(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00443R000200340005-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 34
• Document Creation Date: January 12, 2017
• Document Release Date: September 13, 2010
• Sequence Number: 5
• Publication Date: May 1, 1984
• Content Type: REPORT

Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Directorate of l`
Intelligence
I USSR Monthly Review
Seeret
SOV UR 84-006
May 1984
578
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Directorate of Secret
Intelligence
I SS M? ffly R vR* ew
May 1984
The USSR Monthly Review is published by the
Secret
SOV UR 84-006
May 1984
25X1
25X1
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Secret
Contents
Soviet Relations Perspective
With Western Europe
In 1983 Moscow failed to prevent US INF deployments and was
embarrassed by public disclosures of its involvement in industrial
espionage and its violations of Sweden's territorial waters. Although
the Soviets have responded with counterdeployments and have
sharpened criticism of Western leaders, their basic policy toward
Western Europe has been little affected by these setbacks. The
Soviets are maintaining normal political and economic ties with the
West European states in an apparent effort to preserve the direct
benefits these contacts bring and to reinforce.their propaganda
claim that the United States is responsible for worsening East-West
Soviet Policy Toward West Germany After INF Deployments
Moscow's policy toward West Germany has been largely unaffected
by the start of US INF deployments, despite earlier Soviet warnings
of political and economic repercussions. Moscow has apparently
decided to mark time with the Kohl government, preserving its
existing equities while hoping to benefit from an eventual return to
power by the Social Democratic Party.
Soviet-French Relations Since IN]F Deployment
Relations between the USSR and France remain fundamentally
unchanged by the deployment of the first US INF missiles in
Western Europe. The Soviets are urging continued French
independence from the United States and are responding positively
to President Mitterrand's efforts to repair the East-West dialogue.
They continue, however, to criticize the Mitterrand government's
support for INF and appear to harbor no illusions that major French
concessions to other Soviet concerns are likely.
25X1
25X1
Secret
SOV UR 84-006
May 1984
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Soviet-Swedish Relations: Will the Chill Continue?
Despite the importance of good relations with Stockholm's socialist
leadership to the Soviet "peace campaign," Moscow has done little
to quiet Sweden's complaints over Soviet submarine incursions and
industrial espionage. The Soviets probably believe that Sweden's
traditional commitment to neutrality will prevent the chill in
bilateral relations from affecting its stance on multilateral issues.
25X1
25X1
The Soviet Economic Stake in Western Europe~ 17 25X1
The value of the USSR's trade with Western Europe topped $40
billion in 1983, second only to its trade with the East Europeans.
More important to Moscow, this trade was in the black by more
than $7 billion-a dramatic reversal of the situation a few years
ago. The substantial surpluses with Western Europe are likely to
continue at' least through 1984, even if Soviet energy exports
stagnate ordrop somewhatF--- 25X1
Other Topics Implications of Census and Birth Undercounts
for USSR Manpower Problems
25X1
25X1
25X1
A recent study by US demographers showing that Soviet population
data undercount children and young adults does not change our
assessment' that the USSR faces serious civilian and military
manpower constraints. The military's problems with ethnic minor-
ities may actually be worse than previously believed.
25X1
25X1
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Nonparticipation in the Olympics
31 25X1
Soviet-Ethiopian Relations Strained) 32
Soviet Visit to Vanua~
Moscow Raises Large Loan in the West
32 25X1
Japanese Aid for Phosphate Project) 33
25X1
25X1
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Soviet
Perspective
elations With Western Europe
Moscow failed in its efforts to make 1983 a Soviet "year of Europe." The
Soviets were unable to prevent US INF deployments and embarrassed by
public disclosure of their involvement in industrial espionage and their
violations of Sweden's territorial waters. Although the Soviets have
responded with counterdeployments and have sharpened their criticism of
Western leaders, their basic policy toward Western Europe has been little
affected by these setbacks. The Soviets are maintaining normal political
and economic relations with the West European states, apparently in an
effort to preserve the direct benefits these contacts bring and to reinforce
their propaganda claim that the United States is responsible for worsening
East-West tensions.
Economic considerations almost certainly have weighed heavily in the
Soviets' decision to maintain positive relations with the West European
states. In addition to providing the USSR with high-quality machinery and
equipment, trade with Western Europe is highly profitable for the Soviets.
Last year, Soviet exports to Western Europe amounted to $25 billion and
imports totaled $18 billion, yielding a $7 billion trade surplus. As in
previous years, Soviet trade with Western Europe was heavily skewed
toward West Germany, France, Italy, and the United Kingdom (see "The
Soviet Economic Stake in Western Europe").
The Soviets also have political equities in Western Europe that they .
apparently are reluctant to sacrifice. In West Germany, for example, they
have grounds for satisfaction with Chancellor Kohl's stance on bilateral
political issues, despite his support for INF deployments. Kohl has carried
on the broad outlines of Ostpolitik and expressly endorsed the Soviet-West
German treaty, an accord his party previously opposed. Moscow's appreci-
ation of this stance and of West Germany's status as its largest Western
trading partner probably goes a long way toward explaining its failure to
follow through on last year's threats to reduce its political and economic
contacts with Bonn (see "Soviet Policy Toward West Germany After INF
Deployments")
Secret
SOV UR 84-006
May 1984
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
The Soviets evidently also perceive political and economic advantages in
pursuing good relations with France and are responding in restrained but
positive fashion to President Mitterrand's recent efforts to repair the East-
West dialogue. Here, however, they probably are motivated as much by a
wish to avoid stiffening France's commitment to defense as by satisfaction
with Mitterrand or the state of Franco-Soviet ties. Presumably, the Soviets
draw comfort from France's continued pursuit of an independent role
within the Atlantic Alliance. On the other hand, Mitterrand's emphasis on
the need for dealing with the USSR from a position of military strength
and his willingness to use force in defense of France's friends in the Third
World clearly disturb the Soviets. Their experience with France must make
them especially mindful that there are risks as well as benefits in
encouraging greater West European independence from the United States
(see "Soviet-French Relations Since INF Deployment").
Moscow is not limiting itself to "getting along" with Mitterrand or with
Kohl. Soviet media have attacked the French Government's moves in Chad
and its economic policies. The Soviets may also have encouraged the
French Communist Party to sharpen its criticism of Mitterrand. The
French Communists, however, clearly are constrained by their status as
Mitterrand's coalition partners. Similarly, in West Germany the Soviets
are encouraging the Social Democrats to continue their criticism of the
government's security policies. In light of the Social Democrats' internal
divisions and the Christian Democrats' seemingly secure political position,
however, Moscow is unlikely to be optimistic about the prospects for a
change in government in the near term.
Although Moscow's political relations with Rome have never been as close
as those it has enjoyed with Bonn or Paris, the Soviets have an economic re-
lationship with Italy that they clearly are reluctant to disturb. Moscow's
trade surplus with Italy last year amounted to $2 billion-its largest with
any West European trading partner. Rome, moreover, is currently reassess-
ing the tentative agreement for the purchase of Soviet natural gas reached
in 1981. Despite their resentment of Italy's support for INF deployments,
the Soviets are unlikely to make any moves that would undercut their
efforts to conclude this long-delayed accord.
Elsewhere in Europe the Soviets do not have the same economic and
political equities at stake that they have in the major continental countries.
Yet, they may have more reason for optimism that developments in the
smaller countries will evolve to their advantage or that the passage of time
will eliminate some recent problems. In Belgium and the Netherlands, for
example, support for INF deployments remains uncertain, and the Soviets
may believe that either country's failure to proceed with deployments
might encourage anti-INF forces in West Germany and Italy. Also, the
Secret 2
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Secret
Soviets' behavior toward Sweden suggests they believe that the Palme
government's commitment to mediating between East and West on arms
control issues will eventually override its concern with Soviet submarine
incursions (see "Soviet-Swedish Relations: Will the Chill Continue?").
Meanwhile, however, Soviet-Swedish relations are at an ebb, and Moscow
must cope with fallout from the submarine issue in its relations with
Norway and Denmark.
Moscow is not merely marking time or allowing the flow of events to
determine when it can regain the initiative. Soviet military activities in
Europe continue apace and, in the case of INF "counterdeployments" and
large-scale naval maneuvers, have taken on an increasingly open character.
