STAFF NOTES: SOVIET UNION EASTERN EUROPE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000400090041-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 9
• Document Creation Date: December 16, 2016
• Document Release Date: July 26, 2004
• Sequence Number: 41
• Publication Date: July 25, 1975
• Content Type: REPORT

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lop Secret
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Soviet Union
Eastern Europe
Top Secret
166
July 25, 1975
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July 25, 1975
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Soviet Drought Could Have Political
Repercussions
SOVIET UNION ? EASTERN EUROPE
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Hungary: Consumer Price Increases. . . . . . . . 5
East German Chemical Industry Off to
Good Start for 1975 6
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Soviet Drought Could Have Political Repercussions
The severe drought in the USSR and the reduced
prospects for this years crop will smudge the lead-
crship's economic record and could eventually--
though probably not immediately- -end in a search for
a scapegoat. Dmitry Polyansky seems made to order
for that role. He has c..lready suffered one serious
demotion from first deputy premier to minister of
agriculture in the aftermath of the disappointing
1972 harvest; but, I' cause of his Politburo member-
ship, he is still the senior government official in
the field. His functional rival, Party Secretary
for Agriculture Kulakov, works well with 'General Sec-
r Lary Brezhnev and, all other things being equal,
Soviet scapegoats are usually found in the government
rather than in the party.
July 25, 1975
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The timing of a move against Polyansky--assum-
ing one is made--is unclear, but foreign and domestic
considerations would seem to argue against any imme-
diate action. The Soviet Union would presumably pre-
fer to re-enter Western grain markets later this year
before revealing that its harvest problems were seri-
ous enough to cause the ouster of a Politburo member.
Moreover, the need for a scapegoat lies in the
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July 25, 1975
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Hungary: Consumer Price Increases
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The Hungarian leadership has been avoiding sub-
stantial consumer price increases for political rea-
sons, but now appearL, ready to move forward in this
sensitive area.
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I KadarIs
refusal to raise prices this spring has been crit-
icized by some Hungarian economists. They claim
that Kadar was presented with solid statistical
evidence of the need for increases, but refused to
act for fear of removing the gloss from the party
Congress in March and the parliamentary elections
in June. Now the regime has apparently decided to
increase some prices in August and perhaps again in
January. The finance minister said the August price
hikes will include a 25-percent boost in energy costs
and a 10-15 percent rise in certain basic consumer
items.
Economic conditions i_n the West may well affect
the timing of the announcement of price increases.
Pricing boss Csikos-Nagy said the regime prefers to
make the announcement while inflation rates in the
West are high, thereby implicitly shifting responsi-
bility to the West. The regime obviously hopes that
such a tactic would help to keep it and the Soviets
from being faulted. The Soviet insistence on higher
prices for oil and other products imported by Hungary
have in fact hit the country hard.
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East German Chemical Industry
Off to Good Start for. 1975
The Fast. German chemical industry performed well
in the first half of 1975, overfulfilling its six-
month plan by 1.3 percent. Plans for the year call
for an increase of 8.9 percent over 1974. Impressive
production increases over the first half of 1974 are
reported for nitrogen fertilizer (16.8 percent),
potassium fertilizer (10.3 percent), polyvinyl chloride
(3.7 percent), synthetic fibers (8.4 percent), and syn-
thetic silk (8.9 percent).
Major additions to capacity during the first half
year included two Western-supplied plants. A second
ammonia plant went into operation at the Piesteritz
Nitrogen Works. The 1,360-ton-per-day plant was built
by Japan using US technology and is supplied by Soviet
natural gas. A 300,000-ton-per-year ethylene plant at
Boehlen, built by Austria and Belgium, began operation
in February and has been supplying ethylene to Czecho-
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July 25, 1975
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