USSR MONTHLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83T00233R000200160003-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 44
• Document Creation Date: December 22, 2016
• Document Release Date: November 24, 2010
• Sequence Number: 3
• Publication Date: May 1, 1982
• Content Type: REPORT

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Directorate of Secret
Intelligence
COPY
. 'p
00 KNOT GIVE OUT
O MARK ON
USSR Monthly Review
Secret
SOV UR 82-005
May 1982
439
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Directorate of
Intelligence
USSR Monthly Review
directed to the authors,
The USSR Monthly Review is published by the
Office of Soviet Analysis. Comments and queries
regarding the articles are welcome. They may be
Secret
SOV UR 82-005
May 1982
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Contents
The Military-Industrial Perspective
Complex in the USSR
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The Soviet military-industrial complex, the world's largest, has de-
signed and manufactured an array of weaponry that has projected the
USSR from a position of military inferiority two decades ago to one
now widely perceived as equal to-and in some areas superior to-our
own. As new Soviet leaders emerge in the 1980s, however, they will
find it increasingly difficult to balance the growing needs of the civilian
economy against those of the military-industrial complex.
The Military-Industrial Policymaking Process
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In the USSR, military-industrial policy is established by a small group
of senior officials, many of whom have long experience with defense
issues. The policymaking and planning process is highly secretive,
resistant to major alterations in priorities, and imparts considerable
momentum to military programs.
Magnitude and Scope of the Soviet Military-Industrial 7
Complex
The Soviet military-industrial complex is the largest in the world. The
nine defense industrial ministries control over 1,500 research, develop-
ment, and production organizations and receive support from a large
but undetermined number of civilian organizations. Several hundred
development programs for weapon systems and major system elements
are currently under way
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The Importance of Western Technology to Soviet Defense Industries) 117
The Soviets have long used Western equipment and know-how,
acquired legally and illegally, to accelerate introduction of new weapon
components and subsystems. This effort is likely to grow, because many
weapon acquisitions programed for the 1980s require manufacturing
capabilities that are rare or nonexistent in the USSR
Soviet Design and Production Practices in the Aerospace Industries) 123
Analysis of Soviet development and manufacturing practices for many
new aerospace weapon systems reveals an emphasis on simplicity, parts
standardization, and generational design inheritance. While these
features save resources, increase system reliability, and minimize
production problems, they also tend to limit system flexibility and
retard Soviet technological progress
Comparative Efficiency of Soviet Military Production
As the Soviets seek more advanced weaponry in the future, they will
find it increasingly difficult to afford the large number of weapons they
have traditionally procured. The Soviet Union is at a comparative
disadvantage to the United States in the production of high-technology
military products because of technical and managerial inefficiencies.
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Other Topics Metalworking Technology in the USSR: Problems and Prospects
The Soviets expect better machinery to improve performance in critical
sectors of the economy, but their efforts to modernize the metalworking
industry are impeded by traditional manufacturing practices as well as
by problems with the new technology
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Western Technology and Polish Production of Military Transport 37
Vehicles for the USSR
Poland's Huta Stalowa Wola Plant, which has benefited from Western
financing and technology since the early 1970s, is now producing a
general purpose armored tracked vehicle. The principal user of this
vehicle will evidently be the Soviet armed forces
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Soviet Trade Unions: Striking a New Balance) 41 25X1
Events in Poland have caused Soviet leaders to refurbish the image of
their own trade unions. Greater weight is being given to improving the
workers' welfare, but boosting production still remains the unions'
primary responsibility.
Briefs Industrial Production Through April
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New Data on 1981 Hard Currency Position 45
Soviet Planner Discusses the Economy
Large Tungsten Imports Continue {
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Regional Commission Claims Success in Improving Management) I 47
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The Military-Industrial
Complex in the USSR
Perspective
The steady increase in Soviet military power since the early 1960s has been
sustained by a large and growing defense industry. The USSR's "military-
industrial complex" now includes:
? Some 200 major weapon research and development (R&D) facilities.
? About 700 additional facilities that perform at least some defense-related
research and testing.
? More than 100 plants for the final assembly of weapons.
? Several thousand production facilities for weapon components and
support equipment.
This far-flung establishment has produced an array of weaponry that has
projected the USSR to a military position now widely perceived to be at
least equal to-and in some areas superior to-our own. For example,
during 1974-80, Soviet defense plants turned out each year an average of
2,850 tanks (compared to 870 for the United States), 900 tactical aircraft
(the United States produced about 580), and more than 22,000 surface-to-
air missiles (the United States turned out 3,500).
The momentum of these programs shows every sign of continuing.
have already identified about 120 development programs for new or
substantially modified weapon systems that could be deployed in the 1980s.
But the development of the Soviet military-industrial complex is not blind
or uncontrolled. Rather, it results from the decisions and political choices
of the small number of officials who occupy key positions in the party's Po-
litburo and the Defense Council. Led by General Secretary Brezhnev-a
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former overseer of defense industries-these men preside over a policy-
making and planning process that is highly centralized, secretive, and
resistant to major changes in priorities. The leaders of the Soviet military
and defense-industrial establishments-many of whom have worked
closely together for decades-have formed political alliances with support-
ers of civilian heavy industries and have consistently been able to assure
priority access to critical resources
These leaders, however, face increasingly difficult choices. The Soviet
Union is at a comparative disadvantage to the United States in the
production of high-technology military products. To some extent the
Soviets have been able to ameliorate the costs of military equipment by an
evolutionary approach to weapon design and by acquisition (through both
legal and illegal means) of Western technology. Nevertheless, as their
economic outlook worsens, Brezhnev and his colleagues will find it
increasingly costly to maintain their compact with the military-industrial
complex-priority in resource allocation in exchange for political support.'
This relationship will be further complicated by a leadership succession
that will affect not only the top political figures, but the leaders of the mili-
tary and defense-industrial establishments as well. Thus the continuity in
leadership that has been one of the hallmarks of the Soviet military-
industrial complex is likely to be jeopardized in the near future. In setting
the tone for development of the military-industrial complex, a new
leadership will have to balance the needs of the civilian economy against
the need to consolidate power by currying favor with the military.
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The Military-Industrial
Policymaking Process'
In the USSR, military-industrial policy is established
by a small group of senior officials, many of whom
have long experience with defense issues. These offi-
cials are advised by the military and several govern-
ment agencies, which in turn formulate programs,
plans, and budgets. The policymaking and planning
process is highly secretive, resistant to major alter-
ations in priorities, and imparts considerable momen-
tum to military programs.
Key Officials and Organizations
In the Soviet Union planning and management of all
defense activities are highly centralized. The ultimate
decisionmaking authority resides with the Politburo,
the chief executive body of the Communist Party. The
Politburo includes the top officials of both the party
and the government and considers the full range of
domestic and foreign policy issues. Many of the
important decisions on military-industrial matters,
however, probably are made by the Defense Council,
composed of the half dozen top party and government
officials with national security responsibilities. With
Brezhnev as its chairman, the Defense Council oper-
ates by consensus. The Council of Ministers, in charge
of the economy, elaborates policy decisions and is
responsible for ensuring that approved military re-
quirements are met
Policymaking bodies are served by a large number of
military, party, and government organizations collec-
tively responsible for planning and oversight of mili-
tary-industrial activity. Four of these organizations
significantly influence policy decisions and exert pri-
mary control over their implementation:
? The Soviet General Staff, the main executive organ
of the armed forces. It apparently serves as the
secretariat for the Defense Council-providing the
agenda, list of attendees, and decision papers. It
prepares threat assessments that are used to assess
defense requirements, and it prepares and defends
military plans for the procurement of weapons and
related materiel.
? The Military-Industrial Commission (VPK), con-
sisting of the top executives of Soviet defense indus-
tries and a supporting staff. The VPK monitors the
work of the nine defense industrial ministries and
coordinates party and government decisions for the
development of major weapon systems. The VPK
also closely monitors weapon programs, enforcing
schedules and ensuring that technical and perform-
ance specifications are met.
? The State Planning Committee (Gosplan), the na-
tional economic planning agency. It is the final
technical authority on the ability of the economy to
meet overall military needs. It has a military-
economic department-manned in part by officers
from the General Staff-to represent military
interests.
? The party Central Committee apparatus, especially
the Defense Industries Department. Central Com-
mittee departments help government agencies inter-
pret policy decisions when plans and programs are
prepared. Departments also maintain independent
party channels into all levels of Soviet military and
industrial organizations, through which they gather
information on compliance with the leaders'
directives.
Officials from these organizations cooperate closely
on military-industrial matters. Conflicts are resolved
through compromise or, failing that, through appeal
to senior officials.
Organizations that implement decisions-the military
services and industrial ministries-can influence poli-
cy through their special expertise and control over 25X1
information. The services originate requirements for
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new weapon systems, and each competes for missions
and resources. Military officers stationed at develop-
ment and production establishments enforce military
claims and maintain high standards of quality control.
Industrial officials have information on development
and production capabilities not routinely available to
the top leaders and planners. Financial and career
incentives generally induce them to favor military
over civilian programs. However, they have reason to
be conservative in all areas, resisting technical innova-
tion or similar measures that could endanger their
established production plans. Military programs bene-
fit from the ability of concerned officials-military,
party, and VPK-to intervene directly throughout
industry to assess capabilities and at least artl
counter managerial conservatism. 7
Crucial positions at all levels in the military-industrial
complex usually are occupied by officials with long
experience in defense affairs. Brezhnev was responsi-
ble in the party for defense industrial matters before
assuming the leadership, and current Minister of
Defense Ustinov became a defense industrial manager
in the 1930s. Frequently, key officials in planning and
management agencies are recruited after successful
careers in defense industry or the military, and some-
times they move between major agencies. Important
industrial managers, such as weapon designers, usual-
ly have long tenure and wield `considerable influence
in party and government channels. The energy, politi-
cal skills, and experience of all such officials influence
the operation of the military-industrial complex, as do
the network of administrative tools at their disposal.
Plans, Programs, and Budgets
Defense Plans. Soviet defense plans set forth the
principal goals and lines of development for military
forces. The 15-year perspective defense plans deal
with broad goals rather than specific programs. The
more detailed five-year and annual defense plans are
prepared by the General Staff on the same cycle as
the corresponding national economic plans. (Although
it presumably is reviewed periodically, the five-year
defense plan is not revised and extended each year as
is the US Five-Year Defense Plan.) Gosplan and the
VPK review the parts dealing with procurement of
weapons and other military materiel before the plans
are submitted to the Defense Council.