The Soviets evidently are hoping that such military pressure will influence
the flow of events and that West European public opinion will focus on
these military activities but view them as countermoves for which the
United States is ultimately at fault. Moscow's maintenance of normal
political and economic ties with the West European states apparently is
designed to foster such a perception-that is, to suggest that the USSR,
not the United States, is committed to preserving stability in Europe
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Secret
Soviet Policy Toward
West Germany After
1[NIF Deployments
Soviet policy toward West Germany has been largely
unaffected by the start of US INF deployments,
despite earlier Soviet warnings of political and eco-
nomic repercussions. Moscow has apparently decided
to mark time with the Kohl government, preserving its
existing equities while hoping to benefit from an
eventual return to power by the Social Democratic
Party (SPD). If the Soviets succeed in fostering the
SPD's radicalization, however, they may hurt the
party's chances of governing in the near future. F
Predeployment Warnings
The Soviets conducted a protracted campaign of
intimidation against West Germany prior to the No-
vember 1983 Bundestag vote approving NATO INF
deployments:
In an interview with Der Spiegel in April 1983,
General Secretary Andropov raised the possibility
of "damage" to.-bilateral relations if deployment
occurred.
In June, West German Economics Minister Lambs-
dorff told an interviewer that Soviet Premier
Tikhonov had warned him that deployment would
affect economic as well as political relations.
o When Chancellor Kohl visited Moscow in July,
Andropov warned that a "palisade of missiles"
would divide East and West Germany if Bonn
allowed INF deployment to proceed.
o In October
CPSU secretary Boris Ponomarev and other Soviet
officials told a visiting Bundestag delegation that
the USSR intended to retaliate against the intro-
duction of new US missiles with cutbacks in trade
that would increase unemployment in the FRG.
o In late October, Soviet Foreign Minister Gromyko
and East German President Honecker issued a joint
communique warning that the appearance of US
missiles on West German soil would "contradict the
spirit and letter" of the treaties that normalized
Bonn's relations with Moscow and East Berlin.F_
Even before the Bundestag vote, however, there were
some indications that the Soviets did not want the
INF issue to destroy their economic and political ties
Recent Mixed Signals
On the political front, Moscow's
25X1
signals to Bonn since deployment began last Novem-25X1
ber have been inconsistent, perhaps reflecting uncer-
tainty or disagreement about what to do next. In a 25X1
January 1984 speech, Gromyko emphasized West
Germany's shared responsibility for the dangers un-
leashed by US deployments but did not accuse Bonn
of violating its treaty obligations. Just days later,
however, CPSU secretary Grigoriy Romanov deliv-
ered a speech to the German Communist Party
Congress in which he specifically accused Bonn of
violating the Soviet-West German treaty.
Subsequent high-level Soviet-West German meetings
have revealed little about Soviet intentions toward
Bonn. Gromyko met West German Foreign Minister
Genscher in Stockholm in late January, and Cher-
nenko met with Kohl in Moscow following Andropov's
funeral in February. Both meetings were by all
accounts businesslike and without acrimony.
The US Embassy in Moscow, however, reported that
in early March Soviet leaders, particularly Pono-
marev, virtually harangued a visiting SPD delegation
led by the party's Bundestag leader, Hans-Jochen
25X1
25X1
Vogel, on INF and US policies. Soviet media reported
that Chernenko told Vogel that, in calculating the
potential for bilateral cooperation, Moscow would
"draw proper conclusions" from INF deployments in 25X1
West Germany.
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Economic Relations
While the Soviets may be trying to convince Bonn
that political relations are strained, they clearly have
backed off from earlier threats of economic retaliation
for the missile deployments in the FRG. After partici-
pating in the November 1983 meeting of the Soviet-
West German Mixed Economic Commission, Lambs-
dorff told reporters that the Soviets did not repeat
their threats of the previous June but rather pledged
that they would make an effort to expand bilateral
economic coo ration despite the difficulties in politi-
cal relations.
Central Committee official and German specialist
Leonid Zamyatin later acknowledged publicly that
Moscow plans to continue trading with INF-basing
countries. In a January appearance on Soviet televi-
sion, Zamyatin virtually reversed Moscow's previous
position on economic repercussions, warning West
European countries to be on guard against alleged US
efforts to use the INF issue to force a reduction in
Soviet-West European trade.
Moscow has much to preserve in its commercial
relations with the FRG, its largest hard currency
trading partner. Two-way trade in 1983 totaled nearly
$10 billion. Not only does Moscow voice a strong
preference for trading with West German suppliers,
but West Germany is the most important Western
market for Soviet exports. The Soviets import steel,
large-diameter pipe, machinery, and transport equip-
ment from West Germany and export raw materials,
especially natural gas and crude oil and oil products.
Moscow has relied heavily on West German partici-
pation in the Siberian natural gas export pipeline
project. German firms provided substantial engineer-
ing services, nearly half of the large-diameter pipe,
and more than one-third of the gas turbines for
compressor stations on the pipeline.
Although trade growth could slow over the next few
years, West Germany will remain the USSR's key
Western trading partner. The level of Soviet exports
will, of course, be set by factors we cannot now
estimate accurately-German demand for Soviet nat-
ural gas, oil production constraints in the USSR, and
decisions on export allocations. It also seems unlikely
Soviet imports from Germany will expand much if at
all from current levels. Completion of the Siberian
pipeline has already led to a slump in new orders, and
the West Germans do not see many large projects on
the horizon in the near term. Nevertheless, the Soviets
continue to show interest in promoting deals across a
range of sectors from energy to electronics to the food
industry.
,Biding Time
The Soviets, while clearly preferring Social Demo-
cratic rule in Bonn, are apparently resigned to their
current cool relationship with the Kohl government.
Although Moscow is dismayed over Kohl's support for
INF deployment, it has reason for some satisfaction
with his performance thus far. In particular, Kohl has
carried on the broad outlines of Ostpolitik and has
expressly endorsed the Soviet-FRG treaty, an accord
his party had formerly opposed
Meanwhile, Moscow has positioned itself to take
advantage of an SPD return to power. Soviet officials
have kept up regular and frequent contact with the
SPD. Vogel has visited Moscow twice since becoming
the party standardbearer in the autumn of 1982.
Although protocol did not require it, he was received
both times by the CPSU General Secretary. In 1983
Egon Bahr traveled to the Soviet Union twice, and
security specialist Karsten Voigt went there once for
The Soviet Embassy in Bonn also maintains regular
contact with several SPD officials, such as foreign.
policy specialists Horst Ehmke and Eugen Selbmann.
Selbmann is a particular Soviet favorite because of his
strong support for detente.
The Soviets are apparently counting on West German
public disenchantment with US policies to pave the
way for a leftwing government. Moscow probably
expects that an SPD-led government at a minimum
would demand withdrawal of US cruise and Pershing
II missiles and most likely hopes that West German
foreign policy would take a more independent turn.
25X1
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Influential Soviet foreign affairs specialists Aleksandr
Bovin and Nikolay Shishlin, however, have publicly
expressed doubt that West European differences with
Washington will lead to any rupture of the NATO
Alliance.
Moscow may have a long wait before the SPD is
strong enough to return to power. The Christian
Democratic government has three years of its elector-
al mandate left and, despite recent scandals, seems
politically secure for the time being. The SPD has
been weakened by internal divisions over INF, and no
new leader has emerged with the political stature and
wide electoral appeal of Helmut Schmidt.
Prospects
One litmus test of the state of post-INF Soviet-West
German relations will be whether Chernenko contin-
ues the 14-year practice of alternating summit meet-
ings and goes to Bonn within the next 12 to 18
months. Kohl extended an invitation to Andropov last
July during the Moscow summit.
According
to press accounts, Kohl extended an invitation to
Chernenko while in Moscow for Andropov's funeral.
A Chernenko visit to Bonn this year would indicate
that Moscow values the maintenance of a state-to-
state dialogue with West Germany over the marginal
benefits of symbolically punishing Bonn for support-
ing INF deployment
closely with Moscow.
Meanwhile, we believe Moscow will continue to nur-
ture its ties to the SPD and try to prod the party
further leftward. This approach is unlikely to change
as long as the 79-year-old Ponomarev, a Comintern
veteran with a reputation for orthodoxy, remains in
charge of relations with the European democratic left.
