GORBACHEV'S PLANS: WESTERNERS SEE A LOT OF ZEAL, BUT LITTLE BASIC CHANGE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000706630012-0
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: December 7, 2011
• Sequence Number: 12
• Publication Date: February 23, 1986
• Content Type: OPEN SOURCE

Declassified in Part -Sanitized Copy Approved for Release 2011/12/07 :CIA-RDP90-OI0965R000706630012-0 STAT
ARTICLE PPP~~R~~QQ~
ON PAGEA_.S~.LJL
NEW YORK TIMES
23 Feb?r'uar~y 1986
hev's Plans: Westerners See a Lot
Gorbac
of deal ~ but Little Basic Change .
By PHILIP TAUBMAI~' Thesec:mtd-ranking Soviet party offi- Philip Hanson, a specialist on the
Soviet economy at the University of
Yegor K. Ligachev, left little
cial
,
sv~ ~ rn. ~. von rime,
MOSCOW, Feb. 2Z -Since he took doubt about the limits of change when
be said last year that economic trans-
ppoower 11 months ago, Mikhail S. Gor- formations would take place "within
bacliev has attacked economic prob- ~ framework of scientific socialism,"
lens with a zeal unmatched since without ..any shifts toward a market
Nikita S. Khrushchev disbanded entire economy or private enterprise."
layers of bureaucracy Z5 years age.
But despite all the zeal it has become ~~ officials have mad8 it clear
apparent that he places no fundamental that ~Y consider China's adoption of
changes in the centralized Soviet econ- tree-enterprise practices a dangerous
omy, according to Western economists and unacceptable departure from
and diplomats. And without profound Marxist-Leninist Principles.
change, they said, it is not likely that Instead, Mr. Gorbachev's plan is to
the Soviet economy can achieve the try to make the existing system work
ambitious growth ob jectives set by Mr. better by streamliciing central man-
Gorbachev and become more competi- agement and giving individual enter-
tive with the West. prises greater autonomy.
Sounding at times more like an evan-
gelical preacher than a Communist His strategy to spur growth in the
leader, he has campaigned against cor- short term appears to depend heavily
caption and alcoholism, ezhorted work- on gains in labor productivity produced
ers to double their efforts, abolished ~,yy by the anticorruption and anti-
Government agencies, dismissed alcohol campaigns, plus the icifusion of
scores of senior managers and talked new managers.
bl tl bout economic fallings. That would buy time, in theory, for
a
There has been some talk among
~ 'Soviet economists about the need for
more daring changes, but skepticism
in the Soviet Union about the Gorba-
chev program is muted.
~ One reason is that initial Soviet tig-
~~ aces show that the economy rebounded
in 1985 after a lethargic first quarter,
I ending the year with a burst than
brought the annual growth rate to 3.1
.percent.
un y
When the Communist Party con- the wholesale modernization of the
vanes its 27th congress in Moscow on economy, including the introduction of
Tuesday, it is expected to approve, advanced technologies, that Mr. Gor-
with little revision, a highly ambitious bachev has promised will generate
program for economic development rapid growth in the 1990's and beyond.
through the year 2000. The plan in- The Soviet military budget is classi-
cludes specifics for development over fied, but Western diplomats said it ap-
the next five years, with longer-term geared Mr. Gorbachev would like to
priorities through the end of the can- limit the growth of military spending to
fury. help finance development in the civtl-
The plan, which reportedly went ian sector.
through at least four drafts before it Soviet officials have said, however,
satisfied Mr. Gorbachev's demands for that military matters would remain the
growth, calls in part for doubling na- highest priority. Specifically, they
tional income over the next 15 years, in- have cautioned that Washington would
creasing labor productivity by 150 per- be mistaken if it assumes Moscow can-
cent and ending the Soviet Union's not afford to keep pace with the United
chronic shortage of agricultural and States in the development of space-
consumer goods. based weapons.
Plans Stop Well Short
Of Radical Changes
But to many Western economists and
diplomats Mr. Gorbachev's goals seem
unattainable because his plans for
change stop well short of the structural
transformations they believe are
needed to make , the cumbersome,
state-controlled economy more flexible
and dynamic.
"It is now quite clear that Gorbachev
has no intention whatsoever of intro-
ducing radical reforms in the Soviet
economy, at least in this decade," Ed.