The five-year defense plan evidently contains a threat
projection that identifies foreign military strengths
and weaknesses, an analysis of current Soviet military
capabilities, and a set of targets for improving these
capabilities and meeting the threats. It probably
shows projections of military expenditures and man-
power requirements and the share of national econom-
ic resources that will be required to fulfill the targets.
This information would enable the Soviet leaders to
assess in general the potential costs of their defense
programs.
Weapon Programs. In drawing up the five-year
defense plan, Soviet officials base their targets for
acquisition of weapons primarily on development and
production programs that are under way. We have
considerable information on how the Soviets manage
these individual programs. Senior organizations and
officials become intimately involved in a program
when the weapon is about to enter initial engineering
development. By this point the military customer and
industrial designer will have agreed on recommended
technical approaches and objectives. The remainder of
the program is governed by decrees formulated at
three decision milestones:
? The development initiation decision, made by the
Defense Council (or, for minor weapons, by the
VPK) on the basis of a proposal by the lead
designer. The decree authorizes development from
the design phase through the fabrication of test
prototypes and identifies the major participating
organizations. At this point the effort gathers mo-
mentum. The Soviets decide on a single design and
freeze the system's basic technology.
? The production preparation decision, made by the
same officials who initiated the program. This deci-
sion finalizes the commitment to production and
often precedes full-scale testing. Heavy resource
commitments may be required to expand or build
facilities. It then becomes extremely difficult to halt
a program, except by resort to a high-level political
decision.
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? The production and deployment decision, made
near the end of the test program. Senior defense,
industrial, and economic planning officials take part
in this decision. Again, major systems may require
explicit approval by the Defense Council.
Economic Plans. The production needed to meet all
civilian and military requirements, including those of
weapon programs, is organized and directed by eco-
nomic plans. Five-year and annual economic plans
establish production targets, and annual plans allocate
the material resources necessary to meet these targets.
Although the economic planning process affords the
best opportunity to assess military- and civilian-indus-
trial trade-offs, planning procedures limit the ability
of decisionmakers to make such comparisons. F_
Gosplan and other agencies participating in economic
planning do not have the technical capability to
compare all potential resources applications when
making plan assignments. Instead, Gosplan tends to
allocate resources sequentially. In plan preparation, it
services military requirements first, relying on its
military-economic department to develop the specific
production and supply relationships within the defense
industries. Once they are established, officials resist
adjusting economic plans because each change re-
quires further changes throughout complex networks
of production and supply relationships. When plans
must be adjusted, Gosplan tends to apportion avail-
able resources according to the priority of the user,
again favoring the military.
The military also has several advantages in disputes
with civilian interests. Because of security consider-
ations, civilian economic planning officials usually
cannot learn of, much less challenge, specific military-
industrial use of resources. When challenges do arise,
political considerations rather than hard economic
criteria usually govern decisions. General Staff and
other defense officials have wide access to civilian
industrial plans. They participate and wield consider-
able influence in the resolution of disputes over
resources
Implications for Future Defense Programs
Although our understanding of Soviet military-indus-
trial planning and decisionmaking is incomplete, we
know the process has a number of characteristics that
must be considered in assessments of the future Soviet
defense effort:
? It is highly centralized. Top leaders are drawn into
the details of military plans and programs and are
personally responsible for their success or failure.
? Decisionmakers on military affairs have long ten-
ures. This gives their policies continuity and
consistency.
? Few officials know the details of defense plans and
budgets.
? There is little incentive to review basic priorities.
Fundamental national policy reviews are required
only at five-year intervals, when national economic
plans are prepared.
? It does not facilitate thorough scrutiny of military
programs in terms of civilian alternatives. More-
over, budgets specify the organizations that receive
funds, but not necessarily the functions for which
funds are to be spent. This makes it difficult to
identify waste and duplication.
? It is resistant to major alterations in plans and
programs. Once development of a weapon begins,
usually only a technical failure or an explicit high-
level decision can cancel the program.
? It promotes gradual change. At every level in the
system, success is measured by fulfillment of goals,
goals are set conservatively, and risk is discouraged.
This results in an evolutionary approach to weapon
development, wherein improvements are incorporat-
ed incrementally in successive generations of weap-
ons.
considerable momentum to military programs. They
limit the ability of civilian claimants (except at the
highest levels of the leadership) to challenge the
military's priority access to resources. And they pro-
mote a basic continuity in the development of Soviet
military power, barring radical changes in the exter-
nal or internal environment for decisionmaking.
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Magnitude and Scope
of the Soviet
Military-Industrial Complex
The Soviet military-industrial complex is the largest
in the world and the instrument through which Soviet
leaders have conducted a vigorous, broad-based build-
up of their military forces over the past two decades.
It has demonstrated a capacity to develop some 140
new or substantially modified systems per decade.
Several hundred development programs for weapon
systems and major system elements are currently
under way.
Allocation of Resources
The Soviet military-industrial complex has grown and
prospered because of the high value which the politi-
cal leadership has placed on the role of military power
to defend and advance state interests. The leadership
enforces decisions regarding the allocation of re-
sources for the development and production of mili-
tary equipment through the Soviet command econo-
my, which is designed to be responsive to leadership
goals. Soviet officials have stated on numerous occa-
sions that they will provide whatever level of resources
is necessary to achieve and preserve military equiv-
alence with the West
To achieve its current position, the Soviet military
effort has, since the early 1960s, required ever-
increasing expenditures. Although these costs repre-
sent a significant portion-13 to 14 percent-of the
Soviet Union's national product, they have an even
greater impact on certain key sectors of the economy.
We estimate that about one-third of the output of the
machine-building and metalworking sector, one-
fourth of the output of all metallurgy, and about one-
fifth of total energy production is consumed by the
military-industrial complex. Critical labor and capital
resources are siphoned off to support development and
production programs for weapon systems. These pro-
grams add little to the continued growth of the
economy
Organization
Most of the organizations that make up the military-
industrial complex belong to one of the nine ministries
identified by the Soviets as the defense industrial
ministries. About one-third of all Soviet R&D man-
power is assigned to these ministries. Each is responsi-
ble for the development and production of specific
types of military products (see table). Together they
control over 1,500 separate R&D and production
organizations.
Basic and applied research is undertaken primarily by
scientific research institutes (NII), while design, de-
velopment, and engineering are usually the responsi-
bility of design bureaus. The production of military
products is carried out by plants assigned to the
ministries.
The Soviets have about 200 major weapons R&D
facilities. An additional 700 facilities perform de-
fense-related R&D as well as testing. About 20 fully
equipped test sites perform final system testing and
acceptance, and some 75 smaller sites conduct initial
system and component testing. Over 100 final assem-
bly plants manufacture the bulk of major weapon
systems. These production facilities are supported by
several thousand producers of major components and
combat support equipment.
The Civilian Connection
Although most of the effort of the nine defense
industrial ministries is devoted to the development
and production of military products, a portion of their
resources is set aside for civilian production. At the
same time, the complexity of modern weapon systems
requires that an increasing number of organizations
from the civilian industrial ministries and the national
and regional academies of science become involved in
military programs. The civilian organizations support
the defense industrial ministries by conducting basic
and applied research and by supplying materials,
components, and parts. They make major contribu-
tions to defense production in areas such as solid
propellants, laser weapon components, military vehi-
cles, electronic warfare equipment, and communica-
tions satellites. Although we do not know how many
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Principal Military-Related Products of Selected
Industrial Ministries in the USSR
Ministry of the Aviation Industry Aircraft, aerodynamic missiles, spacecraft, air-to-air missiles, defensive missiles (both tactical
and strategic), tactical air-to-surface missiles, and ASW missiles.
Ministry of General Machine Building Liquid- and solid-propellant ballistic missiles, including submarine-launched missiles
(SLBMs); SLBM fire-control systems; space launch vehicles; spacecraft; and surface-to-
surface cruise missiles.
Ministry of the Defense Industry Conventional ground force weapons, mobile solid-propellant ballistic missiles, optical systems,
antitank guided missiles, tactical surface-to-air missiles, lasers, and ASW missiles.
Ministry of the Shipbuilding Industry Naval vessels, naval electronic and support systems, mines, torpedoes, submarine detection
systems, acoustic naval systems, and radars.
Ministry of the Radio Industry Radars, communications and navigation equipment, special purpose computers, guidance and
control systems, and lasers.
Ministry of Medium Machine Building Nuclear weapons and high-energy lasers.
Ministry of Machine Building Conventional ordnance, munitions, fuzes, and solid propellants.
Ministry of the Electronics Industry Electronics parts, components, and subassemblies.
Ministry of the Communications Equip- Communication equipment, radar components, electronic warfare equipment, military
ment Industry computers, and facsimile equipment.
Other Key Defense-Related Industrial
Ministries
Ministry of the Automotive Industry Trucks, armored personnel carriers, and transporters.
Ministry of Heavy and Transport Machine Armored vehicles, diesel engines, and generators.
Building
Ministry of the Electrical Equipment In- Batteries, electrical components, communications equipment, radar components, and
dustry biological/chemical warfare detectors.
Ministry of Instrument Making, Automa- Computers and instrumentation control systems.
tion Equipment, and Control Systems
Ministry of Power Machine Building Generators.
Ministry of the Chemical Industry Fuels, fiberglass components for rocket motors, propellants, chemical warfare materials, and
plastics.
Ministry of Tractor and Agricultural Ma- Tanks and tracked vehicles.
chine Building
Ministry of the Petroleum Refining and Tires, rubber, fuels, lubricants, and clothing.
Petrochemical Industry
organizations fall within this category, we believe the of steel, industrial explosives, transportation machin-
number is large, possibly exceeding the number of ery, tractors, machine tools, and industrial electronics
facilities in the defense industrial ministries. in a variety of the defense industrial ministries. C
The extent to which the defense and civilian sectors Joint production of military and civilian goods is
are interrelated was suggested by President Brezhnev crucial to Soviet industrial mobilization planning. The
when he claimed that 41 percent of the output of the Soviet belief that a high level of national preparedness
"defense industries" went for civilian production. He is a prerequisite for military victory extends through-
presumably was referring primarily to the production out the military-industrial complex. Mobilization
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plans for Soviet defense plants call for increasing
military production by curtailing civilian production,
consolidating military product lines, relaxing quality
control standards, increasing the number of shifts,
and using existing plant and equipment more inten-
sively. Industrial mobilization plans, which normally
cover the first year of conflict, are generally supported
by dedicated reserve stocks of raw materials and
components at defense plants. In addition, a number
of civilian plants are slated for conversion to military
production during wartime.
