ADDRESS BY ALLEN W. DULLES DIRECTOR OF CENTRAL INTELLIGENCE TO THE EDISON ELECTRIC INSTITUTE NEW ORLEANS, LA 8 APRIL 1959 - 2:30 P.M., CST 'THE CHALLENGE OF SOVIET POWER'

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP62S00545A000100090023-2
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 21
• Document Creation Date: December 9, 2016
• Document Release Date: July 17, 1998
• Sequence Number: 23
• Publication Date: April 8, 1959
• Content Type: SPEECH

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ADDRESS
BY
ALLEN W. DULLES
DIRECTOR OF CENTRAL INTELLIGENCE
TO THE
EDISON ELECTRIC INSTITUTE
New Orleans, La.
8 April 1959 - 2:30 p.m., CST
"THE CHALLENGE OF SOVIET POWER"
I appreciate this opportunity to speak to your 27th Annual
Convention on the subject of the "Challenge of Soviet Power".
This topic is particularly appropriate for the Edison Electric
Institute. It was Lenin who defined Ccamnunism "as the Soviet system
plus electrification." The very first Soviet economic plan in the
early 1920s had as one of its principal objectives the development of
a modern electric power system.;
In effect, the Soviets propose to electrify Marxism. What they
may in fact do is either to shock their backward political institution
into key with their more modernized technical and industrial skills
or electrocute the whole archaic Marxist political system.
In any event, the Soviet Union has certainly sought to follow up
Lenin's emphasis on electric power and has become a leader in many
electronic fields. It has developed intensively the role of radio in its
massive effort to promote its subversive policy on a world-wide basis.
It uses electricity to jam the airways and to build an electronic iron
curtain around the minds of their own people.
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In my own business of Intelligence, the various manifestations
of electrical power are changing the whole system of information
collecting in many vital fields. Electricity operates the radar which
is on watch against sneak attack. It helps to make possible the ready
transmission of warning of impending danger and as the mass of
intelligence pours in day by day, over electric channels, it is electronic
machinery which becomes a valued partner in helping us in its collation
and dissemination.
* *
The challenge of Soviet power presents today a triple threat:
first, military; second, economic; and third, subversive.
This challenge is a global one.
As long as the principles of international Communism motivate the
regimes in Moscow and Peiping, we must expect that their single purpose
will be the liquidation of our fo n of free society and the emergence of
a Sovietized, communized world order.
They change their techniques as circumstances dictate. They have
never given us the slightest reason to hope that they are abandoning
their over-all objective.
We sometimes like to delude ourselves into thinking that we are
faced with another nationalistic power struggle of which the world has
seen so many. The fact is that the aims of the Communist international
with its headquarters in Moscow are not nationalistic; their objectives
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are not limited. They firmly believe, and eloquently preach, that
Communism is the system which will eventually rule the world and
each move they make is directed to this end. Communism, like
electricity, seeks to be an all-pervasive and revolutionary force.
To promote their objectives they have determined -- cost what
it may -- to develop a military establishment and a strong national
economy which will provide a secure home base from which to deploy
their destructive foreign activities.
To achieve this objective, they are devoting about twice as
much of their gross national product to military ends as we do. The
USSR military effort as a proportion of GNP is greater than that of
any nation in the world. Their continuous diversion of economic
resources to military support is without any parallel in peacetime
history.
We estimate that the total value of their current annual military
effort is roughly equivalent to our own. They accomplish this with a
GNP which is now less than half of our own.
Here are some of the major elements which go into their military
establishment. The Soviet Union maintains an army of 2J million men
and the tradition of universal military-training is being continued.
The Soviet Army today has been fully re-equipped with a post World War
II arsenal of guns, tanks and artillery. We have reason to believe the
army has already been trained in the use of tactical nuclear weapons.
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They have the most modern types of aircraft for defense: night
and day fighters, a very large medium bomber force and some long-range
bombers. They have built less of these long-range bombers than we had
expected several years ago, and have diverted a major effort to the
perfection of ballistic missiles.
Their submarine strength today is many times that with which
Germany entered World War II. They have over 200 long-range modernized
submarines and a like number of less modern craft. They had made no
boasts about nuclear powered submarines, and on all the evidence, we
are justified in concluding that we are ahead of them in this field.
We must assume, however, that they have the capability to produce such
submarines and will probably unveil some in the near future.
I would add a word on the ballistic missile situation.