The payoffs from this policy will be measured by the
extent to which the Social Democrats, together with
the Greens and the West German peace movement,
can frustrate the conservative government's plans to
proceed with further INF deployments, push it into
greater independence vis-a-vis the United States, and
influence the West German security debate in a
direction more amenable to Moscow's interests. But 25X1
the strategy also runs the risk of further weakening
SPD electoral support and helping to relegate the 25X1
party to the role of permanent opposition. The SPD-
realizing this-will be hesitant to associate itself, too
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Soviet-]French Relations
Since INF Deployment
Relations between the USSR and France remain .
fundamentally unchanged by the deployment of the
first US INF missiles in Western Europe. The Soviets
are urging continued French independence from the
United States and are responding positively to Presi-
dent Mitterrand's efforts to repair the East-West
dialogue. They continue, however, to criticize the
Mitterrand government's support for INF and appear
to harbor no illusions that major French concessions
to other Soviet concerns are likely. The Soviets will
give the French President a cordial reception when he
visits Moscow later this year, but they probably will
continue to encourage his East-West diplomacy with
only cost-free political and economic gestures.F-7
Past Relations
The Soviets have been wary of Mitterrand since
before his election as President in May 1981. They
openly supported the reelection of the center-right
candidate Giscard d'Estaing, whom they commended
for the "pragmatic" approach to East-West relations
that he demonstrated by agreeing to meet Soviet
President Brezhnev in Warsaw only five months after
the invasion of Afghanistan. The Socialist Mitter-
rand, in contrast, made clear he had little regard for
the Soviet system and condemned Soviet policies
toward Afghanistan and Poland as outspokenly as he
criticized certain Western policies. His active support
for NATO's December 1979 INF decision-a deci-
sion to which the French were not even a party-was
particularly galling to Moscow.
The Soviets were somewhat heartened, however, by
the controversy that erupted immediately between the
new French President and the United States over his
appointment of four Communists to his cabinet. Addi-
tional friction over US Third World policies and other
issues encouraged the Soviets to believe that Mitter-
rand did not intend to renounce the independent creed
first espoused for France by President de Gaulle. The
"special relationship" with France that the USSR had
enjoyed since de Gaulle's time appeared to be in
suspended animation, but the Soviets openly cher-
ished hopes that it might soon be revived.
Recent Developments
Moscow's public reaction to Mitterrand's current
diplomatic attempts to effect a resumption of the US-
Soviet dialogue and a general reduction in East-West
tension has been restrained but positive. The Soviets,
who announced on 13 April that Mitterrand will visit
the USSR later this year, have welcomed his avowed
intention to seek an improved dialogue with the
USSR and his apparent willingness to urge the Unit-
ed States to do likewise. They have applauded his
calls for an amelioration of the post-INF atmosphere
in Europe but remain publicly skeptical of his motiva-
tions and critical of his support for NATO's stance on
security issues.
The level and frequency of Soviet contacts with the
French-as with other West European governments
including those of the INF-basing countries them- 25X1
selves-have not diminished since NATO deploy-
ments began in December. France's Transportation
-Minister-a Communist Party official-visited the
USSR from 6 to 10 December and later said he was
impressed by Soviet willingness to expand relations
despite continued differences on major issues, espe-
cially INF. In late December, senior officials of the
two foreign ministries held their regular biannual
consultations on the Middle East and met to discuss
the impending Conference on Disarmament in Europe
(CDE).
Soviet media coverage of Foreign Minister Gromyko's , 25X1
meeting in Stockholm with Foreign Minister Cheys-
son at the CDE opening in- mid-January avoided any
direct attack on French policies-in sharp contrast to
the acerbic treatment of Gromyko's talks with the US
Secretary of State. During a colloquium on disarma-
ment sponsored by the USSR-France and France-
USSR societies in late January, Soviet representatives
reiterated their insistence that French and British
nuclear forces be included in any INF agreement.
This demand has repeatedly been rejected by the
Mitterrand government. The Soviets reportedly were
upbeat, however, about the possibility of bilateral
cooperation on some security issues.
25X1
25X1
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
From 29 January to 3 February, First Deputy Pre-
mier Arkhipov visited France to sign a five-year trade
protocol. Under the agreement, the Soviets reportedly
promised to help reduce France's deficit in bilateral
trade, which had reached $938 million in 1983. In
addition to the deficit, about which the French had
been berating the Soviets for years, the contentious
British and French forces issue surfaced again during
Arkhipov's discussions in Paris. French officials and
journalists nonetheless portrayed the visit as highly
successful, and Izvestiya highlighted the special im-
portance of the Soviet-French economic and political
dialogue during periods of "aggravated international
tension."
French officials' initial contacts with General Secre-
tary Chernenko evidently convinced them that the
USSR would remain receptive to French overtures
and might even take a more active role in fostering
better bilateral relations. After meeting with Cher-
nenko at Andropov's funeral in mid-February, Prime
Minister Mauroy told French reporters that he re-
garded his reception by the new General Secretary as
"a slight overture." In the February issue of Novoye
Vremya, the Soviets underlined the potential for
Soviet-French cooperation on such issues as the CDE
and the Middle East (although the Soviets at the end
of the month vetoed France's proposal to replace the
multinational force in Beirut with a UN contingent).
France Between East and West
The Soviets took careful note of Mitterrand's state-
ments both before and during his weeklong visit to the
United States in late March. (The Soviet Embassy in
Paris reportedly was taken by surprise when the
French President told Paris Match on the eve of his
departure that he also intended to visit the USSR
before the end of the year.) Although critical of
Mitterrand's references in Washington to Western
allied solidarity on INF and other matters, Pravda
highlighted US-French disagreement over Central
America, trade sanctions, and particularly Mitter-
rand's plea for an immediate resumption of the US-'
Soviet dialogue. Soviet media also tried to dilute the
impact of Mitterrand's highly successful visit by
contending that the French President needed to claim
a "success" while he was having difficulties at home
and with his Common Market partners and that the
French press organs acclaiming the visit were influ-
enced by the United States.
In its commentary on Mitterrand's trip, Pravda com-
mended the French Government for continuing to
defend its interests and independence against alleged
US pressure and noted that "despite Washington's
opposition" Soviet-French trade and cultural ex-
changes had proliferated over the past year. Trying to
portray Mitterrand's trip as a media event masking
continued serious disagreements, the Soviets probably
perceived a degree of truth in their own rhetoric. They
almost certainly were pleased by reports that Mitter-
rand had stressed to President Reagan the need for a
more positive US-Soviet relationship and by the possi-
bility that a US failure to respond could create strains
among the allies.
The USSR's approach to Western Europe in the
months since NATO deployments began has been
designed to ensure an unbroken Soviet-West Europe-
an dialogue, thereby putting pressure on the United
States to reach accommodation with the USSR or
risk isolation from its own allies. The Soviets may feel
that France-a member of the Western Alliance but
still officially outside the military structure and deci-
sionmaking-is uniquely suited to press the United
States in this way. Moscow almost certainly hopes as
well that Mitterrand's example and interest in a
coordinated Western diplomatic effort .will spur the
West German and other West European governments
to more strenuous efforts of their own to improve
relations with Moscow.
Soviet Reservations
The Soviets, nevertheless, remain uneasy about Mit-
terrand. They,
,have been gratified by his readiness to
criticize US policies on the Third World, East-West
trade, and other issues, but they are aware that
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Secret
neither his socialism nor his nationalistic determina-
tion to maintain an obvious independence from the
United States and NATO translate into support for
Soviet interests. Even while lauding Mitterrand's
efforts in the East-West arena, Soviet media have
assailed the French Government's policies in Chad
and Lebanon, which Moscow probably perceived were
aimed in part at containing Soviet expansionism. The
Soviets almost certainly expect that they will come in
for at least as much and possibly more pressure from
the French leader regarding US-Soviet relations and
that the credibility of the USSR's commitment to'
arms control and detente will be as much at risk as
that of the United States.
