SOVIET UNION-EASTERN EUROPE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00865A002400060001-0
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 15
• Document Creation Date: December 15, 2016
• Document Release Date: August 12, 2004
• Sequence Number: 1
• Publication Date: December 19, 1975
• Content Type: NOTES

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Top Secret
Soviet Union-Eastern Europe
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December 19, 1975
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CONTENTS
December 19, 1975
A Delayed CEMA Summit . . . . . . . . . . . . . . 1
Czechoslovakia: The "Lessons" Live . . . . . . . 4
Yugoslavia: Tito Concerned Over Downward
Economic Drift . . . . . . . . . . . . . . . . 5
ANNEX: Yugoslavia: The Cominformist Threat and
Soviet-Yugoslav Relations 7
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A Delayed CEMA Summit
Convocation of the delayed CEMA summit continues
to slip.
Romanian dissent on issues the Soviets ap-
parently want to raise at the meeting has been a
factor in the delay, but it is unlikely that Moscow
would permit Bucharest's recalcitrance alone to post-
pone the summit. Heavy travel schedules, preparations
for party congresses in Poland and the USSR, and the
difficulties of completing plan coordination protocols
and trade agreements among the CEMA countries have
also contributed to the delays.
The Soviets have circulated a document on CEMA
integration hich re-
portedly has the concurrence of all the East Europeans
except the Romanians. Buch-
arest is dickering over the document's language on:
CEMA-EC ties: The Romanians seem agreeable to
CEMA-EC negotiations, but reportedly insist that the
document specifically mention the right of individual
CEMA countries to maintain ties with the EC. The
Soviets, who are reluctant to dilute the multilateral
approach, probably argue that no reference is necessary
because the safeguards are written into the CEMA
charter.
CEMA Specialization: The Romanians believe that
Soviet-proposed wording would preclude efforts by
individual countries to build or expand certain in-
dustries. Bucharest has long been concerned that
CEMA decisions on specialization that are based
solely on economic criteria and taken from a CEMA-
wide perspective would favor the more developed CEMA
countries and thereby perpetuate Romania's less de-
veloped status. As a counter, the Romanians have
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argued--this year and in the past--that they and
other less-developed CEMA countries deserve politi-
cally-motivated economic assistance to equalize the
development of all CEMA members. The Soviets re-
fuse to consider Romania a less-developed country.
Joint Development Projects:
the Romanians object to allowing
the Soviets to have full control of a jointly devel-
oped project (and its production) on Soviet territory,
even after Moscow has repaid East European development
assistance. This, in effect, is a demand that Mos-
cow earmark greater quantities of raw materials from
such joint projects for the East Europeans. While
this demand is in line with Romanian efforts to get
more of certain raw materials from the Soviets, it
is inconsistent with Bucharest's view that jointly
developed projects on Romanian soil are subject only
to Romanian control.
The Romanians may be dissenting on other issues.
The Soviets at one time were proposing that CEMA's
planning cooperation committee be given increased
power to direct other CEMA units and that it be put
on a full-time operating schedule. Moscow clearly
hopes that such steps--which are aimed at greater
efficiency and integration--will counter Romanian
delaying tactics within CEMA. Bucharest will resist
any institutional changes that have a supranational
ring and ideally would like to perpetuate a creaky,
inefficient CEMA structure.
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It is more likely that any other East European
dissent would focus on specific economic proposals
by Moscow. said that the
summit would make "particularly important" decisions
in agricultural as well as the raw material sectors.
All the East Europeans, of course, are eager to get
further Soviet assurances on long-term deliveries of
raw materials, but it is not likely that this overall
issue can be--or is intended to be--resolved before a
a CEMA summit. Any Soviet effort to seek even partial
solutions in these or other sensitive areas could
further delay a CEMA summit.
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Czechoslovakia: The "Lessons" Live
Several recent articles in the Czechoslovak
press throw cold water on hopes that the coming
15th party congress might take a softer line to-
ward ostracized reformers of the Dubcek era.
The articles are part of the activity commem-
orating the fifth anniversary of "Lessons," a Cen-
tral Committee document approved in December 1970.
Inasmuch as they stress the continuing validity of
"Lessons," the press commentaries suggest that the
congress will not make a dramatic gesture toward
national reconciliation by providing a way to reha-
bilitate large numbers of the ostracized reformers.
The regime's defense of the document is not
surprising. "Lessons" was intended to serve as both
a post mortem of "what went wrong" in 1968 and an
apologia for the restoration of rigidly orthodox
Communist rule. Moreover, the document rationalized
the roles that several of the present leaders played
during the reform era. It also exonerated the sys-
tem by blaming the Novotny and Dubcek regimes for
making the party vulnerable to the "rightist" on-
slaught.
