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January 11, 2017
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April 7, 2010
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April 1, 1973
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No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 . MEMORANDUM NATIONAL SECURITY COUNCIL SECRET MEMORANDUM FOR MR. KISSINGER i FROM: William Hyland SUBJECT: Will Brezhnev Survive? Three independent assessments from CIA, State/INR and the American Embassy in MoscoWall agree that Brezhnev seems to be in no political dan er (Tabs A, B, C). Each assessment is couched guarded language as usual, but the consensus seems to be: --Brezhnev has far greater resources at his command than his critics and has shored up his position in recent months. --He has been unusually active in preempting more and more of Kosygin's governmental functions. --The public deference to his leadership is growing. He was awarded Party Card No. 2 during the current exchange of party cards. He receives more and more personal credit (this can be double-edged of course). --He seems to be careful to check with his colleagues, and not challenge the principal of collective leadership. Now for some of the reservations: --All' seem to agree that the Soviet economy, and particularly the next harvest will "complete-I! Brezhnev's position if he does not show an "average" year. --He will definitely have to buy grain from the US, even if there is a good spring sowing. --This will increase his dependence on the capitalists and may strengthen some of his critics. --In any case, the poor state of the economy has precipitated a debate about future policy; Brezhnev will be in a position of defending a program that is falling apart. V ~. SE No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 ... No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 SECRET Nevertheless the Embassy concludes: "There is no serious danger that his power base will be eroded in the coming months unless he is struck by an unlikely constellation of foreign and domestic cases." (They do not speculate on what such a constellation. might be.) We have noted only one non-governmental source that disagrees with this estimate, Robert Conqeust interprets events as a leadership crisis. "The appointment of Dimitry Polyansky as Minister of Agriculture comes at a time when the political struggle has reached an intensity not seen since the defeat of the Shelepin faction in the wake of the Six Day War in 1967. " (Tab C) This judgment reflects Conge'u,st's feeling that the leadership is aging, that they pursue too many compromise policies, that personnel changes reflect increasing fact` -lism -- all aggravated by an economic crisis. He has a low opinion of all the Soviet leaders, which biases his judgment, but he is, an extremely shrewd student of Soviet politics.. Now for some speculation. 1. One could interpret Soviet politics as the very early stages of a succession crisis. --This is a leadership that is approaching the end of its political life. Clearly, the five most powerful and influential are Brezhnev, Kosygin, Podgorny, Suslov and Kirilenko. Podgorny and Suslov are over 70; Kosygin is 69, Brezhnev and Kirilenko are 67. None are,likely successors to Brezhnev. If we arbitrarily limit Brezhnev to age 70 he will be gone before- the. next Party Congress in 1976. --In the present politiburo of 15 members (with 12 based in Moscow) there are four who have been downgraded under Brezhnev (Shelepin, Shelest, Voronov, and now Polyansky). They are a disparate group, and probably have little in common. But they could be the nucleus of an anti-Brezhnev coalition. SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 SECRET --Brezhnev has in effect jumped a generation, promoting several men in their forties to key positions: Katushev, the secretary with some foreign affairs responsibilities, and Dolgikh, the secretary. in charge of industrial affairs rose rapidly. Kulakov, who is in his fifties was elevated to full politburo membership without even serving an apprenticeship as a candidate member. --This rend is more evident in the second echelon of party secretaries in the republics. It puts enormous pressure on the politburo members to secure their own position a gainst the new generation. But the age of the top command means that some key replacements have to be made in the next year or two. 2. Brezhnev's economic program is a shambles. --Since 1965 he has had a personal responsibility and stake in agriculture. His main policy has been to pour in money for mechanization, fertilizers, etc. But one bad harvest has had enormous repercussions. --The Soviets may have to buy 40 million tons of grain in the next three years. They will use hard currencies or credits, the overall hard currency deficit is forcing them to sell gold -- a policy for which Khrushchev was attacked. And the Soviets have borrowed so much that a high percentage of their exports are mortgaged for years to come. --Wages are virtually frozen despite promises of steady increases of 4-5 percent. --Potatoes and butter are being rationed. Meat is abundant because the farmers are slaughtering cattle'for lack of fodder which means a meat shortage next year. Economic growth has slowed to about 1. 5 percent. --Key goals of the five year plan will not be met: chemicals, oil, gas and light industries. --Brezhnev's promise that consumer goods would grow more rapidly than heavey industry, the traditional favorite, has been repudiated in this year's plan. (This is a key political decision given the long history of struggle over the. priarnacy of heavy industry. ) In sum, Brezhnev has consolidated his power on a program of prosperity at home and peace abroad announced in March 1971. On the first count he is very vulnerable. SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 s w No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 SECRET It is more difficult to know what the effect of foreign policy is on the leadership. Many top leaders do not have any responsibilities for foreign affairs, and probably simply support Brezhnev. Others, particularly Kosygin, Podgorny and Suslov, share with Brezhnev the power and therefore the responsibility for past policies. Thus they may not be eager at their age to start a foreign policy struggle. Brezhnev is in a position to claim that his peace program has been successful, but it rests on the German treaty and the May summit. On both counts he was opposed in some degree by Sehelest, who was decisively defeated, at a time (the Vietnam blockade) when he could have made a strong case. It may follow that no coalition is likely to find as favorable circumstances in which to attack Brezhnev. On the other hand, the imminence of the summit may have helped Brezhnev to isolate his opponents. The major unknown is China. One has the impression that Brezhnev is taking a tougher line in public. This has not been his record and perhaps he is being pressed within the leadership. In any case, he is vulnerable because he cannot demonstrate how his peace program has strengthened Moscow's hand against Peking. Indeed, one could claim that Soviet prospects in a five power balance are poor: -- their relations with Japan are complicated by the territorial question, which cannot be conceded without undermining their position on the Sino-Soviet border controversy. Yet, they need Japanese investment and technology. -- Consolidating their gains in Europe looks better, but there is not going to be any spectacular advance unless Bonn can be split from the EC- or US. - - Brezhnev is guilty of mortgaging too much of his freedom of action to the US. Not only does he need US grain and technology, but he cannot move in Europe without the US, and the US is scoring heavily in China. The impression is growing that if the USSR does not attack China, it.will be because of fear of the consequences with the US -- a very weak image for a Soviet leader that governs a population of 50 percent non-Russians and is trying to discipline an increasingly diverse set of Allies in Eastern Europe. SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 SECRET one suspects, therefore, that the Soviet leadership situation is more fluid than, say, at the Party Congress in 1971. Brezhnev has probably passed the zenith of his personal power, if only because he is. near the end of his career. Maneuvering for the succession will intensify, which means factionalism. Inevitabl this or that foreign policy will become a debating point in factionalA rezhnev probably has no way to turn but. to reinforce his domestic policies and his foreign policies. He becomes more dependent on us, but at the same time more vulnerable because of it. Questions such as MFN therefore will take on an importance all out of proportion to their value. So will projects such as natural gas. The summit whenever it occurs, will be pivotal for Brezhnev prospects. And perhaps more important, to the degree that Brezhnev tilts toward the US and defers dealing with China, in that degree his opposition must adopt a conservative platform -- which could mean that the successors will be obliged to repudiate Brezhnevism, much as he repudiated Khruschevisrn after serving him loyally for 15 years. This does not mean that we should "save" Brezhnev, but it does mean that we are in a more complicated period than we may realize. We have far greater leverage than he does, assuming the Vietnam ceasefire holds up. The real question is how to use.that leverage to ensure that Brezhnev and his successors have no real options but to "coexist" with us and with China e SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 V CENTRAL INTELLIGENCE AGENCY Directorate of Intelligence 27 February 1973 INTELLIGENCE MEMORANDUM Implications of the Present Soviet Economic Problems Summary Faced with slower economic growth and a com- mitment to meet rising consumer expectations and having experimented unsuccessfully with economic reform, Moscow has turned to the West to help re- lieve its economic problems. Soviet dependence on Western food and technology has grown substan- tially. The bad Soviet harvest of 1972 brought to a head a growing dependence on the West that the above-average harvests of 1970 and 1971 had dis- guised. Srezhnev's program for increasing meat production and bettering the national diet has created a demand for grains that cannot be met from domestic production even in a year of good weather. In order to fulfill their long-run goals for meat, the Soviets will have-to import a min- imum of 40 million tons of grains over the next three fiscal years in addition to the 29 million tons already contracted for in 1972. At the same time, the USSR is embarked on a program of importing large quantities of advanced equipment and technology from the West. The So- . yiets badly need the boost such imports can-give to their productivity, which has been holding down their economic growth to a disappointing rate. .They particularly need Western technology to help .develop Siberia's oil and gas resources, now that Note; This memorandum was produced jointly by the Office. of Economic Research and the Office of Current Intelligence. 4 j1 .Jt SECRET OD~B'2'fl . ? ". ... _ _; 1 a..