THE CIA TODAY SOUNDED A NEW WARNING TO WESTERN POLICY MAKERS THAT IT WOULD

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85M00363R000601440023-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: January 4, 2017
• Document Release Date: April 7, 2008
• Sequence Number: 23
• Publication Date: January 8, 1983
• Content Type: OPEN SOURCE

Approved For Release 2008/04/15: CIA-RDP85M00363R000601440023-6
REUTERS
8 JANUARY 1983
The CIA today sounded a new warning to Western policy makers that it would
be a mistake to underestimate the economic strength of the Soviet Union.
That is the principal message in previously secret CIA testimony to the
Joint Economic Committee of Congress. The testimony was made public today.
"We do not consider an economic collapse -- a sudden and sustained decline in
(the Soviet) gross national product -- even a remote possibility," testified
Henry Rowen, chairman of CIA's National Intelligence Council.
It was the second report from the Central Intelligence Agency in the
last two weeks that portrayed the Soviet economy as generally self-sufficient
and growing, although at a slower rate than in recent years.
The views of the CIA's Soviet experts run counter to the publicized Reagan
administration perception of the Soviet Union as militarily strong but an
economic cripple.
Rowen acknowledged an "unusual amount of confusion" in official circles and
among the public as to the strengths and weaknesses of the Soviet Union.
Western observers, he noted, have pictured the Soviet economy as
deteriorating at a time of a rapid defense buildup despite the continued Soviet
economic growth.
He did not mention a CIA analysis of the Soviet economy during the 1970's
when the agency predicted Moscow would be a net oil importer, rather than
exporter, in the 1980's.
In the last two years, the CIA has reversed itself on this point.
Rowen said the CIA believed the Soviet economy would be growing at a slow
rate and predicted a growth of one to two per cent "for the foreseeable future."
Soviet growth averaged 4.6 per cent annually from 1950 through 1981, faster
than the United States, which grew 3.4 per cent a year, according to the CIA.
Since 1978, however, there has been a steady slowdown in the Soviet Union's
yearly growth with 1981 economic activity rising about 1.5 per cent. This pace
has paralleled a slowdown in growth rates of Western industrial countries.
The Soviet slowdown reflects four consecutive poor harvests but the CIA
notes industrial performance has been slack too.
Some retarded growth is from inefficiencies and bottlenecks in the Soviet
system that even its new leader, Yuri Andropov, will not be able to change,
according to the CIA.
Rowen said Andropov's succession to power did not alter the CIA's view of
economic prospects in the Soviet Union.
He also commented that Andropov's remarks to the Soviet Central Committee
suggest no significant change in economic policy, indicating a cautious approach
to economic reform.
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in its generally cautious view of the economic future of the Soviet Union,
the CIA believes that if Andropov introduces major policy changes the forecast
of one to two per cent growth could be off the mark, Rowen said.
He said growth could be faster, for example, if the Andropov regime has good
harvests, reallocates money from defense to investment and consumer demands and
improves productivity and efficiency.
On the other hand, he said slower growth would follow bad harvests,
accelerated defense spending or any active unrest among the Soviet people.
Of the possibilities for a marked slowdown in economic growth, Rowen said
widespread unrest, as in Poland, would hurt economic production the hardest.
"However, we consider such an eventuality unlikely," Rowen said.
"It would probably require a steep and prolonged drop in living standards in
the first instance," he added. "Large scale labor disturbances might also occur
if Andropov pursued with excessive zeal his promised campaign to impose greater
discipline in the work place."
The testimony was requested by Sen. William Proxmire, a Wisconsin Democrat,
who said the CIA report showed "the Soviet Union is perhaps the most
self-reliant industrialized nation."
The Soviet Union probably has more ability than any other nation to remain
viable in the absence of imports because of its vast raw materials, he said.
The CIA testimony said expanded Soviet demands for agricultural imports
were intended mainly to prevent a decline in meat consumption and were not
essential to maintaining an adequate quantity of food.
Proxmire agreed with a basic theme of the CIA report that the Soviet
economy was viable.
"One-of the worst things we can do is to underestimate the economic strength
of our principal adversary, " he said in an introduction to the report.
The first CIA report on strong Soviet economic growth was issued on
Christmas. ~= r ;=
Rowen acknowledged an "unusual amount of confusion" in official circles and
among the public as to the strengths and weaknesses of the Soviet Union.
Western observers, he noted, have pictured the Soviet economy as
deteriorating at a time of a rapid defense buildup despite the continued Soviet
economic growth.
He did not mention a CIA analysis of the Soviet economy during the 1970's
when the agency predicted Moscow would be a net oil importer, rather than
exporter, in the 1980's.
Approved For Release 2008/04/15: CIA-RDP85M00363R000601440023-6
 Approved For Release 2008/04/15: CIA-RDP85M00363R000601440023-6
In the last two years, the CIA has reversed itself on this point.
Rowen said the CIA believed the Soviet economy would be growing at a slow
rate and predicted a growth of one to two per cent "for the foreseeable future."
Soviet growth averaged 4.6 per cent annually from 1950 through 1981, faster
than the United States, which grew 3.4 per cent a year, according to the CIA.
Since 1978, however, there has been a steady slowdown in the Soviet Union's
yearly growth with 1981 economic activity rising about 1.5 per cent. This pace
has paralleled a slowdown in growth rates of Western industrial countries.
Approved For Release 2008/04/15: CIA-RDP85M00363R000601440023-6