Weapon Development Strategies
Technology transfer-either legal or illegal-has
been significant in allowing the Soviets to field better
weapon systems at less cost. An overwhelming propor-
tion of their new weapon system development pro-
grams have benefited from Western technology. This
dependence on Western technology is a testament to
the USSR's technological lag in weapon systems
development and to the inefficiencies in both the
.R&D and production sectors of the military-industrial
complex. Even when the Soviets incorporate Western
technologies, the quality of the military product sel-
dom exceeds-and often does not equal-that of the
West. The Soviets tend to compensate for technologi-
cal limitations by producing large quantities of weap-
ons, since this quality-quantity trade-off is a viable
military alternative for many types of weapons. (For
additional detail and examples, see "The Importance
of Western Technology to Soviet Defense Industries"
in this issue.)
Technological deficiencies also lead Soviet weapon
developers to emphasize evolutionary advances in
military technology characterized by incremental im-
provements applied to existing systems. In the few
instances when the Soviets have tried to achieve major
advances in military technology, they have committed
resources on a massive scale and persistently pursued
the task over decades. Their continuing effort to
develop solid-propellant strategic missiles comparable
to the US Minuteman and the Polaris is a case in
point. (For additional detail and examples, see "Soviet
Design and Production Practices in the Soviet Aero-
space Industries" in this issue.)
Outlook
Although the military-industrial complex has been
largely successful in developing the weapons required
to meet the military objectives of the leadership, it is
likely to have considerable difficulty maintaining its
momentum through the late 1980s. The development
and production of weapons for the current military
force has been largely at the expense of broad techno-
logical development in the civilian sector. Weapon
systems now in development or planned for this period
will require additional infusions of advanced technol-
ogy. Yet the Soviets are now entering a period in
which productivity gains in the civilian sector must
also come through technological improvements, thus
raising the opportunity cost (alternative return) of
maintaining the defense sector's high priority in the
use of those high-quality resources required to gener-
ate advanced technology
In the past, expansion of floorspace at R&D establish- 25X1
ments and production facilities has been a good
indicator of future Soviet defense effort.
nate major programs now in the R&D stage or reduce
the number of systems they plan to produce, they
must be prepared to support continued expansion of
the defense sector at least at historical rates of growth
until the mid-1980s. Any immediate retreat from
current trends would probably be exceedingly difficult
for the present leadership-given the immense re-
source allocations already committed to programs
now under way
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The Importance of Western
Technology to Soviet
Defense Industries
For over three decades, Soviet defense industries have
relied on Western technology to accelerate innovation
in weapon R&D and production. Although largely
self-sufficient, Soviet defense industries routinely use
proven Western R&D approaches to shorten weapon
leadtimes. Also, Western manufacturing know-how
and equipment-obtained legally and illegally-per-
mit production of key weapon components many years
sooner and often reduce production costs by increas-
ing efficiency. Acquisitions have increased since trade
with the West opened up in the early 1970s. Soviet
legal and clandestine efforts to obtain Western tech-
nology have become larger, more sophisticated, and
better managed.
The acquisition effort is likely to increase during the
1980s and to focus heavily on manufacturing technol-
ogies. Future military requirements dictate an in-
creasingly sophisticated weapons mix that requires
production of many advanced component and subsys-
tem technologies. Resort to Western expertise and
equipment offers Soviet defense industries the best
opportunity to rapidly develop the necessary manufac-
turing capabilities. Economically, it can make the
defense industries more efficient and thus better able
to cope with worsening shortages of labor and materi-
als in a faltering economy. But greater recourse to
Western technology will increase the risk of techno-
logical dependence on the West and worsen an al-
ready poor Soviet hard-currency and credit outlook.
Impact on Weapon R&D
Soviet designers evaluate samples of Western military
hardware to develop effective countermeasures and
select specific designs useful for their own weapons.
They often use proven Western design solutions and
test data to eliminate the preliminary stages of re-
search in weapon R&D. For projects in the earliest
stages of R&D, this practice probably can shorten
leadtimes of more than a decade needed to field a new
The USSR's use of Western technology in its weapon
R&D effort is both cost effective and low risk.
Savings achieved by using proven Western technical
approaches to compress weapon R&D cycles probably
outweigh severalfold the costs of legal and clandestine
acquisition. Failure to obtain specific equipment or
know-how can delay introduction of more advanced
component technologies for several years. But a lack
of Western technology rarely, if ever, forces the
Soviets to stop or forgo development of a weapon.
Soviet developers prefer improving selected compo-
nents to adopting completely new designs without
technological predecessors. Therefore, less sophisti-
cated but proven component technologies can usually
be substituted when new technologies are not avail-
able. Even if the lack of a critical technology were to
force the Soviets to stop or forgo a weapon develop-
ment program, relatively few resources would be
wasted. Decisions regarding the technologies that
weapon components will include are made early in the
development cycle, before large amounts of manpower
and capital are invested in preparations for full-scale
engineering development, testing, and production.
Impact on Weapon Production
The infusion of Western manufacturing approaches
into Soviet defense industries has become increasingly
important since the early 1970s. Know-how and
equipment acquired are carefully selected to bridge
technological gaps between Soviet weapon R&D ad-
vances and relatively backward manufacturing capa-
bilities. Technology from the West has enabled de-
fense plants to implement relatively advanced
manufacturing approaches-so important to produc-
tion of increasingly sophisticated Soviet weapons-
many years before indigenous capabilities could be
developed
weapon by two to five years. Table 1 summarizes
technologies that have greatly benefited the Soviet
weapon R&D effort during the past decade.
Secret
SOV UR 82-005
May 1982
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Key Military-Related R&D and Manufacturing Technologies
Acquired From the West During the 1970s
Computers and microprocessors Complete systems, software and ancillary equipment, computer-aided design and test
programs, minicomputers, avionics, and fire-control systems for Western weapons.
Machine tools and industrial robots Multiaxis NC and CNC tools, NC machining centers, transfer lines, gear cutters, grinders,
rotary forges, heavy hydraulic presses, welding robots, and quality- and process-control
equipment.
Ultrapure metal and alloy refining techniques, powder metallurgy, induction and vacuum-arc
furnaces, automated casting and molding lines, and nondestructive test and quality-control
equipment.
Chemicals and petrochemicals Polymers and adhesives for composite materials; photoresist chemicals and films; adhesives
and binders; lubricants; and turnkey plants and processes for polymers, synthetic rubber, and
other products.
Signal processing Seismic streamers, acoustic spectrum analyzers, underwater navigation and direction-finding
equipment, and recording devices.
Guidance and navigation Inertial navigation components; laser gyros; and guidance components for air-to-air, surface-
to-air, and ballistic missiles.
Low-light television, image-intensification technology, night vision devices, electro-optical
sights and trackers, laser rangefinders, and US reconnaissance satellite technology.
Radars Terrain-following and airborne-intercept radars and SAM radar antenna technology.
Propulsion Nuclear submarine, diesel-automotive, and aircraft propulsion.
Materials Ultrapure refining techniques and composite materials.
The use of Western manufacturing processes and
equipment enables the Soviets to achieve higher pro-
duction rates with less labor and scrap and thereby to
reduce production costs. Metal savings are important,
since Soviet defense industries consume about one-
fourth of all metallurgical output. Table 1 shows
manufacturing technologies that have greatly contrib-
uted to accelerated technological growth in Soviet
defense industries.
The acquisition of microelectronics equipment and
know-how is the most striking example of Soviet
resort to Western manufacturing technology. Over
the past decade, the ability to make high-quality
microelectronic components has become increasingly
important to the production of advanced guidance
components for missiles and precision-guided muni-
tions. Microelectronics are also important for produc-
tion of minicomputers and microprocessor devices for
modern airborne radar, fire-control, and electronic
warfare systems. Their production, however, required
manufacturing and fabrication techniques that were
not widely available in the USSR. To fill this gap, the
Soviets acquired Western microelectronics manufac-
turing technology valued at hundreds of millions of
dollars (see table 2). Much of this was military-related
technology clandestinely obtained.
Western multiaxis numerically controlled (NC) ma-
chine tools also have important uses in Soviet defense
industries. Many advanced weapon components, such
as microbearings for missile guidance, require precise
tolerances and complex geometries producible only
with flexible NC tools, which are often computer
assisted. Poor-quality electromechanical components
and inadequate minicomputer technology limit the
development and production of domestic NC tools.
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Examples of Western Microelectronic Equipment and Technology
Acquired by the Soviet Bloc
Manufacturing Technology Equipment Acquired
Process technology for microelectronic wa-
fer preparation
Process technology for producing circuit
masks
Over 400 pieces of equipment related to wafer preparation, including expitaxial growth
furnaces, crystal pullers, rinsers/dryers, slicers, and lapping and polishing units.
More than 60 processing techniques including computer-aided design software, pattern
generators and compilers, digital plotters, photorepeaters, contact printers, mask compara-
tors, electron-beam generators, and ion milling equipment.
Nearly 700 mask aligners, diffusion furnaces, ion implanters, coaters, etchers, and
photochemical process lines.
Nearly 200 items including scribers, bonders, probe testers, and final test equipment.
Soviet defense industries have also benefited substan-
tially from legal purchases of large numbers of gener-
al purpose machine tools. Frequently, conventional
Soviet machine tools such as gear cutters and grinders
cannot provide the precise tolerances that many mod-
ern Soviet weapons require. Roughly three-fourths of
the some $4 billion the Soviets spent for Western
machine tools during the past decade went for conven-
tional general purpose tools. Custom-designed ma-
chine tools from the West are also critical to defense
products.
Metallurgical manufacturing capabilities in Soviet
defense industries also lean heavily on Western equip-
ment and know-how. Automated casting lines ob-
tained from the West are used in high-rate production
of military automotive components such as engine
blocks, brake cylinders, and wheel drums. Access to
Western metallurgical technology has also reduced
Soviet dependence on imports of specialty steels,
which are used extensively in military products. An
array of electric furnaces from the West process
specialty steels used for such products as tank armor
and artillery gun tubes. Most of these processes also
tend to conserve metal.