A. Hewett, a specialist on the Soviet
economy at the Brookings Institution,
wrote in an article to be published soon
in the quarterly Soviet Economy..
Birmingham in England, cxtib~ ~~ ~
another article soon to be pu
the Soviet Economy journal that "the
whole economic strategy being P~-
sued by the new leadership probably
appears radical to many Soviet citi-
zens, including many senior officials."
The Soviet economy, after years of
relatively robust growth in ttN 1! ~s
and early 1970's, has struggled
vance in the last 10 years. F
1980 accord' Lo H
e antra
economy grew a an averaite rat~Qi~.
cercen a veer. _
on a different basis, showed growth
running at an average annual rate of
3.2 percent from 1981 through 1985.
The five-year plan for 1988-90 that
Mr. Gorbachev has proposed calls for
an average annual growth rate, as
cording to Soviet calculations, between
3.5 percent and 4.1 percent. In the
19~J0's he projected growth of more than
5 percent a year.
A Call for More Money
For the Soviet Worker
During the next five years. according
to the plan, the target figure for an in-
crease in the average monthly per
capita income will be between 13 per-
cent and 15 percent. The target for the ~
increase in industrial labor produc-
tivity is between 20 percent and 23 per-
cent, and the production of a variety of
household appliances is to increase by
more than 130 Percent.
The five-year plan, incorporating a
special program for the development
of consumer goods aPProv~ by the
Politburo in 198.5+ envisions more than
doubling the production by 1990 of dif-
ferent kinds of goods. including clod i
ing, furniture. televisions and
the delivery of
players, and expanding
t of service in- ',
medical care and a hos
dustries.
The plan puts a premium on improv-
ing 9uality as well as quantity. Mr.
Gorbachev, reflecting a coma-on ~nH'
ment among Russians. has often cocn-
plaiaed about shoddy consumer g~
and indifferent services. Simieaders
forts launched by P~~ ements
produced only marginal mpcw
before couapsing? ian calls for substan- I~
In addition the p
A Better Economy
Brings Higher Hopes
Although Western economists said
the recovery was based on better
weather and tempoYary increases in
labor productivity produced by the
Kremlin's discipline campaign, Mr.
Gorbachev's initiatives have raised ex-
pectations among many Russians.
Mr. Gorbachev's efforts, diplomats
said, have also unsettled large seg-
ments of the bureaucracy threatened
by a loss of power and the privileges
~ that go with it.
Declassified in Part -Sanitized Copy Approved for Release 2011/12/07 :CIA-RDP90-009658000706630012-0
 Declassified in Part -Sanitized Copy Approved for Release 2011/12/07 :CIA-RDP90-009658000706630012-0
tial increases in agrlcultural~P~odttc-
tion, housing cottstructiaa ~
development of energy reaources?
Under the plan, oil productiat. whidt
has deciitted in the last two years,
would increasesI~~t1y,while natural
gas and coal pnx'htCUaa would grow
sharply.
At the same time, energy conserva-
tion would improve and the production
of electric power iro>et futdear rescCars
would rise.
The Nuts and Bolts:
Gorbacheds Ideas
Here are some of the spedfic
changes Mr. Gorbachev has advocated
to achieve these std dolmas of other
goals in the plan:
gp~ng investment capital into
rerwvatian of the aglag indttsa~lal Plant
rather than, into eoosttnccian of flew
factories. Under the iiv-year plan.,
halt of investment would go to retooiittg{
existing factories. compared witlt tM
current level d about 30 percent. A
particular emphasis would be PMc~
on expanding std modernizing mar
chines-building industries.
I 9Developintg ~ 1n~p~
dustry trees teetuwlogiee
ens and robots tD improve productivit9'
A Failure to Address
Fundamental Problems ,
~ycetern economists and diplomats
contend that Mr. Gorbadrev's changes.
while sensible as tar as they go, oNy
tinker with a system that. produced
rapid izdustriallzatiaa under~S WPSt int
is lll-suited to o~P~
~ p~_~dustrlal era.
They said Mr. Gorbadtev has so [ar
tailed to address several structural
problems that cripple the ecotwmy.
