ECONOMIC IMPACT OF RESTRICTIONS ON EXPORTS OF WESTERN ENERGY EQUIPMENT TO THE USSR

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R001202900027-8
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 5
• Document Creation Date: December 22, 2016
• Document Release Date: April 21, 2009
• Sequence Number: 27
• Publication Date: August 31, 1982
• Content Type: MEMO

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TRANSMITTAL SLIP DATE 31 Aug 82
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NIO/Economics
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Maurice C. Ernst
CONFIDENTIAL
CONFIDENTIAL
THE DIRECTOR OF
CENTRAL INTELLIGENCE
National Intelligence Council
DDI #7073-82
31 August 1982
MEMORANDUM FOR: Director of Central Intelligence
FROM: Maurice C. Ernst
NIO/Economics
SUBJECT: Economic Impact of Restrictions
on Exports of Western Energy
Equipment to the USSR
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For your information and reactions and
for possible use at your meeting with McFarlane,
is a draft outline of the SOVA paper on the economic
impact of restrictions on exports of Western energy
equipment to the USSR.
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CONFIDENTIAL
Embargo of Energy Equipment and Technology
to the USSR in Perspective
I. Prospective Soviet Energy Balance
A. The Changing Nature of Energy Production
? Policy shift from coal to oil and gas.
? Resource constraints and rising costs.
B. Trends in Energy Use
? Changing pattern of energy consumption.
? The record and outlook for conservation (via
efficiency gains) and interfuel substitution (no
major gains on the horizon).
C. The Role of Energy in Soviet Foreign Trade
? Brief description of the importance of energy to
the Soviets as a source of hard currency earnings
with which to achieve economic objectives
(including defense programs).
II. The Role of Western Equipment
A. What have they been using and for what purpose?
? Description of past trends in acquiring Western
energy equipment.
? Increasing importance of high capacity, high
quality equipment in the 1980s is leading to
greater significance for Western equipment in
Soviet energy production (i.e. the opportunity cost
of not having Western equipment will be higher than
in the past because of the points made in I A. and
I B. above).
B. Types of Equipment Needed
? Relates specific equipment to specific problems
facing Soviet energy producers (e.g. watercut, high
sulfur, etc.).
? Relative capability of Soviet domestic equipment to
cope with these problems.
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CONFIDENTIAL
III. Cost of Disrupting the Balance
This section examines the cost to the Soviets of having to
go it alone; (1) almost completely (an embargo of Western
energy equipment from the US plus other NATO countries plus
Japan) and (2) with only the loss of US equipment (an
embargo of US energy equipment only).
A. Impact on energy production
B. Soviet response
? by themselves
? with other Western countries
C. Implications for the economy
? Policy options (i.e. do they take impact out of
their domestic hide or their foreign exchange
earnings).
? Impact on hard currency earnings and use.
? Impact on economic growth
-- aggregate impact (i.e. GNP)
-- bottlenecks created (i.e. direct impact of
energy shortfalls on individual sectors)
-- resource redistribution issues (investment,
labor, industrial materials).
? Impact on military programs and defense
resources.
CONFIDENTIAL
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