Thus, the Soviets appear to be keeping their counsel
with regard to Mitterrand's current diplomatic ef-
forts. They publicly criticized Mitterrand for bolster-
ing his arguments to the US administration by claim-
ing that, now that US INF missiles are deployed in
Europe, the West can deal with the East from a
position of strength. Meanwhile, Soviet media contin-
ue to focus on Mitterrand's domestic problems, as if
both to remind him of his political and ideological
vulnerabilities and to question his motivation for
seeking policy success abroad. In addition, the Soviets
have acquiesced in-and may even have approved-
the French Communist Party's recent unprecedented
attacks on its coalition partner.
The USSR has not provided Mitterrand with concrete
economic inducements of any substance to boost his
domestic standing or to encourage him to assume the
role of East-West mediator. The trade protocol signed
by Arkhipov in early February represents little more
than-a promise to the Soviets to try to redress the
trade imbalance and does not tie either side to specific
projects or financial outlays. French officials nonethe-
less have interpreted what they describe as Soviet
cooperativeness on trade issues as a "political" deci-
sion to seek better relations with France.
Outlook
Moscow has been disappointed by Mitterrand in the
past and probably will maintain its reserve with
regard to his current efforts unless and until it
discerns some significant benefit. As with Canadian
Prime Minister Trudeau's peace initiative, Soviet
officials will be receptive to the French President's
arguments but will remain noncommittal, seeking to
place the onus for the failure of such initiatives on the
West.
The USSR welcomes the planned visit by the French
President-reportedly scheduled to begin on 21
June-in part perhaps because in the exchange of
visits it is the Soviets' turn to send their leader to
Paris, and Mitterrand's willingness to travel to Mos-
cow could appear to put him in the position of 25X1
supplicant. The Soviets probably will try to stage-
manage the visit to dilute the residual effects of
Mitterrand's trip to the United States.
Barring some major political development between
now and then, however, the Soviets almost certainly
expect the visit to yield little of substance. They will
use the event primarily to demonstrate their willing-
ness to meet and negotiate with any Western leader
and to strengthen the USSR's political and economic
ties with France and with the rest of Western Europe.
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Will the Chill Continue?
Although good relations with Stockholm's socialist
leadership are important to the Soviet "peace cam-
paign," Moscow has done little to assuage Sweden's
complaints over Soviet submarine incursions and in-
dustrial espionage. The Soviets probably believe that
Sweden's traditional commitment to neutrality will
prevent the chill in bilateral relations from affecting
its stance on multilateral issues. As long as this belief
persists, they are unlikely to make more than token
concessions to promote closer ties with Stockholm.F_
Soviet Interests
Regional considerations-both Nordic and Europe-
an-have usually predominated over bilateral issues
in Moscow's approach to Stockholm. Moscow has
been interested in Sweden more for the role it plays in
European security and East-West disarmament ques-
tions than for the direct political or economic benefits
that Soviet-Swedish ties bring to the USSR
Political. The Soviets have traditionally tried to es-
tablish common cause with Sweden and other neutral
and nonaligned countries on international issues and
have encouraged their "bridge-building" activities
between East and West. Moscow generally welcomed
the efforts of European neutral countries to find
compromise solutions to disputes at the Helsinki,
Belgrade, and Madrid meetings of the Conference on
Security and Cooperation in Europe (CSCE). Soviet
spokesmen have publicly expressed hope that the
neutrals will continue to play that role at the current
Stockholm Conference on Security and Confidence
Building Measures and Disarmament in Europe
(CDE).
Moscow has taken a particular interest in cultivating
ties with Swedish Social Democratic Prime Minister
Palme. Since 1980, Palme has served as chairman of
the Independent Commission on Disarmament and
Security Issues-generally known as the Palme Com-
mission-which includes Soviet members. While
Moscow has many differences with Palme and other
European socialists, it values their disarmament activ-
ity as a source of pressure on the United States and
Economic. The Soviets have only limited economic
stakes in Sweden. Soviet-Swedish trade in 1982 to-
taled $1.15 billion, placing Sweden 12th among the
OECD countries trading with Moscow. The Soviet
Union habitually runs a trade surplus with Sweden, a
situation the Swedes would like to remedy. In 1981
the two countries signed a 10-year trade agreement
that envisions a substantial increase in bilateral trade.
That increase has yet to be realized, however.
Crude oil and petroleum products constitute the bulk
of Soviet exports to Sweden. Moscow has tried to
attract Swedish interest in Soviet natural gas via a
proposed pipeline across Finland and the Gulf of
Bothnia, but, the
Swedes will probably reject the project because of the
The Soviets import mainly-steel, assorted manufac-
tures, and foodstuffs from Sweden. The Swedes had
hoped to cut their trade deficit with the USSR in half
by landing a contract for the expansion of the port at
Tallinn, but the Swedish bid was rejected last Decem-
ber in favor of one by a Finnish consortium.
Sweden is not a member of COCOM and- therefore
not subject to its controls on technology exports to the
USSR. However, Sweden ranks only ninth among the
industrialized Western countries as a source of high
technology' for the USSR. Thus far, its relative
importance as a source has been limited by the high
cost of Swedish high-technology goods, Sweden's rela-
tively good security procedures for protecting foreign
and' domestic military technologies, its joint efforts
with the United States to limit diversion of dual-use
technologies to the Soviet Bloc, and Soviet success in
obtaining technologies from other Western countries
despite COCOM controls. Over the next decade,
NATO to modify policies toward the East.
25X1
25X1
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
however, Sweden's efforts to improve its export com-
petitiveness through investment in high-technology
industries may make it a more attractive target for
Soviet exploitation.
Security. Swedish neutrality is important to the
USSR's northern defense. Combined with Finland's
neutrality and close ties to the Soviet Union, it helps
deny NATO use of most of the Nordic region adja-
cent to Soviet territory. Moreover, Soviet defense of
the Leningrad region in a conventional war hinges
upon control of the eastern Baltic Sea, a task that is
facilitated by Swedish and Finnish neutrality, Soviet
territorial control of the Baltic states, and Soviet
forces in Poland and East Germany.
Impact of the Submarine Issue
Moscow's relations with Stockholm, which had been
cordial through the 1970s, plummeted in October
1981 when a Soviet W-class submarine ran aground
in Swedish waters near the Karlskrona naval base.
That incident and subsequent reports of additional
submarine sightings produced a bilateral chill that
even the return to power of Palme and the Social
Democrats in 1982 has not reversed. The tension was
aggravated in 1982 and 1983 by Sweden's expulsion
of six Soviets for industrial espionage and by its
seizure of US computer parts being illegally diverted
through Sweden to the USSR
The submarine incidents have sensitized Swedish
public opinion to Moscow's apparent disregard for
Sweden's territorial integrity and helped forge a
political consensus for tough action. In October. 1982,
reports of sightings in the Stockholm archipelago
prompted Palme to authorize the use of force against
the intruders. Military action has been hampered,
however, by Sweden's limited antisubmarine warfare
capability.
Palme also ordered a special bipartisan commission to
investigate and report on the incursion problem. The
commission's report, released in April 1983, found
that submarine incursions were on the increase and
concluded that the Soviet Union was the probable
perpetrator. As a result of the report, Palme recalled
the Swedish Ambassador to Moscow and issued a
strong protest to the Soviet Union.
The Palme government has since shown interest in
improving relations, but its scope of action is limited
by the political fallout from continuing reports of
violations of Swedish territorial waters. Last autumn,
Swedish media reported that Palme had authorized
UN Ambassador Ferm to make a conciliatory over-
ture to the Soviets the previous spring through Palme
Commmission member Georgiy Arbatov. The resul-
tant political furor forced Palme to defend himself
publicly.
Palme continues to look for opportunites to improve
relations, while attempting to project firmness on the
submarine issue. He raised this issue in a January
meeting with Soviet Foreign Minister Gromyko-the
first ministerial-level meeting between the two coun-
tries since the W-class submarine incident. Gromyko
denied that Moscow is responsible for the incursions
and voiced no objection to Sweden's dealing harshly
with future intruders. Afterward, Palme publicly por-
trayed Gromyko's words as a "signal" that Moscow
intends henceforth to respect Sweden's territorial
This momentum toward a thaw was disrupted in
February when the Royal Swedish Navy discovered
evidence of what was believed to be a foreign under-
water vehicle in the Karlskrona archipelago. Once
again, the Soviets were widely assumed to be responsi-
ble.