Acquisition of Western production technology, how-
ever, is costly, and the Soviets are often unable to
properly install and operate Western equipment with-
out onsite assistance from the West. Legal or illegal
acquisition of Western manufacturing equipment and
know-how normally require large outlays of hard
currency and capital many years before new equip-
ment becomes productive. Because Western manufac-
turing technologies are often more advanced than
those in the USSR, the customer does not always have
the know-how required for proper use of the equip-
ment or processes purchased. For example, Western
machining centers often require higher quality cast-
ings for workpieces than many Soviet foundries can
provide. In addition to proper tooling, efficient manu-
facturing operations require an understanding of how
complex materials processing, machining, and fabri-
cation activities interrelate. This know-how is com-
monly gained by the vendor largely through years of
trial and error.
Outlook Through 1990
Soviet military requirements through 1990 dictate an
increasingly sophisticated weapons mix. Successful
development and deployment of many of these new
weapons hinge on advanced component technologies.
A number of key military technologies currently
available or now emerging in the West will offer the
Soviet weapon R&D establishment substantial oppor-
tunity to master these critical weapon component
technologies more rapidly. Acquisition of Western
microelectronics, in-flight guidance computers, US
inertial components, signal-processing techniques,
composite materials, and computer-aided design
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Key Military-Related R&D and Manufacturing Technologies:
Priority Requirements for the 1980s
Technologies Equipment and Know-How Targeted
Computers and microprocessors Computer-aided design (CAD) techniques and equipment, random access memory, all
categories of production equipment and know-how.
Machine tools and industrial robots Multiaxis NC and CNC tools, NC machining centers, transfer lines, and process- and quality-
control robots.
Metallurgy Ultrapure metal and alloy refining techniques; process- and quality-control technology; hot-
isostatic and isothermal pressing technology; and powder metallurgy technology including:
reduction furnaces, sievers, ballmills, and process- and quality-control methods.
Chemicals and petrochemicals Polymers and adhesives for composite materials, high-energy fuels, solid-propellant process-
ing, high-temperature lubricants, photoresist chemicals and films, adhesives, manufacturing
technology for hydraulic fluids, motors, and flexible tubing.
Signal processing Signal-processing techniques for detection and discrimination and digital imagery processing
techniques.
Guidance and navigation Advanced inertial guidance components, algorithms and software for guidance calibration,
and in-flight guidance computers.
Electro-optics
Radars
Propulsion
Forward-looking infrared (FLIR) technology and electro-optical sights and trackers.
Synthetic-aperture, phased-array, and programmable airborne radar technology.
Aircraft engine technology, automotive electric drive technology, vehicular turbine technol-
ogy, and digital power control systems.
Manufacturing and design techniques for carbon-carbon, Kevlar-like, and other composite
materials.
(CAD) probably have highest priority. Table 3 shows
other key R&D-related technologies we believe the
Soviets will seek during the coming decade. F__1
The acquisition effort probably will focus increasingly
on Western manufacturing equipment and know-how
in the coming decade. Many of the manufacturing
approaches that production of new weapon component
and subsystems technologies require are currently
rare or nonexistent in the USSR. For example, the
Soviets probably will rely on Western technology for
expansion of their microelectronics production capa-
bilities. The USSR is currently seeking US help to
build two or three plants to produce polysilicon mate-
rials suitable for military applications. It is also highly
interested in emerging technologies related to very-
high-speed integrated circuits.
The Soviets have begun to acquire Western equip-
ment and know-how to improve the quality of their
metal powders and sintered products. This will enable
the USSR to develop and produce tungsten-based
heavy-alloy penetrators for improved kinetic-energy
antitank rounds. Similar powder metallurgy processes
can be used for advanced high-temperature turbine
blades necessary for more fuel-efficient military air-
craft engines. The Soviets are also seeking large-
capacity hot-isostatic press (HIP) technology. HIP
technology has a variety of applications in aerospace
ranging from hot-stage turbine components for air-
craft engines to structural components. Another likely
target for Soviet acquisition is isothermal pressing
technology, which allows large structures to be cast as
a single piece.
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The Soviets will also seek many other less exotic
manufacturing technologies to enable their defense
industries to produce higher quality products at lower
costs. For example, they hope to build a plant to
produce electric drives for heavy equipment with
Western help. Electric drives can also be used for
large missile transporters. The Soviets have difficulty
producing reliable hardened electric motors suitable
for military use and are seeking manufacturing tech-
nology in the West. Also, the poor quality of Soviet
adhesives, high-temperature lubricants, and hydraulic
fluids underlies Soviet efforts to improve these manu-
facturing capabilities through Western know-how and
equipment.
Using Western technology to sustain the growth of
technological competence in Soviet defense industries
also will yield economic benefits. A faltering economy
makes the Soviets increasingly aware of the costs of
sustaining defense production. The labor pool will
continue to decline and the outlook for steel produc-
tion is bleak. This makes it even more likely the
Soviets will continue to seek Western manufacturing
approaches, which are substantially less labor inten-
sive and consume less metal than counterpart Soviet
processes.
Large purchases of Western manufacturing equip-
ment and know-how, however, would worsen the
already poor hard currency and credit outlook for the
USSR over the next several years. Consequently, the
Soviets are likely whenever possible to rely on clan-
destine acquisition, especially to meet the needs of the
Soviet weapon R&D community. Military researchers
and weapon designers generally seek specific know-
how or hardware to relieve a particular technological
bottleneck. Industrial needs, however, are more sub-
stantial and usually require hard currency outlays.
The necessary processes and machine tools are diffi-
cult to obtain by clandestine means.
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Soviet Design and
Production Practices in
the Aerospace Industries
The predominant Soviet design philosophy for new
aerospace weapons-ICBMs, SAMs, aircraft, and
space systems-is an evolutionary approach that re-
sults in significant development and production cost
savings but may increase total life-cycle costs. This
philosophy stresses (1) extensive design inheritance
between systems and gradual incorporation of new
technologies; (2) development of single-mission sys-
tems; and (3) development of systems that are easy to
manufacture, operate, and maintain, using to the
extent possible off-the-shelf components even for sys-
tems with different missions. Such practices are im-
posed by the limitations of the Soviet industrial base,
and while they can reduce development and procure-
ment costs and enhance export appeal on Third World
markets, they also limit flexibility and system
performance. There is some evidence that the Soviets
are moving toward more technologically advanced
systems designed for multipurpose roles. Such at-
tempts in the past have resulted in somewhat longer,
more expensive development cycles.
Design Inheritance
Soviet designers stress the use of existing systems,
subsystems, and components whenever possible, incor-
porating new technologies only where mission require-
ments for greater performance or reliability require
them to do so. Most Soviet space systems, for exam-
ple, evolved from a few basic spacecraft designs. New
systems hardware is integrated with common space-
craft components and subsystems to meet new mission
requirements. All Soviet photoreconnaissance satel-
lites are modifications of the early Vostok and Soyuz
manned spacecraft with the life support systems
removed. The required optical components are incor-
porated into operationally proven capsules and series-
produced launchers, a practice that significantly re-
duces the time and expense of developing a new
satellite.
cruise missile. Combined production of the two mis-
siles currently exceeds 30,000 units. Such a large
production run substantially reduces unit cost. If our
current estimate of AS-5 production is correct, the
Soviets have already saved the ruble equivalent of
about $100 million-enough for 300 additional mis-
siles-by using common components. Most Soviet
naval SAMs are ship-based versions of ground sys-
tems. Because of the extensive commonality between
ground and naval systems, Soviet naval SAMs cost an
average of 60 percent less for research, development,
test, and evaluation (RDT&E) than the ground ver-
sions on which they are based.
This evolutionary design approach also frees resources
for other purposes and eliminates the time and risk
involved in the research and application of wholly new
technology for all elements of a system. Resources are
then concentrated on the development of any new
The design inheritance approach has sometimes been
carried to the extreme-with catastrophic results. In
response to the US challenge to land a man on the
moon, the Soviets began development of a large space
booster, the TT-05. They chose to simply increase the
number of dated conventional liquid engines rather
than develop the higher energy liquid cryogenic en-
gines used in the US Saturn V. Acoustic disturbances
and vibration destroyed three prototypes before the
The use of the same components in systems for
different missions or services is also prevalent. The
AS-5 air-to-surface missile shares several major com-
ponents and subassemblies with the SS-N-2 naval
program was eventually canceled in 1974.
Secret
SOV UR 82-005
May 1982
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Single-Mission Design
Soviet weapons are generally designed to perform a
single, limited role. They are then integrated with
other complementary systems to meet overall mission
requirements. An example is the SA-6, which was
designed for use with the SA-4 and SA-9 in a tactical
role to provide air defense for Soviet ground forces.
The SA-6 is intended for medium-range intercept of
high-performance aircraft, while the SA-4 and SA-9
are for intercepts at the long and short ranges,
respectively. Because of reduced design complexity,
individual systems can be fielded in large numbers
and as long as the perceived threat or need exists. For
example, the multitude of single-purpose SAMs, in-
cluding the SA-1, deployed over the past three dec-
ades are still in use, although new technologies have
been gradually incorporated through modifications to
improve their performance and enhance their capabil-
ity against the current air threat.
Although Soviet aircraft can perform various mis-
sions, they are optimized for a single role. The
MIG-25 interceptor was designed and deployed, in
conjunction with the SA-5, to defend against high-
altitude, high-performance strategic bombers. Even
though the US high-altitude bomber development
program was canceled, the Soviets continue deploy-
ment of both systems as a defense against future
threats.
An exception to this single-mission design practice is
the SA-10. This new SAM appears to be designed for
a multimission role and is expected to perform well
against aircraft at all altitudes. With an overall design
inheritance factor of only about 5 percent, it cost
more than twice as much to develop as any other
Soviet SAM.
Design Simplicity
In general, Soviet weapons reflect a commitment to
functional designs that can be easily manufactured in
labor-intensive factories and readily maintained in the
field with a minimum of technical skill. Soviet weap-
ons designers do not face the competitive pressures
that drive Western designers to press the state of the
art. Rather, Soviet designers, are required to adhere to
industry standards, use off-the-shelf components, and
employ the preferred design and manufacturing meth-
ods detailed in official design handbooks to ensure
producibility, maintainability, and ease of operation.
