ORR RESEARCH PROGRAM - SUMMARY AND CONCLUSIONS
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August 12, 1952
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5!WY 111r"tt..T!9;'
tor for Research and Reports
12 August 1952
Special Assistant to AD
ch Program ? Summaz7 and Conclusions
1.
On the basis of ORR experience for the past two years Task
has shown the gaps in our econo do intelligence information and
research methods and techniques, The 3-% and 3-52 series projects
wars intended to fill these gaps, but failed to do so. Moreover, they
have demonstrated the fallacy of an economic intelligence research
program by popular electionn$ rather than centralized direction and
control..
2. On the positive side? basic principles which could serve as
a framework for a cos rlete research program have been de eloped and are
contained in the following ORR publications and projectst
(a) The Role of !RR in Economic Intelligence - 1 August 1951
(b) sted Check List for C~ty and Industry Studies -
13 i
(c) Standard Classification of Economic Activities - 18 July 1952
(d) 110-510,
(e) is -65,
as for -r of USSR and Satellites
Potential 1952 -
(f) Appraisal of Foreign ononic Intelligence Requirements
...,.
t b A)
oo tJLppend= 15
3, It is recoamonded that all Branches be assigned broad subjects
(based on selections aired; indicated from the standard Classification
of Economic Activities) in accordance with their respective substantive
respo s3bilities, a '"on the broader aspects ther at, as a basis for
working papers comprising basic srtudies. These are to be coapleted in
a limited time, to be followed shortly thereafter by definitive reports
on the same broad subjects. The guiding principles of these reports will
be t h e suggested Check List for C i and 1BLustEZ Studies. As part
of this over ,l p specific ranch projects may be g oposed by
the Branches for publication. These should be carefully appraised and
considered subordinate to the main research objectives.
I. Projects 110-51 and RIB comprise methods and techniques
for the development and application of the basic economic information
and the relevance of the latter are shown to problems of national security.
These projects can be ended in connection with other ite;,s and problems
relating to cold and hot war,
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S. About 40 high priority special projects, based on careful study
and selection, of which sots than ow-gird relate directly to the soviet
}slot, and which coiariee comprehensive problems relating to nationAl
security have been developed in an ORR paper on Foreign Economic Intel
Requirements (Appendix B to Tab A). These should be used as a point of
departure in the selection of broad economic intelligence projects.
6. The paper on The Role of ORR in Economic Intelligence up
clearly the general priap 'sus 7h rh co d7% Sam u ul in connection
with all of the resaarcb Of ))RR.
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Assistant Director for Research and Reports 12 August 1952
Special Assistant to the AD
ONR Research Program
1. introduction
The object of this report is the development and/or selection of
certain basic principles to serve as a guide or framework, as well as a
concrete basis,, for a research program for ORR following the completion
of the 3--51 and 3-52 series in September. This group of projects was
a follow-up of Task Force Is and together with the latter was the
major sector of the ORR Research Program for 1951 and 1952. The
conclusions and experience gained from these two programs rhicch will
have taken the better part of two years for completion,, even if
largely of a negative character) are most useful as a baekgrourr1 and
perspective for future research programs, Those conncl~usions were
presented in a mernrandua dated 8 May, up briefly
here an they are not only pertinent to the conclusions in thiai report,
but it is also desirable that we avoid some of their pitfal'is. On
the more constructive and positive side in connection with the develop-
ment of a new program, are the principles developed and seed up
from various office papers and special projects. These will be
discussed below in connection with the principal conclusion of the
present memorandums that the application of these principles, if care-
fully selected and properly appraised, should servo as a framework
and basis for a sound economic intelligence program. Another report,
to follow the present one, will be directed to a discussion, including
tables, of the basic economic data,, which are the "building blocks"
of our economic intelligence reports and estimates. This is done
with a view to their improvement rather than criticism of our present
estimates*
2. Task Forme I
Task Faroe is designated as "an inventory of ignorance,"
served its purpose in this respect emphasising particularly the weak
areas of knowledge in (1RR which, however, were already known to exist.