The Navy's failure to come up with any direct proof
after a two-month search enabled Palme to resist
pressures to cancel a March visit to Moscow by the
political director of the Ministry of Foreign Affairs,
Jan Eliasson. In a newspaper interview in early April,
Foreign Minister Bodstrom refused to comment on
the Karlskrona incident and said that Stockholm
places great stock in Gromyko's assurances on the
Soviet Responses
Moscow has remained intransigent on the submarine
issue and obviously has no intention of admitting to
willful violations of Swedish territorial waters. The
Soviets may hope that the Swedes' inability to capture
25X1
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
or disable a submarine or submersible will erode the
credibility of the accusations and fortify the Soviet
Prospects
We believe that during the next few years any
improvement in Soviet-Swedish relations is likely to
be gradual. Palme apparently feels that the current
chill serves no useful purpose, but the political con-
straints on his government will compel it to proceed
claims of innocence.
To counteract the submarine charges, Moscow has
launched a propaganda attack accusing NATO and
the Swedish military of manufacturing the whole
affair and charging the Swedish media with waging a
campaign of anti-Sovietism. The Soviet press has
suggested that the Swedish military openly cooperates
with NATO by sending its officers to the United
States for training, instructing NATO pilots in Swe-
den, and permitting the transport of NATO military
equipment across Sweden to Norway.
Moscow has exempted Palme from public criticism
and has continued to accord his disarmament activi-
ties favorable press coverage. the
Palme Commission's mid-January meeting in Rome
typically played up his criticism of US arms policies.
Following the meeting, a leading Soviet weekly fea-
tured a front page interview with Palme focusing
exclusively on arms control and European securityF_
The Soviets have tried to burnish their image with the
Palme government by moving closer to Palme's posi-
tion on the proposed Nordic nuclear-weapons-free
zone (NNWFZ). In a June 1983 speech, Soviet leader
Andropov reversed Moscow's longstanding opposition
to discussing nuclear-free status for the Baltic Sea,
where the Soviets station six G-class ballistic missile
submarines and other vessels carrying tactical nuclear
weapons. Andropov's speech came just five days after
Palme had advocated a nuclear-free Baltic in a speech
in Helsinki.
It is not clear whether Moscow has tried to use its
limited economic leverage with Sweden to prod Stock-
holm into political concessions. Swedish officials be-
lieve that Moscow's rejection of Swedish participation
in the lucrative Tallinn port expansion project, which
was announced in the midst of the computer diversion
case, was politically motivated. On the other hand, in
courting the Swedes on issues such as the proposed
natural gas pipeline through Finland, the Soviets
continue to profess their interest in expanding com-
mercial ties.
with caution, especially as the scheduled 1985 Riks-
dag elections approach. Moscow, in turn, has only
limited incentive to make concessions to the Swedes.
The Soviets have not suffered economically because of
strained relations, nor do they stand to gain substan-
tial economic benefits from a thaw. More important, 25X1
they apparently believe that Sweden is unlikely to
abandon its traditional neutrality no matter how
much it protests against territorial violations
The submarine controversy has hurt Moscow's image
in the Nordic region, however. Thus, Soviet conces- 25X1
sions, if they come at all, are likely to pertain to
regional security issues-the Nordic nuclear-weap-
ons-free zone above all-rather than to Sweden's
concerns over its territorial integrity. Andropov's June
1983 offer to discuss nuclear-free status for the Baltic
was an example of this strategy. Last December, a
Soviet general told a Finnish newspaper that Moscow
may also be willing to discuss partial denuclearization
of Soviet territory "which borders on Finland and the
Baltic states" in conjunction with the establishment of
an NNWFZ, a statement Palme called a promising
signal. As further inducement to Palme and other
Scandinavian socialists, Moscow will probably contin-
ue to evince flexibility on the proposed zone.
Under existing conditions, Moscow is most likely to
continue to flail away at the Swedish press and 25X1
military while it simultaneously woos the socialist
government with European disarmament proposals.
Any substantial change in the Soviet modus operandi
would require a perceptible increase in the cost of its
policy or a shift in the political-military consensus in
Moscow. 25X1
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
The Soviet Economic Stake
in Western Europe
Moscow's trade with Western Europe is a highly
profitable operation, in the black by more than $7
billion in 1983.' The region is second only to Eastern
Europe among the USSR's trading partners. Trade
with Western Europe accounts for some 20 percent of
Moscow's overall commerce and 65 percent of its hard
currency exchanges. Nevertheless, we expect the
USSR will continue to avoid becoming too dependent
on trade with the West. Thus, Soviet imports of West
European machinery and equipment-which surged
in 1982-83 with deliveries for the gas pipeline from
Siberia to Western Europe-are likely to stagnate or
even decline.
The General Picture
Moscow is maintaining its cautious approach to East-
West trade and is increasing pressure on its Commu-
nist trading partners to provide more of the goods the
Soviet economy needs. This caution stems from the
Soviets' longstanding conservative approach to bor-
rowing, reluctance to rely too heavily on non-Commu-
nist suppliers, and doubts about the capacity of their
economy to assimilate large amounts of imported
Western technology. The Western trade sanctions
imposed after the Afghanistan invasion and the Polish
crisis almost certainly dampened the enthusiasm of
Soviet planners for depending on imports from the
West.
Even so, the Soviets believe that maintaining trade
ties with Western Europe carries both economic and
political benefits. Economically, the region is a source
of hard currency for their energy exports and a major
supplier of machinery and equipment. Politically, the
Soviets see trade ties as a way of diverting West
European interests away from the United States.
After rising sharply in the first half of the 1970s, this
trade has grown more slowly since 1976.
Soviet trade with Western Europe is largely an ex-
change of fuels for steel and machinery. Energy
products account for roughly 80 percent of Soviet
'Trade values used in this article are from officially reported Soviet
data and, as such, vary somewhat from totals reported by the West
Europeans. Both exports and imports are expressed on an f.o.b.
basis. ~
exports to the area. Within the energy account,
roughly two-thirds consist of sales of crude oil and oil
products (both Soviet-origin oil and OPEC oil that
Moscow lifts for resale in Europe), and natural gas
accounts for most of the rest. Other Soviet exports
include raw materials, chemicals, diamonds, and vari-
ous precious metals such as platinum and gold.
25X1
25X1
Soviet imports from Western Europe are dominated
by machinery (especially heavy industrial machinery)
and steel products (notably large-diameter pipe). Im-
ports of machinery and equipment-which in real
terms had declined in 1977-81-surged in 1982-83 25X1
with deliveries for the Siberia-to-Western Europe gas
pipeline. Moscow also has depended. on Western
Europe for some agricultural products. In addition to
French grain, Moscow purchases sizable quantities of
refined sugar,,meat, and soybean meal from European
suppliers.
As a trading partner, Western Europe is far more
valuable to the USSR than the Soviets are to the
West Europeans. Exchanges with the region account
for 20 percent of the USSR's overall trade. The
export gas pipeline project, for example, required
substantial imports, particularly compressors and tur-
bines, as well as large-diameter pipe from West
Germany, France, and Italy. Imported Western 25X1
equipment has also been critical to Soviet efforts to
expand the chemical and automotive industries. Mos-
cow depends on West European suppliers for certain
specialty imports (most notably plastics, pesticides,
and manmade fibers) that the Communist countries
either do not produce at all or do not produce in the
On the other hand, exports to and imports from the
USSR represent less than 5 percent of Western 25X1
Europe's overall trade. The obvious exception is ener-
gy. In 1983, Soviet oil deliveries accounted for nearly
10 percent of West European oil consumption, and the
share of gas was even higher. By the end of the
decade, when the Siberian gas pipeline system is fully
operational, the USSR could be providing as much as
one-third of the gas requirements of West Germany,
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
France, and Italy. Energy demand in Western Europe
is currently weak, however, suggesting that a Soviet
effort to increase sales there could falter fairly quick-
ly; demand for the USSR's nonenergy products also is
uncertain.' (Moscow's economic relationship with the
major West European countries is detailed in table 1.)
