Created: 4/11/1963

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Current Support Brief





CENTRAL INTELLIGENCE AGENCY - Office of Research and Rcp<

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Onarch the USSRweeping reorganization at the top level of the Soviet economic planning and administrative structure. The announcement appears to complete the framework of the general reorganization of economic management called for by the November plenum of the Party's Central Committee. This latest phase of the reorganization contains two major provisions: first, it provides for the establishmentew Supreme Council of National Economy to coordinate and direct Gosplan, the USSR Sovnarkhoz, Go ss troy, and their subordinate republic and regional units; second, it provides for the subordination to the new Supreme Council of the state-branch-of-industry committees, which are now mainly responsible for industrial research and development. The two provisions thus concentrate in the hands of the Supreme Council responsibility for the coordination and direction of almost all aspects of industry and much of The Supreme Council also has been given importantin agriculture through the subordination to it of Gosplan itself, which engages in the planning of over-all agricultural production, and through Gosplan and the USSRf such committees as Soyuzserkhoztekhnika. which supervises the supply and maintenance of farm equipment. However, the agencies responsible for administrative direction of the individual farms, for administration of procurement, and for agricultural research have not been subordinated to the Supreme Council, and thus its responsibility in agriculture is less pervasive than in industry and construction. (For the central administrative structure of the USSR as of ISee the chart. )

The Supreme Council of National Economy

Membership in the new Supreme Economic Council consistshairman (D. F. Ustinov, simultaneously elevated to the position of first deputy chairman of the USSR Council of Ministers) and five deputy chairmen: one without portfolio (A. N. Tarasov) plus the chairmen of Gosplan (P. F.he USSR Sovnarkhoz (V. E. Dymshits).

Goastroy (I. T.nd the State Committee for the Coordination of Scientific Research (K. N. Rudnev). As yet, no provisiontaff or for other members of the council has been made public although the existencebureau" has been mentioned in the press. The small size of the council and the fact that three of its members have full-time duties in agencies subordinate to the council indicate that the leadership intends the activities of the council to be confined to more general and high level questions.

Subordination of State-Branch-of-Industry Committees

The principal responsibility of most of the state-branch-of-industry committees is now industrial research and development of new products and new technology within their respective fields. To bring research and development under the purview of the new Supreme Council, all state-branch-of-industry c'ommitteesumber of other statesuch as that for standards and measures have been subordinated to the now council either directly or indirectly via subordination to Gosplan, Gosstroy. or the USSR Sovnarkhoc. To place direction of industrial production more fully under the control of the new council, five former ministries and one main administration engaged in the administration of industrial production or construction those for electric power, medium machine building, geology, transportconstruction in the Central Asian region, and gas production and distributionere reformed into state "production" committees and subordinated directly or indirectly to tbe new council.

To some extent, the new subordinations of the state committeesattern. The state committees concerned with various aspects of construction have been subordinated to Gosstroy; those concerned with defense or defense-related production, such as aviation, atomic energy, and shipbuilding have been subordinated directly to the Supreme Council; most of those concerned primarily with civilian production have been subordinated to Gosplan; and two state committees concerned with distribution those for domestic trade and for supply andof agricultural equipmentave been subordinated to the USSR Sovnarkhoz. In many cases, however, the basis for the new state

committee subordinations is still obscure. For example, the State Com-mittee (or Fish Industry has been subordinated to the USSR Sovnarkhoz. whereas the committees for food and light industry have been subordinated to Gosplan. Moreover, although most state committees not concerned with specific branches of industry (such as those for standards andand for inventions and innovations) have been subordinated directly to the Supreme Council, the state committee for vocational and technical training has been subordinated to Gosplan and the state committee for labor and wages presumably has retained its direct subordination to the USSR Council of Ministers.

Relation ol the New Measures to the Plenum Proposals

Formation of the new Supreme Economic Council waa not proposed at the November plenum. The new council doesistincthowever, to the technical economic council proposed inplenum speech and about which no more has been said. At the plenum. Khrushchev proposed that consideration should be given to the formationechnical economic council within Gosplan that would be composed in part of the chairmen of the state-branch-of-industry committees and would "deal with vital issues relating to the working out of national economic plans, as well as to the furtherof planning and of the draft plan for the development and introduction of new technical means. " The long delay between the plenum and the announcement of this final phase of the reorganization thus may have resulted from indecision or disagreement within the Soviot leadership as to whether the new council should operate within or above Gosplan and what relation it should bear to the state-branch-of-industry committees.

Evaluation of the Reorganisation Measures

Formation of the Supreme Economic Council should be ofhelp in improving top-level coordination between the functions of planning performed by Goaplan and of Implementation performed by the USSR Sovnarkhoz and in part by Gosstroy. In the case of high priority industriesarticularly those whose state committees are subordinate

directly lo the new council formation of the new council ilio may result in increased emphasis on technological progress in drawing up plans. These two problems were the ones most heavily stressed by Khrushchev in his plenum speech and appear to be major factors in the decision to form the new council. Because of the high level on which the new council will operate and because of tho apparent failure of the state -branch-of-industry committees to obtain representation on it in spite of Khrushchev's original proposal, however* the oper-ation of the new council may have little impact on the rate ofprogress in lower priority industries.

This phase of the reorganization does not make much change in the degree of centralization of the administration of the economy envisagod by the proposed elevation of the authority of the state-branch-of-industry committees. It does, however, provideoneentration of powers within an administrative agency responsible solelyowers formerly exercised, if imperfectly, by the Council of Ministers.

The announced provisions of any phase of the reorganisation fail to deal with most of the widespread problems of parallelism andin the structure of economic administration and of poorof supply with production planning about which there has been much complaint in the Soviet press. There is increasing evidenceonsiderable reshuffling of functions,ndhas taken place within Gosplan. the USSRnd Gosstroyeshuffling that could result in the clearing of some of this administrative confusion. Until more information becomeson the nature and objectives of these changes, however, anof their probable effectiveness is premature.

Continuity in Planning

eparate action onarch the USSRecision to begin work on the national economic plans forearnd forear. This announcement appears to signal the adoption of at least two of three proposals for improving the

continuity of planning that have been under top-level consideration for atears. Inonference on the improvement of planning held by Gosekonomsovethe long-term planning agency at that timealled for three major innovations in planning procedures: first, instead of preparing detailed plans toiven long-term plan each year, these would be preparedear periods; second, during each yeariven long-term plan, general guide Unci for production and investment would be worked out for the yearears ahead; and third, preparation of theear plan would begin midway through the current one.

Although adoption of these proposals presumably will involve additional work for the planners without necossarlly improving the quality of planning, it could smooth out some of the abrupt changes of pace in economic activity that led Khrushchev as early7 to call for recommendations for improving the continuity of plans.

Adoption of new planning procedures at this time may have been prompted additionally by the need toumber of changes in the existing Seven Year. eed is to be expected toward the endong-term plan period and la not necessarilyof major difficulties.


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