Relatively crude finishes and tolerances are generally
used where performance will not be impaired, but
meticulous manufacturing and quality control are
undertaken where necessary. Circuit designs are sim-
ple by US standards and contain a limited variety of
components. The use of exotic materials, which are
costly and often difficult to machine, is also kept to a
minimum
The R11-F-300 jet engine used in the MIG-21 fighter
contains only 2,500 parts, approximately one-ninth
the number in a comparable US engine. A US jet
engine manufacturer has estimated that the Soviet
engine could be manufactured for 60 to 70 percent
less than a comparable US engine. Most of this
savings results from simplified engine design specifi-
cations, the use of less exotic materials, and selective
finishing. (In contrast, US engines tend toward costly,
higher quality finishes for primarily cosmetic reasons.)
The engine inlet duct, for example, is highly finished
only at the leading edge where airflow is significantly
affected, but farther back in the duct, fastener heads
protrude above the surface. Variants of this engine
have also been used by the Yakovlev and Sukhoy
design bureaus for the YAK-28 and the SU-15.
Design simplicity increases reliability while reducing
development and production costs. In addition, be-
cause simpler systems are easier to maintain and
require fewer types of components as spares, they are
more attractive on Third World export markets,
where skills are at a premium.
Reliability
System reliability is achieved through redundancy in
critical subsystems, the use of proven components
produced in large quantities, and simplified field
maintenance procedures.
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Components that have proved reliable in an operation-
al environment continue to be used in a variety of
systems, thus avoiding lengthy qualifications testing
of newly developed and manufactured hardware.
Another design practice used to increase system reli-
ability is the inclusion of numerous easily accessible
test and adjustment points to offset the difficulties
with commercial-grade components. For example, the
entire nose section of the Foxbat aircraft rolls forward
to permit easy access to the avionics system. Exami-
nation of the SA-2 and SA-3 SAM systems revealed
metal plates engraved with the appropriate waveforms
attached at test points to simplify critical adjust-
ments. Routine preventive maintenance checks are
designed to detect potential problems, and test points
are typically monitored to determine if an associated
potentiometer can be adjusted to obtain prescribed
tolerances. If not, corrective action is taken. The
inclusion of slide-out equipment racks also precludes
the need for complex test equipment, permits in-
circuit troubleshooting, and minimizes requirements
for trained technicians in the field
Equipment that cannot be rea ily
repaired in the field is replaced and returned to rear-
echelon repair facilities where skilled maintenance
personnel are concentrated. As a result of these
practices, annual maintenance costs for the Soviet
SA-2 are approximately one-half those for the US
Nike Hercules. However, total life-cycle costs for
Soviet systems may be greater because of mainte-
nance and replacement costs over extended lifetimes.
Limitations of Industrial Base
The Soviet predilection for an evolutionary design
philosophy is more a matter of necessity than choice.
Labor-intensive production and the failure to master
precision and automated production technologies limit
the designer's freedom. Current Soviet plants have
difficulty producing weapon systems that incorporate
complex new technologies. Soviet designers try to
overcome these technological limitations through in-
novative combinations of proven components and ade-
quate substitutions of a lower technology solution for
a higher risk, advanced technology-for example, the
use of hybrid computers in lieu of digital computers.
older ICBMs.
The Soviet state of the art in missile production lags
that of the United States in several areas. The Soviet
production base is geared to manufacturing with loose
tolerance, whereas certain advanced technologies re-
quire precision techniques. Totally solid-state guid-
ance mechanisms required for onboard digital com-
puter functions necessitate precision manufacturing
capabilities, skilled assembly operators, and advanced
test equipment. The test equipment currently used in
US subassemblies is completely computerized and
more advanced than anything known to be within
Soviet capabilities. The components required to build
the test equipment consist primarily of the same solid-
state devices necessary for the final product. These
weaknesses in microelectronics production capabilities
have inhibited Soviet designers from across-the-board
reliance on digital guidance systems. The software
requirements for onboard digital systems and auto-
mated production controls are another Soviet weak-
ness -one which affected accuracy and readiness in
Extensive reliance on design inheritance also inhibits
rapid Soviet responses to military problems that re-
quire innovative solutions. When the Soviets attempt
to meet new strategic challenges with advanced tech-
nology, they make early commitments of resources
and persistently pursue the objective in spite of fail-
ures. Technical problems with advanced solid propel-
lants prolonged the preflight development stage of the
new medium solid-propellant ICBM from the usual
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seven or eight years to about 14 years. The Soviets
probably benefited from data on the Concorde in
developing their own SST, the TU-144, but they
failed to fully understand advanced Western industri-
al materials and processes and the complex thermody-
namic stresses associated with sustained supersonic
flight. Although development began in 1962, the TU-
144 has not yet entered service. The most pronounced
success with advanced technology has been the A-
class submarine, although the development program
lasted over 20 years. Development and production
costs far outstripped those of other torpedo attack
submarines.
On balance, however, these design policies have
served the Soviets well by making most individual
military systems more affordable and enabling them
to produce large numbers of items to meet most of
their military needs. In addition, expanding produc-
tion to meet export demand in Third World markets
further lowers their own unit costs.
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Comparative Efficiency of
Soviet Military Production
As the Soviets seek more advanced weaponry in the
future, they will find it increasingly difficult to afford
the large number of weapons they have traditionally
procured. The Soviet Union is at a comparative
disadvantage to the United States in the production of
high-technology military products. This is due to
deficiencies in Soviet production machinery and tech-
niques as well as inefficient managerial practices. The
more technologically complex the weapon system is,
the greater the disadvantage.
Reasons for Higher Cost
Advanced technology represents a real challenge to
the manufacturing capabilities of most Soviet plants.
The manufacturing base is backward and has difficul-
ty in meeting requirements for close tolerances, high
reliability, "clean" production facilities, and produc-
tion of defect-free materials. To compensate for these
deficiencies, Soviet plant managers must often employ
expensive manufacturing techniques:
? To obtain the required number of acceptable high-
quality electronic components, managers will often
have large production runs from which a batch of
quality components are selected. The high reject
rates result in higher overhead costs.
? To obtain more durable metal parts required in
modern weaponry, the Soviets have employed pow-
der metals, but have had to cope with problems
resulting from flaws and impurities in these metals.
While such advanced processes as hot isostatic
pressing techniques may be used, poor materials
increase the number of rejected parts and hence the
cost of parts fabrication.
? Implementing advanced weapon designs with unso-
phisticated, labor-intensive production practices
raises both labor and materials costs. For example,
to achieve the desired performance characteristics
of the SA-6 SAM radar, the Soviets had to depend
on a large number of vacuum tubes and labor-
The higher relative cost of advanced military weapons
is also probably partly due to poor industrial manage-
ment and perverse incentives. Because plant managers
have a strong incentive to fulfill gross output plans
regardless of cost, they inflate cost accounts by
hoarding material, spare parts, and machinery as
insurance against the risks and uncertainties of in-
stalling and mastering advanced technology. New
products and processes make it more difficult to fulfill
routine production plans and to meet scheduled dead-
lines found in the Soviet leadership decrees that
launch new weapons development programs. Yet plan
fulfillment is critical for the payment of worker
bonuses and the advancement of the careers of senior
managers.
Soviet bookkeeping allows these prac-
tices to persist, even in defense plants. For example,
the Scientific Research Institute of Automation in
Leningrad reportedly needed only 15 engineers from
its 100-man production engineering staff to monitor
ongoing production of airborne computers. Occasion-
ally they needed 30 more to put a new product into
production. Thus between 55 and 85 retained for
contingencies were inactive at various times and their
wages only added to the overhead costs of production.
Evaluation of Relative Efficiency
The Soviet disadvantage in the production of high-
technology weapons can be roughly measured in
economic terms by a comparison of what it costs the
Soviets in rubles to produce various items and what it
would cost in dollars to manufacture the same prod-
ucts in the United States. If Soviet manufacturing
efficiency were the same at the different levels of
technology-from the conventional to the advanced-
there would be no marked difference in the ruble-
dollar ratios as technological complexity increased.
Our calculations suggest, however, that the disparity
intensive wiring methods
Secret
SOV UR 82-005
May 1982
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between the ruble costs for high-technology and con-
ventional-technology production in the USSR is much
greater than the difference in corresponding dollar
costs in the United States (see chart):
? For each dollar that would be spent in the United
States to produce a conventional radio set, the
Soviets would spend about .50 rubles. But for each
dollar spent in the United States to produce a
communications satellite ground station, the Soviets
would spend .70 rubles or about 40 percent more in
relative terms.
? For each dollar that would be spent in the United
States in producing military fighter and transport
aircraft, the Soviets would spend an average of
about .70 rubles or about 70 percent more relative
to the conventional AN-2 light aircraft employed
for both military and civilian uses.
The disparities are even greater for the production of
military items embodying more advanced technology
than those noted above. For example, the cost to the
Soviets of producing state-of-the-art aircraft averages
over 1.5 rubles per dollar-more than twice the
relative cost of the average fighter or transport.
These figures provide an approximate measure of the
Soviets' comparative disadvantage. Possible future
refinements of the estimates may yield different nu-
merical results but probably will not affect the basic
conclusion regarding the comparative disadvantage.
This disadvantage is a function of the inefficiencies of
the defense industries and management practices,
which are magnified as production technology in-
creases. The ruble-dollar ratios cited only provide a
tool to index these inefficiencies.
Relative Resource Costs of Soviet
Military Equipment
Electronics
Advanced radios
Computers
Communication satellites
Conventional radios
Aircraft
Advanced
Standard
AN-2
Ground Arms
Advanced weapons
Tanks
General Purpose Equipment
Trucks
Construction equipment
Tractors
aRatio of the ruble cost (1970 rubles) of a military product to its dollar
value (1975 dollars) if it were produced in the United States.
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Impact on the Military
A variety of pressures-foreign military threats, in-
ternational political considerations, and concerns
about prestige-have operated over decades to pro-
duce strong military demands for more advanced
technologies in areas such as microelectronics. Thus
the technological level of Soviet weaponry has been
increasing constantly. Because of the relative back-
wardness of Soviet industry-particularly regarding
high-technology production-the Soviets have sought
to keep up with the United States by using an
evolutionary approach to weapons development and
the considerable design inheritance from system to
system that results. Their emphasis on acquiring
foreign technology for military programs is a reflec-
tion of this technological backwardness.'