Recent Trade Trends
In 1983 the value of the USSR's trade with Western
Europe topped $40 billion,
Soviet exports to the area amounted to nearly $25
billion, and imports totaled nearly $18 billion (table
2). This trade is heavily skewed toward the major
industrial countries. Trade with West Germany,
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
table 2
USSR: Trade With Western Europe
E
xports
Imports
Balance
Exports
Imports
Balance
Exports
Imports
Balance
Exports
Imports
Balance
Total 2
2,578
16,405
6,173
22,393
16,839
5,554
24,598
16,186
8,412
24,798'
17,616
7,182
Major partners 1
5,894
12,706
3,188
16,098
12,445
3,653
17,145
12,347
4,798
17,755
13,286
4,469
West Germany
4,767
4,603
164
5,053
3,757
1,296
5,610
4,020
1,590
5,490
4,536
954
France
3,453
2,326
1,127
3,509
2,314
1,195
3,162
1,749
1,413
3,270
2,332
938
Italy
3,235
1,438
1,797
3,453
1,393
2,060
3,952
1,687
2,265
4,048
1,939
2,109
United Kingdom
1,323
1,467
-144
897
1,193
-296
1,122
1,038
84
1,600
853
747
Finland a
3,116
2,872
244
3,186
3,788
-602
3,299
3,853
-554
3,347
3,626
-279
Secondary partners
6,684
3,699
2,985
6,295
4,394
1,901
7,453
3,839
3,614
7,043
4,330
2,713
Austria
894
610
284
1,187
705
482
931
739
192
764
1,063
-299
Belgium
1,297
590
707
1,038
625
413
1,423
790
633
1,337 .
825
512
Netherlands
1,582
555
1,027
1,417
637
780
2,163
496
1,667
1,653
661
992
Sweden
547
496
51
405
482
-77
587
476
111
881
344
537
Switzerland
685
620
65
460
691
-231
763
567
196
689
466
223
Other b
1,679
828
851
1,788
1,254
534
1,586
771
815
1,719
971
748
a Finland and the USSR trade on a soft currency basis that carries
a mandate for balanced trade.
b Includes Denmark, Greece, Ireland, Liechtenstein, Luxembourg,
Norway, Portugal, and Spain.
Cl)
A A
f~D A
w
'- A
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
USSR: Balances With Selected West European'Trade Partners
1 I I I 1 I I I I I L-' I I I I I I I I 1 I 1 I I I I I I I I I I I 1 1
-0.5 1973 75 80 83 1973 75 ? 80 83 1973 75 80 83
I I I I I I I I I I I I
1973 75 80 83
-1.5 1973 75 80 83 1973 75 80 83 1973 75 80 83 1973 75 80 83
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
France, Italy, the United Kingdom, and Finland alone
accounted for 20 percent of total Soviet exports and
16 percent of imports last year. With the first four of
these, the USSR ran a trade surplus of $4.7 billion.
With the first two, its economic position is a dramatic
reversal of the position a few .years ago (see graphr-
Maintaining large trade surpluses with Western Eu-
rope allows the USSR to cover the trade imbalances it
runs with hard currency suppliers elsewhere. In 1983,
while the USSR's trade was in surplus with Western
Europe, its trade with Japan, Canada, Argentina, and
the United States was in deficit by $7 billion._-
West Germany. West Germany is the Soviet Union's
largest hard currency trade partner, accounting for
nearly one-fourth of its trade with Western Europe.
Moscow values the quality of industrial technology
provided by the West Germans, who supply equip-
ment and expertise for a number of large-scale devel-
opment projects in the USSR. Their firms have
provided nearly half of the large-diameter pipe, many
of the turbines, and much of the management and
technical expertise for the Siberian gas export pipe-
line. Soviet orders for West German equipment,
however, have fallen more than 50 percent since
pipeline and other contracts were signed in 1981, and
in 1983 they totaled only $800 million (table 3)F--]
Foreign Minister Gromyko, in talks in Vienna with
his West German counterpart, reaffirmed his coun-
try's desire to expand trade. This reflects an effort to
prevent the trade surplus with Bonn from dropping
further (it fell from a record $1.6 billion in 1982 to $1
billion last year). -In addition, Soviet officials partici-
pating in the Soviet-West German Economic Com-
mission meetings in Moscow in November 1983 reas-
sured their counterparts that INF deployment would
not affect bilateral economic ties, despite earlier hints
to the contrary.
France. The Soviets have run trade surpluses with
France ever since the late 1970s. France is a major
buyer of Soviet energy, but French sellers generally
are at a disadvantage when competing against other
Western firms-particularly the West German. In an
effort to redirect some. purchasing toward France, the
USSR reportedly will award the multimillion-dollar
Tenghiz gas-gathering project contract in May to a
Table 3
USSR: Orders Placed for
West European Machinery and Equipment
Total
2,066
5,380
3,184
1,310
Major partners
1,892
5,050
2,411
1,174
West Germany
892
1,797
1,162
808
France
806
1,948
746
123
Italy
55
843
326
140
United Kingdom
139
462
177
103
Secondary partners
174
330
773
136
Austria
121
137
655
19
Belgium
1
0
1
6
Netherlands
1
70
30
10
Sweden
30
93
11
30
Switzerland
0
29
11
41
Other a
21
1
65
30
a Includes Denmark, Norway, and Spain.
consortium that includes French firms. This could be
the first major Soviet contract awarded to France
since 1982 and may improve Moscow's relations with
Paris, which is known to be concerned about the
perennial French trade deficit with the USSR.
United Kingdom. Soviet trade relations with the
United Kingdom have been strained for several years,
with neither side inclined to launch'a drive to expand
ties. Moscow is suspicious of Prime Minister Thatch-
er's government and displeased by her strong support
of Washington's policies. British business and indus-
try representatives maintain contacts with Soviet
counterparts, but their interest currently seems to be
minimal.
Italy. Close economic ties between the Soviet Union
and Italy predate the growth in Soviet-West Europe-
an trade that occurred in the 1970s. Trade relations,
however, have been affected by Italy's frequent gov-
ernment changes, the limited Soviet demand for
25X1
25X1
25X1
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02: CIA-RDP86T00443R000200340005-5
Italian exports, and Rome's reliance on Soviet energy
supplies. The $2 billion trade deficit the Italians ran
with Moscow last year was the largest in Western
Europe. Nevertheless, Italian, firms continue to com-
pete successfully for Soviet business-Montedison
and Fiat maintain long-term economic cooperation
agreements with the Soviets-and Italy remains a
major purchaser of Soviet energy.
Prospects
The large trade surpluses with Western Europe are
likely to continue at least through 1984, even if Soviet
exports stagnate or drop somewhat. Nonetheless,
Moscow's ability to maintain its oil exports to the
region could be constrained by domestic oil produc-
tion difficulties, variations in the weather and energy
demand in Western Europe, and OPEC pricing strat-
egies. Earnings from gas sales-the USSR's second-
largest export to the region-are subject to many of
the same influences. Rome and Moscow have agreed
that Italy will pay a lower price for gas and will buy
less than it had previously contracted for; both Bonn
and Paris have said they will try to duplicate the lower
prices. F__-]
As Soviet domestic difficulties mount and economic
growth slows, it appears that Moscow will try to hold
down Soviet reliance on economic ties with the West.
Soviet planners apparently hope to reduce imports
from the West this year, in order to offset the
expected sluggishness of exports. The plan for 1984
calls for a rise of 10 percent in trade with Communist
countries-implying a decline of roughly 10 percent
in trade with non-Communist countries. Soviet aver-
sion to the rapid growth of hard currency debt in the
mid;1970s led to a sharply slower growth in real
imports-from more than 18 percent a year during
19.71-76 to about 2 percent a year during 1977-83-
and restraints on new borrowing. (The sharp upturn in
imports of Western farm products and pipeline-relat-
ed equipment accounted for much of the trade growth
in 1981-83.)
Although the USSR continues to look to Western
nations for advanced technology to boost its lagging
productivity and growth, the value of Soviet orders for
machinery and equipment declined last year, as
shown in table 3. After peaking in 1981 at more than
$5 billion (mostly for pipeline equipment), orders
amounted to just $1.3 billion in 1983. The value of
Soviet orders placed with West European firms last
year was the lowest annual total since the early 1970s
and 75 percent below that of 1981.
In the longer run, we expect that Moscow will
continue to give import priority to the equipment
necessary for developing energy resources. The Food
Program, which gives top priority to upgrading capital
stock in all phases of.food production, is also likely to
receive special attention over the next few years.