They included sparseness of use patterns and input data, and lack of
or deficiencies of consumption s9and regaireAte a..'-. S were also notable for the inclusion of large amounts of extrusoua
irrelevant material of a text book and encyclopedic character. In
addition, many of the contributions contained specific cases of unwarranted
conclusions, and also in most casee, the analysts failed to disclose
the methods and techniques employed to make the estimates. One of
the principal positive contributions of Task Force Is in addition to an
over-all review, was the excellent "Check List for Commodity and
Industry Studies," which first appeared at that time in a preliminary
way and lat6r was consolidated. Task Force III contributions to NIFO-33
were excellent as area studies of the Satellites.
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3. 351 and 3-52 Seriex
The principal purpose of the 3-51 and 3-52 series was to fill
the gaps and remedy the deficiencise in Task Fore* I. With few excep-
that in the majority of cases the analyst was allowed to be+ his
judge of the gam and deficiencies in Task Force 11 also he was left
free in general to chow his own subjects and the method of pursuing
the sagas, This has resulted in the prograali, as a whole,
cohesive, and the individual projects, especially' where they relate
to specific subjects, are narrow in scope, are not of a definitive
characters and in most cases lack critical aspects from the intelli-
gence viewpoint. The lack of coordination and proper research direction
of the program as a whole is highly evident in the result. Finally,,
the sound principles developed in the office papers (referred to beelo)
as a framework and guide to our basic research in economic intalli
were largely overlooked in the 3-51 and 3-52 series program.
4. Sealeection and &ppraa-isal of Priac as a Guide and Framework
.? _... _......_... ~..........~..~....... ,..,......... .
or arrhiroems
It is one of the most important conclusions of the 9vesra t
memorandum that within the four corners of the following docualeent9
and projects (sad the extension thereof) will be found the basis of
a sound framework for our research generally as well as for a concrete
research program which will serve the requirements for foreign economic
"The Role of ORR in Economic Intelligent.," 1 August 1,951
b. "Standard Classification of Economic Activities" (and
previous indctstrial classifications,) 18 July 1952
c. "S ~sted Check List for Community and Indus
13 December 11951
d. 3,10-A. "Economic Capabilities for War of tom, and its
Satellites"
NI8-65.. "Soviet war Potential 1152--1957"
to "Appraisal of Foreign Economic Intelligence Requireem '
All of the requirements for a good research program are
__ _ _.,
--
forth in the above references, although they require selection and
* Son* impaertant perinciples, e. g. balawo of Supplies against
requirements and the determination of conraumfaetion and use patterns
involved in these later papers and projects, have been developed in
essence in reports made, as far back an 19!39 (an 239, spotrolen in
the MMO and
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integrations Another problem for their implementation is a fug. a iei'
s tandimg and acceptance of tom, and of their applications by all
concerned in OM. The brief discussions below are intended to indicate
the bearing which each may have on th* proposed general r ch progra
From this a framework may be developed and specific research projects
set up as desired.
5. The Rol s o Oi in Economic
The main problem with which ORR is concerned are those foreign
economic problems relating to national sec
economic capabilities and vulnerabilities of the Soviet Bloc. Some
of the criteria inrolved are as follows e
?(l) to estimate t h e magnitude, of possible present or
future military or other threats ourselves and a w allies .
(2) to estimate the character and location of possible present or
future military or Oth sate . . . to assist us in
estimating, within the range of the poesible, the intontiaa3
the USSR or any other potential amor . .. (}4) to
he4
makers decide that we can do to reduce pnsibl* or probable
military or other threats by inp 1 as enemy s economic
capabilities to carry them out . . . (5) to assist in estimating
the probable development of the relative strength* of the Bast
and the West over the next fear ,y"9' ~s if global hostilities are
avoided."
Some of the important factors developed in the report as a
guide to the special problem involved in ORRrss research are shomm
belowt
The difference begin economic intelligence and infcer-
nation, i.e. the latter does not become economic intelligence
its relevance to national security is made clear; also that a
measuring rod must be devised to add up In J_neommeasurablesv and
unlikas things and activities to an Index of capabilities. It is
also a hasi zed that the foundations of our knowledge tit be
improved to give better and quicker aura in response to day-fir
day pressures on the question of determining basic research
priorities. The bottleneck *fallacy* is eliminated as
factor in the research program. ' reelevas a to toearrowts needs
Mt be f amsm of the basic research selected f or our effoarta.