-- - No No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 older fields are rapidly becoming exhausted, and to increase and improve production in consumer industries, which are generally in bad shape. They will probably need considerable help making the new facilities work. To pay for these imports the USSR is looking for credits and joint ventures which will produce exportable goods such as oil, gas, and timber. There is no evidence that defense plans were affected by 1972's dislocations in the civilian sector or that they will be affected by.similar dislocations in the future. The production capacity of the USSR is now so large that even a moderate growth of GNP can support reasonable increases in military spending without undue strain. The USSR can manage its probable trade deficit of $1.8 billion for 1973 with a combination of credit and gold sales. Any additional purchases of grain in 1973, which will be necessary if the harvest is poor, will create pressures to cut other imports, particularly consumer goods and perhaps Western equipment. Growing economic dependence is uncongenial to traditional Soviet doctrine. The whole detente policy has been a controversial one, and there are some people, like Shelest, who have opposed it and suffered politically. Other options, however, are also uncongenial: (1) The Soviets could try to achieve greater efficiency and growth through reforms, especially in agriculture-- but piecemeal reforms undertaken after 1963 did not work and drastic reforms-have been politically unac- ceptable. (2) They could accept a lower growth rate for GNP and consumption--but this would mean slower growth than in most industrial countries, which would lead to a disgruntled populace at home and a damaged image abroad. No Objection to Declassification in Full 2010/04/07: LOC-,HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 In thee circumstances, the shot un course the present leaders probably will take is to make adjustments where pressed---perhaps. some cuts in consumer programs or some agricultural reforms- but to try to maintain the broad outlines of cur- rent policies. Soviet dependence on the West does not equate with Soviet dependence on the US. The most critical need from the US over the next year is likely to be grain. if the Soviets were willing to pay higher prices and tap the markets of smaller exporting countries, the US share of grain purchases could be considerably reduced. If pressed for-conces- sions in other areas in return for US grain, they would be more likely to cultivate other suppliers especially over the long run. In the field of technology the reliance on the West is important and growing, but the dependence on US equipment is relatively small as the USSR's requirements can be met for the most part by Western Europe and Japan. The USSR does need to expand its hard currency exports to pay for grain and equipment imports, and the US is a promising large new market for Soviet products. If certain large joint US-Soviet projects are not undertaken, this would mean slower growth of export earnings and hence the capacity to import Western technology. The Soviet leadership has already shown itself ready to increase its economic relations with, and to some extent its dependence on, the US in all these areas. This policy is not without its critics. There is a fear in Moscow that the US, more than other Western trading partners, is prone to link economic dealings with political questions. The Jackson amendment directed at the USSR's Jewish emigration policy is a current case in point. Those still wary of US intentions can argue that it is only good business to develop multiple suppliers, and that the USSR can get most of what it wants elsewhere in the world without the political risks. of concentrating upon the US. Supporters of the present policy can also em- ploy extra-economic arguments. They can maintain that growing economic relations with the US are part No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 ? - No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 and parcel of a detente approach which has already brought the USSR substantial benefits in such areas as Europe and arms control. They can argue that any resulting dependence will be mutual, with US industrialists and farmers coming to rely on the Soviet market and to lobby on its behalf. They can also point out that it is useful and important to develop these relations as a counter to growing ties between the US and China. The present leaders will probably consider that the present pace of developing relations does not expose the USSR to undue political risks. A different situation would arise, however, if this year's harvest were another disaster.. Should a 20-million ton requirement for grain imports arise, perhaps two thirds of this would have to come from the US. In an emergency of this sort (which the Soviets would try to minimize for tactical reasons), Brezhnev would realize that he was the.supplicant and that the US might be looking for something in return. At various points across the range of bi- lateral relations, he might be willing to meet the US a little more than halfway if Washington in its turn made concessions which would save his face. At the same time, the USSR would move to avoid future vulnerabilities of this sort by arranging larger future imports from such other,suppliers as Canada, Australia, and Argentina. Thus the US ad- vantage would be short run in, nature. As a worst case, a disastrous harvest could put Brezhnev in deep political trouble. Much,would depend, of course, on how his other policies were faring. One cannot predict how such a harvest would affect Soviet policy toward the US; it might push it forward or lead to a retreat, according to the exigencies of Kremlin politics. If Brezhnev were to fall, we are inclined to think that, after a temporary retreat, his policies would largely survive him. A total withdrawal into a fortress Russia does not seem to be a viable alternative for the Soviets.. But if the US had sought to press its advantage in the grain trade, the search for other Western alternatives to US supplies would become even more intense. 10 SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 "Introduction in 1972 Soviet leaders were increasingly pre- occupied with economic matters. By the end of the year, the goals of the Ninth Five-Year Plan were in jeopardy as problems in industry and agriculture forced a number of adjustments in economic policy. From mid-1972 on, the news of a failing harvest was the major concern, and the impending downturn in grain production was responsible for the. decision to import unprecedented quantities of Western grain. The drought and its aftermath, however, obscured some of the chronic economic difficulties which have curbed Soviet economic growth since the 1950s. The Soviet Union's central economic problem is that it has passed out of the phase of its history in which it can rely on "extensive" growth--growth based upon larger and larger increments of labor and fixed capital. Since the 1950s the.returns to new investment have been declining steadily. Other countries have grown at high rates without increasing capital stock very rapidly; their growth has been supported by substantial productivity gains. These productivity gains--based mainly on technological progress but also on innovations in organization-- have been much less influential in Soviet growth during the past 15 years or so. Since the present Soviet leaders assumed power, they have been trying, but with indifferent success, to spur the growth in productivity by internal reforms and foreign contacts. A second, continuing economic problem for the Soviet leaders is the need to improve the lot of the Soviet population. In so doing, they have had to alter the traditional pattern of Soviet economic growth in favor of sectors which are less efficient and more costly to develop. Brezhnev's commitment to expand meat production is the most striking ex- ample of the effect of some consumer-oriented pro- grams on economic growth. The demand for meat (and other high quality foods) has been rising at a very high rate as the incomes of the Soviet pop- ulation have grown. While the growing demand for meat is a world-wide phenomenon, the cost of pro- ducing meat is far greater in the USSR than almost No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 .0 anywhere. else. For example, the USSR needs about twice as much grain as the US to produce a given amount of meat, and, at existing retail prices, meat production is heavily subsidized. moreover, it takes far more grain to feed a population with ,meat instead of bread, and the USSR has always had difficulty in growing enough grain even for a bread-based diet. Thus, the USSR must deal with two separate economic problems in the coming year. First, it must overcome the shortages resulting from the bad harvest of 1972--this is the problem which has absorbed much of the leadership's attention since last summer. Second, in the longer term it must make capital and labor more productive in both in- dustry and agriculture. If the USSR cannot ac- celerate the pace of productivity growth, it will be unable to prevent a continuing slowdown in eco- nomic growth. -6- SECRET ,.., .._. rte., No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 Selected Indicators of Soviet.l"conomic Performance Actual average annual increase 1966-1970 Actual average annual increase Planned average annual increase Percent -2 -1 0 1 2 3 4 5 6 7 a 9 .Gross National Product 1971-75 Plan ? 3 Agricultural Production 1971-75 Plan Industrial Production 1971-75 Plan Total Investment 1971-75 Plan CONFIDENTIAL 554163 2-13 CIA No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 1972--A Disappointing Year In 1972, a poor harvest and an accumulation of chronic economic problems reduced the rate of growth of Soviet GNP to 1.5 percent--the lowest rate of in- crease since 1963.. This compares with an average annual increase of about 5.5% in 1966-70 and 3.5% in 1971 and must be particularly galling to a leadership whose main shibboleth is economic growth. Almost all sectors shared in the decline, but the drop in farm production and a slower growth in industrial production were most at fault (Figure 1). The slow- down leaves attainment of the goal of overtaking the United States as distant as it was a decade ago when Khrushchev announced it as imminent. Agriculture--The Leadirig'Trouble Spot An abrupt decline in farm output was largely responsible for the slump in over-all economic growth in 1972. Net agricultural production dropped almost 7% below the 1971 level, and grain output fell by about 10%. Although Soviet leaders have blamed most of their problems on the weather, it should be noted that 1972 was a poor agricultural year chiefly in comparison with the peak year 1970, a year well-favored by climatic conditions. Even though the percentage decline in crop production was one of the largest in 20 years, the total value of farm output and even grain production were still greater than in all but one of the years of the 1960s. Grain production was only 10 million tons or 7% below the level that would have been predicted on the basis of long-term trends and normal weather. The drop in agricultural production in 1972 resulted from an unusual streak of poor weather throughout the growing and harvesting season. First, a lack of snow cover combined with. extreme cold in _ late January and