the West was given heavy emphasis in the Eighth Five-Year Plan directives published
Current Soviet efforts to obtain Western goods and technology have again resulted in an upswing in trade with the West. The share of the West is now larger than at any timet is too eaily to judge whether this share will increase further. But looked at in the perspective of two decades, continuing Soviet efforts to obtain Western equipment, technology, and now large sums of capital are leading the USSR willy-nillyreater dependence on the West. The USSR, for example, is committing itself to long-term deliveries lo Western trading partners and increasing its participation in the international division of labor. In the gas-for-pipc deals with firms in Austria, Italy, West Germany. France, and Finland, the USSR agreed lo deliver natural gas for periods ofoears. Long-term Soviet supply commitments also are involved in the French participation in the Ust-llimsk pulp complex and in the Italian Moiitecantini-Edison's sale of seven large chemical plants to the USSR. The same type ofarrangementsapply to the prospective multibillion dollar projects which envision US and Japanese development of Soviet fossil fuel resources.
Obviously there are limits to dependence on trade with the West. The USSR is still working toward CEMA integration,ajor objective being an integrated
USSR: Trade with Ihe Developed
Share of DevelopedToial Trade
economic plan for Ihe member countries. Writing in Izvestiya O. Bogomolov, Director of the USSR Institute of Economics of the World Socialist System, suggests that it might be more advantageous to rely on foreign suppliers for some items and, meanwhile, expand export capacities in areas where the USSRomparative advantage to pay for rising imports. He recognizes, however, that before the USSR ever "fully" subscribes to the idea of the international division of labor, "much time and effort will be required to solve many theoretical and methodologicalcertain psychological reorientation of Soviet thinking, working, and planning' will be required.
n seeking new technology, in what areas is the United States the sole ot clearly the best supplier? Conversely, to what degree can the USSR meet its objectives from non-US Western sources?
In many areas, the USSR can obtain technology equal to or even belter than US technology from other developed Western nations. In some areas, however, the United States clearly possesses the best technology in the world, or is Ihe sole supplier. The flavor of ihe situation can perhaps be suggestedurvey of some of these high-technology sectors.
The United States is the only country that can provide computer hardware and software across the entire spectrum. For very large scientific machines (such as the, the United States is the sole supplier.and manufacturing technology for producing general-purpose computersery large scale exists only in the United States. Also, certain types of production equipment (high-capacity core presses) and computerized testing systems are available only in the United States. But design and production technology for most hardware and software systems are available in Western Europe and Japan. Japan. Britain. West Cqrmany. France, and the Netherlands alliversified product mix, but produceuch smaller scale than the United Slates.
The United Stales leads the world in semiconductor technology and is the only country lhat can supply the USSR with design and production technology for semiconductor devices across-the-board. For advanced integrated)hat is. high-speed and high-density deviceshe United States is still the sole supplier. It is also cleaily the best supplier for advanced semiconductor production and testing equipment such as computer-aided design systems, computerizedesters, and ion-implantation equipment and techniques.
Nevertheless, technology for the production of modern semiconductors is available outside the United Stales, although only Japan lias an industry sufficiently large and diverse lo be able lo supply the USSRide range of production processes. Japan is particularly strong in areas where the Soviets appear to beiffusion, mask-making, and probe testing.
Western Europe, considerednit, could sugply the USSRide range of semiconductor technologies However.
consistently hasOCOM the sale of this technology to Communist counliics.
Non-COCOM counincs have limited capabilities in select areas, but are not able cither individually or collectively to meet Soviet needs Switzerland is strongest in thin-film technology and Sweden in hybrid integrated circuit technology.
The United States clearly is the best supplier of complete systems for onshore, offshore, and permafrost exploration, production, and pipelining. Advanced geophysical equipment and related computer hardware and software that would best serve the USSR's exploration needs can be acquired only in the United States. US firms also manufacture the most advanced drilling and production equipment in the world. Only US companies, subsidiaries, or foreign licensees manufacture fully automated pipeline valves, compressors, and pumping equipment for large diameter pipelines. Permafrost technology is largely controlled by US firms and their Canadian affiliates and subsidiaries.
As with computers, however, Soviet objectives could be metonsiderable degree by turning to non-US sources. Britain, France, and West Germany can supply certain types of seismograph and geophysical equipment. Some offshore technology is being developed by Dutch, French, Norwegian, British, and Japanese firms. Western Europe and Japan can supply large diameter linepipe. The USSR could carry out its exploration and development programs with its own equipment, supplemented from such non-US Western sources, but at greater cost andonger period of time than would be the case if It had access to US technology and equipment.
In petroleum refining the United States leads the world in technology, but again the USSR could meet most of its needs from non-US sources. West European and Japanese firms can supply most of the process equipment and the technical assistance required, although some processes may be available only under US license arrangements.
Automotive technology available in Western Europe or Japan generally is good and often is available on more favorable purchase terms than in the United States. The United States has the best specialized automotive machine toolsransfer machines) for high-volume output and computerized warehousing systems. Because the USSR has based the differential gearing of its cars and trucks on US designhe United States is its sole source of supply for differential gear-cutting machine tools incorporating the latest technology.
The United States is probably the only country the USSR can turn to for the design of very large automated foundries. The foundry that the USSR recently acquired from Swindell-Dressier for the new Kama plantnique
production process. The United States is also the best supplier for certain types of foundry machinery such as very large melting and molding machines.
Chemical Industry Technology and Equipment
The extensive cross-licensing of chemical technology and the restricted nature of much industrial cost data makes it difficult to differentiate national origin or excellence among several chemical processes. Certainly US process technology for large-scale productionroad range of petrochemicals and synthetic materials must be ranked among the world's best. Nevertheless, most of the equipment needed for such processes can be produced by non-US firms For example, although US technology was provided for five Soviet ammonia plants ordered, Japanese firms provided much of the equipment.
There maylearer case for US technological superiority in the field of relatively low-volume but important chemical or related items such as catalysts, fiberglass products, and engineering plastics. But the US superiority by no means extends to all such materials. Moreover, substitutes entailing some sacrifice in efficiency and cosi probably arc available.
