THE CHALLENGE OF SOVIET POWER

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP67-00318R000100680001-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 17
• Document Creation Date: December 27, 2016
• Document Release Date: July 22, 2013
• Sequence Number: 1
• Publication Date: April 27, 1959
• Content Type: OPEN SOURCE

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the
CHALLENGE
Of
SOVIET POWER
by
ALLEN W. DULLES
Director of Central Intelligence
DEPARTMENT OF STATE
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Reprinted from the
Department of State Bulletin
of April 27, 1959
DEPARTMENT OF STATE PUBLICATION 6823
European and British Commonwealth Series 55
Released May 1959
Public Services Division
BUREAU OF PUBLIC AFFAIRS
For sale by the Superintendent of Documents
U.S. Government Printing Office, Washington 25, D.C.
Price 10 cents
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The Challenge of Soviet Power
by Allen W. Dulles
Director of Central Intelligencel
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 ex-
pect that their single purpose will be the liquida-
tion of our form 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
overall objective.
We sometimes like to delude ourselves into
thinking that we are faced with another national-
istic power struggle, of which the world has seen
so many. The fact is that the aims of the Com-
munist International with its headquarters in
Moscow are not nationalistic; their objectives 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 revo-
lutionary force.
To promote their objectives they have deter-
mined?cost what it may?to develop a military
establishment and a strong national economy
I Address made before the Edison Electric Institute at
New Orleans, La., on Apr. 8.
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which will provide a secure home base from which
to deploy their destructive foreign activities.
Soviet Military Establishment
To achieve this objective they are devoting
about twice as much of their gross national prod-
uct to military ends as we do. The U.S.S.R. mili-
tary effort as a proportion of GNP is greater than
that of any other nation in the 'world. Their con-
tinuous diversion of economic resources to mili-
tary support is without any parallel in peacetime
history.
We estimate that the total value of their cur-
rent 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 2i/2 million men, and
the tradition of universal military training is be-
ing continued. The Soviet Army today has been
fully reequipped with a post-World War II ar-
senal of guns, tanks, and artillery. We have
reason to believe the army has already been
trained in the use of tactical nuclear weapons.
They have the most modern types of 'aircraft
for defense: night and day fighters, a very large
medium-bomber force, and some long-range bomb-
ers. 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 sub-
marines and a like number of less modern craft.
They have made no boasts about nuclear powered
submarines, and on all the evidence we are justi-
fied 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.
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Ballistic Missile Situation
I would add a word on the ballistic missile situ-
ation.
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 Ger-
man technicians. From that base, over the past
10 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 produc-
tion of certain models for some time.
They also early foresaw that, in their particular
geographical position, the long-range ballistic mis-
sile would become their best instrument in the
power struggle with their great rival, the United
States. As the size and weight of powerful nu-
clear weapons decreased 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 ICBM's in serial production.
They hope in this way eventually to be able to
hold the U.S. under the threat of nuclear attack by
ICBM's 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 misinterpre-
tations. 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 pro-
voke 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 them, even if they resorted to surprise
attack, would be unacceptable.
Taking into account our overall 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 to-
day greater than that of the Soviet Union.
Furthermore, we have allies. The strength, the
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dependability, and the dedication of our allies put
them in a very different category than the unwill-
ing 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 for-
eign policy can be somewhat more assertive. In
1956, during the Suez crisis, we had the first Soviet
missile-rattling as a new tactic of Moscow diplo-
macy. 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 mili-
tary 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.
Soviet "Economic Order of Battle"
I will turn now to some of the highlights of
the economic aspect of the Soviet challenge.
The new confidence of lihrushchev, 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 nonmilitary means. Here the Soviet economic
offensive looms large.
The proceedings of the recent 21st Party Con-
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gress laid out what we might call the Soviet eco-
nomic order of battle.
Khrushchev explained it in these words, to sum-
marize the 10 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 eco-
nomic 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 econ-
omy 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 7 years,
through 1958, Soviet industry has grown at the
annual rate of 9y2 percent. This is not the of-
ficially announced rate, which is somewhat larger.
It is our reconstruction and deflation of Soviet
data.