When World War II ended, the Soviet acquired much of the German
hardware in the missile field, V-1 and V-2, and with them many German
technicians. From that base, over the past ten years, they have been
continuously developing their missile capability, starting with short-
range and intermediate-range missiles. These they have tested by the
hundreds, and have been in production of certain models for some time.
They also early foresaw that in their particular geographical
position, the long-range ballistic missile would become their best
instrument in the power struggle with their great rival, the United
States. As the size and weight of powerful nuclear weapons decreased,
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with the improvement of the art, they became more and more persuaded
of this. Hence, they have concentrated on these weapons, have tested
some and assert that they now have ICBMs in serial production.
They hope in this way eventually to be able to hold the U.S.
under the threat of nuclear attack by ICBMs while they consolidate
their position in the fragile parts of the non-Communistic world.
Before leaving the military phase of the Soviet threat, I want
to dispel any possible misinterpretations. First, I do not believe
that the Soviet now have military superiority over us; and second, I
do not believe that they desire deliberately to provoke hostilities
with the U.S. or the Western world at this time. They are well aware
of our deterrent force. They probably believe that the risks to than
even if they resorted to surprise attack would be unacceptable.
Taking into account our over-all military strength and our
strategic position vis-a-vis the Soviet Union, I consider that our
military posture is stronger and our ability to inflict damage is
today greater, than that of the Soviet Union.
Furthermore, we have allies. The strength, the dependability,
and the dedication of our allies put them in a very different category
than the unwilling and undependable allies of Moscow, even including
the Chinese Communists.
But as the Soviet military capabilities and their nuclear power grow,
they will feel that their foreign policy can be somewhat more assertive.
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In 1956 during the Suez crisis, we had the first Soviet missile-
rattling as a new tactic of Moscow diplomacy. Since then there
have been the Taiwan Straits and Berlin crises, and today the
aggressive Communist penetration of Iraq. Hence, we must assume
that they will continue to probe and to test us, and they may even
support other countries in aggression by proxy. They will put us to
the test.
There are two points to keep in mind as we view the military future.
Firstly, with a much lower industrial base than we, they are producing a
military effort which is roughly equivalent to our own; and secondly,
they have conditioned their people to accept very real sacrifices and
a low standard of living to permit the massive military buildup to continue.
If the Soviet should decide to alter their policy so as to give their own
people a break in the consumer field with anything like the share in
their gross national product which we, as a people enjoy, the prospects
of real peace in our time would be far greater.
I will turn now to some of the highlights of the economic aspect
of the Soviet challenge.
The new confidence of Khrushchev, the shrewd and vocal leader of
the Soviet Communist party, and incidentally head of government, does not
rest solely on his conviction that he, too, possesses a military deterrent.
He is convinced that the final victory of Communism can be achieved
mainly by non-military means. Here the Soviet economic offensive looms
large.
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The proceedings of. the recent 21st Party Congress laid out what
we might call the Soviet economic order of battle.
Khrushchev explained it in these words, to summarize the ten
hours of his opening and closing remarks:
"The economic might of the Soviet Union is based on
the priority growth of heavy industry; this should
insure the Soviet victory in peaceful economic competition
with the capitalist countries; development of the Soviet
economic might will give Communism the decisive edge in
the international balance of power."
In the short space of 30 years, the Soviet Union has grown from a
relatively backward position into being the second largest industrialized
economy in the world. While their headlong pace of industrialization
has slowed down moderately in the past few years, it still continues
to be more rapid than our own. During the past seven years, through
1958, Soviet industry has grown at the annual rate of 91 per cent. This
is not. the officially announced Crate which is somewhat larger. It is
our reconstruction and deflation of Soviet data.
Our own industrial growth has been at the annual rate of 3.6 per
cent for the seven years through 1957. If one included 1958, the comparison
with the rate of Soviet growth would be even less favorable.
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I do not conclude from this analysis that the secret of Soviet
success lies in greater efficiency. On the contrary. In comparison
with the leading free enterprise economies of the West, the Communist
state-controlled system is relatively inefficient.
The secret of Soviet progress is simple. It lies in the fact
that the Kremlin leaders direct a far higher proportion of total
resources to national policy purposes than does the United States. I
define national policy purposes to include, among other things, defense
and investment in heavy industry.
With their lower living standards and much lower production of
consumer goods, they are in effect, plowing back into investment a
large section of their production, thirty per cent, while we in the
United States are content with 17 - 20 per cent.
Soviet investment in industry as planned for 1959 is about the
same as U.S. investment in industry during 1957 which so far was our
best year.
