SOVA COMMENTS ON THE OECD'S REVISED EAST-WEST TRADE PAPER

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00287R000900450001-5
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 4
• Document Creation Date: December 22, 2016
• Document Release Date: August 19, 2010
• Sequence Number: 1
• Publication Date: April 1, 1983
• Content Type: MEMO

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MEMORANDUM FOR: '~8E ~tECORD
The attached memorandum was. requested
by Mr. James Libera, EUR/RPE, Department
of State, for use by the US delegation?
in.OE'CD meetings scheduled for 8 April
in Paris. The material was daycomed.to
State, on 1 April 1983.
0
Chief
Trade Braneh
Soviet-Economy Division
Office of Soviet Analysis
Date ~ Apr i 1 19 8 3
~s loos
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GONFIDLNTIAL
1 April 1983
SUBJECT: SOVA Comlments on the OECD's Revised
East-West Trade Paper
1. The Office of Soviet Analysis has reviewed and is
generally pleased ,with the revised OECD ministerial paper on
East-West trade. Not only has the paper been considerably
strengthened in the redrafting, it seems to represent a more
balanced statement on the state of East-West trade. Perhaps the
most obvious omission, however, is a continued lack of any
extensive treatmeryt of financial issues. As we noted in our 3
March memorandum,linsufficient attention is given to the linkages
between credit and trade policies. Finally, the statistical
tabulations whichl~accompany the text have not been available for
review and thus ar'e not addressed in this memorandum.
The following comments are keyed to individual paragraphs of
the paper:
Para 3: In the discussion on the valuation of antra-CEMA
t.
trade, it should b,e noted that the USSR pays a premium price to
Eastern Europe for the machinery it buys, while offering oil at a
discount. Indeed, because the recent drop in the world price of
oil ie eliminating much of the oil subsidy to Eastern Europe,
machinery pricing !has become an even more important element in
the valuation of tirade, and this should be noted.
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CONFIDENTIAL
Par a 29: They draf t implies that the USSR has t aken away
most if not all o#~ the incentive the smaller East European
countries may have had to re-export refined Soviet oil to the
West. While we dd not quibble with the statement that this trade
has shrunk, it is~equally important to note that the East
Europeans retain ~n incentive to export to the West because they
would continue to derive income from refining and re-marketing
Soviet oil. In any event, they will be likely to continue this
trade as long as they receive hard currency for their sales to
the West while pa}~ing the Soviets for the crude oil with goods
they cannot sell in the West or substitute for imports from the
Para 33: Information available to us suggests that the USSR
has offered additional supplies of up to "35" rather than "40"
billion cubic meters of natural gas to the various West European
countries. The draft also notes a number of claims that gas may
have placed on it: Absent from the list, however, is the need to
export gas for hard currency. We believe this option will have a
very high prioritp.
Para 40: Change third sentence to read ". average grain
production was 20.$ million tons and nearly 240 million tons has
already been achieved in one record year."
Para 46: Chajnge first sentence to read ". imports to
some 20-30 million tons. .
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CONFI DENTIAL
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CONFIDBNTIAL
Para 47: While we would agree that the present downturn is
attributable in pert to import policies introduced by the Eastern
countries, it also is due in part to growing financial caution in
the West.
Para 66: In .addition to mentioning the present emphasis on
modernization of elxisting capacity, the draft should also note
the debate over the sufficiency of investment now going on in the
USSR. In other wdrds, the investment ratio could turn upward
again.
Para 76: The' draft mentions that, except for the USSR, the
financial position, of the Eastern countries deteriorated
significantly between 1975 and 1982. Unfortunately, the
improvement in the; USSR's position largely results more from the
choice of dates. '( 1975 was a bad year while 1980 was a good
year.) Of course, since 1980 the Soviet financial position has
also deteriorated.,
Para 78: We believe the statement that the USSR's current
account surplus can be maintained at about the 1982 level is
probably erroneous., especially now that energy prices have
declined. Even before prices started falling, our analysis
indicated that the' USSR would have to be very lucky to keep its
current account frpm slipping--a ~udg went we still hold.
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CO NF I DENTIAL
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