Created: 8/21/1962

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Current Support Brief


12 Copy No.



CENTRAL INTELLIGENCE AGENCY Office of Research and Reports


a !.


Information on the high-level economicin Moscow2 gives no supportspeculations in the West that dramatic action wouldon such key issues as Berlin, Soviet Blocsupranational planning. Bloc agriculturalthc Common Market. The conferences, however,sot the stage for more vigorous efforts toplans and technical developments among CEMAconclusion is supported by the rocent appointmentseconomic administrators to tho newlyCommittee" of CEMA and lo special posts lncreated to ovorsce economic planning and

The conferences concentrated on long-term development of the "world socialist system" andorestatement of planning doctrine and assumptions than had previously been released. The "socialist countries" were declared to havenewn which International socialist division of labor and the development of the "world socialist system" play key roles in paving the road to Communism. The structure of CEMA was expanded to include new organizational elements designed to further the program of intra-Bloc coordination. The CEMA charter was modified to permit acceptance of non-European members, and the admission of the Mongolian Peoples Republic (together with the exclusion of Albaniu) gave further emphasis to the Sino-Soviet dispute. With respect to the Common Market and trade with the West, thc conferences echoed (somewhat weakly) Khrushchev's statements on coexistence and the need for an international trade conference to promote world tradenondiscriminatory" basis. Neither thepublished nor the actions taken at the conferences indicate that radical changes in Bloc economic policy Or in tho functions of CEMA are impending. The establishmentoro explicit yet flexible doctrine for economic cooperation, however, may help to clear the way for more coherent policies aimed at closer economic cooperation within the Bloc.

There were actually three separate, although closely related, conferences, as follows: he Conference ofof the Communist and Workers' Parties of the Member Countries of CEMAune, attended by the iirsi

21 August C_ 1

secretaries of tho central committees and heads of(with Albania conspicuously absent and representatives of the Mongolian Peoples Revolutionary Partyhe remarkably brief Sixteenth (Extraordinary) Council Session of CEMAunea pro forma meeting that rubber-stumped tho outcome of the Communist Party conference and made administrative changes in the structure of CEMA to Implement the Party-approved policies;he meetingune of tho CEMA Assembly of Representatives, which studied measures to put into effoct tho changes decided on by tho Council Session.

The fact that the main conferenceop-level Communist Party meeting, with the first secretaries of the Parties of the various countrioa in attendance, underscores its importanceuide to shifts in policy. The'rosults were not radical departures from past policies but embody many preexisting planning premises in an explicit framework of principles in the Conference communique and in the "Basic Principles of International Socialist Division of Labor" adopted by the Conference. These principles had been given preliminary approval by tho Fifteenth Council Session in Warsaw in

The prolix declarations emanating from the Conference are built on tho thesis that the socialist countries haveew stage in which tho interaction of internal policies on industrialization and mutual cooperation (in the "world socialistre necessary to insure rapid growth ln each country and to make possible their entering Communism at "more or less the same time." In spelling out this broad thesis, the "Basic Principles" are ambiguousumber of issues, including the extent and nature of intra-Bloc integration ln the long run, relations toward underdeveloped countries, and the implications for relations involving the Chinese Communists. Consequently, the principles provide doctrinal Justification for eventual policy moves In various possible directions. On the other hand, the factoctrine, however vague, was established has some importance in Communist countries, and, in this case, thc doctrine appears toeasure of agreement that more should be done to promote economic cooperation within

the Bloc.

Tho principal method by which CEMA is to influence socialist construction is the coordination of current and long-term plans, with emphasis on the latter. Only through

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the coordination of long-term0 and beyondcan agreements on specialization result in basic changes in tho economies of CEMA countries. In the absence oframework, the tendency is to concentrate on short-term problems in the supply of key commodities rather than on tho basic proportions of economic development. The technique of oporation in CEMA remains coordination of separate national plans (but with new emphasis on common objectives and assumptions). This approach carriesof forestalling balks by thoso Bloc countries that would be loatho to accept .supranational planning from Moscow and alsoess ominous Image of economic planning to underdeveloped countries that might mistake more direct measures for something akin to imperialism. On the cither hand, the communique and the principles are written:inanner that an eventual transition to supranational planning would not require undue dialectic strain.

The stated objective of equalizing levels of economic development in socialist countries "in the same historical period" is hedged considerably, for it is also stated that this objective does not mean elimination of all differences resulting from peculiarities in natural resources, climate, national structure of demand, and the way of life of UK-people. Maximum mobilization of domestic resources is prescribed as the primary method for industrialization. The various types of assistance that developed socialist countries would lie expelled to give their less fortunate comrades. Among the direct aid measures, credits aro listed last (suggesting that in tho "world socialist system" some members aro likely to remain "more equal thanoint investment projects, which implicitly involve credits, however; arc given prominence in the program.