Although the Soviets in recent years have been continually upping
the production of consumer goods, their consuming public fares badly
in comparison with ours. Last year, for example, Soviet citizens had
available for purchase barely one-third the total goods and services
available to Americans. Furthermore, most of the U.S. output of
durable consumer goods is for replacement, while that of the USSR is for
first-time users. In summary, the Soviet economy is geared largely to
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economic growth and for military purposes; ours is geared largely to
increasing consumer satisfactions and building a higher standard of
living.
Here are some examples: while the Soviets last year were
producing only one automobile for every fifty we produced, they were
turning out four machine tools to our one.
This contrast in emphasis carries through in many other fields.
Our capital expenditure for transportation and communications is more
than double the comparable Soviet expenditure. Yet this is largely
accounted for by our massive highway building program which has been
running 15 to 20 times the USSR spending, whereas their annual investment
in railroad rolling stock and fixed assets substantially exceeds ours.
At the moment, they do not feel much incentive in the road building
field. They have no interest in having their people travel around on a
massive scale. Also this would put pressure on the Kremlin to give
the people more automobiles.
Commercial investment, which includes stores, shopping centers,
drive-in movies and office buildings, has been absorbing over 6 billion
dollars a year in the US, and only two billion in the USSR.
Our housing investment is roughly twice that of the Soviet even
though living space per capita in the U.S. is already four times that
of the USSR.
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What of the future? In Khrushchev's words, "The Soviet Union
intends to outstrip the United States economically . . . To surpass
the level of production in the United States means to exceed the highest
indexes of capitalism."
Khrushchev's ambitious seven year plan establishes the formidable
task of increasing industrial production about 80 per cent by 1965.
Steel production, according to the plan, is to be pushed close
to 100 million net tons. Cement output is set at a level somewhat
higher than industry forecasts place United States production in 1965.
The energy base is to be revolutionized. Crude oil and natural
gas will constitute more than one half of the total energy supply, and
relatively high cost coal will be far less important than now.
By 1965, the USSR plans to produce about 180 billion kilowatt
hours of electricity. As a study comparing U. S. and USSR electric
power production prepared by a leading industrial research group pointed
out, this means that the absolute gap between the U. S. and USSR in the
quantities of electricity generated will increase somewhat in our favor
over the next seven years.
This interesting study received a considerable amount of deserved
publicity. We agree with its conclusion. However, what is true about
electric power is not true across the board, as some commentators
concluded.
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For example, compare primary energy production trends in the
tw,o countries. Soviet production of coal, petroleum, natural gas
and hydroelectric power, expressed in standard fuel units, amounted
to 45 per cent of the U.S. production in 1958. By 1965 it will be close
to 60 per cent. The absolute gap in primary energy has been closing
since 1950. At the present pace, it will continue to narrow over the
next seven years.
Similarly, the absolute gap in steel production has been shrinking
over the past five years. The maximum gap in steel capacity apparently
was reacned in 1958.
The comforting illusion spread by the "disciples of the absolute
gap" should not serve as a false tranquilizer.
At the sane time, it is important not to exaggerate Soviet
prospects in the economic race. In the propaganda surrounding the
launching of the Seven Year Plan, Khrushchev made a number of statements
about Soviet economic power which were nothing more than wishful
thinking. Specifically he stated that, "after the completion of the
Seven Year Plan, we will probably need about five more years to catch
up with and outstrip the United States in industrial output." "Thus,"
he added, "by that time (1970), or perhaps even sooner, the Soviet
Union will advance to first place in the world both in absolute volume
of production and in per capita production."
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First of all, to reach such improbable conclusions, the Kremlin
leaders overstate the present comparative position. They claim USSR
industrial output to be 50 per cent of that of the US. Our own analyses
of Soviet industrial output last year concluded that it was not more
than 4+0 per cent of our own.
Secondly, Khrushchev forecasts that our future industrial growth
will be only two per cent a year. If this is true, the United States
will be virtually committing economic suicide. This prediction I regard
as unrealistic.
A saner projection would place 1965 Soviet industrial production
at about 55 per cent of our own. By 1970, assuming the same relative
rates of growth, USSR industrial output, as a whole, would be about 60
per cent of that in the United States.
Further, when Khrushchev promises his people the world's highest
standard of living by 1970, this is patently nonsense. It is as though
the shrimp had learned to whistle, to use one of his colorful-conm~ents.
These Soviet exaggerations are a standard tool of Communist propaganda.
Such propaganda, however, should not blind us to the sobering implications
of their expected economic progress.