Given the present Soviet chemicalynthetic materials andhe USSR does not depend much upon direct purchases of technical data from US firms. The chemical and petrochemical technology needed by the USSR can be obtained mainly in Western Europe or Japan. West European firms can supply modern equipment and technologyumber of man-made fibers, plastics, fertilizers, and related intermediates Japanubstantial capability for providing petrochemical technology and equipment as well as process and design data for installations producing synthetic fibers and plastics.
US civil aircraft production technology ranks with the best in the world, although it is uniquely superior inew areas. The greatest US advantage is its overall, large-scale syslcms approach to civil aircraft produclion. Excepl for some parts of inertia) navigation systems, the large-scale numerically-controlled assembly line operation, and some aspects of airframe fabrication. US technology can be matched by France. Britain, and West Germany. The USSR could acquire advanced engine technology in Western Euiope that is equivalent to US technology if il were not barred by COCOM trade controls. US technology for air safely (air traffic control) and for pollution control rates among the best in the world but can be matched by other Western countries, particularly Britain.
The Umicd Stales is the sole supplier of heavy-duty industrial tractors and the largest sues of earth-moving equipment, such as front-end loaders and dump trucks- It also is the sole supplier of ihe process for manufacturing pain-oriented electrical sheet (for transformerlthough thevailable in Western Europe and Japan. The United States is the best supplier of numerical controls for machine tools, especially those for simultaneous control of more than two axes. US numerical controls are easdy programmed, and delivery times are more favorable than elsewhere.
ow important aitt economic considerations, particularly technological transfer, in the general Soviet policy of detente?
Economic considerations, particularly technological transfer, arc extremely important, but not overriding in Soviet detente policy. Such problems as coping with China, controlling nuclear risks, and advancing Soviet political influence in Western Europe are also important factors in leading the USSR toetente approach. Economic considerations complement these other aspects of detente, offering an alternative to autarkyesponse to changing world conditions-
The Soviets need advanced Western technology and have flatly admitted this. The USSR can, as it has in the past, however, do without US or other capitalist assistance and obviously can do so in the future. Given the self-imposed Soviet commitment to accelerate technological progress and economic growth and to overcome deficiencies in critical sectors of the economy, the USSR would in some areas prefer to obtain superior US technology and know-how and have access to the large US capital market. Without detente, this desire would go largely unfulfilled.
The Soviets already have obtained important economic benefits from detente: massive quantities of grain to mitigate the effects of2 crop failure; technology and equipment delivered or ordered that were previously denied by US export controls, and moreillion dollars in credit to finance grain and machinery importsime of difficult payments problems
The USSR has obtained substantial amounts of equipment and technology from Western Europe and Japan as well as ample long-term credit to help finance such imports. In some instances. US technology and equipment would have been preferred, but the levels of technology embodied in much of the equipment imported were in any event superior to that available in the USSR and Eastern Europe. Even though the relaxation of US export controls has made considerable amounts of US equipment and technology available, the USSR continues to placeof its orders for Weiteni capital equipment in Western Europe and Japan.
Superior US technologies which the Soviets would like to acquire in helping overcome some deficiencies in critical industries utclude equipment and technology for the petroleum industry, computers, and semiconductors. Aside from outright purchases of equipment, access to highly pnzed US technology would also be realized via the scientific and technical agreements that the Soviet Union has concluded with more thanS corporations and other organizations. Inoothold in the Soviet market. US companies may be willing to part with technology that the USSR desires but has not been able to obtain through trade channels.
Perhaps one of the most important benefits which can be derived from detente is access to US technology, know-how, and capital through so-called cooperative arrangements. Without US capital, for example, some of the ambitious projects the Soviets have inorth Star and Yakutsk gas or Sakhalinould have to beome for manyince the USSR is unwilling or unable now or in the near future to make the necessary investment to develop these resources and sufficient capital is unavailable in other countries.
o what extent would the USSR sustain its current foreign economic policy if detente faltered badly on otherrms control, the Middle East?
If detente suffered in important strategic or political areas, Moscow would make great efforts to sustain its foreign economic policy so long as some major Western governments were receptive. The economic considerations that led Moscow to formulate its current policy of improving business ties with the West would remain even if certain political considerations supporting detente lost various specific competitions with other Soviel policy priorities.
Almostears of economic experimentation have failed to deliver the USSR from its relative technological backwardness compared with the industrial slates of the West; this has been acknowledged by some of the more forward thinking Soviet officials. These Soviets also acknowledge that the gap may widen between East and West in the vital area of economic competition unless vigorous efforts are made to adapt to the demands for technological growth.
Apart from the desire to lessen the risk of global nuclear conflict, probably no other aspect of Moscow's current detente policy hastronger consensus among Soviet leaders than its economic policy. However, there are doubtless greatly differing views on the implications of detente for the structuring of the Soviet domestic economy. The need for Western technology and credits seems lo have few serious critics, though there are strong forces in Moscow who oppose any fundamental tampering with the Soviet economy in order that it might more effectively absorb the technology and investments the USSR seeks. The*'! are also influential circles who worry about the constraining implications of growing economic interdependence,
A serious setback for detente would seriously hamper but not slop the Soviet leaders from pursuing their foreign economic course. The Kremlin would likely judge that it would have to forgo some of the economic benefits it seeks from the West, but that it would be able to maintain economic dealings with some major Western governments and in time restore beneficial relationships with others.
9. Oo Soviet foreign policy considerationsreference for US suppliers?
Yes. for both political and economic reasons. Soviet officials have for some time said that Moscow would prefer US sources of advanced technology and credits in order to strengthen political relations and create conditions for greater mutual trust. Among economic considerations, the Soviets clearly like the resourcefulness of US businessmen and the American technological experience, and they know that the volume of capital investments they require is available from virtually no other Western state.
The Soviets have also made the case, however, that unless the US terms for expanded economic tics arc economically non-discriminatory, they will be forced to turn to other states for the technology and capital they need They have insisted that most-favored-nation (MFN) treatment in particular be granted, inasmuch as Moscow cannot indefinitely accept an unfavorable trade balance with the United States. They have acknowledgedrade deficit with the Untied States will exist for some lime, even under the most favorable conditions, but that this situation can eventually be corrected as Ihe Soviet economy adjusts to US and other Western market demands.