The planning guidanco in the "Basic Principles" ami the .Conference communique stresses the maximum development of fuels, power, ores, metallurgy, and chemicals in all member countries. Except in mining, where location of deposits obviously is crucial, all member countries apparently aro expected to develop the major branches of those industries, although not to the same degree. Specialisation apparently would be limited mainly lo Ihe assortment of products (for example, rolled -el) and vould reflect the structure Of demand and output in the individual countries as well as prospects for economies of large-scale production. More extensive specialization ot only by individual articles or type si/.cs liul also by basic groups and in tho supply of

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componentsis called for in machine building, Such specialization clearlyery long-term objective, which has lower priority than the expansion of production in basic industry. These principles are entirely consistent with the basii economic policies of member countries as expressed in the current Five Year Plans, Top priority in investment allocations throughout the Soviet Bloc is being given to basic industries, and not enough resources are being alio* catcd to the machine building industries to support any rapid* changes in the broad composition of their output.

The actions of the Conference wore not limited to doctrinal matters and to such questions touching .onvthei.Sino-Soviet dispute as the decision to admit non-European members to CEMA and the admission of the Mongolian Peoples RopubliCi while continuing Albania's anomalous stattus ln tho organization (not formally disassociated, but rJot participating), Steps were also taken to improveof CEMA policies. echnical level thestressed the need for developing common standards, coordi nating sclenti fic-lechnical research, and achi eviommon methodology ln statistical reporting and theof technical Indexes. To coordinate Bloc efforts in seeking solutions to these problems, the CEMA Council Session established the following four new organizations: the Permanent Commission on Standardization, the CEMA Institute for Standardization, the Permanent Commission on Coordination of Scientific-Technical Research, and the Permanent Commission on Statistics,

Decisions were also taken at the Conference and action has been taken in the CKMA organization and in several of the member countries' national governments to make the process of economic coordination within the Bloc moreby administrative means- In CEMA an Executivewas created, consisting of deputy heads of theents of the member countries. This Committee, which met for the first timeuly, is expected toand expedite the coordinating processes through pressure oo the various planning and administrative organs by the top level of government in each country. Although no change was reported in the status of CEMA recommendations, which are not obligatory or enforceable by CKMA, it is likely that such recommendations will carry morn weight than in the pant, for the new administrative surveillance has been sanctioned by the Communist Party first secretaries at the Conference The USSR, Czechoslovakia, and East Germany underlined the importance of the new Committee's functions by assigning the

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responsibility of coordinating cema affairs to their top economic officialsthe former chairmen of the respective state planning commissions. In Hungary and in East Germany, guidelines for long-term planning recently approved by the Central Committees reflect the program and principles adopted by the Moscow Conference.

It la probable that the now administrative machinery was established also to cope more of feclively with incompatibilities and failures in the Implementation of current Five Year Plans. This action, together with specific stress at the Conference on the importance of honoring delivery commitments, reflects tho concern of the Conference with the economic strains being experienced in some Bloc countries.

The meetings apparently did not establish concrete measures on multilateral clearing and payments but once again endorsed their gradual Introduction. There was no organization created to handle the Joint financing of investment, yet joint investment is repeatedly emphasized in tho documents. Nor was any note taken of current agricultural problems beyond the usual call for improved techniques and wider cooperation and an expression of satisfaction with tho rapid progress in collectivization without much reference to trends in.

The decisions of the Communist Party leaders essentially dealt with mat tors of principle and provide no timetable for phasing of implementation. It is their clear intent, however, to apply new stimuli to bringore thorough and more efficient coordination of national plans and an extension of specialization and cooperation in production in the Bloc. Tho door has boon left ajar for the Chinese Communists to enter CEMAif they will establish conformity to the correct (Soviet) doctrinal approach to the development of world socialism and Communism. There is appeal to the loss developed countries within and outside the Bloc, in the doctrine of equalization of levels of developmentand, al the same time, appeal to the more developed countries of tho Bloc in ath toward Communism without impairment of their higher levels of living through excessive sharing with their comrades in the less developed countries (the recognition of variant standards for "equalization").

The approval of the new statement of doctrine on more thorough plan coordination and more effective specialization by tho first secretaries attending the Conferencethe stamp


of authority s likely to result in the new measuroa being taken seriously by Communist Party members andfunctionaries. This response may result in their carrying out necessary cooperative activity more efficiently. The stops taken to improve coordination on technical matters should increase the ability of Bloc countries to link their economies more closely. Most important, the creation of next-to-top-level administrative posts in national governments and the Executive Committee in CKMA is likely toore vigorous implementation of agreed policies and actions.

August 2



Analyst: Coord :



Text of the Communique of the Conference ofol I ' -nd he Member Countries of "CEMA from FBIS, DAi ly

Report, (USSR and East1S. 'OFrHJSE.

Text of the Communique of the XVI Session of CEMA from East Berlin, Nationaltune." un fiS, Weekly Report

<>n Ihc Kasl German IS Jun If.


Report on the meeting of CEMA representatives TASS. 11 Dail^ Report

(USSR and East Europe), 12 p. On 34 Off USE

Auiiust Gti H'A St)


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