February killed almost one third of the area sown to winter grains. These grains usually provide almost one third of total Soviet grain output. The USSR planted a larger :than nor- mal area to spring grains to make up for the winter- kill, but the "worst drought in 100 years" curbed their germination and growth in European Russia. Record crops in the "Virgin Lands" of Kazakhstan No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 ,. No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 and Siberia prevented a complete disaster, but the harvest was late. As a consequence, a good deal of the grain was gathered in rain and snow, reducing its quality. The grain and potato crops, both of which were down, are the core of the Soviet diet and are also essential to the production of meat, milk, and eggs. But the drought also damaged sugar beets and sun- flower seeds, the country's primary source of vege- table oil. In fact, the output of all important crops except cotton fell below the levels achieved in 1966-70. The output of livestock products failed to match the vigorous growth achieved in 1971, largely because of tight feed supplies. There was little slaughtering of livestock, however, such as occurred on a massive scale of ter:the poor harvest of 1963 because of feed shortages. By the end of 1972 the number of cattle exceeded the previous year's level, while the decline in hogs, sheep., and goats was held to reasonable proportions. What made the drop in grain production so criti- cal was that it came at the same time that the demand for grain as livestock feed was increasing rapidly. Use of grain for food has hardly changed for over a decade, but the use of grain as livestock feed in- creased by roughly 40% between 1968 and 1971 as a result of Brezhnev's 1965 program to provide more meat and other quality foods. By 1969-70, produc- tion of grain was not keeping up with demand because of the requirements of the Brezhnev program. Since imports were low in these years, there were deep inroads into the government's reserve grain stocks. In 1969-70, about nine million tons of wheat were released from these stocks for livestock feed, prob- ably reducing them to a dangerously low level. Thus, the fall ingrain output in 1972 left. the regime only two choices--to cut deeply into Brezhnev's meat program or to import large amounts of grain from the West. The decision to do the latter clearly shows the high priority the present Soviet leadership gives to improving consumer wel- fare. The USSR spent roughly $700 million in hard currency to purchase large quantities of grain, sugar, and meat in 1971 and early 1972. Even before the full extent of the damage: to last year's grain 8_ SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 crop became apparent, the USSR bought $250 million worth of wheat from Canada and promised to buy at least $750 million of US grain over a three-year period (and at least $200 million in the first year). All told, their purchases. of grain for delivery by mid-1973 reached about 29 million tons, worth about $2 billion in hard currency. This amount is equivalent to roughly two thirds of total Soviet imports from the Developed West in 1971.. 'Industry and Construction Lag Too While feeling the repercussions of the harvest, the industrial sector was having problems of its own last year. Continuing a slump begun in 1971, in- dustrial output grew by no more than 4.5% in 1972-- the smallest annual increase since World War II. Although a number of industries slowed, the largest slowdown. was in the production of machinery and, consumer goods. The oil industry. did not meet its production goal for the first time since the early 1950s, largely because of an unexpectedly rapid depletion of older fields. The gas industry's production increase last year was the smallest since 1959, and some pipeline construction tasks were not completed on schedule. The USSR's agricultural situation hurt industry by reducing the flow of some raw materials and by diverting resources away from industry. Industry in 1972 was already on short rations with respect to sugar beets, sunflower seeds, milk, and wool as a consequence of the stagnation or decline of 1971 production. In addition, the above-normal manpower and transportation requirements of the 1972 planting and harvest periods probably held down industrial activity. More industrial workers than usual were detailed to support the farm work, and industrial supply must have been interrupted by the roundup of trucks for agricultural work and especially by the heavy load that the grain harvest in the east and the grain imports put on port facilities and the rail system. Industrial growth was also held back by the failure to increase productivity and to introduce new plant and equipment on schedule in key sectors. -9- SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 ? W The plans for 1971-72 explicitly called for an ac- celeration in productivity growth through the in- troduction of new technology rather than by raising the rate of investment. These plans were not real- ized; gains in the productivity of labor and capital in both 1971 and 1972 amounted to about 0.5% per year, considerably less than those required to keep industrial production in line with the five-year plan goals. The productivity plans were frustrated for the usual organizational and political reasons: inefficient management practices, a. cumbersome planning system, and the overriding priority given to increasing the quantity of production as quickly as possible to the detriment of efficiency and quality. Introduction of new technology---the key to increased productivity-has been slow. The construction lag in 1971-72 was not the result of a failure to provide enough investment; almost one third of the nation's gross national product goes,toward tfiis end. The problem lies rather in a failure to complete investment projects on time. New projects readied for use in 1972 fell 5.7 billion rubles short of the planned 93.1 billion rubles, adding another 6% to the backlog of unfinished construction (10.3% had been added the previous year). As a result, the growth in new plant and equipment dropped to about 6% in 1972 compared with an annual average increase of 8% in 1966-71. In recent months both Premier Kosygin and. State Planning Chief Baybakov have publicly de- nounced this investment logjam. In his annual speech to the Supreme Soviet last December, Bay- bakov complained of the "lag in the commissioning of production capacities, especially in ferrous metallurgy, chemicals, oil, gas, and light in- dustries..." Earlier, in a speech to-the State Planning apparatus, Kosygin called for ahalt to "unwarranted capital investment" and charged that- too many new projects were begun without fully using existing facilities. Although construction lags seem endemic in a "planned" economy, the tend- ency to start too many projects may have been worsened by the economic reform of 1965 which allowed more investment decisions at the local level at the ex- pense of central control. Decentralized investment -10- SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 grew at an average annual rate of almost 13% in 1966-70, diverting resources away from centrally planned projects and causing "unbalanced capital development." In an effort-to regain greater cen- tral control, the growth in decentralized invest- ment was cut to 8.2 n in 1971 and 2.2% in 19 7 2 . Nevertheless, the response in terms of project com- pletions has been unsatisfactory. The construction sector was not entirely to blame, however. Project completions in some industries---especially in the light, food, and ferrous metals industries--were- delayed by the failure of industry to provide the necessary equipment on time. The?Consumer Suffers Last year must have been disappointing to the Soviet consumer who has been consistently told since 1971 that his welfare is now the prime concern of the state. It was small comfort that the leadership took unusual measures to insulate him from the poor harvest or that the traditionally favored growth- oriented sectors also suffered. He was only aware that his rising expectations had not been met. In 1972 per capita consumption rose by 3% com- pared with about 5% per year in the preceding six years. The poor harvest held back food consumption, but no one went hungry. There were sporadicrfm d shortages, but the massive grain per the West and imports of potatoes and some vege- tables from Poland and East Germany eased the situa- tion. The government also maneuvered to extract as much farm produce as possible from the private sec- tor. At the same time, the Soviet press launched a nationwide campaign to save bread, and food sales were rationed selectively. It also became apparent that the welfare package introduced at the 24th Party Congress in 1971 was not being implemented. on schedule. Plans to raise minimum wages and to cut income taxes have been delayed, and some of the more "expensive" features of the package may have even been shelved. -11- SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 ECONOMIC IMPACT Internal Economic Policy in 1973 As the Soviet planners watched the. discouraging events of 1972 unfold, they had to decide on the ad- justments to make in 1973. The Ninth Five Year Plan had placed unusual emphasis on bettering the lot of the consumer--that is, consumption and con- sumer-related sectors such as agriculture seemed to be on a more equal footing with heavy industry and investment. Over-all growth was to be main- tained by rapid assimilation of new technology and the consequent productivity gains rather than by accelerating growth of capital stock. The plan for 1973, announced last December, revealed that the leadership had decided to retain the original five-year plan targets and basic pri- orities while making major revisions in the 1973 goals. The revisions were intended to rectify past errors and get the economy back on track, although this would mean a temporary distortion in sectoral growth rates. This year's GNP growth target is about 7%, in sharp contrast to the 1.5% achieved last year. The planned recovery depends mainly on a 12.6% increase in farm output and an accelerated industrial growth rate of 6.7%. Goals for oil and gas, chemicals, and some consumer and machinery items were cut in recognition of raw material short- ages or lags in the expansion of production capacity. The new plan is specifically designed to deal with the knotty investment problem. First, it calls for a stringent limit on new construction starts. Investment resources are to be concentrated on pro- jects which are already under way and on those "which are decisive to the fulfillment of the Five- Year Plan." To this end, the growth in total in- vestment in 1973 is to be held to 3.5% compared with the nearly 9% implied in the original plan. ? Secondly, more investment resources will be allo- cated to the parts of the economy in which projects are most behind schedule. Consumer-criented sectors such as the processed food and light industries and agriculture will receive an increased share of in- ..vestment allocations. No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No-Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 Thus, policy statements and investment targets indicate that there will be a continued emphasis on