If the Soviets are eager to reinforce the positive bilateral political relationship by means of expanded economic lies with the United States, they are not eager toolitical price for economic objectives desirable in themselves. The Soviets have insisted that there be no political preconditions for increased economic ties with the United States, but in fact they hoveertain willingness at times to make some politicaln Jewish emigrationo gain ihe kind of economic benefits Ihey seek. They have also indicated, however, that there are sharply defined limits to the concessions they are prepared to offer so long as the prospects for acquiring MFN and credits arc unfavorable.
Apart from normal business bargaining for the best deal available, Soviet competitive bidding for Western technology is also grounded in ideological rationale. The Soviets view economic competition among capitalist states in particularly stark lerms, characterizing it as an unbridled, unprincipled scramble for national and corporate advantage.
It is not surprising therefore that Moscow should attempt lo play the leading Western nations against each other bolh for political and commercial advantage. Thus Soviet Trade Minister Patolichcv, in an effort to prod the United States into granting more favorable credit terms, threatened in February to take Soviet trade elsewhere in search of belter terms.
Perhaps more surprising is the readiness with which Soviet leaders have for political reasons bluntly threatened lo boycou US firms attempting to do businessraternal socialist ally, Romania.
o what extent do Soviet loaders view increased trade and exchanges with the Westehicle for building Western constituencies with vested interests in pressing tor greater accommodation to broader Soviet objectives?
Soviet leaders clearly hope that increased commercial contact between the United States and the USSR will aid in "making the process of detenteoscow has consistently pressedery high level of bilateral trade, and Kremlin leaders from Brezhnev down havereference for long-term economic commitments, ranging up to forty years. They obviouslytrong connection between the breadth and depth of economic ties and the "stability of US-Soviet relationshole."
The Soviets apparently expect that the capitalist appetite for profit, once sufficiently whetted, willowerful force in shaping future Western policy toward the USSR. In addition to the economic dividends which they see flowing from expanded commercial contact, the Soviets probably expect enhanced political leverage with the West, though they must realize that this can cut both ways.
Moscow appears already to regard US businessmen as allies in the campaign to defend detente against its Western opponents. Soviet commentators, for example, have been quick to publicize support from the US business community for liberalized trade and credit policies toward the Soviet Union.
s there any evidence that Brezhnov it out in front of his Politburo colleagues In promoting trade with the West, and with the United States in particular?
he principal spokesman foe the Soviet leadership on most subjectv certainly including detente and its economic aspects Hespoken more voluminously and more often than any other member of the Politburo, and his recent collected speeches outweigh even the sum of all the olhct members. He is patently, therefore, "out in front" of his colleagues. There is. ofifference between being the spokesman for an agreed position androponent of that position in the closed councils of the Politburo. On the specific issue of trade with the West and with the United States in particular, however, there is no evidence to suggest that Brezhnev iseluctant front-manolicy he regards as distastefu) or dubious Moreover, from the Kremlin vantage point, his identification with detente with the United States is no more marked than his identification with detente with West Gcrmjny.
The General Secretaryelatively new convert on this subject. In the, Kosygin as Premier was actively pushing track prospects with hoih Western Europe and the United States. Brezhnev,'using on his responsibilities as Soviet head of the international Communist movement, was suggesting that praise for Western technology by proponents of trade with the West denigrated the achievements of the "socialistowever. Brezhnev has more than made up in volume and enthusiasm foiard performance earlier
In part because of his enthusiastic personal style. Brv/hncv is particularly associatederies of large projects, rather than with the levs drama tie pe rural growth of trade. This has been true in his discussions with the Germans and Japanese as well as with the United States Brezhnev, more ihan his culleague.is linked with projects whose failure would he public and conspicuous
Some comparison of how individual Politburo member* stand on economic cooperation with the West is possible on the basiscries ol speeches made byf the lb full members in the fall and winter4 The positions that emerged must, of course be viewed with caution I'olyansky and Shclepin. for example, have both sufferedetbacks and must bo concerned to maintain their acceptability to the (ieneral Secretary, regardless of their inner inclinations There are. in addition, professional or bureaucratic inhibitions It would be Inappropriate for Grcchko as Minister of Defense lo dwell on the economic benefits to flow from detente. Hiso assure luv audience that the security of the Soviet Union will nol be endangered bynd to assure the military that they arc still needed. Similarly. Andropov asf the KGB can scarcely afford to denigrate the threat of ideological subversion from the West.
Wuh these caveats in mind, however, there are some dilfc-rcncc* in cinpluxn to be gleaned from the speeches No one expressed explicit douht* atxnit trade with either the United Slates or Western Europe, but tome werenthnsiasik than others. Brezhnev, Gromyko, Kosygjn. Mazurov. Polyansky. Shckpin. and Suslov all specifically mentioned economic factors in thef improving relations wiih ihe developed countries. Brezhnev at the high tide of his enthusiasm in October commcnled thai ihe limesbroad international division of labor" He described "mutually advantageous, long-term, large-scale, bilateral and multilateral cooperation"eans for "dependable material strengthening .if peaceful relations between states "
Gromyko noted that "multilateral and mutually beneficial contacts" with the states of Western Europe areis long and relatively favorable account of relations with (he United States contained no reference to tiade. possibly in recognition of the sore point of failure thus far to achieve MTN status. In contrast, he made specific reference to prospects for trade with Japan, including "joint economic projects in Siberia and the Far East."
Kosygin came down hard on scientific and icchnologka! progress, an area of exchange with which he has long been associated. He argued that it represents the main way lo raise Soviet labor productivity, and lhat both rising living standards and successful economic competition with capitalism depend on the rate at which technological achievements arc introduced into the Soviel economy
Mazurov called for "constructive business links with capitalistlightly less enthusiastic formulation Polyansky pointed lo the economic benefits of detente, and Shelepin called for large-scale mutually advantageous economic relations with ihe capitalist world. Suslov called for large-scale, long-range, mutually advantageous economic relations among capitalist and socialist slates
A second group of leaders used less explicit formulations (hat could still be interpreted as Including prospects for trade among the benefits to flow from detente. Andropov described improving relations with the West as creating (he most favorable conditions foi the construction of communism in the USSR Grechko referred lo the promise of the creation of conditions for Ihe USSR's "ftirlhci advance along the pulh towardirilenko referred to "prospects for mutually advantageousulakov noted thaionsiderable adv.mcc had been achieved in the development of relations between Ihe Soviet Union and the United Slates and several other slates."