Our own industrial growth has been at the an-
nual rate of 3.6 percent for the 7 years through
1957. If one included 1958, the comparison with
the rate of Soviet growth would be even less
favorable.
Investment for National Policy Purposes
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 Com-
munist 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.
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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-30 percent?while we in the
United States are content with 17 to 20 percent.
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 com-
parison 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. out-
put of durable consumer goods is for replacement,
while that of the U.S.S.R. is for first-time users.
In summary, the Soviet economy is geared largely
to 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
1 automobile for every 50 we produced, they were
turning out 4 machine tools to our 1.
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 high-
way building program, which has been running
15 to 20 times the U.S.S.R. 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 roadbuilding field. They have no interest
in having their people travel around on a massive
scale. Also this would put pressure on the Krem-
lin to give the people more automobiles.
Commercial investment, which includes stores,
shopping centers, drive-in movies, and office build-
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ings, has been absorbing over $6 billion a year in
the U.S., and only $2 billion in the U.S.S.R.
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
U.S.S.R.
Industrial Production Trends
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 ex-
ceed the highest indexes of capitalism." ?
Khrushchev's ambitious 7-year plan establishes
the formidable task of increasing industrial pro-
duction about 80 percent 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 in-
dustry 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 U.S.S.R. plans to produce about
480 billion kilowatt hours of electricity. As a
study comparing U.S. and U.S.S.R. electric power
production prepared by a leading industrial re-
search group pointed out, this means that the
absolute gap between the U.S. and U.S.S.R. in
the quantities of electricity generated will increase
somewhat in our favor over the next 7 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 com-
mentators concluded.
For example, compare primary energy produc-
tion trends in the two countries. Soviet produc-
tion of coal, petroleum, natural gas, and hydro-
electric power, expressed in standard fuel units,
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amounted to 45 percent of the U.S. production in
1958. By 1965 it will be close to 60 percent.
The absolute gap in primary energy has been clos-
ing since 1950. At the present pace it will con-
tinue to narrow over the next 7 years.
Similarly, the absolute gap in steel production
has been shrinking over the past 5 years. The
maximum gap in steel capacity apparently was
reached in 1958.
The comforting illusion spread by the "disciples
of the absolute gap" should not serve as a false
tranquilizer.
Soviet Exaggerations
At the same time it is important not to exagger-
ate Soviet prospects in the economic race. In
the propaganda surrounding the launching of the
7-year plan, Khrushchev made a number of state-
ments about Soviet economic power which were
nothing more than wishful thinking. Specifically
he stated that "after the completion of the 7-year
plan, we will probably need about 5 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."
First of all, to reach such improbable conclu-
sions the Kremlin leaders overstate the present
comparative position. They claim U.S.S.R. in-
dustrial output to be 50 percent of that of the U.S.
Our own analyses of Soviet industrial output last
year concluded that it was not more than 40 per-
cent of our own.
Secondly, Khrushchev forecasts that our future
industrial growth will be only 2 percent 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 in-
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dustrial production at about 55 percent of our
own. By 1970, assuming the same relative rates
of growth, U.S.S.R. industrial output as a whole
would be about 60 percent 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 comments.
Implications of Soviet Economic Progress
These Soviet exaggerations are a standard tool
of Communist propaganda. Such propaganda,
however, should not blind us to the sobering impli-
cations of their expected economic progress.
First of all, rapid economic growth will pro-
vide the Kremlin leaders with additional re-
sources with which to intensify the arms race.
If recent trends and present Soviet policies con-
tinue, Soviet military spending could increase by
over 50 percent in the next 7 years without in-
creasing the relative burden on their economy.
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 slowdown 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 7 years. This level, if achieved, will still be
far below that which our own citizens are now en-
joying, but it will look good to people who for
long have been compelled to accept very low
standards.
Finally, the Soviet 7-year plan, even if not
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fully achieved, will provide the wherewithal to
push the expansion of trade and aid with the un-
committed 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 in-
dustrialization 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.
Communist Trade-and-Aid Programs
This is an unprecedented epoch of change.
Within little more than 10 years, over three-quar-
ters of a billion people in 21 nations have become
independent of colonial rule. In all of these
newly emergent countries there is intense nation-
alism coupled with the determination to achieve a
better way of life, which they believe industrial-
ization will bring them.