The commentaries point out that political set-
tlement of the crisis was possible without resort-
ing to "sectarian approaches which aggrandized the
significance of administrative coercive approaches."
They also stress the "differentiated" case-by-case
approach to rehabilitation that party chief and
president Husak reportedly favors. Although the
articles thus suggest that the "moderates" scored a
victory, selective rehabilitation falls c nsiderabl
short of what many emigres had hoped for.
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Yugoslavia: Tito Concerned Over
Downward Economic Drift
In a hard-hitting speech on December 11, Tito
scored the Party Presidium for failing to fully im-
plement the economic stabilization program for 1975.
Tito hinted that even stronger restraining measures
might be taken in 1976.
Tito expressed concern about the festering
problems of inflation, unemployment, and the large
hard-currency trade deficit. In the first nine
months of 1975, consumer prices were up 24 percent
over the year before, unemployment 20 percent, and
the hard-currency trade deficit 12 percent.
Industrial growth has fallen to 6 percent from
11 percent in 1974, and a mediocre harvest will prob-
ably mean there will be little growth in agriculture
this year. Economic growth already has slowed sharply
--we expect gross national product to increase ap-
proximately 3 percent in 1975 compared with 6 per-
cent in 1974.
The slowdown in industrial growth reflects a
decline in both domestic demand and Western demand
for Yugoslav exports. Shortages of some imported
raw materials and intermediate products, as a result
of the selective import restrictions imposed during
1975, are other contributing factors. The tobacco,
food processing, and printing industries were hard-
est hit by the import restrictions. Production cut-
backs are also likely to occur soon in those indus-
tries where large inventories have accumulated--for
example, in the textile, electric appliance, and
furniture industries.
Export growth has stagnated because of the
Western recession and the impact of domestic infla-
tion on the competitiveness of Yugoslav goods in
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Western markets. Remittances expected from workers
abroad and receipts from tourism will fall far short
of overcoming the trade deficit, leaving a current
account deficit of about $1 billion for 1975.
Yugoslavia's foreign exchange reserves declined
from $1.3 billion in February 1975 to about $1 bil-
lion in October--the lowest since early 1973--as
balance-of-payments pressures have mounted. These
reserves are the equivalent of only one and a half
month's imports from the convertible currency area.
The Yugoslavs may be forced to draw reserves down
even further by the end of the year because of in-
creasing difficulties in obtaining credit in the
West.
A basic problem with economic policy in Yugo-
slavia is the structure of the system. There is no
mechanism for insuring full implementation of fed-
eral decisions at the republic or enterprise level.
Instead, Belgrade must rely on the regional party
and mass organizations to provide coordination and
direction for Yugoslav policy at those levels.
The 1976 plan, now being hotly debated at
the republic level, calls for another round of
stablization measures. Under the plan, import con-
trols are to be continued, stronger measures taken
to regulate investment spending, and stricter cri-
teria established for price increases.
The federal government is being criticized
in some republics for making key economic deci-
sions that constitutionally belong to the repub-
lics. Tito, nevertheless, told the party leaders
that the cabinet is acting properly and that it
is the republics which are mainly at fault for the
economic situation.
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Yugoslavia: The Cominformist Threat
and Soviet-Yugoslav Relations
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Belgrade's policy toward Moscow since the dis-
covery of the plots has followed a zigzag course.
The Yugoslavs, from Tito on down, are very worried
that Soviet intentions toward post-Tito Yugoslavia
are less than benign, but there are realistic limits
to Yugoslavia's current options. Tito seems to be
gambling for time--and a reversal of Soviet fortunes.
Meanwhile, he is preparing his people to fight, if
necessary, to keep Moscow out.
Tito's Rude Awakening
Soviet willingness to take risks in Yugoslavia
became apparent, in Belgrade's eyes, after the first
Cominformist arrests in April 1974. Clearly, the
Yugoslavs were caught off stride. From 1972 to early
1974, Tito had conducted a major reorientation of
.his diplomacy. One of his principal goals was to
establish a durable working arrangement that would
assure a friendly and cooperative Soviet Union during
the transition in Yugoslavia. Even as the first ar-
rests were made and the thread of pro-Soviet subver-
sion began to unwind, Tito gave his personal assur-
ances to suspicious Yugoslavs that we have nothing
to fear from the East.
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Embittered by what he regards as Kremlin treach-
ery, Tito threatened subsequently to lay out the de-
tails of the conspiracy and let the chips fall where
they would. He has, however, found weighty reasons
for avoiding a frontal conflict with Moscow. The
major inhibition is that the loosening of Western
political cohesion seriously limits the credibility
of his traditional policy of leaning Westward for
support when Moscow is most threatening.
Covering All Bets
Tito's actions thus amount to a minor modifica-
tion of the pickpocket diplomacy Yugoslavia has fol-
lowed since the end of World War II. Underlying all
his tactical maneuvers, however, is his sincere and
abiding determination to ensure Yugoslavia's autonomy
and independent role in the world, whatever happens
after his death.