Imports of machinery for other sectors probably will
suffer, though Moscow probably will try to continue
its imports of spare parts and other maintenance
items.
25X1
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Other Topics
Implications of Census and
Birth Undercounts for USSR
Manpower Problems
A recent study I estimates
that Soviet population data "miss" 4 to 6 percent of
annual births and up to 3 to 4 percent of selected age
groups under 25. Although the birth undercount may
be slightly exaggerated, we believe the findings are
~
basically accurate
We have adjusted our manpower estimates to reflect
these findings, but the increase is too small to change
our assessment that the USSR faces serious manpow-
er constraints and regional imbalances in the 1980s.'
The additional young adults are only 0.1 percent of
the working-age population. The impact on our pro-
jections of draft-age youth (18-year-old males) is also
minor, adding 1 to 4 percent. Thus, the military still
faces a significantly reduced manpower supply=
The Undercount Problem
Using complex but widely accepted techniques for
manipulating population data
found that published
Soviet demographic data systematically undercount
children and adolescents.' Comparing data from the
1959 and 1970 censuses with primary school enroll- 25X1
ment data shows that both censuses undercounted
children up to 6 by 3 to 4 percent; the 1970 census
also undercounted those 16 and 17 and 20 to 24 by 3
to 4 percent. (The Soviets have made a complete count
of males 18 and 19 in both censuses because of the 25X1
universal conscri tion of males in this age group.) In
addition, estimated that Soviet 25X1
birth statistics, which give us the annual population
increments, missed 4 to 6 percent of all births in the
1950-70 period.
We believe that primary school enrollment data,
which used, are more complete
than census or birth registration data because of the
virtually universal enrollment in the primary grades,
the uniform age at entry, and the availability of data
since 1950. However, most enrollment data are not
25X1
reported by grade and must be adjusted for repeaters,
dropouts, and enrollments in schools for the handi- 25X1
capped. Also, school and calendar years do not coin- 25X1
cide. On balance, these disadvantages are outweighed
by the fact that enrollment data provide a highly 25X1
complete independent registration system.
Young children, adolescents, and young adults are
likely to be undercounted by censuses generally.
Young.Soviet adults (16 to 24) could be missed
because they may be living illegally in certain cities.
without a required residence permit. They also would
not appear on housing lists, which serve as verification
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
for census takers. Moreover, people in this age group
show the highest rates of migration and, as transients,
are difficult to enumerate. They may be marginal
members of households, such as temporary residents,
or recent migrants supposedly counted elsewhere.
Young adults also have the highest fertility rates, so
any children they may have would be omitted as well.
Preschool children might also be missed in the census,
because resident registration, particularly in rural
areas, is often incomplete. Privately owned houses,
commonly found in rural areas, are not subject to
mandatory household registration, so parents could
neglect to register children with the housing authori-
tiesF--
The principal reason for the birth undercount is that
the Soviet Union relies primarily on parental initiative
in registering births. Estimates of birth registration
are likely to be low by as much as 4 to 6 percent
despite the fact that registration facilitates access to
medical services, housing, and monetary rewards.
Although do not estimate the
regional breakdown of the undercount, most of the
births not counted are almost certainly in Central
Asia. A comparison of reported births with the census
shows that in the late 1960s birth registration in the
European republics was virtually complete, but in the
Central Asian republics from 5 to 10 percent of births
were missed.'
The undercount is not surprising to those familiar
with collecting population data. What is unexpected is
that the Soviets apparently pay no attention to the
problem. To the best of our knowledge, not one Soviet
publication addresses national enumeration issues.F_
Implications for the Labor Force
Historically, rapid growth in the size of the labor
force has been a major contributor to Soviet economic
growth. During the 1980s this will not be possible
because growth of the working-age population (males
16 to 59, females 16 to 54) and of the labor force will
decelerate sharply. The working-age population dur-
ing 1981-90 will increase.only one-quarter as much as
it did during 1971-80. This slower growth rate will be
caused by fewer children reaching working age, re-
flecting the sharp fall in the birth rates in the early
1960s, and more adults reaching retirement age,
reflecting the high birth rates during the 1920s and
1930s.F___1
The tightness in the national labor market will be
exacerbated by differences in regional manpower
availability. Of the roughly 9.5 million workers who
will join the labor, force during this decade, about 90
percent will come from Central Asia and Kazakhstan.
But the greatest demand for workers in the 1980s will
be in the highly industrialized western USSR, where
the native labor force is expected to decline, and in the
resource-rich but climatically severe area of West
Siberia, which has traditionally had to rely on immi-
gration for the bulk of its labor increments.
Our projections of the working-age population to 1990
were adjusted upward to account for the findings of
We increased the number of 16-
year-olds and persons 20 to 24 by up to 3.5 percent
annually.' Figure 1 shows that the adjusted increment
to the working-age population in 1990 will be 150,000
larger than our original projection: This change is
only 0.1 percent of the working-age population, too
small to indicate that the labor shortage will be
significantly less severe than we had thought previous-
ly. Moreover, workers in the southern-tier republics
generally have less education and fewer skills, and the
economy there is more heavily agricultural than in
other parts of the country. Therefore, adjustments to
our projections of economic growth would show an
even smaller impact if we took into consideration
differences in the contribution of labor from these
regions.F__1
Military Manpower Implications
Quantity. Since 1977 we have estimated that the
Soviets will have a serious military manpower short-
age in the 1980s. We are not sure exactly when this
shortage will occur because there is a ? 10 percent
' Age data from the 1979 census have not been released thus far,
but would probably show a similar undercount
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Figure 1
USSR: Increments to Working-Age Population
New estimate a
Previous
estimate
I I I I I I I I I I I I I I I I I I I
0 1970 75 80 85 90
a Adjusted by 3.5 percent in 1970 for the 1970 census undercount of 16-year-olds, by 2.5
percent in 1980-86 for the 1970 census undercount of 0- to 6-year-olds, and by 3.5 percent
in 1987-90 for birth undercount.
Figure 2
USSR: Conscript Demand Versus Supply
III1111111 IIII~I11111111 IIIII
1.8 1970 75 80 85 90 95 2000
Note: Requirements assume constant force levels after 1983 and are 7.5 percent more
than estimated conscript demand to account for health, education, and family hardship
deferments. This assumes that education deferments after 1982 are minimal; if they are
closer to historical levels, manpower requirements would be 10.5 percent more than
estimated demand.
uncertainty in our estimate of military manpower
requirements and we do not know how many uncon-
scripted males under 27 are available to help offset
the decline in the number of 18-year-olds. For exam-
ple, as recently as 1980, there were 200,000 more 18-
year-olds than we estimate the military required.
These youths can be conscripted any time during
1981-88.FI
The addition of 1 to 4 percent more 18-year-olds
obviously improves the Soviet picture, but not dramat-
ically, given our uncertainty range (see figure 2). With
the adjusted estimate, there are just enough 18-year-
olds to meet the estimated minimum annual require-
ments except during 1986-88; the unadjusted estimate
was below the minimum annual requirement for
1984-91. In both cases, there is a marked change from
the situation during the 1970s, when there were
enough 18-year-olds to meet even the maximum
requirement. Regardless of which estimate'of the 18-
year-old population we compare with the midrange
projection, manpower constraints are severe: the num-
ber required exceeds the unadjusted, lower estimate of
18-year-olds from 1982 to 1998 and the revised,
higher estimate from 1983 to 1996.
Overall, we continue to believe that the military faces
an extended period of manpower constraints. The
additional 18-year-olds may make it slightly easier to
cope with this problem without extending the term of
service; but the Soviets almost certainly will not be
able to maintain current force levels without signifi-
cant changes in their personnel practices. Possible
25X1
25X1
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
measures include selective reductions in the rear
services or construction troops; heavier use of reserv-
ists; greater reliance on civilians or women; a covert,
selective extension of the service term for specialists;
and an across-the-board troop reduction.
Ethnic Mix. For most of the USSR's history, the
ethnic mix of the draft-age population has been
relatively stable with slightly more than 20 percent
non-Slavic. In the late 1960s the non-Slavic share
began to grow rapidly-it now stands at 35 percent
and will reach at least 39 percent by the end of this
decade. Since the birth undercount is concentrated in
Central Asian republics, this latter figure may be
higher, perhaps 41 percent. This shift toward non-
Slavic groups has intensified the military leadership's
longstanding concerns about non-Slavic soldiers.