The principle of selection or stressing of any particular subject
to the exclusion of other necessary subjects, particularly fro
a long-razes viewpoints in discarded on the bad that for a
proper study to be made exclusively of a subject, e.g. , such. as
requirements, techniques and methods of production,, etc., could
conceivably utilize the energies of the entire staff of
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(a) The need for more stud of
organization
s and
(b) The need for more systematic study of Soviet
military intentions as rerseea2.d in scono .c events
(c) need for more study of the reIatior
among itzdnstri*s
(d) The need for More study of the eco
ments of military operatic
(e) The need for more study of particular ituastries,
commodities, and services
(f) The ned for more study of
Soviet industry
(g) The need for more study of the ependan
(h) The need for more s
problem.
6. Suited Check List for Cannodi and
This check list is a carefully worked out study of the kind
of inf c coati x it has been f cnmd reicessary to fully describe a particular
commodity or industry in order to understand its relatiahip to the
econou as a whole. In addition to a very brief introduction wits
On the question of specific problem it is pointed out t in a
study of current problem in foreign ecenno,#n iat?Ui bey for
the National Sscwit yr Couxt . a very incomPlat aas yielded a list
of 42 top priority probla ., This list is reviewed below with rogerd
to those *iich id t have special interest in connection with the
present program...
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regard to histry, location, ox
industry, the study should also inc
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b. Supplies including outputs and production ccitiest
stockpiles, inv entarioe? reserves
c. Inputs and input requirements
d. Use pattern and use requirements, su
The techniques and methods eamploydd in arriving at
be clearly stated in the appendix.
7. Standard Classification
Industrial ssf`.~'"..??..
The detailed classification of economic activities furnishes
a complete basis for the selection of those comsodities and industries
with which CM is concerned. The present standard classification
dated 18 July 1952 is an .argement, and develo t of the report
of 18 April 1952. The most recent report co teizas about 500 itearae
divisions and subdivisions of the following princip . activities
med according to the table of contents
a. Agriculture, Forestry, Hunting and Fishing
b. Vining and Quarrying
c. Uenvfacturing
d.
(1) Basic Metal Products
(2) Machinery
(3) Transportation Equipment
Construction
Electricity, gas, waterr, and sanitary services
f. Cie
g. Transport, storage and communication
h. Sexes
i. Military item
The above divisions are arbi
careful selection must be made from the total of 5DO items
practical as the basis of a research program. This sect
.~
based on any one of a number of breakdoas al=ly mom, for
according to the office maasarandun of 20 y 19,
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zation of I)conc is Divisions, 010t,06 or according
items resulting from the collapsing of subdivisions to fit
bilities of the orr trnization by di ions, br , and
which the writer drew up about the same date. The coati:
here is that'there is a basis for an immediate point
this reep.ct.
8. General Research Pry o Rwommendatioli
From all of the foregoing we can clearly derive a proper
approach to our major research activity nam*y the ce nation of
basic data on a variety of industries, with respect to the Soviet Bloc.
This activity must be a continuing process on a current basis,, as
well as for the past and future by projection. f*z organization
as well as its pens ll is set up pzim r ily at present to accomplish
this objective. In fact,, these data are its primary product and. a]i.
of its final products depend on this klixi of intelligence information.
Efficiency and accuracy in the handling of special pro,
the response to the day-by-day pressures for which MR
depend upon improvement in the foundation of our information. It
has been demonstrated that the 3-a and 3-52 series, in gensrral* do
not accomplish this purpose. Hance# it is recommaded that each
branch and/or section be assigned the job of c
limited time) a working pier cowering s
scope of their responsibilities and fields of intereit. The a
follow the principles elucidated in section 5# 6, and "1
report and siialfl take advantage of the criticism directs against tF*
3-.51 series, particularly, and any other questions raised in the
preceding vections.e After completion the working paper is to be u set
as a basis for a definitive report which will also fallow the princj , ss
shown in the check list for commodity and industry a tudises ( ction 6
of this r sport) and in a~e nee will be a carefully edited (from both
the substanti*e and *sema"tic* vie ts) cut,-down version of the
working paper. A limited time will likewise be set on the de+-f initivr
report which, why completed,, will be published as a formal re
Special Wicautione should be WOW to aaoi4
"window tarimrdng* particularly in the historical and
sections of the working paps 's and to include a
search based on, e.g. Soviet publications.