Podgorny's references to Ihe potential benefits from detente were cast almost solely in stale-to-slatemutual respect for tcmlorul integrity andnon-interference in internalis sole reference to trade was limited to Europe and was so low-keyed at lo be almost
a brush-off: "Ifusiness cooperation among states ishis testifies to the fact that positive tendencies in this pari of the world arc gaininge made no reference to Sovicl-US relations in any field.
A rough leadership grouping on the economic elements of detente might look like this:
Brezhnev (Party head) Gromyko (Foreign Minister) Kosygin (government Premier)
t Deputy Premier, industrial responsibility) Polyansky (Minister of Agriculture) Shelepin (trade unions head)
Sustov (senior Party ideologist, world Communist movement expert)
Andropov (KGB Chairman) Grechko (Minister of Defense)
Kirilcnko (Brezhnev's Party deputy, supervises industry) Kulakov (Party Secretary, supervises agriculture!
Minimizing or silent
Podgorny (Head of State)
Pelshe (Party-Control Commission)
ow strong are the political forces opposed to increased economic relations with the West and the United States?
A number of ihe USSR's more powerful interest groups seem lo have reservations about the wisdom of increased economic relations with the West and the United States.
The one most frequently mentioned by Soviet sources is the Parly bureaucracypecifically, ihe regional political bosses whose viewsood deal of weight with the top leadership in Moscow. Their negative attitude towaid increased trade with the West is said to be prompted by severalot the least of whichonviction that it would violate an unwritten "Trading with the Enemyriclly put, many of these local satraps arc far more isolationist and suspicious of the capitalist West than Moscow-based officials seem to be at this time.
Regional Party leaders' negative altitude is reinforced by their awareness that they themselves will have to cope with the local dislocations resulting from any increase in trade with the outside world. They are Ihe ones who will be tasked with seeinghai local enterprises adjust to the new conditions: make use of the imported technology even though change-overs interrupt production, conform to higher slandards of quality, and so forth. They will also be responsible for making sure that increased trade does not lend to undesirable side effects in the political sphere, and that rising expectations of the Soviet population do not get out of control While some may view East-West tradeanacea for Soviet Ills of the moment, most probably see it as only adding to the complications of their day-to-day life.
The Soviet ideologists and security officials responsible for dealing with "impcnalist" intrigues and subversive activities are also likely to be against increased East-West trade. Many undoubtedly view the prospect with alarm, certain that it will make it easier for foreign intelligence services and other hostile forces lo operate within the Soviet Union. While some KGB and GRU officials may feel that more trade will make it easier to recruit foreigners to work for the USSR and lo assign Soviet intelligence officers abroad, mosl probably see il as working againsl Soviet national interests, as well as their own.
The attitude of the Soviet defense establishment is more difficult to fathom, but it may be significant that it has been the politicalesponsible for the ideological health of the armedho have emphasized the importance of economic autarky and integration with ihe otheT socialist countries along Cb'MA lines, rather than economic cooperation with the capitalist world.
Meanwhile, it is the experts at the policy-oriented research centers such as the USA Institute in Moscow who come out with the mosl outspoken endorsements.
in private and in public, of more East-West trade and cooperation in scientific and technological fields. Several of these experts have lies, past if not present, with the Soviet military' hierarchy, specifically with the General Staff. It seems likely that at least some professional soldiers also feel that economic growth and social investment, not just military hardware, are required to ensure that future defense needs can be met. This is likely to be particularly tme of those familiar with the problems connected with qualitatively improving Soviet weapons.
At the same time, it seems unlikely that this attitude would predominate among lower-levelhe colonels in troopho may see detente as all right in itself but dangerous when it threatens to weaken troop morale. They and their superiors, up to and including military district commanders and their counterparts in the navy, probably feel that any increase in East-West contacts could make it more difficult for them to keep the Soviet armed forces up to the mark in terms of combat readiness.
Additionally, there arc other known grounds for opposition to increased economic ties with the West, although the exact political clout of their adherents is uncertain. One school of thought objects to paying for increased Western imports with Soviet raw materials, especially energy-related resources. The worldwide energy shortage has given new force to this argument. Concern also exists that increased trade with the West will arouse Soviet consumer expectations that the regime will be unable to fulfill.
re there any indications of the development of important vested interests in acquiring important new means of technical and economic assistance from the West?
There is some evidence of the rise of vested interests in the Soviet Union at both the national and local levels which arc actively promoting increased economic ties with the West. Such interest groups may be defined as those which have been able to build new administrative empires and/or set more ambitious production goals because of the import of Western technology and equipment.
important of these groups are:
State Committee for Science and Technology (SCST).
In general, whatever policy promotes trade is in the best interest of the Ministry of Foreign Trade. However, at least one report suggests differences of opinion and very real bureaucratic maneuvering among middle-level Ministry officials as to the relative merits of the US and West Germany as trading partners for the Soviet Union. No doubt there are others whoajor expansion of trade beyond CEMA boundaries with foreboding. But Patolichev's public support has, as noted earlier, been unequivocal.
The SCST was placed directly under the Council of Ministers inandroad mandate lo establish Ihe priority of and approve all national scientific and technical programs. Included in this task arc the identification and introduction of foreign science and technology into Soviet industry. The Committee's Chairman.. Kirillin. claims that it acts mainlyatalyst in this respect, paving the way for cooperation between Soviet ministries and foreign traders. It is much mote than that, however, since it approves the expenditure of most foreign currency for Western equipment and technology and signs virtually all "scientific-technical cooperation agreements" with foreign firms and governments.