First of all, rapid economic growth will provide the Kremlin leaders
with additional resources with which to intensify the arms race. If
recent trends and present Soviet policies continue, Soviet military
spending could increase by over 50 per cent in the next seven years
without increasing the relative burden on their economy.
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Secondly, some additional improvement can be made in the standards
of living of the Russian people, even with continued emphasis on heavy
industry and armaments. It is only since the death of Stalin in 1953
that serious attention has been given to improving living standards.
The moderate slow-down in the headlong growth of heavy industry which
then ensued has been caused, in large part, by the diversion of more
resources to housing, to agriculture, and to consumer goods.
Living standards, based on present Soviet plans, are expected to
increase about one-third over the next seven years. This level, if
achieved, will still be far below that which our own citizens are now
enjoying, but it will look good to people who for long have been compelled
to accept very by standards.
Finally, the Soviet Seven Year Plan, even if not fully achieved,
will provide the wherewithal to push the expansion of trade and aid with
the uncommitted and underdeveloped nations of the Free World. By 1965
Soviet output of some basic raw materials and some industrial products
will be approaching, and in a few cases exceeding, that of the United
States. Most prominently, these products will be the kind that are
needed for industrialization in the less developed countries.
The outcome of this contest -- the Communist challenge in underdeveloped
areas -- is crucial to the survival of the Free World.
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This is an unprecedented epoch of change. Within little more
than ten years, over three quarters of a billion people, in twenty-
one nations, have become independent of colonial rule. In all of these
newly emergent countries, there is intense nationalism coupled with the
determination to achieve a better way of life which they believe
industrialization will bring them.
The leaders of world Communism are alert to the opportunity which
this great transformation provides them. They realize the future of
Communism can be insured only be expansion, and that the best hope of
such expansion lies in Asia and Africa. While they are attempting to
focus all our concern on Berlin, they are moving into Iraq with arms,
economic aid, and subversion, and giving added attention to Africa.
The Communist bloc trade and aid programs in undeveloped countries
moved into high gear during 1958. The equivalent of over one billion
dollars in new credits was extended to underdeveloped countries by the
bloc in this year. In the four year period ending 1958 the total of
grants and credits totalled 2.5 billions, of which 1.6 came from the
USSR and the balance from the satellites and China. Three-fifths of
the total delivered to date has been in the form of arms to the UAR --
Egypt and Syria -- Yemen, Iraq, Afghanistan and Indonesia. These same
countries, plus India, Argentina, Ceylon, Burma and Cambodia, have
received the bulk of the economic aid.
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Over 4,000 bloc technicians have been sent to assist the
developnent of nations in the Free World. About 70 per cent of
these technicians are engaged in economic activities. Others are
reorganizing local military establishments and teaching bloc military
doctrine to indigenous personnel.
The bloc also has a well developed program for training
students from underdeveloped countries. About 3,200 students,
technicians, and military specialists have now received such training
behind the Iron Curtain.
While these figures are still well below the total of our on
aid, loan and training programs, this massive economic and military
aid program is concentrated in a few critical countries and of course
these figures do not include Soviet aid and trade with the East
European satellites and Communist China.
India, which has received over 325 million of bloc grants and
credits, is a primary recipient. The Soviet economic showplace here
is the Bhilai steel mill, being built by the Russians. The U.A.R.
over the past four years received over 900 million dollars in aid
and credits. This investment today does not seem quite as profitable
to the Soviet as it did last year.
Iraq provides a prime example of the opportunistic nature of
the bloc's aid program.
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Prior to the coup d'etat on July 14th last year, Iraq's
economic involvement with Communist nations had been negligible.
In the past few months, the USSR has provided over $250 million in
military and economic development credits. The Iraq Development
Board has dropped its two Western advisors. Western technicians are
also being dismissed and contracts with many Western fines cancelled.
Increasingly, Moscow is pressuring the Iraq government to accept
dependence on Communist support and the number of fellow travellers
in high government posts is growing.
The Soviet policy of economic penetration fits like a glove
into their world-wide campaign of subversion, which is the third
main element of the triple Soviet challenge: military, economic and
subversive.
International Communism has not changed its operating procedure
since the days of the Comintern and the Cominfonm. The Communist
Party of the USSR, of which Khrushchev is the leader, is the spearhead
of the movement. It has a world-wide mission, formulated by Lenin
and Stalin and now promoted by Khrushchev but with more subtle
techniques than those of Stalin. This mission continues to be the
subversion of the entire free world, starting of course with those
countries which are most vulnerable.