The moat basic, they said, is the c~n-
tralized nature of the system. stream- ~
lining the planning bureaucracy and
giving greater autaaomy to plant man- .
ages may reduce some of the in~til-
Western specialists, but will~at red~ue
the system's traditional resistatioe to
inuovatiaa, particularly the develop-
meat and application of new technolo? 1
~"A ~ernrse s tam of inc (gs
romoces e c eat av
ngp to the
tv Director Irate igence at the
~a"~~n TligT DiDlo-
and efficiency. Mr.. Gorbadtev said
last year: "We must harness T~he~rtiens
and technologi ~ Pr ~~ rn~~
simply no other Y?
said the Soviet Union lags 5 to 10 years
behind the West ins s tit othe~ d
electronics, noboti
vanoed technologies.
9 Redirectin8 the central planning
bureaucracy away from active involve
meet in day-today operations o! enter-
prises toward broader policy tormWa-
tion, consolidating minisMes, and
turnin8 over increased authority to
plant managers and workers. Five
ministries and a committee dealing
with agriculture were abolished last
year and their responsibilities com-
bined in a new super agency; Similar
moves are expected this Year involving .
the management of energy and fuels,
minerals and raw materials and coa-
structi~~ um of incentives
~nkit~g wages more directly to the
quality of goods Produced and giving
workers a grceter share of revenues
that exceed Planned targets. Mr. Gor-
e said last ycer, "Our system of
material incentives is extremely con-
tused, cumbersome and inetfident."
9Transterring managers anti manu-
facturing teclutigttes from the military
to the dviliao sector. For years militar
industries. Provided with the best re-
murtxs and people, have produced
higheryualifY Pzod~tcts and operated
with tar greater effidency, according
to diplomats.
g~ produced than the quality ebe-
cause of the heavy emphasis In the sys-
tem oa reaching or exceeding P~~
lion targets set in the annual plan.
The System Thwarts
Attempts to Innovate
One diplomat said, "There's no in-
centive in the system to develop and
use new technologies, roduction and
troduction wUl disrupt p
might cause a failure to met goals set
in the plan."
A related problem is the system of
subsidized prices that costs the Gov-
ernmenf tens of billions of rubles a
year. Western economists said it also
stifles competition and thwarts quality
Writing in a recent issue of EKO, the
journal of the Economics Institute in
Novosibirsk, David M. Kazakevich, an
economist, noted that the price of
bread has not changed for 30 years $nd
the price of dairy Products has xe-
mainted the same for Z3 years.
My motor dec~tralization would
require radical alterations is the prime
ing system, according to economists. to
allow the price of goods to reflect the
cost of their production and to let mar-
ket forces, rather than central plan-
ners, determine production levels.
Mr. Gorbachev talked last yeat< of
the need to change the Pricing system,
but he has not proposed specific
changes. Diplomats a~w~ ~ ~~
it the party congress
on prices. ,
Fewer Workers ,,~
And Fewer Dollars
In addition, there are problems. be-
yond the immediate c;antroi of the G'pv-
ernment. The popWatioa'a rate
is declining, pr'odttdn~g a iu`the
number of people entering the labor
Murray Feshbach. an expert' dh
Soviet demographics at GeorgetoNm
University, has calculated that -the
labor force g~ree~ww at as annual ratl; of
1.6 percent during the 1970's but felt to
an anrntal increase of 0.5 percent ia.the
~Dec~ln~ittgs?ail are also likely to
cut into Mr. G r~biche 's plans nbgys
tba e~ededp~ne*~terh- .
~~ nology tran the West. ,
Oll a>~orts to tits West account to; 60
percent of Maacow's hard cuts+gttcy
reveates, or about tI5 bWion last yar,
acoondiag to Western diplomats. It oil
prices reaaai>s depressed, this income
could drop by 30 percent in 1966.. ,
Ultimately a failure to mast the eco-
nomic goals be has sec may force. Mr.
Gorbachev to oaasider amore rac}ical
traasformatiam, Western ecaamists
said.
Political c~astrainta, bwever, woiild
make the adoption of major structural
changes difficult. they said.
One diplomat said, "It is sate to. ~-
sume that Gorbachev is acutely aware
that he cannot afford to get too tar put
in front of the party and the buteaucra-
~y.
I ~~
Declassified in Part -Sanitized Copy Approved for Release 2011/12/07 :CIA-RDP90-009658000706630012-0