The Soviets probably expect the relative burden of
high technology to grow as they are driven by ad-
vanced US programs to seek more advanced weapon-
ry of their own. Soviet military writings have com-
plained about the rising cost of weapons development
and production, indicating Moscow's sensitivity to the
problem. As the burden grows, the Soviets will be
forced to look at alternatives-raising defense pro-
curement budgets at the expense of other elements of
defense, reducing the quantity of weapons purchased,
or raising the defense budget relative to the economy.
While the Soviets have historically relied on innova-
tive simplifications in design to reduce unit costs, the
use of more advanced technology probably precludes
this alternative. In spite of escalating costs, current
Soviet commitments to pursue high-technology pro-
grams such as the ABM, more advanced avionics
systems for aircraft, weapons-grade lasers, and more
sophisticated SSBNs indicate a willingness thus far to
pay the price.
' See articles "Soviet Design and Production Practices in the
Aerospace Industries" and "The Importance of Western Technol-
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Other Topics
Metalworking Technology in
the USSR: Problems
and Prospects
Moscow's efforts to raise, industrial productivity by
modernizing its machine tool industry are impeded by
traditional manufacturing practices as well as by
problems with the new technology. Much of the
industry's current output consists of general purpose
tools that are relatively inexpensive to produce but do
not meet the needs of special purpose or complex
production in a technologically changing society. The
need to service a huge repair and spare parts sector
(itself the result of poor quality in original equipment)
and to replace the aging portion of the huge Soviet
machine tool industry creates great pressure for con-
tinued large-scale production of conventional models.
The USSR also has problems producing automated
machine tools and incorporating them into its indus-
trial production system. The industrialized West has
moved from the simpler numerically controlled (NC)
two-axis point-to-point machines to multiaxis contour-
ing models and, in the late 1970s, to widespread use of
computer-operated (CNC) machinery. Soviet partici-
pation in this technological revolution in metalwork-
ing has lagged because of the backwardness of Soviet
electronics and computer technology, managerial and
structural rigidities reinforced by the Soviet incentive
system, and a policy of concentrating resources on the
mass production of simple models, such as NC two-
axis point-to-point machines.
Despite some success in following the Western lead by
shifting more production to complex metal forming
tools' (with a cutback in general purpose metalcutting
' Metalforming tools, such as hydraulic presses, precision forging
machines, and stamping machines waste less metal and are more
versatile and cost efficient than metalcutting equipment.
tool production), the product mix of the machine tool
inventory, has not changed substantially. As a result,
the USSR now faces not only a still lagging tool
modernization but shortages of conventional machin-
ery as well.
Proponents of Modernization
The January issue of a leading Soviet economic
journal 2 was devoted to an assessment of the techno-
logical level and production problems in the metal-
working machinery sector. The 124-page issue con-
tains special reports, interviews with officials, and the
stenographic report of a conference of experts held in
Ivanovo.
The contributors to the volume-government offi-
cials, plant managers, and other important figures in
the planning, R&D, and production of advanced
automated metalworking machinery in the USSR-
have a professional stake in reforming the organiza-
tion, management practices, and technology of the
industry along Western lines and, if necessary, im-
porting large amounts of Western machinery, compo-
nents, and know-how to accomplish this goal. Their
conception of the strategy to be followed in moderniz-
ing the metalworking machinery sector is summarized
in an article by S. A. Kheynman, chief of the Institute
of Economics of the Soviet Academy of Sciences, who
2 Ekonomika i organizatsiya promyshlennogo proizvodstva (Eco-
nomics and Organization of Industrial Production, EKO).
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is perhaps the most widely published authority on
Soviet machine tool modernization.3
Recommendations for Upgrading Soviet Machine
Building
The consensus of the participants at the Ivanovo
conference was that the USSR should adopt Western
industrial production patterns and make major orga-
nizational changes in its metalworking machinery
industry. These include centering primary responsibil-
ity for modernization in the machine-building indus-
tries by:
? Abolishing the prevailing system of producing ma-
chine tools in multipurpose plants.4
? Establishing a nationwide infrastructure of small-
to-medium-size plants, employing 28 to 40 persons
each, devoted solely to the manufacture of special-
ized machine tools and parts.
? Instituting a service industry of small-to-medium-
size plants to serve users directly, as in the West.
? Stepping up the replacement rate from the pre-1981
2-percent level to 4 percent.
? Increasing vastly the production of key state-of-the-
art components such as instruments, controllers,
programing devices, and state-of-the-art cutting
tools (diamond and sintered carbide).
' Kheynman highlights Soviet problems by comparing recent Soviet
and Western metalworking experience. He documents the greater
efficiency and sophistication of metalworking equipment in the
West by showing that:
? In 1978 roughly one-third of the machine tools in the US,
Japanese, and West German inventories were of the metalform-
ing type, compared with 20 percent for the USSR.
? The poor finishing quality in the USSR stems not only from the
composition of the Soviet inventory itself, but from the products
used in machining. The USSR uses mainly cast billets and bars,
which require greater use of metalcutting than metalforming
technology. The USSR lags behind the West in sheet metal
production and has relatively few plastic molding machines.
? In the 1970s the rate of replacing obsolescent and wornout
machinery was about 2 percent in the USSR as compared with 5
percent for the United States and 7 to 9 percent in West
Germany.
? In the West, product specialization is extensive and machine
building is supported by a vast infrastructure of secondary
producers of specialized parts and components. In the USSR, the
specialized machine-building plants produce less than half of the
machine tools; nonspecialized plants and repair shops produce the
rest.
? The volume has much information on this practice. A striking
example is Leningrad's Red Proletariat Plant, a major producer of
advanced machine tools, which turns out tens of thousands of
mowers on the side.
? Shifting more funds away from the large-scale
production of conventional tools to increased pro-
duction of advanced tools and their supporting
infrastructure.
The journal offers extensive evidence that technologi-
cal deficiencies and gaps in production have forced
the USSR to continue its heavy reliance on imports.
Total Soviet imports of machine tools are four times
greater than exports.
The contributors differ, however, in their assessments
of the impact on the USSR of such large, critical
imports of metalworking machinery. A minority be-
lieves that imported state-of-the-art machinery and
better conventional tools do not contribute to the long-
range development of indigenuous production capabil-
ity and make the USSR dependent on foreign supply.
Most are willing to import machines and components
that are in short supply, not available in the quality
required, or cheaper abroad. Some would agree with
the view of N. Smelyakov, Deputy Minister for
Foreign Trade, who recently called for more Soviet
involvement in Western technology transfer and ar-
gued that the acquisition of foreign licenses and the
purchase of state-of-the-art Western technology
would help the USSR become a top producer of
advanced metalworking machinery.
Pressures for Maintaining Established Production
Practices
The thrust for modernizing is balanced by powerful
pressures in the USSR for maintaining traditional
strategy in the machine-building industry. This be-
comes clear from the remarks of the director of
Gosplan's 5 machine tool department, Lev Nikolaye-
vich Snovskiy. According to Snovskiy, the pressures
for the maintenance of the traditional metalworking
machinery system are greater and more widespread
than those for innovation. He stated, for example, that
when a new plant is established, it is still equipped
with machines having manual controls, other conven-
tional metalworking equipment, an oversupply of
available parts, and machines that are larger than
needed.
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Gosplan thus operates on the horns of a constant
dilemma, planning investment for modernization
while striving to satisfy those who operate the vast
conventional machine-building system in the USSR.
The planners, however, can satisfy neither those push-
ing for an increase in the production of advanced
machine tools nor those wishing to maintain estab-
lished production quotas for conventional tools. Ad-
vanced metalworking equipment is still produced too
slowly, and the cutback since 1978 in production of
metalcutting tools is causing shortages in lathes,
milling machines, and other heavy machine tool
equipment.
Conclusion
Innovation in the metalworking industry now has a
permanent place in the Soviet industrial system.
Soviet planners and policymakers are committed to
some degree of upgrading in the metalworking indus-
try. There is also a sizable group of both researchers
and practitioners whose work is institutionally embed-
ded and whose views, research, and experience find
expression in trade journals and even in the central
press. However, their work is inhibited by an industri-
al establishment still heavily committed to traditional
manufacturing practices.
Since the late 1970s, the modernization of the ma-
chine tool sector, on which all metalworking depends,
has been viewed as critical for the Soviet economy.
There has been a steep decline in the growth of overall
industrial labor productivity since the early 1970s,
from 4.4 percent in the first half of the decade to 1.3
percent in 1981. Because of the rapid decline in the
growth of the population of working age, the Soviets
now expect labor-saving machinery to achieve the
increase in productivity and to improve performance
and output in critical sectors of the economy. These
expectations may not be fulfilled, however. Since the
late 1970s, the production of conventional machine
tools, still the backbone of the industry, has fallen.
The production of advanced tools, though increasing
at a constant rate of growth, appears insufficient to
take up the slack. Thus the USSR is short on both
conventional and advanced tooling, and the response
has been to rely more heavily on imports. Because of
probable reduction in hard currency earnings by the
mid-1980s, however, the Soviet planners will be under
considerable pressure to meet future needs for ma-
chine tools from domestic sources, and to reduce
imports.
The Case of the Ivanovo Machine Tool Plant
Some of the difficulties and frustrations that Soviet
machine builders encounter in modernizing their
equipment and plants are described by V. P.
Kabaidze, Director of the Ivanovo Machine Tool
Plant, in a report about his efforts to change the plant
from a repair facility for the Sverdlov Machine-
Building Association in Leningrad into one of a
handful of manufacturers of state-of-the-art machin-
ing centers in the USSR.6
Kabaidze's account shows how unusual managerial
initiatives and all-out plant modernization efforts
collided with powerful ministerial conservatism and
established Soviet industrial practice over a 10-year
period. Kabaidze, backed by his parent plant in
Leningrad and his party organization, set up a long-
range plan to manufacture NC machine tools in the
early 1970s. He purchased NC machines and compo-
nents from Japan, West Germany, and Switzerland
and produced the first NC machine tool prototype in
1973. In 1975, after returning from the International
Tool Exhibition in Paris, he realized that machining
centers had the greatest potential for the marriage of
machinery and electronics. With the help of his
backers and a Siemens control system bought from
West Germany, he built the first machining center,
the IR 500 (see photograph). As of January 1982 the
plant had built 863 metalcutting machine tools, of
which 130 had numerical control and 40 were ma-
chining centers. Half of the NC tools are used in the
plant itself, and 10 machining centers have been sold
abroad. While the plant is not yet a large producer of
either NC machines or machining centers, it is well
known in the USSR.