(and Scterna1 Research venerally), and the results of the Basic Intel
full explanation of the basis of selection of the path leading to the
official, estimate.
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_7w
9 . Roc tf oas for SpocW_ '. Research cb Pro- cts
ORR already has ua-y a group of special projects which
are in lice-with correct procedures and objectives of our research
off arts as outlined above. Zz ples of those are 11441 an ' --65,
which were requested by the Joint dnisi'e and the motion. Board of
Estimate respsctive4. Extensions-of these projects and similar oft
will be necessary as outlined below, and they should also be included
in the program, In the developnareut of a program involving special
projects, the iroblsm is oft of =rrov zag down the selection the
than in "dreaming u6l new projects, As has already been pointed
out under section s on the question of specific problem, a study of
current problems in foreign economic intelligence by O RR .for the
National Security Coup yielded a list of 42 top priority problems
from "a very incomplete aampIa." These problem which wore carefully
drawn-up, as well as other problem previously considered should be
revieved as part of the prose-it program, particularly a section bearing
directly on the Soviet Bloc. A review should also be wine of the
proposed program of the Board of National Estimates (*.go 22 April 1952)
and its critique of its toss can the Wit, 13 February 192.
Gonferre ,ce3 should be held on a continuing basis with the National
Board of Estimates as well as with the C, IAC, and other groups which
originate intelligence projects and requests so that have the besnetit
of their thinking in our o field of economic intelligence to
assist us in developing our own top priority problems, The following
is a brief revise of some individual questions raised in section 9 to
develop the relationship of the" questions to a research program for
the immediate future.
1G, ial Pecta in ?rooess * ch Bear Direct x on Fe oseci
Research egraa
a. 1113--5i, "Eco is Capabilities o the Soviet Bloc to
Support a General Jar"
This is an extensive project covering the near i; sis of
a large number of econ.c sectors in Irhich an attempt bag been
to follow the suggested check list for c ty and
industry studios. The complete outline of the study is givers in
a oarandus dated 3 Dooember 1951. Because of the lack of
basic economic information of the Id ad referred to under section 8,
it has been necessary to develop this inf ormati.on especially for
this project; axed c. tpletion of the first pb se of has consequently
been delayed and postponed. In additioi t c pressures on the
various analysts in connection with obtaining the required
information on time has resulted in some questionable estimates,
particularly on inputs and requirements. These deficiencies corm,
in due course, be subjected to the principle *of sucasssivs
approximations" to improve them. Despite these defects the project
will represent a marked advance in the art; and the project
represents the type of research that should be continued by R.
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The cold war aspects of the project, which required about one
year, will be completed shortly. After this is coiVleted the hot
war estimates will be made. The principles of 1151 should be
extended for both ciald and hot war to include other co oditi es
and industries, e.g. Ferro-alloye, such as molybdenum, vanadium,
tungsten, cobalt? nickel, and cbrom i um; xplo .ves such as Tffp
Picric acid, Anatol, RDX, single and doable base propel ts;
aoditiona2 non-ferrous metals ouch as z, lead and fix; precision
and scientific instruc is and special equipment and machinery
(other than moue tools., which is already included); atomic
energy, raw materials as well as others,,*
b. NI"5, #Sovio t War Potential V52-19,578
T is project involves a spacial index techniq f or
combining heteroganeous items into a common expression far each
component in the same ts- s. The product will consist of a time
series of physical output levels frost 1927 to date and will be
projected to 1957. Output estimates for various products will
be combined into a total which will represent output and rate
of growth for an industry as a sector or as a wholes for example,,
individual non-ferrous metals (such as copper,, lead, zinc, tin and
aluminum) and in combinabiun wit each, other to form a oup
sector. These may then be combined with other groups or sectors
such as iron, and steel and the Ferro-alloys to form larg
It is obvious that this techniques while it may have certain
l im tation*, may also be applicable to r3aW other large sectors;
perhaps ` as an 'ad" (even if in appr ox.i mate f wz only) of the entire
econoeay. The techuiqua, therefore,, be the basis alone or in
combination with others of continuing research'ojects in a now
program.
e and ethers in the present proram were included in a project
which was similar to I&-lul designated as the Munitions Bo rd Project
entitled, #Soviet Production, Requirements, Purchases, Imports, etc6
.
of Selected CQmmoditdee,# 19 lhw and 20 June 1950. The principle of
balancing supplies against consamtion and requirements, and that of
inputs, was also included in these projects. Ilk-3.31 was published.