The leaders of world communism are alert to
the opportunity which this great transformation
provides them. They realize the future of com-
munism can be insured only by 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 dur-
ing 1958. The equivalent of over $1 billion in
new credits was extended to underdeveloped
countries by the bloc in this year. In the 4-year
period ending 1958 the total of grants and credits
totaled $2.5 billion, of which $1.6 billion came
from the U.S.S.R. and the balance from the satel-
lites and China. Three-fifths of the total deliv-
ered to date has been in the form of arms to the
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U.A.R.---Egypt and Syria?Yemen, Iraq, Af-
ghanistan, and Indonesia. These same countries,
plus India, Argentina, Ceylon, Burma, and Cam-
bodia, have received the bulk of the economic aid.
Over 4,000 bloc technicians have been sent to
assist the development of nations in the free
world. About 70 percent of these technicians are
engaged in economic activities. Others are reor-
ganizing local military establishments and teach-
ing 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 own aid, loan, and training programs, this
massive economic and military aid program is con-
centrated 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 4 years received over $900
million 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 oppor-
tunistic nature of the bloc's aid program. 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
U.S.S.R. has provided over $250 million in mili-
tary and economic development credits. The
Iraq Development Board has dropped its two
Western advisers. Western technicians are also
being dismissed and contracts with many Western
firms canceled. Increasingly, Moscow is pressur-
ing the Iraq Government to accept dependence on
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Communist support, and the number of fellow
travelers in high government posts is growing.
Communist Campaign of Subversion
The Soviet policy of economic penetration fits
like a glove into their worldwide 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 Comin-
tern and the Cominform. The Communist Party
of the U.S.S.R., 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 en-
tire 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 Com-
munist China. These in turn direct the hard-core
Communist organizations which exist in practi-
cally every country of the world. Every Com-
munist Party maintains its secret connections
with Moscow or, in case of certain of the Com-
munist parties in the Far East, with Peiping.
These parties also have an entirely overt as-
sociation 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 U.S.
Communist Party. The single theme of these
Communist leaders was their confidence in the
eventual worldwide triumph of the Communist
movement.
From time to time Moscow has made agree-
ments, such as the Litvinov pact in 1933, not to
interfere in the internal affairs of other countries.
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On the strength of this we resumed relations with
the Soviet. They are eager to conclude like agree-
ments of "friendship and nonaggression" with
all countries of the world. These are not worth
the paper they are written on. During World
War II Moscow abolished the international Com-
intern to propitiate the United States, its then
wartime ally. Its functions have, however, been
carried on continuously under other forms.
In addition to its worldwide 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
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 Demo-
cratic Federation, the World Federation of
Teachers Unions, the International Association of
Democratic Lawyers, and Communist journalists
and medical organizations. Then cutting across
professional and social lines, and designed to
appeal to intellectuals, the Communists have cre-
ated 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 partic-
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ularly black Africa, are high on their target list.
They do not neglect this hemisphere, as recent dis-
closures 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 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 appeal-
ing 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, Viet-Nam, 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 Com-
munist world have the slightest idea of abandon-
ing 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 con-
cession we give him merely strengthens his posi-
tion and prestige and the ability of the Soviet
regime to continue its domination of the Russian
people, whose friendship we seek.
Our defense lies not in compromise but in under-
standing and firmness, in a strong and ready deter-
rent military power, in the marshaling of our
economic assets with those of the other free
countries of the world to meet their methods of
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economic penetration, and finally in the unmask-
ing of their subversive techniques.
The overall 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 destruc-
tion 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 Mus-
lims and Buddhists against international commu-
nism. The institution of the so-called commune
system on the China mainland has shocked the
free world, and even the Soviet leaders apologeti-
cally 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.
The outcome of the struggle against interna-
tional communism depends in great measure upon
the steadfastness of the 'United States and its will-
ingness to accept sacrifices in meeting its respon-
sibility to help maintain freedom in the world.
15
tr GPO : 1959 0- 481494( 47)
Declassified and Approved For Release 2013/07/22 :
DIA-RDP67-00318R000100680001-3