6 This account is supplemented by a report by V. Ya. Maximov,
chief of the plant's technical-programing division, in EKO, pp. 107-
109, and by a lengthy article published in the national press by L.
Gladysheva and V. Shilov, "Vneplanovaya initsiativa," Sovetskaya
Rossiya, 13 September 1982, p. 2.
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The IR 500 MF4 Horizontal
Machining Center Produced at
Ivanovo
Spindle
Workpiece
A machining center is perhaps the most efficient and versatile machine tool combining electronics and
machinery. In the past, a workpiece such as an engine block had to be drilled, milled, bored
or threaded on two or three different machines. A machining center can perform all of these
functions on the same workpiece, with great savings in labor and time.
The machining center is a complex integrated system with 20 or more tools attached. The workpiece
is set on the table. The tool changer picks up a new tool from the magazine, removes the old tool from
the spindle, and replaces it with the new one. The column moves along three axes (up and down,
sideways, and forward), and the table with the workpiece on it can turn. All motion is produced
electronically and dictated by a program inserted into the controller. The machining center in the
photograph is the basic prototype produced by the Ivanovo plant. Note that the controller is from
Bosch, a major electronics firm in West Germany.
586656 5-82
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Secret
Kabaidze has had to engage in an unusual struggle to
meet his goals. The plant has never had its plan for
moving into series production of machining centers
approved formally by its ministry. The director has
broken with several Soviet managing practices, in-
cluding the budgetary, which in the USSR still
rewards conventional machine tool production. In-
deed, in the past five years the plant lost 2 million
rubles in incentive funds, and members of its engi-
neering and technical staff lost 1,800 rubles each in
bonus money. The enormous costs for electrical com-
ponents and service, which are not built into the usual
budget for machine tool plants, forced the plant to
underfund housing, vacations, and other employee
benefits, causing an exodus of 50 percent of its staff.
Given these difficulties, no one has tried to emulate
the example of Ivanovo.
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Secret
Western Technology and
Polish Production of
Military Transport
Vehicles for the USSR
Poland's giant Huta Stalowa Wola Steel and Machine
Plant, which has benefited from Western financing
and technology since the early 1970s, is now produc-
ing general purpose armored tracked vehicles
(MT-LBs).' This plant has produced military equip-
ment in the past, but its production of MT-LBs is part
of a growing Polish involvement in producing tracked
vehicles for the USSR.
Military Production at HSW
In the past, HSW has produced military equipment
including chassis for the ATS-59 medium tracked
artillery tractor, which were shipped to Bumar
Labedy Mechanical Works-the Polish tank plant-
mover to HSW.?
for final assembly.' In addition, HSW produced gun
breech and barrel assemblies for the Polish T-55 tank
and towed artillery pieces for domestic use and for
export to Third World countries. HSW's role in
military production apparently increased in the late
1970s, when the USSR laid requirements on Poland
for production of both civilian and military tracked
vehicles. The Soviets designated the Labedy plant as a
producer of T-72 tanks for the Warsaw Pact coun-
tries, which forced the plant to retool and to relinquish
production of the less sophisticated tracked prime
In retooling for T-72 production, the Labedy plant purchased
Western equipment, including a numerically controlled (NC)
punchmaster press from the United States, a bending machine and
seam welder from Belgium, spinning lathes and testing devices
from Holland, and an NC pipe-bending machine from Sweden.
' ATS-59 production was estimated at over 1,000 vehicles annually,
of which 90 percent were exported to the USSR. Production was
scheduled to be phased out in 1981 because of increasing shortages
of raw material and to provide skilled labor for producing T-72
' In the past decade, HSW has shipped pipelaying tractors to the
USSR. It is highly probable that many of the new tractors will be
Secret
SOV UR 82-005
May 1982
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The MT-LB is an extremely versatile
vehicle. It was develop ed from the MT-L, a light
tracked vehicle designed for geological research in the
Far North. The MT-LB was first seen with Soviet
troops during the Dvina maneuvers of early 1970. The
Soviets have used variants of the MT-LB chassis in
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Figure 2
MT-LB Multipurpose Tracked
Vehicle
over 15 different vehicles, including an armored per-
sonnel carrier, an artillery prime mover, a transport
vehicle for the Big Fred radar, a transporter-erector-
launcher (TEL) for the SA-13 missile, four different
command and artillery support vehicles, and the
122-mm self-propelled gun. Although not state-of-
the-art equipment, the MT-LB incorporates proven
components and has good mobility.
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Soviet Trade Unions:
Striking a New Balance
The emergence of Solidarity and the ensuing political
crisis in Poland have caused Soviet leaders to reex-
amine their own trade unions, with an eye toward
improving the image of the unions among Soviet
workers. In the past year and a half, the head of the
Soviet trade unions has been purged, and the unions
have been instructed to show more concern for their
members and to take a more active role in factory
management.
Soviet trade unions traditionally have been entrusted
with the often conflicting tasks of boosting production
and improving the workers' welfare. The priority
attached to each of these tasks has varied over the
years, but during the 1970s the emphasis was increas-
ingly on production responsibilities. Since 1980, how-
ever, events in Poland have helped to reverse this
trend. Accounts of the March 1982 All-Union Con-
gress of Trade Unions suggest that a new balance may
in fact have been struck, giving greater weight to the
union's role in improving the workers' welfare.
bottlenecks force a manager to ignore overtime regu-
lations to meet production goals, the union committee
may choose to overlook juridical rights since the
causes are beyond the plant management's control.
Factory trade union committees participate in the
assignment of welfare benefits. They help to formu-
late workers' wages, monitor the distribution of pen-
sion funds, and distribute cash benefits payable under
the social insurance system for sickness, pregnancy,
and maternity, and also passes and vouchers for
health and recreation facilities.'
Debate Over the Role of Trade Unions
The first rumblings of Polish unrest stimulated a
discussion in Pravda that sought to define more
clearly the role of trade unions in Communist soci-
eties. A series of articles focused on the sensitive
subject of the relationship between the party and the
trade unions. This discussion helped to lay the
groundwork for arguments to expand the influence of
Soviet trade unions.
The Role of Soviet Trade Unions
Trade unions represent the largest mass organization
in the USSR and claim a membership of 130 million
people or about 98 percent of the total work force. In
return for dues of 1 percent of monthly wages,
members receive housing, medical, welfare, and wage
benefits unavailable to nonunion workers. The unions
act as transmission belts linking the party with the
majority of workers who are not party members.
Officials do not view their role as representing the
interests of the workers vis-a-vis the employer, but as
part of a troika working with managerial and party
colleagues at the factory.
Unions, in theory, have the power to influence wages,
norms, and national labor policies, but their role has
been largely advisory. They do exercise some author-
ity in resolving disputes and in enforcing management
compliance with labor legislation through a complex
mediation process. But union leaders must decide
which issues to press at any given time. When supply
The first article, appearing in September 1980, urged
unions to be more active in defending workers' rights
and interests, but clearly stated that this must be done
under the "direct leadership" of the party. An article
on 25 December went even further, suggesting that
the party's influence over the unions be limited to the
persuasive powers of party members who are also
union members. A final article in this series took a
more doctrinaire view of trade unions, stressing the
need to subordinate union activity to the party and
emphasizing party control over the unions "in every
' Nationally, trade union central committee representatives meet
with corresponding ministries to discuss changes in wage rates. The
All-Union Council of Trade Unions also maintains a staff of liaison
officers in touch with the State Committee on Labor and Social
Questions and the State Planning Committee (Gosplan) to lobby for
changes in the wage system. Locally, the factory trade union
committee can play a role in determining take-home pay through
its distribution of profit-sharing premiums and supplementary
social service benefits.
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possible way." Despite the emphasis on party control,
each article exhorted the unions to better represent
the workers' interests.
Impact of Solidarity on Soviet Trade Unions
Soviet officials responded swiftly to the failure of
Poland's official trade unions as defenders of workers'
interests. This became apparent almost immediately
after the emergence of Solidarity, particularly in the
Baltic republics, along the Polish border. At an
August 1980 republic party plenum, for example,
Lithuanian party leaders criticized local unions for
failing to adequately protect workers' rights and
complained that the unions were not sufficiently
independent of management.
Georgian party chief Shevardnadze, at his republic's
January trade union congress, conceded that the
.Polish leadership's mishandling of official trade un-
ions was a major factor leading to the rise of Solidar-
ity. He emphasized the need to reform Soviet trade
unions and cited a poll showing that 40 percent of
Soviet workers were dissatisfied with the trade unions'
performance in defending workers' interests.
Heightened concern for promoting the unions' role
was clearly demonstrated by the strong Politburo
turnout at the recent trade union congress, in contrast
to the limited attendance by party leaders at the last
congress in 1977. During the past year, President
Brezhnev and Central Committee Secretary Konstan-
tin Chernenko have stressed the need for improving
the work of trade unions.
President Brezhnev had given these efforts a major
boost at the CPSU Congress in February 1981 when
he criticized the unions for failing to make full use of
their legal rights in protecting workers' interests. He
called on the party to more vigorously support the
unions, and suggested a larger union role in planning
and management, as well as personnel matters.
Brezhnev's remarks were the subject of discussion at a
March 1981 trade union plenum. Aleksey Shibayev,
then trade union chairman, interpreted Brezhnev's
speech as a mandate for an "enhancement" of trade
union functions. He called on local unions to increase
their monitoring of members' living and working
conditions while promoting the use of "democratic
principles" at individual enterprises. The plenum's
message to Brezhnev declared that workers' interests
would be at the "center" of future trade union activity
and suggested that the unions should increase their
role in the management of individual enterprises.
Central Committee Secretary Chernenko has been
the most outspoken party leader in support of Brezh-
nev. In November 1980, for example, Chernenko
stated that the unions' "most important" duty is to
defend workers' rights and improve their living and
working conditions, and he called on workers to play a
"broader" role in monitoring the decisions of factory
managers. Chernenko stressed similar themes last fall
when he endorsed efforts to make unions more respon-
sive to workers' interests and "guaranteed" them
party support in dealing with unresponsive
administrators.
Pravda and Izvestiya editorials during the past year
have repeatedly urged greater attention to workers'
needs and encouraged a more active role for the
unions. Other articles have reprimanded party organi-
zations for failing to give the unions their full support.
Trud, the trade union newspaper, organized 10 "open
letter days" at farms and factories where workers had
the opportunity to meet with officials to voice their
complaints.