Soviet leaders view technical progress as neither haphazard nor spontaneous butrocess amenable to central planning and control. Assessment of the USSR's technological position and the formulation of technology policy are carried out in great detail at the highest party-government levels as part of the long-range economic planning process. Once these plans arc set. theretrong disinclination to change them. This is one respect, of course, in which the whole Soviet economic organizational structure ts likely gradually toested interest in technological transfer and the rest of economic transfer.
The planning goal of such bodies as ihc SCST is loong-term, integrated technology policy that combines imported technology with domestically developed technologyomplementary fashion To this end. the SCST is assigned the job of sorting out the technological problems that will receive piioiity. It then decides which technology will be obtained abroad and which technology will be developed domestically. For the top priority projects, even the decisionarticular foreign supplier is believed to be made by the SCST.
One of the Committee's four deputy chairmenvishiani, Premier Kosygin's son-in-law. who handles all foreign relations in the field of science and technology. His officeatural first stop for most Western businessmen, reportedly incurring the wrath of Foreign Trade Ministry officials who believe that some of their functions have been usurped. Clvrshiani's prestige has grown with the importance of his office, making him an outspoken advocate of scientific-technical cooperation with the West.ecent Pravda article, he justified Western equipment and technology importsay "to improve the living standards of the people living undere also co-authored an articleolonel Bondarenko in the Soviet military newspaper Krasnaya Zvezda which sought to persuade skeptics that increased trade with the United States "insures considerable advantages for both countries."
The economic ministrieslear vested interest in the import of Western technology, especially those ministries that are expected to shoulder the main burden of growth. This growth must now come from increased productivity rather than from additional inputs of capital and labor, meaning that more advanced technology must be found. According to Academician O. Bogomolov, writing recently in Pravda on the importance of expanding economic ties,haracteristic of the Soviet Union's import policy is the purchase of equipment for those sectors of industry which will develop rapidly in the five-yeare identifies those sectors that have benefited most from imported equipment as the chemical, metallurgical, automotive, pulp and paper, light and food industries, the merchant and fishing fleets, and the railroads. The computer, electronic, petroleum, and livestock sectors may be added to this list as future beneficiaries if current negotiations with the West are consummated.
Ministry officials have been acutely awareide technology lag behind the West and have viewed the import of Western technology and equipmenthort cut to boosting productivity and fulfilling state plans. Since the leadership has given the green light to such tics, the Soviet ministerial bureaucracies hove unabashedly courted Western firms.ecent trip to the USSR by US chemical industry representatives, for example, the Soviet Chemical Industry's chief of science and technology presented the visitorshopping list ofeeded chemical technologies. The minister of another priority sector, the petroleum industry, recently admitted to Western visitors that Soviet oilfield technology is
Cot*-dp rt re*
ears behind current US know-how and equipment He concluded ihai Ihey must acquire foreign assistance if the country's increasing needs for energy arc to be met.
In an effort to speed the introduction of new technology into Soviet industry, the) sector was restructured by II decrees issued between6 andasically, thisought to tie the "economic incentives and material rewards" of research institutes to the economic effectiveness of the new technologies which they developed. One of the decrees defined the rights and duties ofrganization, specificallyesponsibility for submitting recommendations to obtain promising foreign licenses and supplies.ore general sense,rganizations were tasked with "engaging in scientific-technical cooperation with foreign countries in order to solve important branch and inter-branch problems."
These new duties, which areart of the institutes' success criteria, should giveested interest in obtaining Western technology. So far, however, it has been difficult to determine if any foreign contracts have resulted from the new regulations.
arty-government decree declared that the production association would become the basic Soviet industrial unitroduction associationumber of enterprises which use similar production technology or manufacture similar products, mainly for the purpose of exploiting economics of scale and putting new technology into use more quickly. Most of the associations formed lo dale have included research institutes under their umbrella. This new industrial unit should allow the more efficient use of foreign technology and would have more power to agitate for such at the ministerial level.
as been rumored for some time that very large enterprises will eventually be given tlte right to engage directly in foreign trade. Some East European enterprises already have this righi-eform wouldreater initiative in the hands of Soviet technical and managerial personnel, givingtrong vested interest in maintaining trade with the West.
i Brezhnev likely to encounter trouble from his colleagues if the large deals with the United States fall through? If so, what would be the likely political results?
Brezhnev's personal prestige seems directly involved in large, joint economic ventures with the United States. How much trouble he will be in if all the big jointor instance the exploitation of Siberian naturalall through will depend in part on how successful he is in arranging alternative or comparable deals with other countries such as Japan and West Germany.
was eager to get (he Germans on board in participating in the Kursk iron and steel project at whatever cost, and that his reasons for doing so were strictly political. He wanted to have something tangible in hand.
ll the join' ventures fall through, and there were no progress In other areas of detente, Brezhnevs position in the leadership would lo some degree be weakened and he would surely be put on the defensive This would probably mean less flexibility in Soviet foreign policy, less willingness to compromise or be accommodating on other issues. Judging from his past behavior. Brezhnev could be expected to trim on detente policy at least temporarily. _
It seems unlikely, however, that Brezhnev would be toppled from leadership in these circumstances, unless he encountered at the same time major setbacks on the domestic front. In the first place, his political support is broadly based. His preeminence within the leadership seems now ro be generally accepted by his colleagues. Personal ambition, lingering bad blood over past political defeats, and policy differences arc all tempered to some extent by the recognition that Brezhnev's greater international prestige enhances the prestige of the USSRhole.
In the second place, if would not be easy for any of Brezhnev's colleagues to exploit any vulnerability of his stemming from even serious detente setbacks. Brezhnev might, of course, be faulted for allegedly mishandling the policy, for banking too much on personal diplomacy because of the enhancement of his own position, and for having overstressed glamorous and grandiose deals. Critics taking this line might get some tacit backing from Suslov, because of his ideological concerns, and from Kosygm. who has lost ground as Brezhnev has gained. Both Suslov and Kosygin appear concerned to maintain their influence over Brezhnev, however, rather than to remove him. There is also the larger problem ofiable foreign policy alternative to controlled detente.