The Munitions Board Project was interrupted by the reorganization in
1950.
The technique involves multiplying each physical output satiate
by the permanent price of ile product, thus obtaining output estimates
in value terms. The separate arithmetic products are then summed uda
to obtain a value estimate of production for the industry as a whole.
Usually the c rarisons are made in term of a percentage of a baser
period; hence, the term index number. By projecting t iiis tce forwar
production estimates for future years can be presented.
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U. Other Sp Pro ecfis
a. Appendix B to Tab A, Foreign Economic Require nte, etc.
This paper developed in Olt after considerable thought
and study amts f arth s ass 40 top priority projects Of foreign
economic inteIlli.gence lowing a direct bearing on national amity'.
At the outset it ehasi that first priority should be gig
to economic analysis in support of policies relating to the conflict
between the Soviet and .nor-Soviet worlds and requires in tellif nce
relating to the capabilities, the Viabilities,, and the intentions
,or probable courses of actions (1) the USSR and its Satellites
(including China); (2) the ; ri cipal European and Asiatic allies
of the United States; and (3) a band of countries on the fringe
of the iron curtain not now clearly in eitber c r, but potentially
contributing to the strength of one or the other.* it one is to
choose priorities among priorities in carder to limit the problem
to a practical scope it is obvious that section B (of Appendix B
to Tab A) of this r sport is most significant being limited to:
"Economic Analysis Relating to Lim USSR and Satellites." The
examples of high priority economic intelligence projects in this
section have been selected as most pertinent to our present interests
and are sh* n in Appendix A of this report. A further concantra-
tion of this group bye tia~n of those of lesser priority,:
or combinations within its would provide an exeellat SPacific
research program in addition to the sectors of the proposed
general program discussed above.
b. Miscellaneous Projects
As emphasized in the foregoing discascion the problems
of a research program at present, particularly on specific projects,
in mainly one of selection rather than of origination. For o,
if one were to consider additional projects sow such as the
following might be taken "out of the hat" s (1) The Separate and
Combined Effects of the Overrunning of Various Areas by the
Soviets; (2) various facets, in the important study of "Conversion
and Rearmament" such as place, timing and ptWasing in the conversion
from cold to hot war; (3) The Long,--fie Impact of Soviet Develop-
ment and Technology on Soviet Military and Economic Capabilities;
(I) he Decentralization of Indd try in the IZM,; (5) 111,
ruinge Impact of Coamaauuis n on Soviet Military, and Econ
bilities; (6) A Study of Soviet Planning (particularly the 1
Detailed Pin) in Relation to uali.tative and. quantitative Aspect
of Soviet Iredustary; (7) A Map Study of Soviet Industrial. Capabilities
and Vulnerabilities; (8) Expansion of UO$i to the whole Indust aa1
* It also re to resources in the rest of the sold, e. G. Africa,
Latin America, etc. which may contribute significantly to the strength
of either center of power.
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I
Classification, etc. Obvio sl ', the list of probl r
(which are undo-&Ied y :i t r. t) could be expar +d i
c. i ra ch P'oJecto*
As a matter o policy all
:Lldivridua) ) s haul II be
i v:idual re earch project.. Ia vr, if sue
pr-or r:ay U?~1eotc c UAqy cool i 1Tu d al t by do ini
in the warking papers and in the definitive reports
t ovo. ';'Us tioa resolve-,! iLst l
one of separsi,4 p'ablication o the proposed specific sabj
which in special caste V have merit. .V oc1 ctiorn of thdi'
tg*ta projects chow,. k cvar', ta;c Liao acecua- ha
a. Whole, ibi Z as afro ` aaipha i d s` auld be c
coxitrol.led. ar l direct Wo ar a ~ in objuctive
results.