improving' living standards. The expected shortages of agricultural raw materials and the construction delays which have restricted the production of con- sumer goods, however, will force.a temporary retreat in.theconsumer program. In particular, meat pro- duction is not scheduled to increase appreciably in 1973. The volume of retail trade is slated to in- crease by 5% in 1973, compared with 7% in 1972. This slowdown in turn forces a change in income policy. In order to avoid further inflationary pressures, wage increases are hopefully to be held to about half the rate achieved last year. There is no evidence that defense plans were affected by 1972's dislocations in the civilian sector. The military has always been favored and largely protected from short-run fluctuations in output. Moreover, the production capacity of the Soviet Union is now so large that even a moderate growth of GNP can support reasonable increases in military spending without undue strain. The an- nounced 1973 defense budget of 17.9 billion rubles is unchanged for the fourth year in a row, but this figure does not include a number of allocations normally associated with defense. The most signifi- cant exclusion is military research and development, which is funded principally from the science alloca- tion. Soviet science outlays in 1973 are scheduled to be 7% greater than last year. It is estimated that total Soviet defense spending in 1973 will be about 3% higher than in 1972 and will amount to the equivalent of about $82 billion. Last year's difficulties in the farm sector .severely tested the leadership's dedication to its expensive livestock program, but recent policy state- ments and the new plan goals indicate that they will continue the campaign at least through 1973. The poor harvest last year, however, makes it practically impossible to fulfill even the modest program for the livestock feed base outlined in the 1971-75 plan. With average weather, they would still have to import a minimum of 40 million tons of grain im- ports over the next three fiscal years to meet the long-term livestock and meat goals. A number of -13- SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 SECRET No-Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 prominent Soviet trade and agricultural officials have recently admitted to US visitors that the USSR will require long-term food and feed grain imports from the United States "even if we have good har- vests.." Meanwhile, the 1973 grain crop is off to a poor start. Last fall, the area sown to winter .grains was one-fifth less than planned because of excessively dry soil. Very little snow has fallen this winter in the major winter grain areas, and as of the first week in February there was insuf- ficient snow cover to protect the seedlings from the low temperatures. It is likely, therefore, that the winter grains have already suffered an above-normal amount of winterkill. To recoup winter losses and make up for the shortfall in fall-sown area the Soviets must sow more than 100 million hectares to grains this. spring--a record. If they fail to meet the spring seeding schedule and encounter only average growing conditions, the chances are slim for a big increase in production above last year's disappointing harvest of 134 million tons of usable grain. The Effect of Another Bad Harvest If a grain crop of 140 million tons or less is harvested in 1973 (as opposed to a "normal" crop of 150 million tons), the leadership will have to make some disagreeable decisions. With a crop of 140 million tons, they could decide to support the meat program again with total imports of grain that could run as high as 20 million tons. At the higher world prices now prevailing, the total cost of im- porting grain on such a scale in FY 1974 would equal the cost of the purchases made for delivery in FY 1973 (about $2 billion). It is quite possible that the Soviet leaders would not be willing to make this expenditure. With a short crop, however, a failure to import sufficient quantities of grain would mean that livestock would have to be slaughtered--ensuring- serious meat shortages in the following years. As the meat queues lengthened, the.leadership would have to decide whether formal rationing should be substituted for the hit-and-miss allocations re- sulting from the queues. Alternatively, they could raise meat prices to avoid the administrative costs -14- No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 5 5 of rationing or the unfairness of a first-come first-serve system of distributing the available supply of meat. In deciding how much grain to buy in the event of a poor harvest, the leadership would have clearly in mind the civil unrest that accompanied Khrushchev's decision to raise meat prices in 1962 and the part that meat supplies and. prices had to play in Gomulka's fall from power in Poland in 1970. Very probably, they would not aban- don the meat program completely; rather, they would reluctantly accept a lower rate of growth in meat production. Foreign Trade and Payments Policy in 1973 One of the consequences of the bad harvest is a considerable increase in the USSR's dependence on the West for food supplies as well as advanced equip- ment and for credit to finance the purchases. As a result of the massive grain purchases the Soviets will have a record hard currency trade deficit of about $1.8 billion in 1973 .compared with an estimated $6.00 million in 1972. (After the 1963 harvest dis- aster, the 1964 deficit was only $533 million). Besides the $1.6 billion represented by contracts already concluded for grain to be delivered in 1973, the gap between earnings and outlays of hard currency will be affected by large imports of sugar, record acquisitions of Western plant and.equipment, and possible new grain purchases in the last half of 1973 (assumed to be about six million tons worth about $500 million. As in 1972, the 1973 hard currency deficit will be financed by a combination of gold sales, credits, and trade adjustments. Up to 200 tons of gold worth $400 million could probably be sold in 1973 without depressing its price below the average 1972 level. Sales of this magnitude would be about equal to annual production (net of consumption) and would leave Soviet gold reserves unchanged at about 1,600 tons. The major source of financing, however, will be credits, and ample amounts are available'through-- out the West. The European money market has a sur- plus of funds for short- and medium-term borrowers. Moscow's Western-based. banks also can attract con- siderable funds at prime rates. In negotiating to buy grain in the US, the Soviet Union will surely SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 1 continue to ask for more favorable credit arrange- ments than have been offered thus far. The United States has emerged as an important creditor in 1972 and 1973, extending about $500 million of Commodity Credit Corporation funds,-and US and Japanese banks and financial houses are exploring ways in which they can increase their roles in financing Soviet trade. The Soviets have tried to prevent the hard currency deficit from interfering with their plans to import Western equipment and technology. There was no clear evidence of a cutback in 1972. In the second half of the year, the 'volume of new orders declined somewhat from the very high level recorded in the first six months, but large orders for such equipment continue to be signed. Some of the orders involve long-term and sel'f'-liquidating credits .(re- payment in kind) and do not bring immediate pressures to pay. The proposed US-Soviet LNG project and the Japanese-Soviet projects for developing natural gas and oil deposits are examples of exchanges that have no-necessary impact on hard currency reserves. The grain purchases put pressure mainly on the USSR's short-term payments position. In 1973, however, as short-term indebtedness increases, it will become increasingly difficult for Moscow to avoid some im--. port cuts. Although the USSR could finance the en- tire likely deficit, and perhaps more, solely with gold sales and credit, it will probably also make some adjustments in its trade. Imports of consumer goods and other items that are paid in cash are likely candidates for trimming. If the harvest is bad and massive additional grain imports"-are nec- essary, cuts in other imports are certain. in any case, even given average weather agri- cultural imports will continue to be a major balance- of-payments burden. The indicated grain import re- quirement might be about 12 million tons a year (worth more than $1 billion), assuming a continued priority for the original Brezhnev livestock program. The prospect of continued imports of grain of such a magnitude may well occasion a re--examination of the long-run wisdom of the meat and consumption programs associated with Brezhnev's leadership. SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 SECRET No-Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 Longer-term Economic 'Outlook Soviet economic growth should turn upward in 1973 because farm output will recover--unless another streak of bad weather intervenes. If average weather prevails over the next few years, GNP should grow by 5% to 600- per year. Even so,.the average rate of growth in the first half of the 1970s--perhaps 4 to 5% per year--would be significantly lower than it was in 1966-70. This is about average for an industrial nation, but unimpressive considering the USSR's comparative economic backwardness and the effort it is making. The USSR almost surely would have to abandon many of the agricultural \ goals and some of the important industrial, goals t: set out in the 1971-75 plan. In the longer term, the USSR will be hard pressed to sustain a.rate of growth as high as 5% per year. The rate of growth of the labor force has slowed and a growing share of all workers is to be employed in the service sector. At the same time, technological progress has not been rapid enough to offset the declining returns to net in- vestment, and there is no evidence that the Soviet Union is finding or will soon find a solution to this problem. In both industry and agriculture low produc-' tivity is caused by organizational factors which discourage efficiency and inhibit the introduction of new products and methods of work. Upon assuming power, the present leadership probably believed that managerial reforms could bring about larger, and continuing productivity gains. Then, their attempts to introduce reforms after 1965 were frus- trated by the defects of the reform proposals, the opposition of the economic bureaucracy, and the fear of decentralization as a threat to party con- trol. Some careful experimentation with new mana- gerial methods has continued, such as the applica- tion of computers to planning, but political con- trols have prevented public discussion of any com- prehensive reform programs relevant to solving economic ills in the near term. No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 As the interest in internal reform dwindled, the interest in economic ties with the Industrial West increased. The Soviet leaders believe that the shortcut to technological progress and accel- erated growth in productivity lies in importing western machinery and technology while promoting other technical exchanges. If carried on consist- ently over a long period