ATTACHED FOR YOUR TRANSMITTAL TO THE PRESIDENT IS THE FINAL REPORT ON

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85M00364R001903730005-7
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 2
• Document Creation Date: December 20, 2016
• Document Release Date: December 19, 2007
• Sequence Number: 5
• Publication Date: July 15, 1983
• Content Type: MEMO

..LENT OF CO._
Approved For Release 2007/12/19: CIA-RDP85M00364RO01903730005-7
UNITED STATES DEPARTMENT OF COMMERCE
CONFIDENTIAL
July.15, 1983
Not referred to DOC. Waiver applies.
MEMORANDUM FOR; Secretary Baldrige.
FROM : Lionel H. Olmerf if
Attached for your transmittal to the President is the final report on
CIA's assessment of .the Soviet economy which has been prepared by the
14 member-panel of experts from the private sector working under my
auspices for the past seven months,
The Panel has performed its assignment in an exemplary manner. Its
report is thorough, clear and to the point; deadlines were met; and
confidentiality has been maintained, in my judgment, this 129-page
Report will be of substantial benefit, particularly to the Director
.of Central Intelligence, because of its detailed commentary on CIA's
analytical methodologies, the broad range of its constructive.
criticisms, and the numerous recommendations for improvements to the
process of estimating the content and significance of the Soviet
economy.
I submit that the most striking conclusion in the Report is the Panel's
unanimous general agreement with CIA's assessment:
There is not even a remote possibility that the Soviet
economy will collapse, although it suffers from a great
many weaknesses.
The Panel was-challenged severely by my internal review group on this.
conclusion; yet it remains firm in its belief that despite strains on
the Soviet leadership,.which will make certain policy choices more
difficult, the economy is sufficiently large, resourceful and adaptive
so as to enable the Soviets to muddle-through their economic problems.
The Panel noted that too often, intelligence assessments overemphasize
weaknesses in the Soviet economy but fail to point out its resiliency
and the ability of the leadership to respond adequately to difficulties.
Additionally, the following. items warrant special attention;
o Although the Panel expresses confidence in CIA quantitative
estimates of the Soviet economy Ce,g., GNP and GNP-growth
forecasts), it notes a number of ways for improving the
___,_ methods of calculation and argues that the significance for
Classified by: Lionel H. Olmer
Declassify on: 7/15/89
337366
CONFIDENTIAL
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 Approved For Release 2007/12/19: CIA-RDP85M00364RO01903730005-7
LUNHUtN I IAL
policymakers of these numbers ~- the qualitative estimates
--
is neither adequately analyzed nor communicated to
intelligence.consumers. In particular, the range of
uncertainty on CIA judgments is not clearly stated, several
important topics and their affects on the economy are
understudied (e.g., the underground economy, regional
differences, social indicators such as drunkenness,
workforce low morale, etc.);
o of the 14 members on the Panel, 10 are or have in the recent
past been academics who feel strongly that the CIA policy
restricting access of scholars to CIA studies is counter-
productive to better understanding of the Soviet economy;
that a more sophisticated group of analysts and products
would emerge from a policy permitting greater-public access
to intelligence. (Such a policy was developed in the previous
Administration.) The costs to our intelligence system in.terms
of time and effort in justifying analytical viewpoints to
public readers yet needing to stop short of complete disclosure
due to source sensitivity, was explained with care but was not
persuasive to the Panel. I disagree strongly with the Panel
on its point of view in this area.
The Report also implicitly minimizes the potential for influencing Soviet
behavior by means of Western economic policies, labeling Soviet foreign
trade dependence a "complicated calculus which involves comparative
advantage considerations" which have been largely absent from CIA's
analytic approach. Thus, the Panel recommends greater attention by CIA
to a number of additional aspects of. Soviet behavior, such as its
responsiveness to prices, the potential for import substitution and the
investment commitment by the Soviets to export sectors.
Clearly, this recommendation has relevance for Commerce as well as for
the CIA. Arguably, economic sanctions may have but limited practicality.
The extent to which they can be a useful tool of our foreign and national
security policies, however, will be highly dependent on careful, thorough
and objective analysis presented with clarity to the decision maker. In
this respect, Z believe that the relatively small reorientation to our
efforts in the International Trade Administration, involving a new
emphasis on analysis of global economic issues, could yield large results
of which the Panel's Report is a current example.
CONFIDENTIAL
Approved For Release 2007/12/19: CIA-RDP85M00364RO01903730005-7