COMMENTS ON SECTOR APPROACH ECONOMIC DEFENSE DIVISION OFFICE OF RESEARCH AND REPORTS CENTRAL INTELLIGENCE AGENCY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP61S00527A000100180011-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 12, 2016
• Document Release Date: September 5, 2000
• Sequence Number: 11
• Publication Date: September 24, 1956
• Content Type: REPORT

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Economic Defense Division
Office of Research and Reports
Central Intelligence Agency
Project 111162
24 September 2,956
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24 September 1956
COI4MENTS ON SECTOR APPROACH
The Defense Department's "sector" approach was promulgated in
slightly different form in interagency committees beginning approximately
a year ago when the broad question of criteria was under review.
These ideas were put forth in connection with Defenseus so-called
"functional" approach to an appraisal of the Japanese proposal for
relaxation of the China differential. Other related ideas have been
incorporated in their "mobilization base" concept. In a Defense
Department evaluation, in October 1955, of the British "thermonuclear
warfare" concept, particular attention was called to electric power
as one example of a vital requirement in thermonuclear production
and it was stated thats
"all items essential to the production
of electric power should be denied to the
Bloc if thermonuclear criteria were to
be applied effectively. Such control would
be particularly appropriate, since it is
known that Soviet atomic arms production
as well as its overall military capabilities,
is now seriously hampered by a shortage of
electric power and the means for increasing
this production,"
To date, however, Defense has never given a clear exposition of the
"sector" approach. By piecing together remarks on the subject over
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the past year in interagency working groups, and from informal
Defense papers on the subject, the following is an informal attempt
at clarification of certain aspects of this approach,,
In the first place, the concept is very broad and is aimed at
materially restricting and retarding the industrial base of the Sino-
Soviet Bloc. It is designed, furthermore, to add items to the control
lists rather than to provide for less coverage? The original plan of
Defense Department in planning an embargo, let us say, of the electric
power sector meant complete embargo of everything essential to the
industry down to the least strategic materials, such as possibly
cement as an extreme example,, and even of the means of transport
required to establish the complex. In the latest explanations attached
to EDAC D-121/4a of 19 September 1956, it is stated that "We must.
beware of the temptation to consider an item strategic simply because
it has a direct usefulness to the military or because it enters into
the last stage of production of military and items"
This plan obviously is unworkable, not only because the Bloc
produces abundantly many of the materials and equipment required in
the electric power or any other sector and relies to an insignificant
extent on imports, but also because of the possibility of substitution
of commodities from sector to sector. In addition, the economic cost
to the free world of such widespread controls would be far greater
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than to the Bloc except in the case of a few items containing either
scarce raw materials or highly developed technology. The items
listed by Defense in Attachment I to EDAC Document 121/4a appear to
be merely illustrative of a few key commodities and not at all intended
to give sector coverage, As delineated in the paper, there is
practically no difference from the category approach in the present
lists, Continuing emphasis is placed on the importance of the industrial
base to defense capability, and the need to broaden present criteria
to justify the addition of items "necessary to maintain a significant
security deterrent," The fact that the Defense Department has in the
past related its electric power sector to the British thermonuclear
approach appears to indicate a lack of understanding of the British
aim of slashing the present lists in order to substitute only item
directly related to nuclear warfare plus certain others such as
conventional arms and munitions, a few scarce raw materials and items
involving a high degree of technologyc,
State Department prefers not to consider its alternative II to
"Proposed Courses of Action" as a new approach to criteria,. However.,
with slight alteration and some difference in degree of coverage, it
could serve as a "thermonuclear" approach and might possibly be used
for negotiation with the UK. 1/ This would entail principally the
l Sep most recent UK position on controls, including statement
that a US response to the "thermonuclear list revision still
UK goal" London, 1583, 20 September 1956, 2 pp., Secret?
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