of time this policy will upgrade Soviet economic performance, particularly in terms of the quality of production. Indeed, the most dynamic sectors have depended crucially on im- ports from the West--for example, chemicals and motor vehicles. Still, the imports will not result in a marked increase in the rate of growth of GNP over the next several years because the contribution of western machinery to total investment is rela- tively small and limited'by the USSR's ability to secure a growing volume of long-term credits. In addition, western technology is not always easy for the Soviet managerial system to assimilate. Many industrialized countries would welcome a steady growth of national product amounting to 4% to 5% per year, but the Soviet Union would find it hard to abandon the idea that the socialist model provides more rapid development than the arrange- ments of other industrial nations. In the face of falling growth rates, some officials might be tempted to rely on a higher rate of investment. In the re- cent past, however, this policy has not been success- ful in boosting growth. While some proponents of industrial growth probably feel that the agricul- tural investment program, for example, has been too expensive, a radical shift in priorities away from agriculture or the production of industrial consumer goods would be risky from an economic standpoint. The cooperation and productivity of the labor force depend on continued progress in living standards, especially steady improvement in the diet. On. the other hand, the effort to maintain planned rates of growth in consumption clearly will involve increasing dependence on the West, and in particular the United States, for grain. SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 Soviet Dependence on the US Soviet dependence on the US i.s:considerably less than its dependence on the West in general. The most critical need over the next year is likely to be for grain. The larger the grain requirement the larger the share that would probably have to come from the US. If the requirement were around 12 million tons, about half would have to come from the US; if it were 20 million tons, perhaps two thirds would have to come from the US. If the So- viets were willing to pay significantly higher prices and tap the markets of smaller exporting countries the US share of grain purchases could be considerably reduced. Particularly, over the longer term, the Soviets could encourage substantially higher production in Canada, Argentina, Australia, etc. with the help of long, term contracts. To the extent that the Russians were pressed for conces- sions in other areas in return for the purchase of US grain, they would be the,more likely to cultivate other suppliers. The reliance of the USSR on the West for ad- vanced equipment and technology is very important and growing. However, the dependence on US equip- ment is relatively small. By far the largest part of USSR requirements for production equipment can be met by Western Europe and Japan, often at. lower prices and with comparable quality. In a few im- portant cases the US enjoys a?substantial tech- nological lead: for example, oil production and exploration equipment, advanced integrated cir- cuits, high capacity data processing equipment, and a few specialized types of equipment for truck pro- duction. In these cases the USSR would prefer to. buy from the US, but the demands are postponable. Other than as a source of grain, the. most im- portant potential role of the US in Soviet eyes is as a market for raw materials and a supplier of credit, equipment, and technology to develop them. The USSR badly needs to expand its hard currency exports to pay for grain and equipment imports. The joint ventures to develop Siberian gas offer the best hope. of dollar exports over the long run. Barter arrangements--for example, nickel for ma- chinery--might also become important. There are -19- SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 other Western markets for these Soviet materials-- notably Japan--and other sources of credit and technology. But if joint US-Soviet projects are not undertaken, expansion of Soviet hard currency exports will almost certainly be considerably de- layed. In the long-term this would mean a sub- stantially slower growth of export earnings and hence the capacity to import Western technology. Thus the principal areas of Soviet economic dependence on the US can develop only in the long term, and will then also involve a growing US eco- nomic dependence on the USSR. Substantial US-Soviet economic links will increase'the Soviet investment in good political relations with the US; at the same time, their development requires that reasonably good relations be maintained for many years. Al- though the US bargaining position is currently strengthened by the large Soviet dependence on US grain, this major US advantage may not continue beyond the next year or so and its value as a bar- gaining tool is, therefore, limited. The Political Outlook Fundamental weaknesses in the performance of the Soviet. economy guarantee that, even with an average harvest in 1973, the leadership will face difficult questions concerning several inter- related issues: the goals for economic growth, adherence to the agricultural and consumer programs- managerial reform, and economic dependence on the West and more particularly on the US. Even with normal harvests, the future needs for foreign grain that will be necessary to support present programs should become even more apparent to the leadership by this summer and the chronic nature of the problem will focus attention on the wisdom or practicality of basic policies. The situation can only complicate Brezhnev's political life. This is all the more so because he has so strongly advocated the agricultural and con- sumer programs that are now beset by difficulties. For example, although Brezhnev at the Party Congress justified at length the new policy of. consumer goods production growing faster than producer goods under the five-year plan, it appears that this in fact will not occur. -20- SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 bl:1CL"1" No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 There has been political fallout from the poor harvest. Polyansky was demoted from first deputy premier to minister of agriculture and the incumbent minister, Mats:evich was removed. Brezhnev has far greater political resources at his command than do. his critics and he seems to have shored up his posi- tion for the time being through his successful harvest-boosting trip to the Virgin. Lands and Cen- tral Asia last fall and through-Pollyansky`s demo- tion. Nevertheless, Polyansky's demotion means the slippage of a once staunch ally of Brezhnev's. Moreover, it leaves an opening for first deputy premier to be fought over. The situation favors :a revival of public dis- of some policy issues. Polyansky's move cussion could encourage greater efforts to pare down the large agricultural investments he has championed and to press for administrative reforms he has fought. Advocates of some current experiment and reforms in managing the industrial economy will become more active, and institutional reorganiza- tion, a traditional panacea in Soviet eyes, will attract more attention. As the Soviet leaders realize how their depend- ence on the West for grains and technology is grow- ing and promises to grow in the future, they will face two particular questions on the wisdom or ac- ceptability of the dependence itself. They.must consider how much to rely on US sources. They must also contemplate whether they will be pressed to pay for such reliance wit~dpolitical concessions should and, if so, how they One group will find dependence in general dis- tasteful and reliance on the US especially so. As late as 1968 Brezhnev himself spoke in public this group, arguing against over-reliance on West- ern technology. The continued strength of this dogmatic school of thought, which Brezhnev has since abandoned in foreign relations, is shown by the rigidity that has been maintained concerning in- ternal policies and controls even as detente has developed abroad. officials of this frame of mind -21- No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 will argue against reliance on US supplies and will cite the opportunity this will provide the US for demanding political concessions---for example, the Jackson amendment. They might also argue that it makes good commercial sense to bargain multiple sup- pliers off against each other and that in any event their needs could be met by Western Europe and Japan. The majority of the current leadership, while sharing these concerns, believe that in economic terms the US is the best source. of certain supplies wanted by the Soviet Union. Improved. economic re- lations with the US is popular among many Soviet bureaucrats and citizens. Some leaders will argue that the dependence will be mutual since US farmers and manufacturers are greedy for markets and can present their case to the US Administration. The intense interest shown by Brezhnev, Kosygin, and other top leaders in. the LNG deal is motivated in part by an assumption that this kind of agreement will increase mutual dependency. These leaders will also maintain that concentrating on the develop- ment of US-Soviet economic relations furthers their political interests vis-a-vis the US and acts as a counterweight to growing relations between the US and China. Although many economic questions may be up for debate, an agricultural year that is no worse than average will make it easier for the top leaders to maintain ultimate control over the issues and ma- neuvering and thus to protect their own positions. Changes, in this case, would more likely be confined to leaders of secondary or tertiary rank and to eco- nomic measures of largely internal significance. As unwelcome as lower growth rates and economic de- pendence. on the West, and the US in particular, might be, Brezhnev and the leadership as it now stands would be loath to abandon the agricultural and consumer programs entirely, considering the consequences this would have on their own political credibility, popular morale, and internal controls. Given an average agricultural year, they will prob- ably opt for making compromises in their economic goals where necessary but retaining at least the general direction of present policies. No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 This outcome would have a double meaning in foreign affairs. Lackluster economic performance F should further encourage Brezhnev and other leaders i to seek "successes" in the conduct of detente pol- icies abroad and to cultivate economic relations with the West that promise help in relieving do- mestic deficiencies. In particular the Soviet leaders will probably continue to turn to the US to supply a growing number of economic needs. On the other hand, serious setbacks in foreign affairs, particularly in relations with the West, would be all the more painful to Brezhnev, especially as they could further call into question the whole complex of inter-related programs he has pursued. Specifically how might economic reliance on the US affect Soviet behavior? The most likely consequence would be to encourage restraint in the conduct of foreign affairs that touch the