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

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CIA-RDP90-00965R000706630012-0
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K
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2
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December 22, 2016
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December 7, 2011
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12
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February 23, 1986
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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