Furthermore, the most outspoken critics of detente have been removed from positions of power, such as Leningrad paity boss Tolstikov and Ukrainian party boss Shclcst. And the remaining critics of detente within the leadership seem mostly lo be in Brezhnev's own political camp, in the so-called "Ukrainianolitical allies such as Kirilenko. Podgomy, and Polyansky have never been out in front
in supper! of detente and have come around with some reluctance. This may have caused some strain in their relations with Brezhnev and they might not be unhappy to sec detente falter, but it seems unlikely that they would feel inclined loetback in detenteolitical weapon against Brezhnev.
It is also questionablehallenge to Brezhnev by some leadership colleagues could get sufficiently broad support among important regional and institutional groups. Brezhnev has sought lo win over conservative regional critics of detente by lending his name to some of their pet local schemes. This goal appears to haveajor factor in Brezhnev's support of the experimenls in industrial and agricultural management carried out by the Leningrad and Moldavian party leaders Even Brezhnev's recent announcement of an ambitious agricultural program for the northwestern non-black-soil region of Ihe Russian Republic may have had the same political motive. In addition to the present validity of the project on economic grounds, it should have strong appeal to conservative, isolationist Slavophile elements, who tend to take an emotional view of the icgion as the neglected "heartland" of "Mother Russia."
Brezhnev has also always kept an attentive car to the needs of the military and has been careful not to leave his flanks exposed to attack from any such powerful dissatisfied quarter.
Brezhnev in the past has also been careful loolicy of relaxing international tensions with tight internal controls, and has apparently succeeded in containing fears of the ideological dangers of detente.
o the Soviets view their present policyemporary expedient which will be followed,ater phase,eturn to greater independence?
Self-sufficiency always hasoviet policy goal. This policy was formulated when the USSRommunist islandapitalist sea. The capitalist encirclement syndrome was carried into the post-World War II period and extended under Stalin to include the other Communist countries. Selective imports from the developed Western countries were designed to foster, not supplant, self-sufficiency. Inhe USSR expanded imports from the West, only to reduceew years later when the leadership believed that the goal had been largely achieved. Trade with the capitalist West increased following Stalin's death but not substantially, and there was no indication that the goal of Soviet self-sufficiency was in any way being repudiated.
The capitalist encirclement decline was eliminatedajor obstacle lo expanded trade with the West under Khrushchev followingh tarty Congressfficially, trade with the West was to be conducted basically to keep abreast of Western technology, to "overtake and surpass the capitalisto import or otherwise obtain Western technology and equipment for upgrading the Soviet economy The goal of self-sufficiency was the same; only the slogans were changed.
By the, however, Khrushchev recognized that plan goals could not be met without Western help, and increased trade with the West was to give the Soviet Union the opportunity for "quicker fulfillment of itsn spite of Khrushchev's claim that fulfillment could be accomplished "through our own effortsour own resources."
Since0 there hasore or less steady, if unspectacular, growth in trade with the West. Imports have been focused largely on machinery and equipment, and from time to time substantial imports of grain have resulted in large increases in trade. But Soviet trade with the West has increased more rapidly than trade with the Communist countries, and in recent years the USSR has counted on the West for about one-fourth of its imports. Thus, this rather significant trade hasore or less permanent feature.
The detente atmosphere has created the impression that the recent increases in tradeew phenomenon. What is new about the current policy of importing Western technology is the scale of imports and the larger share that is being bought in the United Stales. Imports of machinery and equipment from the West were about SI billion annually1hey may reachillionssuming sufficient Soviet wherewithal, such imports could reachillion annually by the end of the decade, if the USSR chooses to rely more heavily on the West for its equipment and technology needs.
Thus, although the Soviets may not have decided lo rely on some son of international division of labor, the increased exchanges with the West suggest that it will be increasingly dependent on Western technology and capital. Even if the USSR really perceives increased Irade with Ihe Wcsleans of increasing self-sufficiency,oal would bes li hasore difficult to attain with ihe passage of time.
hat problems is the USSR likely to encounter in importing Western technology? Will the leadership adjust its course if assimilation ol new technology proves to be more difficult than expected?
There is already ample evidence that imports of Western technology often fail to meet Soviet expectations. Western businessmen have remarked from time to time that ihe Soviets seem lo be overly optimistic about what Western technology and equipment can do for them and consequently there will be disappointments. Frequently, imported equipment does not mesh well with existing Soviet equipment, with other foreign equipment, or with Soviet inputsroduction process. Soviet difficulties often stem in partendency to import equipment that is too advanced for rapid assimilation, given existing levels of domestic technological development. Assimilation of foreign technology also depends on the quality of the labor force. Soviet workers must first master the unfamiliar and complex foreign machinery; therefore, many foreign-built plants reach rated capacity only after lengthy delays.
Because of problems in digesting imported technology piecemeal, the USSR has turned increasingly to the purchase of turnkey plants. Turnkey plants have not proved toompletely satisfactory answer to the USSR's difficulties with foreign technology, however, because they arc too expensive to buyassive scale and because they do not resolve all of the interface problems. The Western plants often require labor skills in construction and operation thai exceed the skills available on site in the USSR. In addition, the processes sometimes demand raw and semi-finished materialsuality that the domestic economy is not prepared to supply.
Finally, problems may be caused by the Soviets' relative tack of experience in managing large complexes of very modern technology. Soviet managers have been trained to concentrate on meeting narrowly defined production goals in an organizational environment that does not promote the coordination of many complex parts. Western corporate management has invested heavily in specifically training middle-level managers in problems of complex organization before advancing them to higher levels. The Soviets have displayed interest in importing these management techniques.
Soviet expectations from these infusions of Western technology may differ from sector to sector, and there may be significant changes in policy in certain sectors resulting from experience with imports to those sectors. The Fiat-built plant at TaTyatii produces Ihe Zhiguli automobile. Its completion was behind schedule, but itar superior to what the Soviets could do on their own. By the same token the Kama plant already is about two years behind schedule, but the Soviets probably would do worse without Western help and turn out trucks less efficiently. Again, in the chemicals field, the Soviets have spent about S2 billion over the past decade or so to upgrade their chemical industry. They have succeeded
in doing so. The plants arc producing more slowly than the Soviets have hoped and many of them have and willlateau of output well below their rated capacities, but the alternative wouldesser one.