US. Thus, considering the state of US-Soviet relations, there are some things that the Soviets :night simply choose not to do, for example, taking a provocative stance in support of some allies such as North Vietnam or Cuba. While growing reliance on trade with the US will increase Soviet motives for being conciliatory on other issues between the two countries, it is very unlikely that this will lead them to make major concession in other areas. Economic interest has been a motive throughout in the Soviet pursuit of detente. It has been difficult to distinguish, how- ever, the effect of this interest on Soviet diplo- macy from the effect of other principal motives, such as their goals in Europe, their distrust of China or ...the political play inMoscow. This will continue to obtain even if the economic factor grows somewhat. Moreover,-the Soviet leaders will resist, as they have'in the past, discussing linkage between eco- nomic relations and specific points at issue in ? other areas. They will do this not only to avoid a poor bargaining stance but also because they will be wary of those political forces at home who are distrustful of detente and especially of this kind of vulnerability. Finally, the Soviet leaders would probably..conclude that important political conces- sions to the US are unnecessary for economic reasons SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 i 1P 1P since they can obtain most of their import needs from Western Europe and Japan, and that US domestic agricultural and industrial interests are anxious to expand their goals in the Soviet market. Nevertheless, Soviet eagerness for expanded economic relations with the US will probably con- tinue to make the leadership willing to accede to some modification of policy when circumstances create a direct linkage to economic questions--for example, the Jackson amendment. The modification of the laws on the education tax for emigrants last year illus- trates the type of concession and the general range of flexibility that may be expected in the future. Likewise, major advances in US-Soviet economic co- operation would increase the pressure from the US to enlarge the scope and freedom permitted business- men operating in the Soviet Union, and some give would be likely from the Soviet side on this matter. in case of a bad harvest, however, the magnitude of the economic problems and the politically unsat- isfactory nature of any of the possible measures for dealing with them would clearly exacerbate tensions within the leadership. Regarding the populace, the relative austerity that would obtain for a second; year in a row would cause a sag in morale and per- haps even some instances of public unrest. As a result, among the'political elite, interest in new policy courses and even new faces at the top would rise. This kind of internal situation would naturally affect the conduct of Soviet foreign affairs. A loss of self-confidence-in dealing with the West would tend to deter the Soviets from.making new agreements, although, for lack of a viable alter- native, large imports of Western grain and machinery would continue. A strong challenge to the present leadership might for a time freeze Soviet policy in its present course, rendering it incapable of taking new initiatives or responding flexibly until domes- tic politics were sorted out. SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 Although their economic needs from abroad and particularly the US would mushroom, the Soviet leadership would probably not be in a position to act on them in any comprehensive way, much.less.to agree to important diplomatic concessions in this connection. if in fact a political crisis of this sort arose and then was resolved, the eventual im- plications for foreign policy---a reconfirmation of the detente line or a retreat from it--would depend on who won. in this connection,' the objective need for fuller economic relations with the West would be a. powerful though not necessarily decisive argu- ment on the side of those defending the present line. -25- SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 - MAY ICR2 E1aiTION 5ELRL V GSA FPMR (41 CM) 161-1t.6 UN1TL_No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 1U~errcora~dum NSC - Mr. Sonnenfeldt DATE: January 22, 1973 FROM : INR/RES Kenneth A. Kerst sUBlEcx: Brezhnev's Power Position Since the May Summit Since the May Summit, Brezhnev's track record has been mixed. If the Soviet Union were a truly parliamentary power, his illness last -fall combined with several policy setbacks could have generated no- confidence votes and it is conceivable that one may have carried. .However, available evidence suggests that Brezhnev has further enhanced his primacy in the wake of the Sumniit. To be sure, this makes him more responsible for policy failures as well as successes and thus presumably more vulnerable to criticism, but his performance indicates that he is an extremely difficult man to back into a corner. Thus, we conclude that, barring major policy reversals undeniably attributable to him, Brezhnev will remain as primus inter pares at least for the immediate future. We suspect, however, that as a careful politician, he will take more than usual care to assure that he has the concurrence of his colleagues in future moves. Brezhnev's Health: A Major Question Mark Last fall, Brezhnev was unable to exercise fully his responsibilities for virtually two months because of ill health. The exact nature of his illness remains unknown. Moscow sources have passed the word that his loss of weight and difficulty in climbing stairs so visible at the November Revolution ceremonies, which were delayed several minutes until he arrived, were due to lumbar problems. The latest analysis based on close observation points to a hernia operation which was possibly followed by pneumonia. Judging from reports from the January 11-12 Franco-Soviet Summit in Minsk, however, he appears to have recovered fully. Brezhnev's illness was never mentioned in the Soviet press. In fact, while he was absent, the usual status indicators -- pictures, citations in speeches, mentions in editorials -- remained at a high level, suggesting that his colleagues, rather than acting like a pack of jackals intent upon bringing the wounded down, were instead more concerned with preserving his image as the leader. Economic Shortfalls: Imo.act on Brezhnev The extremely poor agricultural year and the failure-to achieve unrealistically high productivity, gains in industry resulted in the SECRET Buy U.S. Savings Bonds Regularly an the Payroll Savings Plan No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 SECRET ? -2- lowest growth rate of national income since World War II and forced a major change in next year's plans. In the production area, the much- .touted consumer program launched by Brezhnev over the explicit criticism of Shelest and Masherov has once again been relegated to second place behind heavy industry. Investment goals are being sharply curtailed except for agriculture, especially in land amelioration which is a long- time Brezhnev favorite, and, surprisingly, in consumer-associated industries, which remain at their original rates. Explicit defense expenditures, another Brezhnev area of specialization, are scheduled to remain at the current level, and the sharp increase in absolute terms in the "science" budget indicates that overall expenditures will rise, especially for research and development. Planned increases in the retail trade plan were reduced, and. the public was told that food and consumer goods will be available during 1973 only "in the main." Even though the economy is not in a recession,. much less a depression,, the Soviets are being forced to retrench, and the political ramifications could be far greater than the statistics alone would suggest. Thus far, however, what criticism has been voiced has been directed against planning and management officials, not the Party. The Party itself has been resorting to such hoary standbys as calls for heightened labor discipline and more socialist competition. Brezhnev, moreover, has been publicly praised for the results of his barnstorming during the Virgin Lands harvest. He could cite with some justification the successes obtained by his detente policy, which enabled the Soviet Union to import massive amounts of grain from the US. In sum, while the economic shortfalls can scarcely redound to any leader's credit, political fallout to date has been minimal and Brezhnev- associated programs have fared well. It is clear, on the other hand, that he and his colleagues are probably suffering some diminution of 'self-confidence as well as considerable chagrin over the shadow that these economic problems cast on their touted image of the Soviet Union as.an "equal" superpower with the US. Foreign Policy Pluses and Minuses ' Despite some setbacks in international affairs, Soviet foreign political achievements area plus for Brezhnev and a factor strengthening his position. The most intractable and worrisome problem for Moscow now undoubtedly is China, and Brezhnev recently resorted to the most lengthy public critique of Peking made by any Soviet leader since Khrushchev's day. SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07 LOC-HAK-32-4-2-9 SECRET 3- But this is an inherited problem, not of his making; and the China issue, because of its intractability, magnitude, and the sensitive chords it strikes in Russian nationalistic feeling, is probably more of a unifying than a divisive force in the Soviet leadership. The setback represented by Sadat's expulsion of Soviet military personnel from Egypt, rather than a crisis-for the regime, was more in the nature of an injury to pride and a public humiliation that can be lived down in time. That is just what. the Soviets appear to be doing. Of course, there will probably be other disappointments for Moscow in the volatile Middle East, but the Soviets evidently calculate that adversities are the worthwhile price to be paid for playing a great power role in that key area. There,are presently no signs of leadership differences over Soviet Middle. East ' pol i cy. The Soviet foreign political achievement that overshadows these problems is the 24th Congress' "peace program," or more specifically, detente policies in the West, with which Brezhnev has become closely identified. In Moscow's calculation, it is achieving long-sought objectives in Europe, and a modus vivendi with the US. In the process the Soviet leadership is assuring for the Russian state probably the greatest degree of security that it has ever known, and the.lessened possibility of international conflict involving the-Soviet Union is an accomplishment that will be welcomed in the Party hierarchy as well as by the citizenry. . Of course, Moscow is paying a price for these achievements: in resources expended in attainment of superpower status, and in sacrifice of revolutionary zeal to make the necessary accommodations to achieve its objectives in the West. The latter course, in particular, has aroused some questioning on the part of the politically alert part of the population. Yet there is little evidence that the Brezhnev leadership is..facing a significant domestic challenge on this issue. More importantly, in,seeking improved relations with the West the Brezhnev leadership is accommodating to political and