Trade Union Leadership
A recent change in the stewardship of Soviet trade
unions may also underscore the leadership's interest in
refurbishing the image of the unions. On the eve of
the trade union congress, Aleksey Shibayev, trade
union chairman since 1976, was removed from his
post and Stepan Shalayev was installed in his place.
This change in leadership does not appear to signal
any shift in trade union policy. Shalayev's 16 March
speech to the trade union congress was remarkably
similar in tone to the public statements Shibayev had
been making during the past year, stressing the
unions' role both in improving workers' welfare and in
increasing production. Brezhnev's speech to the con-
gress gave no indication why the change was made; it
contained only mild criticism of trade union work
since the last congress.
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Unions and the Economy
The leadership is counting on easing the economy's
mounting burdens somewhat by raising labor produc-
tivity, but its hopes for improvement may be ill
founded. Trade unions are being urged to take greater
initiative in improving working conditions, upgrading
worker morale, boosting farm and consumer goods
output, as well as supporting discipline in an effort to
motivate workers.
Union leaders consider boosting production advanta-
geous to workers as well as to management, because
workers' take-home pay would rise with the increased
funds generated by greater output. But productivity is
inhibited by high turnover and discipline problems
such as absenteeism and alcoholism, which unions are
trying to combat. A number of articles have appeared
recently, encouraging union efforts to improve work-
ing conditions as a necessary step toward solving these
problems and thus raising productivity. A prominent
economist recently claimed that "a proper social
climate" could increase productivity by 20 to 100
percent.
The commitment to raise productivity through incen-
tive and persuasion rather than coercion and punitive
measures seems firm, particularly in light of events in
Poland. However, union ability to motivate workers is
severely limited. First, the generally poor economic
situation-marked by chronic shortages of quality
foods and other goods and services-has weakened
the incentive effect of wage hikes for which the unions
might try to claim at least some credit. Second,
reflecting the unions' fundamental lack of independ-
ence, the programs involving union participation and
direction have continued to be aimed at bolstering
labor discipline and raising output in ways that
conflict with safeguarding or promoting the workers'
interests.
A prime example of the two separate, often mutually
exclusive roles that unions are expected to play is a
comprehensive decree issued in December 1979. It
rewards good job performance by providing nonre-
payable housing loans for those who have worked for
five years or newlyweds who have worked for two
years and by increasing increments to pensions and
calling for additional leave time for continuous serv-
ice. However, the decree also advocates disciplinary
action against those who come to work drunk, are
illegally absent, or avoid employment. It tries to
reduce turnover by requiring one month's written
notice of intent to resign from a job.
Other measures aimed at trade unions since the
turmoil began in Poland in mid-1980 continue to
reflect their bifurcated role. Unions have taken pro-
duction-oriented actions including:
? Expansion of union participation in factory manage-
ment, particularly through factory production con-
ferences. The conferences, which are convened twice
each quarter, serve as the principal forum for unions
and managers to resolve disputes and discuss topics
of mutual interest such as improving production
techniques. In the past, the conferences have func-
tioned unevenly; moreover, they lack authority to
enforce their recommendations. At the March con-
gress, Chairman Shalayev urged more active use of
the conferences and stated that management's prac-
tice of not consulting the conference in making
decisions was "quite inadmissable."
? Expansion of the brigade system of labor organiza-
tion-a longstanding form of grass-roots autonomy
whereby a number of workers contract collectively
for a specific project. Although the leadership sees
the brigades as a path to raised productivity, they
also serve to discipline lax workers through group
pressure.
? Encouragement of factory party leaders to side with
unions in support of the workers against negligent
administrators. During the last 18 months, the press
has publicized numerous cases of managers being
fired or punished at union initiative for violations of
workers' rights, such as illegal dismissals and in-
fringements of safety standards. One account cites
6,000 management officials who were fired in 1980,
nine times the published figure for 1976. Chairman
Shalayev has also encouraged unions to be more
assertive with management.
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? Upgrading, in July, the organization charged with
protecting workers' safety to state committee status,
and appointment of a former trade union official as
its head.
? Promulgation, in January, of a CPSU decree to help
improve and widely expand vocational facilities for
trade union members.
Thus, the regime manipulates the unions through
palliatives and an emphasis on workers' welfare to
guard against a situation similar to that in Poland
arising in the USSR. Despite these changes, the union
position in the Soviet economy remains contradictory
and ambiguous.
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Secret
Briefs
Industrial Production Civilian industrial performance in the USSR improved slightly in April, bringing
Through April= the level of output in the first four months to 0.7 percent above that for the same
period in 1981. Labor productivity did not increase at all, and the slight growth in
output can be attributed entirely to more industrial workers. Output in five of the
10 branches of industry remains 0.5 to 4 percent below levels reached in 1981.
These include ferrous and nonferrous metals, construction materials, processed
food, and soft goods. Unless there is eventual improvement in these branches, the
plans for capital investment could be doomed and consumer morale could
deteriorate further.
The slight improvement in April is consistent with our forecast of another record
low growth of industrial production in the range of 1 to 1.5 percent by yearend.
Unless labor productivity resumes its upward course, additional growth will
become harder as influsions of new manpower decrease. Much depends on the
ability of the machinery sector to rally and supply high-quality equipment to
promote labor productivity.
New Data on 1981 Hard Recently acquired data show that despite the large trade surplus in July-December
Currency Position= 1981 the USSR's trade deficit for the year rose to $4 billion-double the 1980 lev-
el. A soaring agricultural import bill, together with a drop in exports, had pushed
the deficit up to $6 billion in the first half of the year. This forced Moscow to draw
down assets in Western banks by an unprecedented $5 billion and to increase
borrowing from commercial banks. Moscow's successful push to rebuild assets in
Western banks in the second half of the year resulted in a sharp increase in short-
term borrowing as well as heavy gold sales. By year's end, the gross hard currency
debt had risen by $3 billion, to $21 billion, and assets in Western banks amounted
to $8.4 billion
Most of the sharp increase in hard currency imports last year was due to higher
grain imports. Imports of Western capital equipment, chemicals, and steel other
than pipe declined. On the other hand, Soviet exports stagnated as the volume of
oil sales fell and the average price of oil rose only slightly. In addition, unrecorded
hard currency expenditures appear to have doubled to more than $5 billion.
Perhaps two-fifths of this amount consisted of hard currency aid to Poland and im-
ports from other CEMA countries-mainly meat and grain-that were purchased
for hard currency. Much of the remainder probably represented economic credits
to less developed countries for purchases of Soviet plant and equipment and short-
term supplier credits to developed Western countries for purchases of Soviet oil.
45 Secret
SOV UR 82-005
May 1982
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The continuing Soviet scramble for financing-mostly for grain purchases-and
sizable gold sales so far this year indicate Moscow is faced with another large
Soviet Planner Discusses I knowledgeable
the Economy0 Soviets share the view of most Western experts that the prospects for solving the
USSR's severe economic problems are dim.
? Bad weather is the main cause for the poor harvests in recent years, necessitating
extensive imports of farm products.
? Problems are being encountered in the coal and oil industries, with gas being the
single hope in the energy field. Gas exports are being counted on to alleviate
Moscow's hard currency problem.
? Investment cutbacks will make it nearly impossible to overcome bottlenecks in
the economy, including the shortage of railroad rolling stock.
? Soviet workers are poorly motivated and frustrated by a lack of goods on which
to spend their wages.
? Economic aid to Poland and large defense expenditures are severely burdening
the civilian economy.
Soviet GNP has
grown less than 2 percent during each of the last three years, and an even worse
start has been made this year. there is
growing concern in Moscow about the prospects of the economy, which may
prompt further changes in the current five-year plan.
Large Tungsten Imports The USSR is continuing to buy abnormally large amounts of tungsten, a critical
Continue alloy in the manufacture of armaments, drilling equipment, and superhard steel.
Soviet imports amounted to about 11,000 tons in 1981, down from the peak of
14,000 tons in 1980, but more than triple average annual imports during the
1970s. The imports supplement growing domestic production-estimated at 9,000
tons last year. We believe that the surge in imports is tied closely to Soviet military
programs as well as to oil and gas drilling. Current Soviet imports would support
annual production of several million tungsten-based armor-piercing rounds and
several hundred thousand tungsten carbide drill bits. Despite hard currency
problems, the USSR spent at least $100 million for tungsten imports in 1981.
Moscow has ordered its purchasing agents to continue to give tungsten a high
priority.
Soviets Cut Iron The USSR recently cut the 1985 plan for iron ore production from 275 million
Ore Plan 0 tons to 262 million tons. Even this lower target cannot be achieved; we believe that
Soviet production of iron ore will, at most, reach 255 million tons by 1985.
Shortfalls in iron ore and other raw materials will limit Soviet steel output to 155
million tons by 1985, roughly 10-percent short of the current target for that year.
It is only a matter of time before Moscow will be forced to trim the 1985 plan for
steel production as well
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Regional Commission Soviet efforts to improve management of the West Siberian Territorial Production
Claims Success Complex (TPK), which includes the critically important oil and gas deposits of
in Improving Tyumen' and Tomsk Oblasts, appear to be having some success. In a recent
Management Pravda article, the chairman of the USSR Gosplan Interdepartmental Commis- 25X1
sion for the Development of the West Siberian Oil and Gas Complex, V. Kuramin,
touts the Commission's accomplishments in resolving both long-term and day-to-
day problems of coordination and planning and calls for even further expansion of
the Commission's responsibilities. Furthermore, according to Kuramin, the West
Siberian TPK has been expanded to include Novosibirsk Oblast with its large
scientific research establishment. 25X1
Kuramin clearly sees the Commission as a prototype for a new form of project
management that would allow for a necessary degree of decentralization of
supervision while retaining centralized control. Although the Commission, which is
located in Tyumen' and includes representatives of local party, government, and
economic organizations, now has only advisory authority, it makes its recommen-
dations directly to higher authorities via a corresponding Commission of the
Presidium of the USSR Council of Ministers and to USSR Gosplan. If the
Gosplan Commission continues to have success, it is likely that similar bodies will
be created for other high-priority regional development projects included in the
1981-85 Plan such as the Ekibastuz and Sayan TPKs, the Russian non-black-earth
zone, and the Baikal-Amur Railroad. Such a proliferation of regional commis-
sions, however, especially if accompanied by efforts to increase their authority, is
likely to run into bureaucratic resistance from the affected ministries.
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