Against an array of conditions favoring Moscow,
Tito has made a number of moves that seem at first
glance to be at cross purposes. He has, for example,
courted the West and the Chinese in an effort to re-
establish the solid political understandings that
might be necessary if Moscow begins overtly to inter-
fere in Yugoslav affairs. This crash program has not
been altogether successful. The arrangement of major
arms deals in the West and the normalization of party
relations with Peking continue to slip through his
fingers. Furthermore, his appeals for economic con-
cessions are not reaping many returns in a period of
slow economic recovery in the West.
Even as he seeks to expand contacts with the
West and China, Tito is insisting that Yugoslavia
wants good relations with Moscow. He sees to it
that bilateral economic relations are in good order
and that Soviet arms shipments to Yugoslavia are
maintained, and he will continue to do so until Yugo-
slavia's economic and military dependency on the USSR
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eases. The Soviets presumably play the game because
the economic and military hardware deals provide
them continuing entree into Yugoslavia and because
they do not want to present opportunities to their
rivals in the West.
Belgrade has nimbly evaded differences with
Moscow that might cause the USSR to reassess its
policy of overt friendship for the Tito regime. The
Yugoslavs, for example, do not openly question Mos-
cow's post-Helsinki maneuvers in the Middle East,
despite Tito's policy of support for Sadat and the
Sinai II accords. Belgrade also continues, despite
its judgment that the MPLA is politically rigid and
excessively dependent on Moscow, to support the Soviet-
backed faction in the Angolan Civil War.
Belgrade is concerned that Yugoslavia could
willy-nilly become the next testing ground for Soviet-
Western contention. The Chinese are warning whomever
will listen that Europe--and specifically Yugoslavia--
is an irresistible attraction for Soviet expansion.
Some Western newspapers are also concentrating on
the Soviet threat to Yugoslavia. While Tito is no
longer inclined to pronounce the Soviets free of
ulterior motives in their policy toward Yugoslavia,
neither is he happy about efforts to heighten the
tension. He certainly does not want Moscow to con-
clude that Western or Chinese influence is on the
rise in Belgrade.
Bricks for Brezhnev
Belgrade thus faces the precarious task of
balancing the need to increase internal vigilance
against pro-Soviet machinations while avoiding an
open breach with Moscow and maintaining balanced
ties with the other great powers. The Yugoslav
regime's complex maneuverings have not cloaked its
paramount need for redefining at home the fact that
Yugoslav and Soviet interests are in large measure
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antagonistic and competitive. Yugoslav media for
over a year have been gradually building ideological
indictments of the Soviet system and holding up to
scorn the sycophantic activities of Moscow's loyalist
allies in East Europe.
Yugoslav challenges to Moscow tend to aim--like
any good partisan tactics--at weak points, and Bel-
grade avoids unnecessary contests in areas where So-
viet reactions would be strongest. Belgrade's im-
proved relations with China, its stubborn obstruc-
tion to Soviet goals in the Communist movement, and
its regular sniping at the Soviets' still-unresolved
attitudes toward the Stalin era are all part of Tito's
strategy. In addition, the Yugoslavs have advanced a
new ideological heresy, heralding revolutionary so-
cialist construction in Third World countries--not
the Soviet "model"--as the wave of the future.
The Yugoslav media are telling their readers
that both the Soviet system and its client regimes in
East Europe have their share of problems. Belgrade
stops short of publicly accusing Moscow of economic
imperialism in East Europe, but there is a strong re-
surgence of Yugoslav propaganda about the common in-
terests of all the smaller European states in assur-
ing that the great powers do not run their affairs-
Playing it by Ear
Tito is clearly not tying his policy toward
Moscow to any single scenario for world events. In-
stead, ad hoc decisions, based on Yugoslav percep-
tions of a Soviet threat, seem to be the controlling
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factor in current Yugoslav foreign policy. Issues
and events whose development are likely to influence
future tactics include:
--The results of the Soviet party congress
next February.
--The outcome of Moscow's current involve-
ment in Angola and the potential impact
on the Soviet leadership.
--Soviet economic prospects and continued
willingness to expand cooperation with
Yugoslavia, without imposing too high a
political price tag.
--The speed of the economic recovery in
the West and the result of efforts to
restore political stability in the
southern tier of NATO.
The short-run prospect is for even more tur-
bulence in Soviet-Yugoslav relations. Meantime,
Tito will probably continue to waltz around the cen-
tral issue of Soviet intentions toward post-Tito
Yugoslavia as long as the Soviets are cooperative
in state-to-state contacts and tolerate his efforts
to isolate the oro-Soviet "fifth-column."
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Top Secret
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