economic imperatives of the day, and this alone places Brezhnev in a sound position at home to the extent that foreign policy is a factor in the stability of his leadership. Leadership Maneuvering: A Brezhnev Plus but Questions Remain Changes of assignment within the leadership taken during and after the Moscow Summit, where identifiable, clearly are manifestations of Brezhnev's political clout. Shelest now joins the already-demoted Voronov SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 SECRET -4- and Shelepin, who puzzlingly remain in the Politburo. Ponomarev was elevated to candidate membership while Mzhavanadze was dropped. And a newcomer to the Moscow political scene appeared when industrial specialist Dolgikh was named a Central Committee secretary. Shelest. Bounced during the Moscow Summit in circumstances which suggested that he was opposed to its convocation, Shelest was named one of nine deputy premiers, evidently with responsibility for transportation and energy. His successor as Ukrainian Party chief was a long-time Brezhnev associate, V. V. Shcherbitskiy, who has shaken up the local Party apparatus but apparently does not hold exclusive sway over Ukrainian affairs. Shcherbitskiy has rapidly moved against manifestations of Ukrainian particularism, such as a 'relative tolerance of nationalistic dissent and economic localism, which strongly indicates that they were among the policy differences with Brezhnev which led to Shelest's ouster. On the other hand, Shcherbitskiy's Dnepropetrovsk clique has had to share the spoils with the established Kharkov grouping, whose foremost graduate is Podgornyy. Ponomarev. The elevation of Party Secretary Ponomarev to candidate Politburo member would appear to reflect. the influence of the 70-year old.Suslov in his role as foreign policy specialist. Long responsible in the Secretariat for relations with non-ruling Parties, Ponomarev has been somewhat more active lately in treating with visiting government officials from non-socialist countries. At 67, however, his promotion may be more in the nature of a reward for services performed than a harbinger of a greater voice in leadership deliberations. Mzhavanadze. The removal of Mzhavanadze, who was not believed to be c ose'to Brezhnev, seems to have been due to the unusual combination of his age, 70, the poor economic performance of Georgia, and the high rate of official corruption which is now being exposed. His successor, a.young ex-MO minister, has spoken warmly-of Brezhnev and rose to local prominence after Brezhnev's close friend, Shchelokov, took over the USSR MVD.' Dol ikh. As Party Secretary in charge of heavy industry, Dolgikh fills t Fe vacancy created in 1971 when Solomentsev was named RSFSR premier. Only 48, Dolgikh is the second youngest man among the top 25 Soviet leaders; the youngest is Brezhnev-protege .Katushev, 45. It is difficult to determine Dolgikh's political ties at the moment but while An his home kray of Krasnoyarsk he met recently with Brezhnev,.who is SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 a 49 SECRET -5- believed to have endorsed his plan for integrated economic development there. Whatever his links to other leaders,. the promotion of the youngish Dolgikh is in line with the reported Brezhnev policy of elevating able young specialists. Status Indicators Favor Brezhnev. Other political indicators of Brezhnev's strong standing have been his major addresses to the May and December plenums in 1972, the publication of his third volume of speeches, numerous feature-length films devoted to his major travels, consistent citation in the media (particularly in Pravda), and the reappearance in December at the 50th anniversary celebration of public endorsements by high political figures of Brezhnev as "head of the Politburo." Another was the surprisingly warm homage paid to him by the alleged "Cassius" of the Kremlin, M. A. Suslov, on the occasion of his * 70th birthday award ceremonies. Finally, it should be noted that Belorussian Party Chief Masherov has moved from a position of outspoken opposition to Brezhnev's announced consumer welfare program to public endorsement of his preeminence in late May and December. It may be that Masherov felt isolated after his fellow critic of "consumerism" was removed from Ukraine and decided it was time to make amends. Unresolved Problems Though external signs point to Brezhnev's enhanced status vis-a-vis his Politburo colleagues, it is always. possible that they may be misleading, for we know far too little about the inner workings of the Politburo to reach any.firm conclusions.' Even if our surmise that he has improved on his position is correct,.this does not mean that he is necessarily firmly ensconced because a number of real or potential problems still face him. Health. Perhaps the most important at this stage is Brezhnev's health. While it is true that his recent illness does not appear to have been due to a chronic condition, he does have a history of cardio- vascular problems, is still overweight, smokes incessantly, and drinks heavily.' At age 66, signs of physical deterioration are noticeable, but lack of information makes any prognosis highly speculative. Our feeling at the moment is, however, that he will probably remain fit enough to exercise his responsibilities for the next year or two. Politburo Opposition? There is no good evidence of opposition within the Politburo to Brezhnev at the present time. On the other hand, that there:is argumentation over various policies seems quite plausible, SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 W' SECRET W -6- and, given Brezhnev's mixed track record, we suspect that he has had to defend policies he has advocated. The greatest danger that he would appear to face conies from three men he has demoted -- Shelest, Voronov, and Shelepin -- who nevertheless remain full members. It is conceivable that they remain only because of the regime's known penchant not to rock the boat by "wholesale" purges. It appears to us somewhat more likely, however, that they remain because on this issue Brezhnev sensed his colleagues would be unwilling to alter the political balance so drastically in Brezhnev's favor. As long as Shelest, Voronov, and Shelepin remain in the Politburo, any one of them or a combination constitutes a nucleus around which'opposition to Brezhnev could form. Their continued presence, moreover, constitutes a restraining influence on Brezhnev's initiative. Domestic Problems. As is the case with virtually all political regimes, the real :"gutsy" issues are domestic. Of these, the most immediate one for Brezhnev and Company is the parlous state of agriculture. As last year's performance demonstrated, the vagaries of the weather exercise an inordinate influence not only on the agricultural sector but.on the industrial as well. Although it is still too early to predict the 1973 crop, it is already obvious that it did not get off to a good start, and there are indications that the Soviets are already back in.- the world grain market. It is moot whether or not the leadership would be able to face another bad year with the seeming equanimity that it has displayed thus far. Consumer grumbling probably will mount, as the latest information from Moscow indicates that the worst shortages are yet to come. We do not believe that this discontent of the man-in-the-street, however, will materially affect the leadership equation unless it permeates upward through a disenchanted Party apparatus and produces cleavages within the power structure itself -- the Politburo and Secretariat, the KGB, and the military high command -- which could be used by ambitious opponents of Brezhnev. At this time, we do not see evidence to this-effect. Other major problems include the growing sense of national identity among the minorities, the lack of ideological elan throughout SECRET No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 a SECRET ? -7- Soviet society, and awareness of the increasing technological gap among the scientific and technical intelligentsia. Brezhnev and Company have given explicit recognition to their problems, but the measures adopted to date appear largely palliative, and they can be expected to persist if not worsen. Nonetheless, they do not appear serious enough at present to provoke a challenge to Brezhnev's leadership. Foy reign Problems. Foreign political issues would not seem for the immediate future likely to have a debilitating effect on Brezhnev's status, and may well enhance it. Detente policies in the West -- Brezhnev's forte at the moment -- seem well established even if, as was the case with the first session of the multilateral preparatory talks for the Conference on Security and Cooperation in Europe, events do not proceed as smoothly to Soviet liking as anticipated. Serious setbacks in the improving relations with the US, especially failure of the USSR to get MFN provisions from the US and the consequent impediment to development of economic relations, could possibly reflect personally on Brezhnev... He might, however, hope to compensate for this loss with intensified efforts along both economic and political lines in West Europe or with Japan. The insoluble China problem is as divorced from Brezhnev's personal leadership as Soviet policy toward the West is identified with it, and will probably continue to be a unifying rather than a diversive issue for the leadership. Ups and downs in the Middle East will probably not seriously affect the basic thrust of Soviet policy in that area. Serious turbulence or increasing independence among the communist countries of Eastern Europe would probably raise the most serious challenge to the stability of Brezhnev's leadership, but this does not seem a likely prospect for the immediate future. Brezhnev's Stle: A Saving Grace. What we know of Brezhnev's manner of conducting business with his Politburo and lesser colleagues. suggests that he has taken care to touch base on all possible subjects. It is true that with his apparently enhanced-status he could begin to act more imperiously and fail to "clear" initiatives, in the manner of Khrushchev. We think it more likely, however, that in times of stress he will be even more desirous of soliciting the views . of his colleagues in order to secure his political flanks. A major difference in Brezhnev's leadership style from that of his SECRET No Objection to Declassification in Full 2010/04/07 : LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 SECRET rambunctious predecessor, which would stand.him irk good stead if n ` a '"arithmetic majority" develops against him in the Politburo, is the fact that': he has taken-pains not to alienate; the republic and 1% leaders who comprise the majority of the Central Committee.'' His emphasis on the importance of the Party and government bureaucraciesl, promotion . from- wi thi n, and lateral transfer of officials out of favor suggest that he'woul.d have their support if a;challenge to his:l?eadership were carried to the Central Committee. All in all, we feel that Brezhnev is perhaps the ablest Soviet politician who has survived and prospered under the aegis of Stalin, and Khrushchev. For a man of his bulk, he is very light on his -feet, and we believe that.his.political Tife expectancy-is good. SECRET: No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 :_. No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 ,''k L.'clia2,T772enr or jw.tC ds _ _ F$ yt;:G~ WL1 53 ACTION EUR-25 CONFIr)ENTIAL 958 26008 A 1 OF m2 1 01 3'2Z INFn OCT-01 EA-I1 ADP-01.z CIAE-00 OODE'-7 PM-09- H 02 INR-09 L-03 NSAE-0101 ';SC-10 PA-113 RSC-~01 PR5-01 SS-14 'US I A,. 