CURRENT SUPPORT BRIEF
CONVERTIBLE RUBLE AREA ENVISAGED IN EASTERN EUROPE
OFFICE OF RESEARCH AND REPORTS
CENTRAL INTELLIGENCE AGENCY
This report represents the Immediate views of the originating intelligence component) of the Office of Research and Reports. Comments are solicited.
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COKVERTIBLE RUBLE AREA ENVISAGED IN EASTERN EUROPE
Ths increasod attention given to multilateral clearing of trade balances In Eastern Europe ia recent months and the genera] decline in the uso of ECE to arrange trading circuits suggest that there Is under active consideration the establishmentmultilateral ruble area" in the not too distant future. oncept would not mean that the ruble would be completely convertible, but rather that trade balances with CEMA countries could be used anywhere in Eastern Europe, Whiloystem would be of marginal interest to Western Europe, it couldignificant stimulus to trade with underdeveloped countries of the Wost with which the Bloc currently conducts trade primarily on the basis of bilateral balancing. Tbe chief advantage to Increasing multilaterallzatlon of trade, however, would continue to be that such an arrangement would facilitate the flow of goods and encourage active regional cooperationontinuing basis throughout tho CEMA area.
The ruble now serves as the unit of account in Eastern Europe, but it isonvertible currency. Although there hasultilateral payments systeu in effectt has not filled the rolerue clearing houso for tho free exchange of balances. Now, howover,ew ruble has been created (with much attendant fanfare) and concentrated efforts are being made to Increase thoof trade balancesegional basis, it appears that the matter of international prestige of the ruble has taken on newfor the USSR.
At the 6th meeting of tho CEMA Commission for Multilateral Clearing, scheduled to take place in Bucharest duringbo cblof topic for discussion was to be how to arrange for continuous participation by the foreign tradein multilateral transactions. Heretofore.Uie enterprises have only prepared the groundwork for exchanges at semi-annual "trading meetings" and the latter have been found to be quiteInstruments for aultllateraiizing trade. One month before the moeting, lists of balances offerod and desired are exchanged by the foreign trade enterprises. At the formal meeting the actual circuits are drawn up for formalization into contracts by theat its plenary session. There has been poor coordination among the foreign trade enterprises both before and after theand according to Ausaenhandel "underrating of multilateral clearingeans of expanding/
During the first half0 multilateral trade transactions by CEMA countries reportedly Increasedorcent above tho first half This oxpansion iseflection of the low state of such clearingsoreover, no value data have been published. Although CEMA members hadultilateral trade charter int was not until8 that the Commission for Multilateral Clearing was organized, and it was not until9 that tho first "trading took place.
Concurrently with this expansion of multilateral transactions in Eastern Europe thereecline in compensation circuits arranged through ECE auspices. Whereas the total volume of circuits arranged by ECEillion in fiscal8illion of trade circuits were arranged in fiscal Bulgaria, East Germany, and Hungary took no part in ECE multilateral circuits in fiscaloubtlessto the decline. 2/
In the spring9 notice was taken by the ECE agentthe drop in use of the ECE compensation system.Aj major obstacle to the success of tbe ECE system, he pointed.out, is the unwillingness of the Eastern European countries to acceptbyv Western Europbanrdebton would be replaced by an Eastern European debtor. Obviously, if attempts to market trade balances in the West were to result in an exchange of balancestheir own regional membership, CEMA countries would have little to gain by using such ECE circuits and would have little choice but to improve the media for exchanging trade balances among themselves. Thus although multilateralism in the past has long been deniedin socialist economic literature, the course of events is bringing the CEMA countries closer to thinking in regional terms.
PIV Nov8gohaSd BerllD'0ion, and
2" the Development of Trade,Annual Report.
3- StaU, Geneva. Dsp.,U0.