Continued on-sitefter plants beginf Western technicians and managers would alleviate some of the problems the Soviets currently face in operating high technology plant and equipment imported from the West. Many Fiat engineers and technicians stayed on for some time at Tol'yalti. This assistance would be maximized, moreover, if the Western firms wereestedquity participation, to ensure the efficient operation of these plants. The Soviets are not yet prepared to make such an ideological compromise, however.
On economic grounds alone, we do notituation in which the Soviets will decide to ait back sharply on imports from the West because expectations have not been realized. The amount of foreign exchange likely to be allocated in this decade to obtain Western technology and equipment istaggering amount, particularly in view of the fact that Soviet earnings will rise substantially for the next couple of years. The alternative of relying even more heavily than the Soviets do now on domestic and other Communist sources makes little sense economically. If the Soviets indeed decide to turn inward, they would do so for other reasons. What adjustments would be necessary would depend on what programs the Soviets had in mind. Many of the Siberian resource development programs would be postponed for long periods. Resources affected would include important ones such as oil. gas. and nonferrous metals. If the Soviets are serious about developing these resources, there seems to be little alternative to Western investment if they plan to exploit them in the next decade or so.
ow has economic detente affected Soviet military capabilities? What is the potential in this regard?
Economic detente offers three sources of potential improvement in Soviet military capabilities. Some have argued that:
Increased trade fostered by detente will help Soviet economic growth, thusetente dividend that could be spent at least partly foT military purposes.
By furnishing medium- and long-term credits, the United States could free Soviet investment resources for military purposes and still allow the USSR to carry out planned projects in petroleum, chemicals, and minerals.
Greater access to US technology might lead to qualitative improvements in Soviet weapons and materiel.
We do noi believe thai detente will help the military establishment by providing it with additional resources. Imports of Western machinery and equipment aremall share of total Soviet investment in plant and equipment and therefore will notignificant growth dividend. Furthermore, to fill military requirements from resources freed from civilian industry wouldeversal of traditional Soviet resources allocation policy. Generous allocations have been made to military programs regardless of shortages elsewhere in the economy.
Detente is much more likely to improve Soviet military capabilities by raising the quality of Soviet military goods and by increasing ihe quantity of basic commodities such as trucks, petroleum, and communications equipment. The general problem is that practically all sophisticatedhether in the areas of automotive technology, electronics, electronic instruments, and metallurgy or in other industrialas some potential application in military production. Large computers imported from the West would improve planning and supply in the civilian economy as well as in military logistics. If the USSR'is successful in purchasing an aircraft factory from the United Slates, the quality of Soviet military aircraft is likely to improve. The air traffic control system for Aeroflol thai the USSR is seeking would increase the efficiency of air defense systems as well as civil air transport.
This docs not mean that military refinements to those technologies would be transferred to the USSR along with the basic civilian technology. For example, by buying integrated circuit technology, the USSR could improve the quality of communications systems generally. Bui the USSR would not gain access to the radiation-hardening process necessary to install integrated circuits in missiles. Nor would the acquisition of general US computer technology give the USSR the
capacity lo manufacture highly specialized minature compuieis for miuilc guidance. The purchase of an aircraft factory would not include L'S military avionics, radar, infrared systems, ot flight recording systems.
Judging from the way US-Soviet commercial relations have developed, detente thus far has not produced discernible transfers of mUitary technology to the USSR. Over the coming years, however, detente probably will promote the transfer of military-related technology in the following ways:
The present inclination of the US Government and business is to approve rather than deny Soviet requests for technology. The USSR clearly is receiving machinery and equipment that was denied before detente.
By the same token, detente will speed technology transfer to Eastern Europe, which isransfer lo the USSR. The sale of integrated circuit technology by France to Poland, for example, will be of great benefit to the USSR.
cooperation agreements and scientific exchanges have encouraged technology transfer in general, although the precise impact on military capabilities is hard to assess. Soviet visitors are not shown uniquely military technology, but informal contacts with US military contractors could provide isolated assistance to the USSR in the production of military aircraft, computers and high-performance metals.
In the short run. detente will undoubtedly enhance Soviet mdltary capabilities in the support and logistics areas Because of US and Western aid. the USSR and the Soviet military forces will have better trucks, more rcliahlc communications and an improved network for petroleum supply, as wellumber of other improvements that are embodied directly or indirectly in the equipment and technology delivered in normal trade. Nevertheless, marginal improvements In transportation and petroleum distribution will not tip the military balance. What matters is the US superiority in particular high-technology fields that provide the foundation for strategic forces.
The long-run effects of detente are difficult to predict as the channels of technology transfer could shift in various directions. If the relaxation ofCOCOM controls continues, the USSR will receive greater amounts of sophisticated industrial process technology that will permit continual quality improvement both in military and civilian production. US firms, desiring to expand their markets, will press for fewer controls To (he extent the USSR is successful in cultivating close, long-term contacts with US firms producing military equipment, the more successful it is likely to be in increasing military-related transfers
Substantial additional research and analysis would be required to go beyond these rather general observations on the long-term problem. We need to study in more detail whether Soviet acquisition of Western technology under detente could contribute to major advances in particular military systems such as highly accurate MlRVed ICBMs, improved ASW systems, or silent, nuclear-powered submarines. Circumstantial evidence, at least, suggests that certain Soviet military programs have been shaped or inhibited by various constraints including design difficulties and production limitations.ew military applications the Soviets appear to have deliberately avoided using computers by adopting design concepts which do not require them.
hat can be said about the effects of economic cooperation, especially big projects involving large numbers of Westerners and increased foreign travel for Soviets, on Soviet managerial structures and procedures?
The long-run effects of economic cooperation on Soviet managerial stinctuies and procedures could be transmitted through:
Constant, prolonged contact between Soviet and Western managers.
Soviel study of Western management techniques through exchange programs and visits abroad.
Long-term management contracts let to Western management companies, and
Western control of enterprises on Soviet soil.
The first and second of these seem the more likely sources of managerial impact. The third and fourth would raise serious ideological problems.