Its arsenal of attack is based, first of all, on the Communist
parties of the Soviet Union and Communist China. These in turn
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direct the hard core Communist organizations which exist in
practically every country of the world. Every Coaenunist party
maintains its secret connections with Moscow, or in case of certain
of the Communist parties in the Far East, with Peiping.
These parties also have an entirely overt association with the
international Communist movement. At the 21st Meeting of the Soviet
Party Congress, there were present representatives of some 60
Communist parties throughout the world, including two representatives
of the US Communist Party. The single theme of these Communist
leaders was their confidence in the eventual world-wide triumph of
the Communist movement.
From time to time Moscow has made agreements such as the Litvinov
Pact, in 1933, not to interfere in the internal affairs of other countries.
On the strength of this we resumed relations with the Soviet. They
are eager to conclude like agreements of "friendship and non-aggression,"
with all countries of the world. These are not worth the paper they
are written on. During World War II, Moscow abolished the international
Comintern to propitiate the United States, its then wartime ally. Its
functions have, however, been carried on continuously under other forms.
In addition to its world-wide penetration through Communist party
organizations, the Communists in Moscow and Peiping have set up a whole
series of front organizations to penetrate all segments of life in the
free countries of the world. These include the World Federation of
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Trade Unions, which claims some 90 million members throughout the
world. International organizations of youth and students stage
great festivals at frequent intervals. This summer they are to meet
in Vienna. This is the first time they have dared meet outside of
the Iron Curtain.
They have the Women's International Democratic Federation, the
World Federation of Teachers Unions, the International Association
of Democratic Lawyers; Communist journalists and medical organizations.
Then cutting across professional and social lines, and designed to
appeal to intellectuals, the Communists have created the World Peace
Council which maintains so-called peace committees in 47 countries,
gaining adherents by trading on the magic word of "peace."
To back up this massive apparatus, the Soviet has the largest
number of trained agents for espionage and secret political action
that any country has ever assembled. In Moscow, Prague and Peiping
and other Communist centers, they are training agents recruited from
scores of other countries to go out as missionaries of Communism
into the troubled areas of the world. Much of the Middle East and
Southeast Asia, and particularly Black Africa, are high on their
target list. They do not neglect this hemisphere as recent
disclosures of Communist plotting in Mexico show us. Their basic
purpose is to destroy all existing systems of free and democratic
government and disrupt the economic and political organizations on
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which these are based. Behind their Iron Curtain they ruthlessly
suppress all attempts to achieve more freedom -- witness Hungary
and now Tibet.
The task of destruction is always easier than that of
construction. The Communist world, in dealing with the former
colonial areas and the newly emerging nations of the world, has
appealing slogans to export and vulnerable economic conditions to
exploit. The fragile parliamentary systems of new and emerging
countries are fertile ground for these agitators.
Also under the heading of subversion we must not overlook the
fact that the Communist leaders have sought to advance their cause
by local wars by proxy -- Korea, Vietnam, Malaya are typical examples.
In conclusion I wish to emphasize again the pressing need for a
clearer understanding of the real purpose of the Sino-Soviet program.
There is no evidence that the present leaders of the Communist world
have the slightest idea of abandoning their goal, or of changing the
general tactics of achieving them.
Those who feel we can buy peace by compromise with Khrushchev
are sadly deluded. Each concession we give him merely strengthens
his position and prestige and the ability of the Soviet regime to
continue its domination of the Russian people whose friendship we
seek.
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Our defense lies not in compromise but in understanding and
firmness, in a strong and ready deterrent military power, in the
marshalling of our economic assets with those of the other free countries'
of the world to meet their methods of economic penetration, and finally
in the unmasking of their subversive techniques.
The over-all power of the free world is still vastly superior to
that under the control of the leaders of international Communism. If
they succeed and we fail, it will only be because of our complacency
and because they have devoted a far greater share of their power, skill
and resources to our destruction than we have been willing to dedicate
to our own preservation.
They are not supermen. Recently they have made a series of blunders
which have done what words could not do to help us unmask their true
intentions. These very days Communist actions in Iraq and Tibet have
particularly aroused Moslems and Buddhists against international
Communism. The institution of the so-called "Communes" system on the
China Mainland has shocked the free world and even the Soviet leaders
apologetically refuse to endorse it.
Despite the problems surrounding the Berlin issue, Western Europe
is stronger than it ever has been since World War II. Much of Free
Asia and the Middle East is becoming alerted to the true significance
of Communism.
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The outcome of the struggle against international CoYmnunism
depends in great measure upon the steadfastness of the United States
and its willingness to accept sacrifices in meeting its responsibility
to help maintain freedom in the world.
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