Open-press articles cite three ethnic-related problems:
Russian-language deficiencies, lower educational
achievement, and conflict among nationalities (which
is referred to obliquely).' There may also be lingering
doubts about the loyalty of some non-Slavic groups
because of Soviet experience in World War II.
Although these problems are not new, they are taking
on a new priority. The June 1983 Central Committee
plenum directed that schools, particularly premilitary
programs, intensify Russian-language instruction,
that political indoctrination of conscripts give more
prominence to ethnic issues, and that more non-Slavic
candidates be "nominated" for officer schools. None
of these moves represents a fundamental reform,
however, and none is likely to achieve quick results.
Since upgrading education and language skills among
non-Slavs will be a slow process, the military will have
to rely on its ability to assign conscripts to positions
that match their abilities. We do not know the details
of Soviet assignment practices, but it is clear that
units with minimal security or skill requirements have
highly disproportionate numbers of ethnic minorities.
We estimate that about 65 percent of the Construc-
tion, Railroad, and Internal Security (MVD) con-
scripts are non-Slavs, twice the non-Slavic share of
the draft-age population in 1980. As a result, the
national security force has disproportionately few
'See, for example, Adm. A. I. Sorokin, first deputy chief of the
Main Political Directorate of the Armed Forces, "Developed
Socialism's Armed Forces," Voprosy flosofti, Number 2, February
1983)
non-Slavs.6 We estimate that, because of intensifying
demographic pressure, the share of non-Slavs in the
national security force has risen from 9 percent in
1970 to 22 percent today. Given the Soviet practice of
conscripting nearly all available men and the concen-
tration of the birth undercount in Central Asia, we
project that by 1990 this share could reach 30 per-
cent, rather than 27 percent as previously estimated.
This greater reliance on non-Slavs has probably out-
stripped any improvements in education and language
abilities. Our undercount-adjusted estimates imply
that in the late 1960s the national security force was
relatively selective, taking about 20 percent of non-
Slavic conscripts, presumably the better educated 20
percent, while the rest did construction work or prison
guard duty. By 1980 the national security force had
about 40 percent of the non-Slavic conscripts, and, if
overall manpower levels remain constant, this figure
will reach 50 percent by 1990. Dramatic improve-
ments in overall education and language ability
among non-Slavs would be required for conscript
qualifications to remain the same. Therefore, the
average non-Slavic conscript in the armed services
probably is less educated and less fluent in Russian
than was the case 15 years ago. In the future,
manpower qualifications will probably be an even
bigger problem than at present.F_~
Soviet Perceptions
If Soviet demographers factored in the undercount,
would it change civilian or military planning? The
negligible impact on the labor force suggests that
awareness of the undercount would not chang
nomic planning.
Ithe military collects its demo-
graphic data for males under 16 from local school
enrollments, the very source against which
tested the census and birth data. The
military is therefore already using the USSR's most
reliable data, and its planning is robabl unaffected
by census and birth undercounts
We define the Soviet national security force as those elements
that perform missions of national defense similar to those of the US
military. These are the 4.4 million men in the armed services, the
KGB Border Guards, and national command and support units.
Excluded are the 1.5 million men in the Construction, Railroad,
Internal Security (MVD), and Civil Defense Troops. For details of
25X1
25X1
25X1
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Iq
Next 2 Page(s) In Document Denied
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Secret
riefs
Differences on IN]F The communique issued following the Warsaw Pact Foreign Ministers' meeting on
Within Warsaw Pact 20 April and recent statements by some East European leaders reflect continuing
East European disagreement with Soviet INF policy despite Soviet pressure for
greater Pact unity. The communique softened Soviet INF rhetoric slightly, placed
more emphasis on dialogue to resolve disputes, and was less categorical in
demanding a reversal of NATO's INF decision as a prerequisite for resuming
negotiations.F_~
Despite superficial support for Soviet positions in public statements, most East
European regimes favor a compromise by the superpowers that would allow a
resumption of the Geneva talks.
Nonparticipation Moscow's decision not to participate in the summer Olympics in Los Angeles was
in the Olympics= intended to dramatize its dissatisfaction with the state of US-Soviet relations,
primarily in order to increase domestic and international pressure on the US
Government for more conciliatory policies. The Soviets focused on security issues,
charging "connivance" by US authorities in the activity of extremist groups and
claiming that anti-Soviet "hysteria" was being generated in the United States.
Moscow was almost certainly concerned both about security and about opportuni-
ties for defection among its athletes. The action, however, was taken for maximum
political effect. Along with suspension of.the Geneva talks on limiting nuclear
weapons, the Soviet decision marks a departure from Moscow's approach to
bilateral relations for over a decade, when the USSR was reluctant to disrupt such
highly visible contacts. Following General Secretary Chernenko's statement the
previous week indicating that US efforts to improve the relationship were
inadequate, the action suggested a Politburo consensus that only unprecedented
toughness on Moscow's part would evoke a moderation of US policies.
25X1
25X1
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Results of Soviet A review of the recent Soviet naval exercise-one of the largest ever conducted-
Naval Exercise~ shows that it was a test of the Navy's ability to ouickly mobilize its, forces,
The exercise tested and demonstrated the Navy's concept for protecting its
ballistic missile submarines and defending them and the USSR from attack by
NATO naval forces. It included most of the steps necessary to prepare the Soviet
naval forces for hostilities. The exercise was the first, however, to contain all these
elements on such a large scale and in a short time.
Soviet-Ethiopian
Relations Strained
Moscow appears to be worried that it may lose influence in Addis Ababa despite
its extensive military aid and that arms credits will never be repaid. The Soviets
might consider making new military or economic aid commitments if pro-Soviet
civilians were given important positions in the new Communist party. Mengistu's
nationalistic military clique, however, probably will control the party. Chernenko
is unlikely to attend the party inauguration in September unless he is satisfied that
the party is pro-Soviet. The USSR, however, will continue to provide the minimum
amount of military and economic aid needed to maintain its position in Ethiopia.
25X1
25X1
25X1
25X1
25X1
25X1
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Secret
Moscow Raises Large The Soviet Foreign Trade Bank, Moscow, and Dresdner Bank International (DB),
Loan in the West Luxembourg, have reached final agreement on a $250 million general purpose loan 25X1
syndication, culminating DB's six-month search for participants. Although the
loan had originally received a cool reception in the Euromarket, the final figure re-
flects a subscription of $150 million more than Moscow had requested. Press
sources report that, had Moscow been interested, the value of the syndication
might have climbed still further. No US banks are taking part in this syndication.
Several factors probably contributed to the enthusiasm eventually elicited by the
loan The USSR, with its current high credit
rating, is an attractive borrower at a time when there is a definite shortage of rela-
tively low-risk outlets for Western bank funds. Also, enough Western banks
indicated interest (31 participated) that the share of risk borne by any one bank
was reduced to acceptable levels. Perhaps most important, the Soviets, while
refusing to let Dresdner Bank raise the actual interest rate spread, agreed to pay a
management fee and shorten the term of the loan, thus bringing the effective rate
spread into line with current market rates.
25X1
25X1
Japanese Aid for The USSR plans to develop East Siberian hos hate de osits with Japanese
Phosphate Project assistance on a compensation basis This is the first 25X1
known instance of a Western country's participation in phosphate mining in the
USSR. Moscow plans to invest $190 million over the next 10 years to develop
Seligdar phosphate deposits near Alden in East Siberia. The USSR estimates
Seligdar's phosphate reserves at 3 billion tons. During 1986-90 the Soviets plan to
construct production capacity for an annual output of 1.5 million tons of apatite
concentrate, and they plan to double that amount during 1991-95. 25X1
Development of the deposit will make it possible to increase supplies of badly
needed phosphate fertilizer to Siberia-supplies are currently transported from the
western part of the country. Extension of a spur from the BAM will be needed to
make the deposit accessible.
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
 Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5
Secret
Secret
Sanitized Copy Approved for Release 2011/03/02 : CIA-RDP86T00443R000200340005-5