Large-scale economic cooperation is too new lo serveeaningful guide to long-term effects on Soviet management. One of the biggest and oldest projects, the Fiat-equipped passenger car plant at Tol'yaiii. has been under way6 but became fully operational only last year. The Italian engineers and managers were phased outoviet ability to manage Ihis plant or to transfer its Western managerial structure and procedures elsewhere has not yel been tested.
Many Western management techniques are hard to apply in the Soviet economy because they are designed to facilitate efficient, flexible decisionmakingarket economy where rapidly changing conditions require quick decisions in the face of uncertainty and high risk. These techniques cannot be used or work less well in the Soviet managerial setting,arge number of largels for oulput, labor payments, and other inputs are handed down from above.
The capitalist philosophy that underlies Western management techniques is not only ideologically unacceptable to Marxist economists in theory, but is not understandable in its practical ramifications lo Soviel managers. Western visitors to the USSR have noted that the concept ofentral feature of theories of management, is totally foreign to Soviet industrial officials. Similarly. US managers and teachers of business administration have no real understanding of day-to-day industrial management in the command economy with its central planning and Party domination of economic activity.
he USSR expressed great interest in importing Western management techniques for use in the USSR, but Ihis interest evaporated.2
ihe USSR had broken off negotiations with Western management consulting firms,cheduled US-USSK management exchange program, and had stopped publishing extensive writings on the subject. With the onset of detente and the rapid increase in imports of Western technology, interest in Western management techniques has revived somewhat as the USSR continues to experience serious difficulties in assimilating Western technology.
Economic cooperation is bound to persuade many Soviet managers that the USSR's existing management practices are deficient. Nevertheless, Western management techniques are likely to be adopted onlyiecemeal basis. And they will be restricted in scope because of the limitations imposed from above. To enable the enterprise manager to maximize output at least cost while adhering to the targets sent down from on high, the manager can make use, for example, of computers for such things as inventory control, accounting, payrolls, process control, andariety of production problems within his sphere of operation. The manager's freedom of maneuver is clearly limited, but some rationalization is possible even within the narrow confines of his operating unit. Other managerial techniques can be applied in the Soviet milieu without causing ideological conflicts or needing basic changes in the way the Soviets run their economy. Thus, US personnel placemen) practices or non-monetary incentives for workers can be applied. Where Western management practices arc successfully implemented and adapted to Soviet practice, they can be disseminated by way of Soviet management schools.
The adaptation of Western management practices and theories to the Soviet setting by definition will exclude those features that would fend to undermine centralized government and Party control over the economic activities of the enterprise. The experience with5he continual amendments of the rules of the original reform to restrict enterprise managers' leeway for aciion, suggests. that Western techniques that contribute to independent action by the enterprise manager would suffer the same fate.
hat can be said about very long-run socio-political effects of economic cooperation especially big projects involving large numbers of Westerners and Increased foreign travel for Soviets?
Any long-run socio-political effects of economic cooperation will be very difficult to identify, because they arc likely lo come slowly and be felt unevenly.
The Soviel leadership itself tvill remain the mosl important determinant of the pace of change in Soviet society. The authorities have considerable capabilities not only to retard change in general but to limit the impact of foreign economic relations on Soviet society in particular. Furthermore, economic cooperation with the West is only one of many factors, and probably not the most important one, that will influence Ihe evolution of Ihe Soviet political system in the years ahead. It will be difficult to look back and ascribe precise impact lo any one of them.
Nevertheless, economic cooperation seems certain lo reinforce liberalizing tendencies in theeginning already may be seen in terms of economic development, political management of the economy, and general world outlook.
The economic basis for both the Soviet political system and the structure of the Soviet economy has been the need to marshal resources for defense and for rapid economic growthituation of extreme scarcity. To the exlenl that it aids economic growth, reduces chronic shortages, and contributes to the development of consumer industries and services, economic cooperation will soften the traditional approach.
Fiat, in building the automobile plant on the Volga,oviet commitment of resources to the consumer sector and aided the Soviets intep in the directiononsumer society on the Western model.
The massive import of US grain23 helped Soviet consumers to maintain an adequate diet and kept the Soviet livestock program on course as well. The leadership's response has nol been simply to coast on the basis of such imports but lo strengthen its commitment of resources tohat is, to try lo build on the level of living thai the imports permitted to be maintained. This commitment is evidenced in the recently decreed program of agricultural development in ihe RSFSR.
An increasingly complex economy marked by growing plenty and attention lo consumption is less and less suited to the traditional methods of political management and control. Khntshchcv wrestled with the problem and sought to find an answer by turning the partyociety of specialists. This regime has reversed that approach, bul its course threatens lo leave economic decisions more and moreanagerial elite outside ihe parly. Foreign economic relations, once they have become broad and routine, will directly enhance the operational role
and influence on decisionmaking of commercial and economic officials who must attend to them. Some Soviet leaders have in recent years expressed this anxiety in attacks on the idea that economic management is the businesspecialized managerial elite, operating according to theories and principles of business management, as in the West.
Finally, economic cooperation will contribute to the erosion of the ideological and foreign policy rationales for the Soviet brand of absolutism. The concept of the undying antagonism between the two world camps, socialism and capitalism, becomes harder to maintain in the popular mind in these conditions- Commerce with and borrowing from capitalists make it harder to use anti-bourgeois labels to protect the purity of doclnnc and practice in all spheres of Soviet life. The populace will find more opportunity and freedom to turn its attention to material comforts and toestern life-style, at least in its consumer aspects. The turn to detente has, in fact, been accompanied by criticism from some leaders of the development of bourgeois "consumerism" in the Soviet Union and the consequent loss of communist morality.
The connection between all of these tendencies, however, and their realization in practiceery uncertain one. Soviet society underwent considerable transformations during Khrushchev's rule with little direct reference to detente, much less to foreign economic cooperation. In recent years the leadership has pursued detente and expanded economic relations abroad while reinforcing the defenses of the status quo in most areas of Soviet life. Factors such as foreign trade may be conducive to change and may thus make change more likely than it would be in their absence. The leadership still exercises enormous discretion in deciding how much change will or will not come, however. The present leadership has leaned toward the cautious side.