1 7 Eg. J 1 AGR-2c IC-01 SAJ-171 RSR-011 GA C'aI TRSE-00 STR-0R OMB-01 COME.. /15s ! ,W R 191217Z MAR 73- FM AMEMaASSY MOSCOW TO SECSTATE WASWDC 70Q I INFn AME"MBASSY CONENPAGrN AMEmSASSY RELCR AOE. AMEMBASSY 9UCWAREST AME.ME3ASSY BUDAPEST AMEMBASSY PRASUE' AMEUI3ASSY SOFIA AMEMBASSY WARSAW USMTSSION NATO AMCnNSUL HONG KONG AMCnNSUL MUNICH AMEMBASSY PARIS NE'A. I O C 0 N F I D E N T I A L SECTION I OF 2 MOSC'?W 2608 PARIS', COPENHAGEN FOR SECRETARY SHULTZ E?C1. 116521 N/A - TAGS $ 'TNT, PF'UR, UR SUR.J1 BREZHNF V DEMONSTRATES STRENGTHENE9 POSITION It SUMMARY. HTUH LEVEL 11F G-NERAL SECRETARY BREZHNEV'S .ACTYVITTES DURING PAST MONT'i, TO c:TLER WITH EXTENSIVE MEDIA COVERAGE DEVOTE^ TO qIM, HAVE WIGqI-Tr-4Tcn HTS - POSTTIU'~N AS PRIMUS T-,TER PARES WITHIN DnRTY HIERARCHY. OOMCSTICALLY, 8REGHh1FV AoPEARS IN FIRM E'ONT7DL; OF PARTY APPARATUS WHILE IN ~?*LM OF PORE!-IN AFFAIRS HE HAS OPTED TO CET TONE FOR SUV T C'T onL T CY ON MANY Iv NOT MST OF" {E'Y ISSuES? FOR REASONS wtICH ARE NOT YET FULLY CLEAR, CONFIDENTIAL ronm No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 a 7 A 1,~ tr.3. J? #4T@& of PAGE oft MOSCOW g260IFi oil OF 112 1013Z BREZHNEV IS APPARENTLY INTERESTED IN DEMONSTRATIN, MORE SELF-ASSURED AND FROMTfE-,'T ROLE IN COLLECTIVE LEAnERSHIP AT "3RESFNT MOMENT? n'eVERTHELESS, THERE .CONTINUES THE' APPARENT LIMITATIONS nN 1419 rREFOOM Or ACTION. END SUMMARY. 2? PAST MONTH HAS BEFM! OME OF UNUSUAL ACTIVITY' INCLUDING INCREASED PUBLIC'?EXP1)nURE FOR RRF7HNEV'. AS eE3RUARY r3EGAN, BRE7HNE.V'S WAND COULD BE SEEN IN RESHUFFLE 4ITNIN NATION'S' AGRTCULTUR.AL WIERARCNy WHICH LEO :TO DEMOTION OF FELLOW POLY'TBURO MEMRkR HLOYANSKIY WHILE AT SAME TIME SIGNALING INCREASED ROLE` FOR MT'-!ISTRY OF AGRICULTURE'. CHAIN OF, EVE%!TS LEADING FROM RIEZHNEV' S TO'JR TO SIBERIAN AND VIR"=IN LAND AGRICULT(-RAL HIERARCUY WAS OVE'RALL' EFFECT OF SI GII.AL I N!G BREZHNEV ' R 'E;RSONAL CONCERN! ABOUT IMPROV I NG COU't'TRY'S AGRICULTUOAL PFRf?:ORMANCF WHILE AT SAME' TIME SHITTING BLAME FOKPAqr FAILURES TO OTHERS. 3. FEBRUARY 19 AWARD CEREMONY HONORING-POLITBURO' MEMPER AND SUPREME Ft. "It"T CHAIRMAN + OGORNI V ON OCCASION OF WIS 70TH BIRTHDAY RROVTOED ANOTHER OCCASION FOR PIJBL'IC E'XPnSUIKr: WHICH WAS AT ' SAME TIME NOTEWORTHY OR PRAISE WHICH PODGORNIY WEAMEn UPON BREZWNEV. SOEAKIN, OF THE "'OUTSTA'N'DING CONDITIr),.IS OF COMRADELY TRUST AND UNITY' WHICH EXISTS AMONG US IN TUT DARTY, IN THE CENTRAL COMMITTEE AND IN ? THE POLI TRURO, " HE SAID, "WE CORRECTLY STE I N THIS THE SERVICE. OF THE PRESENT COMPOSITION OF THE CENTRAL COMMITTEE AND THE PDL?TSURO, AND THE GREAT RERSONAL CONTRIBUTION OF L?Ii aREZHNEV, IN BRILLIANTLY UNIFYING AND O.RU A N I Z I Nr OUR COt. LECT I VE, OR ENTIRE - ?A RTY' I N DECIDING THE TASKS CONFRONTING US." 4. aRELWNEV'S TRAVEL YO CZECHOSLOVAKIA (FEB. 21-2'5) TO ATTEND THE CELEB3PATIrt,'S OF- THE ?5TH ANn!IVERcARY Or TUE COMMUN1fiT TAKE-O""ERJ mROVIDED YET ANOTHER OCCASION FOR ENHANCI\'G.HIS PRESTI'tz' AND I-OR HEAVY MEDIA :OV!RA,E. IT IS PARTICULARLY NniEWORTHY THAT PPE7.HNEV WENT TO PRAGUE UNACCOMPANIED aY ANY OTHER SENNIOq DA*TY OFFICIALS. THE TRIPP COMING AT TTMF WHEN CZECHS COULD ASSERT THAT SIT-IATI^N IN COUNTRY uAn RETURNED TD NORMAL FOLLOWING DURCEK ADVENTI-KE, HAn EFFECT 'iF PERSONALLY ASSOCIATING BREyHNEV WITH CORRECT''ESS OF SOVIET ROLICY IN DEALING WITU CZECHOSLOVAK SITUATION OVER LONG TERM. IN ADDITION a. I CONFIDENTIAL No Objection to Declassification in Full 2010/04/07: LOC- Sr. -ti -r e No_ Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 Q \yY a' ?i fit v it 1, vJ t,,-mm Og P ' CONFIDENTIAL PAGE` 03 MOSCOW ?!26VA 01 OF fi2 1Z TO 'ISUAL MOSCOW DEPAP1'UPF AND ARRIVAL PICTURES, SOVIET MASc MtnIA DEVUTED NrAVY CfVERAG9: T!) SRET_:iN=VCR ArTIVITIES? IN rZECUOSLOVAKTA? r?NI FEBRUARY ?4 VIRTUALLY 75 PERCENT OFo THE SpArE ON THE F Knk!T PAGES OF THE CENTRAL PRESS WAS DEVOTEU TO aRELWNEV T\! DPA.,UE? FULLY 47 MI'IIATES Or EVEN'INU TELEVISION a!rYS COV .RAGE '?N F-:RRUARY' ?S WAS DEV'TEU TO THE' PRAGUr CELEBRATIONS WITH RREZH7V GETTING CENTRAL ATTENTION. 59 GEQUeNCE OF EVENT SUPROUNDING ISSUAaCE 1F ,EW PARTY CARDS PROVIDED FUKTHF? IFVIOENCE OF': g EZ-NE'V'S STANDIU1 ON L EAD!RSHIP LA!DEu. ALL CENTRAL PRESS MAP--H ? CARR'IED' LAR^F., rRONT-PACE, PwnTOS nF BREZHNEV SIGNIN!G CART) NO. Ovrm 1 ISSUED IN NAME O. LENIN. L!SS PROMIK!=NT1_Y r)Ifi? PLAYED WAS PICTURE OF MnSCO'W-4ASEr) LEADERSHIP ATTI~NnTNG? CEREMONY. (IT INTEREFTIN'G TWAT' GRTS4T J, SHEI EST AND SH .EPIN! WERE NOT ~,n1! ._PI~T.I)?cS a.L~'-In!ara L11STr0 IN REF'-2I?T5 AS PART IC I PAT r!'C .Ir~1.:-.CE.RE`t0'~Y.) L`OLL')W I UG DAY (MA'CH ?) CENTRAL PRG^c ANNOUNCED, TN RTLATTVELY LENGTHY ARTTCLE'z, THAT RPEZLM!Cv RECEIVED HIS NEW ?A.RTY CARD (NO. 00009102) IN PRESENCE nr PARTY SECRETARIES. AL THf)UGH PHOTOS OF CEREMONY NOT CARRIED IN P?ESS, TVINTNG TELEVISION NEWS DIr'` HAVE COVERA ^ nr EVENT. ONLY NEXT DAY (MARCH 4) 010 CENTRAL PPESS HAVE RRIEF REPORT THAT'OT-(E"R PARTY. LEAnERS HAD RECEIVE!) rWEIR NEW CARDR. CONFIONTIAL '"RC? No Objection to Declassification in Full 2010/04/07 : LOC-HAK-32-4-2-9 4r a..rRwljf441 ~tdra$ O,~ t CONFIOENTIAL 9~;9 PAGE 01 MOSCOW 72609 02 OF 02 10134 SE 50 ACTION FUR-P5 INF!I OCT-0I EA-11 ADP-(AM CIAE-01 DODF-'"C PM-09 H-02 INR-09 L-03 NSAF-00 "'SC- 10 ?A-711 RSC-01 "s-01 SS- 14 USIA- I" ER-11 AGR-2" *'IC-01 RSR- 1 SAJ-%l GAC-11 NE'A-10 1RSE-00 STR-c a OMF3-01 COME-00 /15.5 020711 R 1012)7Z MAR 73 FM AMEM'3ASSY MOSCOW TO SECSTATE WASHOC 7M:!? INFn AMEMBASSY COf'ENWAGEN AMEMBASSY RELGRA'Th AMEME3ASSY BUCHAREST AMEMI3ASSY RUDANESI. AMEMBASSY PRACUF' AMEMBASSY SOFIA AMEMBASSY WARSAW USMISS1ON NATO AMCINSUL_ HONG KONG AMCONSUL MUNICH AMEMeASSY PARIS C 0 N F I 0 E N T I .A. L SECTION Or-12 MOSC1W 2608 6? 0REZWNEV HAS ALSO nLAYEO AN ACTIVE p'7LE' IN FOREIGN AFFAIRS OF LATE, SETTtNr THE TO'Jr FOR S7VIEY POLICY ON MANY IF NOT MnST OF TWE KEY ISSUES? HG' HAS !OE"TIrIE7 141 ELF STRONGLY W I YU .-TWF VIETNAM SrTTL 'ME"!T, UcET I NG FOR THL F-I RS T TIME V T THrRE!UEmT "ISCO 4 VISITOR LE DUC TH0 ANU OUTLINING S0V ? ET POSTWAR ATTITUDES !N A BAN ?UF'T' SPEFCW MN JANUAPY 3.1. WITH THE EXr.EDTION Or THIS DECEMBER 21 ^E13UKE TO THE US nk' RENEWED SOM51N'S, He WAO REMAINED OUT OF THE LIMELIGHT ^N VIETNAM IrS"c5 !UNTIL THE. OUTCOME COULD BE BILLED AS A cUCCwSS. IN APneR5NT E=FORT TO E,RAcE. SCADS LEFT BY LAST JULYS E~'p~Jl_SI'~N 0= SOVYE'.T MILITARY ADVIgORS ANn InEN'TIFY WIMSELc WITW SEARCH FOR PEArE IN MIDOLt. FAST, BPFF7HNEV QECEIVEt3 F;JTA SADAT ADVISER HAFEZ ISMAIL (F'B? 81 AND WAR MINISTER ISMAIL-, No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 V. atir v Va+, ,~,Ib v,&,~' LJ 46'I G V1.. 14 (`?L. try. `~ x~ Of h C~UNIF a PAGE 02 MOSCOW 026MA 012 OF q2 10134RZ AL I (FE.Q. 271- SI M I I_ AnLY, nREZHN-Ev MET' WI TW SOt)Tw YEMENI PRIME MINISTcP (MAR. 81. FACT THAT';?RE7'NEV SHOULD CHOOSE TO KECCTVF JAPANESE A4BASgAQn~ (MAR. 6) CARPYIN, MESSAGE' PRIM JAPANESE POTME HI'VTST-R (IN CONTRAST TO HIS rAI!_,I-,E TO MEET LAST OCTOckER WITH FONMIN OHIcA1 ALSO IDENTIFY- fPFZH r-V WITH NEW ErrOR7 TO' IMOROVE HITUL.RTn FROZEN SUVIrT-JA?A'4iSE 4cLATIONS? TNSTDE THE BLOC, tiREZHNEV HAS YAWEN LEAD TO ROOST' SOLI';OARITY WITH FRATERNAL CCIUMTRIESt TN ADoITTo TO HIS VISIT TO r_ZECHbS- LOV4KIA. WE WAS ONLY TOP LEADER TO MEET WIT'-+ NORTH KORCAN WARTY DELEGATT^.N (F'ES? ?R) AND HIr 'EVAN MET WITH DEPARTING CUBAN AM9Afi1!AOOR (MAR. 71 IV ME'E'IVG WHICH COULD HAVE US-CURAN Ac WELL AS FATTY SIGNIFICANCE. 7? ASIUE FROM PERLNrNT nL PROBLEM OP. CWtII , PRINCIPAL CLOUD ON OREZWNE'V'S H^RTZON CONCrPNS US.SOVTET' ECONOMIC RELATION'S AND THEIR OnSStstE IMPACT ON RETURN VISIT TO U*S. IN RECEIVING Ap-1ANf HAMMER (FEQ? 191, RREZHNEV I..'=NT HIS DERSONAL INFLUENCE, HOWEVER, To rURRE'NT SOVIET CAMr,AIGN FOR INCREASED TRADE WITH U.S!. VISIT Or SECRETARY Ru!)LT7 WILL' TEST N'1W FAQ ;?REZHNEV' WISUES TO GO IN IDENTIFYING HIMSELF WITH MOST VULNERABLE ASPECT OF HIS POLICY TOWARD U.S. ZA? DESPITE EVIDENCE Or A PERHAPS STRF VGTHENrD PERSONAL POSITION, CIRCUMSTANCCS SUET THAT a4EZWNrv STILL DOES NUT HAVE, AND 0E'RHA04~ RnES NOT ACTIVELY SEE'' ,. COMDLFTE FREEDOM OF ACTIONIO Ti' IS SIGNIFICANT THAT' 9~E714NEV- HAS EITWER NOT SEEN A'LE', nR CONSTDE'RE'D IT '}NWISE, TO TRY To REMOVE THOSE W+ O L OSTOUT I N na.ST POWER PLAYS, SUCH AS SHELEPIN, VOP^NOV AND SWELEST. WE HAS DEMON- STH n TEO WITH POLYANIRY T Y A QQU I NTMENT, 40WEVE'''3, THAT- WE IS AbLL TO PLACE ONE nF YOUNGER, 03LE3 LEAD PS IN VUL"!ERARL.E POSITION. TRFLUE'NCE Or KOSYGTN AIPAPENTLY REMA INNS STRONG ('W'IT"'ccS HIS 4E'CEN!T Tn7U1L.~-SHOnT I -.1G MIScION TO TYI.IMEN' AN'h VFA OIL AND GAS OVOeIIPINr RE'GIONS' AND HIS ANNOU"'CET VIfiTT TO SCANOINAVTAIt aRcZWYEV WAS .CHOCEN, HOWEVFR. TO UrET TEAS PAST MONTH WITH DELEGATIONS. (E.r., S. YEMENI AND JAPANTSE) WHO wF zr, RcCEIVED RY KOSY(UN LAST YE A4, a' OCCASIONAL MEF:TT,c s :ET4EEN kOSV jIN AND Ffl ETGNrgc. G.C., OFPARTINt IT.a{?IAV A RASSADOR (FEgi 1R), ARE GIVE`J MUCH LESS PRIMTNE'NCE T-AN THOSE' WITH CONFIDENTIAL lcr FORM Me. t re:~s No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 far 3 y No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 41 Jt xl`~,1~ ?y'4t J~. s~"'-res D t CONFIDENTIAL PAGE 03 MOSCOW 026Pst O2 OF p? 101348?_ 3REZHNL V. IT IS c)UEcTTONARLE 14WFTt4ER RP HNCV WOULD WISH TO TAKE: ON BURDEN OF TOFr TIF ICATI')N WITH 4I0V1 SOVIET INDOSTRY ON TO!' OF Al)ICULTURc. FACT TWAT" ONLY PRAVr)A UKR4INY REPORTED ^1EET"' 3E'TaN'E'EN UKRAINIAN 'ARTY I_EAr)ER. SHIai L.FD BY POL? TR'I V PROTEGE' SH"HzRqITSKT 1, AND BRE7HNEV EN ROUTE' Tr oRA(;UE SUGGERTS THIT OTSCUSSIOV' MAY HAVP HAD TNTRA-O&PTY IMPLTCATTO"JS 17.11o gT'~ENRTHEVING SHCWER8 I TSK I Y O S PUS T T T ON V I S- A-V T S g1E'L17ST) WHICH SREZHNEV PREFERRED E,+!1'1' TO aUt3LICI7E IN CENT-7AL' PRE'SS'. 9? COMMENT: BECAUSE az~EZHMEV IS ASSERTING HIMSELF MORC TUrAY fJFS NOT MAN THAT 4' 4AR CLEAR AIL-INr AHEAO. THE INTERNAL O&RTY cITUATI'?N AND THE BURDENS OF LEADERSHIP OF SO rmr"PLEY A STR'JCTURE AS THE USSR SUGr E:ST THAT COLLECTt?'E LF'aOEgSHI? 4ILL REMAIN THE` CORYERSTONE OF PARTY sOL T CY, T--IFRC9Y Im:~OS I NG CDN. STR4INTR ON S9E!H11E"" r , c EEOOM OF ACTION. AIDITIONALLY, 14E CACLS ENOUGFH T NTFcINAL (Abu I CULTtY c, ,ENE? AL' ECONOMY AND FOKCI aN POLICY 1r,.,T'1Av MIDDLE EAST, US-C'1VTET ECONOMIC) PRQRLEMS cn TWAT HE RE'`? 4 I `Nti 01T'NT I ALLY VULN'.ERAALE TO CRI TICT^M AN11 EVEN CHALLENGE'. H7'4EVER, OUI ANALYSIS PEMA I Nq 'SSF:NT I ALLY THAT OC LACT CALL' (MOCCOW 99181. GIVE,! AR! Z4NEV'S AaTLTTY AT TNRTGHTINGo HE czHOULD MANAGE r0 SnPFAO NESPnNNcI tL 'ITY FIR ANY SETBACKS, 1 AND TWEPE TS "!O RE9Tn,'1S r,ANNGE'4 T'a4T uT !< WILT, RE ERnD O IN T11c Cf+""I'?1U MONT4S '.JVLE'SS HE IS STRUCK' 14Y AN U'+'LIKELY COMSTE1_LATIOr4 OF FlQvIGN AND DOMESTIC CRISES. ' O U B c 5 b' vJr, ; tN h'-- E~`~' i~rt uc L GUNF I DENT T AL a- FORM.r.w ratan No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 No Objection to Declassification in Full 2010/04/07: LOC-HAK-32-4-2-9 Vol. 2 N a. 4 February 15, 1073 'f i-.. \.. A FORT!`1F 3t`d ~ ~ ? 1V !S_1 Ts1? ie.?' 1,3 F LNtS POLYANSKY: AGRICULTURAL AND POLITICAL CRISIS NATIONALITY AND THE POWER STRUGGLE THE PEOPLES' CAR NiANPOWER TROUBLES THEf~~, AND US r. ar ~y ~,y',. A .r nit