CIA ANALYTICAL SUPPORT FOR EAST-WEST STUDY PROGRAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85-01156R000200170003-5
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: March 21, 2012
• Sequence Number: 3
• Publication Date: January 13, 1983
• Content Type: MEMO

Declassified in Part - Sanitized Copy Approved for Release 2012/03/21 : CIA-RDP85-01156R000200170003-5
UNDER SECRETARY OF STATE
FOR ECONOMIC AFFAIRS
MEMORANDUM FOR: Henry S. Rowen
Chairman
National Intelligence Council
Central Intelligence Agency
SUBJECT: CIA Analytical Support for East-West
Study Program
As you know, the program of East-West economic studies
described in the "Summary of Conclusions" is now well under-
way, with SIG-IEP approval having been granted for the terms
of reference and implementation plans in each area. In
energy, the study terms of reference have also been agreed
to by Summit Seven countries, and the IEA/OECD Combined
Energy Secretariat has begun work on the energy requirements
and alternatives study itself.
The USG's success in advancing these studies toward the
goals set in NSDD 66 will depend in large part upon our ef-
fective use of analytical support provided by the CIA. For
this purpose I hope that the CIA can continue and expand upon
the excellent work it is now doing in support of our efforts
in each of these areas. This work will serve as a check on
the work done by national bureaucracies, CoCom, the NATO Eco-
nomic Committee, the OECD, and the IEA, and, as appropriate,
permit us to correct or supplement these analyses.
In the area of the overall strategic and military im-
plications of East-West economic relations, we have identified
the following questions where additional CIA analysis will be
a key element in supporting the study process:
1) What is the elasticity of East-West trade with re-
spect to credit or other subsidies?
2) what are the major economic benefits that the So-
viets derive from their trade with the West? Do we
have good data on the magnitude of these benefits and
the sectors in which they are concentrated? How and
to what extent does the USSR use economic relations
with the West to expand its military power?
 3) What are the most important infrastructure elements
that support -- but are not a direct part of -- Soviet
military production? Has Western trade been important
in these areas?
4) Is there any empirical evidence, beyond the in-
famous 1972-73 grain deal, that the Soviets have ex-
ploited their monopsonist or near-monopsonist position
vis-a-vis their more numerous Western trading partners?
5) Among what uses could the Soviets be expected to
allocate their foreign exchange earnings for various
levels of those earnings?
In support of the energy requirements and alternatives
study, we see the following particular requirements:
1) A "shadow study" based on the terms of reference
for the East-West energy dependence and alternatives
study.
2) A related "shadow study" on the physical character-
istics of the European natural gas distribution grid
and the physical constraints on responses to IEA-
stipulated disruption scenarios.
3) Continued CIA export help to advise the IEA Secre-
tariat on gas supply modelling techniques and to monitor
the progress of the IEA work. In particular, we would
hope that who participated in the most
would be available to attend future sucn meetings.
4) Key experts may also be needed for travel and con-
sultations in other OECD capital cities in the coming
months, depending on the course of the energy require-
ments study.
5) Further CIA analysis of Soviet gas export capabil-
ities and pricing strategies will be needed for our
guidance and for exchange with affected countries, in
particular Norway and the Netherlands, (i.e., whether
the Soviets could exploit their enhanced natural gas
production and transmission facilities to discourage
the future development of Western European supplies).
6) Whether the Soviets view and/or use energy as a
strategic resource in international relations.
 As mentioned in the SIG-IEP meeting, an additional area
in which your work could support the negotiating process is
a country-by-country determination of the responses that our
allies are likely to make to our initial proposals, and what
arguments we could make that would most effectively counter
these arguments.
Also, as you may be aware, we are assuming the avail-
ability for temporary detail to NATO of one economic expert
who can work with the NATO international staff on the securi-
ty implications of East-West economic relations. As in the
past, we would also appreciate the participation from time
to time of a senior-level economist to reinforce the U.S.
NATO mission for Economic Committee meetings.
Finally, in addition to the analytical work, it will be
vital to set up procedures for rapid "sanitization" of CIA
findings so that we may exchange substantive views with our
allies, both within the various study fora as well as bi-
laterally.
cc: Mr. McCormack
Mr. Niles
Mr. Bailey
Mr. Ikle
Mr. Olmer
Mr. Bradley
Mr. Wendt