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# Al des od diversified branch projects which co,
gated with profit (an the basis of a substantial bearing
the Soviet scone) a list of specific projects deal ng
of about 5 subdivisions each was developed and reported by
in parch 1950
goo
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Appendix A
Us= far the Executive Secretary, h : sub3ectt 'Appraisal of ?orei
Economic Intelligence Requirements, FeeiUties and Ar~rangemo is to
National Security dated 31 1951s May CIA 4M74., Appendix B to Tab A
Be 'Ecox ,mi c 4s*es Re lato the USSR and its atollites a
' les of high priority economic intelligence projects are
follows:
puree aaad t the United Stat4s
aneutralal
a. Irlartims Capabilities of the Soviet Bloc to Meet
Essential cis and Military Requirements for Selected
Critical Items (e.g., electronics equipment, copper,
aviation fuels special machine tools, f ergo-al toy ng
precision instxumente, natural rubber, etc.)
b. "Economic Capabilities of the Soviet Bloc to Develop
and Produce Selected Military Items (e.g. atomic weapons, guided
m i.ssiles, germ warfare agents, radar, long-range jet bombers,
tanks, sub arines, et-c. )
c. 'Effect on Soviet Economic capabilities for Prolonged
s
v
, V Yt41i pp
a) Western Europe, b) the Middle East, c) Ja rs d) Southeast Asia
d. ''Over-all Economic Capabilities of the Soviet Bloc a
W
ho]e Simultaneously to Conduct Specified Rili.tary
and Maintain Essential Civilian and Iilitary Production
e. 'Effect of the Korean
Controls on the Catpabilities of the Chinese Econ r
and Without Soviet Assistance*
f. 'economic capability of the European Satellites
Unassisted by the USSR to Wage War on Yugoslavia: Requir
G. "C zl hies of th'io Soviet Bloc to Wage Eco
Against Non-,Soviet Rations
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of the economic capabilities of the USSR and its
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2. *Analysis of the economic vulnerability of t
its Satel l3 messuonoed c wa~rf are kyalao
a .1! s arts c ca;
a. "vulnerability of the Soviet and Satellite Economi
Including China's, to Strategic Bombing with particular
to Their vulnerability to Ambomb Attack
b. "vulnerability of the Soviet Bloc as a oleo to
; estern Program of Economic artare. Relative Vulnerability
to Various Measures- Overt and Covert.
~' c. INy ability of the Chinese Ec nog yr
Controls an a) Exportes to CBS (b) Shipping
d. "vulnerability of the Soviet and Satellite Economies
to a Program of Induced Defection of TAW Technical
Personnel
"e. "Vulnerability of the. Sovi? t and Satellite Food
to Biological. Warfare
upply
3. "Anal sis of economic indications of robabl~ Soviet and
satell,iet and
a. "Economic Activity Within the USSR and Its Satellites
Which Might Reveal Their Intention to Resort to Military Action
b. "atterna of Allocation of Economic Resources
Productionrof Military Items Within the Soviet Bloc Which I
Reveal the Kirvi of Military Operations Contemplate d
co "Cournos of Action Like].,; to be Taken
Response to an Effective Western Program of Export Control
d. "Soviet Economic Measures With Respect to C
Might Reveal the Extent of the Political, and Be
of These Countries
e.. "Evidence Which. Might Suggest What Air Target Systems
they Soviets Auld be Likely to Adopt for Western op e-
Sanitized - Approved For Release : CIA-RDP75-00662R000300130007-1
Sanitized - Approved For Release : CIA-RDP75-0092R000300130007-1
OFFICE Gi R.1 SI ARC:I A; . TETOR a,
R po to Division
29 Aug t11951
x-0joet X51 (T.F. I) Rapers To Bs Issued as Provisional P.mpo.rts
Sulp1ua c Acid
Coke Chemicals
Caustic Soda and Chlorine T.nduetriGs
`$rnth tic Ammonia industry
Gain and Grain Products
A' amino
Copper Industry
:Lad Industry
"'in Industry
Zinc I. id try
Coal
ZQ
Bail Txw_srorwW.ou
Inland tutor : a part
Highway Tr port
PHLelines
I: .lway Gauge Dtf'foential and tbn 1 nsic tiding Facilittios
of the Wastarn S4viot antier
l!~rc ':ant Shipping
psr Production in tho is
F ,j,rilat en and ut: r
Dly
Machinc3 Tool Industry
Electron Tube Industry
. n''i r fiction Bert ng's
_-U-6 i on ,y an Initial solo-c- on, ;?c wi
1ik
Sanitized - Approved For Release : CIA-RDP75-00662R000300130007~'1