USSR MONTHLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84T01083R000100030002-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 38
• Document Creation Date: December 22, 2016
• Document Release Date: December 19, 2011
• Sequence Number: 2
• Publication Date: March 1, 1983
• Content Type: REPORT

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Directorate of Secret
Intelligence
USSR Monthly Review
Seeret
SOV UR 83-003X
March 1983
573
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Intelligence
Directorate of
USSR Monthly Review
The USSR Monthly Review is published by the
Office of Soviet Analysis. Comments and queries
-Seeret -
SOV UR 83-003X
March 1983
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Contents
The State of Perspective
Sino-Soviet Relations
The USSR and the PRC in the past year have taken the first steps on
the long road toward reducing bilateral tensions and establishing a
political channel for resolving differences. The Chinese apparently
believe that their economic modernization effort requires prolonged
stability on the Sino-Soviet border and that reduced tensions would
allow a diversion of resources from military to nonmilitary purposes.
The Soviets clearly want to prevent any further erosion of their
strategic position in the US-USSR-China triangle and, at this
juncture, want to capitalize on Sino-US differences. Indeed, both
sides have sufficient motivation to improve relations in view of their
serious domestic problems and their current difficulties in dealing
with the United States.
The Soviets are conscious of China's recent efforts to increase
contacts and reduce tensions and presumably want to encourage
further movement in that direction. Several factors could hinder
Soviet efforts to make significant concessions, but the two sides can
be expected to make further progress toward a "normalization" of re-
lations in the coming months. A full-scale rapprochement is highly
unlikely, but the atmosphere will improve and contacts will expand.
The Chinese View of Sino-Soviet Relations
Chinese leaders remain suspicious of the USSR but want to explore
prospects for easing tensions and to probe Soviet willingness to
accommodate their demands on the basic issues that divide the two
countries. This marks a substantial shift in Chinese tactics in dealing
with the USSR since the invasion of Afghanistan
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SOV UR 83-003X
March 1983
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China and the Soviet Union have agreed to increase trade with each
other, and there is a chance they will agree to greater use of Soviet re-
sources in reequipping China's industrial plants. We believe, how-
ever, that China would refuse any Soviet offers to resume economic
aid.
Vietnam remains concerned that its position in Kampuchea could be
undermined by the Sino-Soviet talks. The Soviet Union, while
attempting to reassure the Vietnamese, does not want to exclude a
possible accommodation with China and might consider lessening its
support for Vietnam in the unlikely event that the Chinese offer
something concrete in return. However, a Soviet withdrawal or
reduction of military and economic aid would not compel Vietnam to
withdraw its troops from Kampuchea
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Other Topics Soviet Military Assistance and Support for Nicaragua) 23 25X1
Over the past year or so, the Soviets have expanded their military and
security links with Managua and have tried to bolster Sandinista
capabilities to cope with the growing insurgency. They have
continued to rely on intermediaries in supplying most military
equipment to Nicaragua, in part to avoid provoking stronger US
countermeasures. Moscow has also continued to softpedal its direct
commitment to Managua, but has stepped up efforts to rally
international support for the pro-Soviet Sandinista regime.
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The Soviet economy grew by 2 percent in 1982; farm output improved
while industrial growth continued to deteriorate. Andropov's efforts
to boost labor productivity through his "disciplinary campaign"
probably will lead to a more rapid growth in industrial output in the
short term. This, together with average-to-good weather, could well
boost GNP growth in 1983. The outlook in 1984 and beyond,
however, will be clouded by continued shortages of industrial
materials and transportation and smaller additions to the labor force.
services
A crackdown on workers to reduce shirking on the job has been a key
element in General Secretary Andropov's strategy for stimulating a
faltering economy. The discipline campaign seems to be boosting
efficiency and production but it is likely to run out of steam if greater
worker effort is not rewarded by an increase in consumer goods and
Since the late 1970s the availability of quality foods-and some
staples-in the USSR has stagnated or declined. The regime has
taken measures to minimize the impact of shortages on worker
morale and productivity, shifting the worst effects from workers to
those in Soviet society less able to mount effective protest. The new
leadership, like its predecessor, continues to count on a better
agricultural performance to increase food supplies; however, there
are signs that it is giving greater consideration to the alternative of
price increases in state retail outlets to contain consumer demand.
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The State of
Sino-Soviet Relations
Perspective
The USSR and the PRC in the past year have taken the first steps on the
long road toward reducing bilateral tensions and establishing a political
channel for resolving some outstanding differences. The Chinese apparent-
ly believe that their economic modernization effort requires prolonged
stability on the Sino-Soviet border and that reduced tensions would allow a
diversion of resources from military to nonmilitary purposes. The Soviets
clearly want to prevent any further erosion of their strategic position in the
US-USSR-China triangle and, at this juncture, want to capitalize on Sino-
US differences. Indeed, both sides have sufficient motivation to improve
relations in view of their serious domestic problems and their current
difficulties in dealing with the United States.
Chinese demands for changes in Soviet border policies (both military and
territorial), as well as conflicts over various third-party relations, should
assure that any progress is limited and gradual. Nevertheless, Beijing's
willingness to begin a dialogue with Moscow marks a substantial shift in
tactics since the Soviet invasion of Afghanistan (see "China Views the
USSR") and presages increased economic activity as well as additional
high-level political contacts. Aleksandr Bovin's trip to Beijing last month
could very well lead to a resurrection of border talks. Bovin has links to
party Chief Andropov and was formerly associated with the party's Bloc
Liaison Department.
In "The View From Moscow," we note that the Soviets appear convinced
that, since both Moscow and Beijing currently have a list of grievances
against the United States, they have a common incentive to settle some of
their differences in the near term. The Soviets may well conclude that
further initiatives on their part will be needed to keep the Chinese engaged
in a process that could eventually lead to an improvement in their
relationship. Such initiatives could include the withdrawal of a division or
so from the border or a thinning of various units in the area, a
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demilitarization of disputed areas, or an acceptance of the main river
channel as the border on the Amur and Ussuri Rivers. At the very least,
some normalization of relations and easing of tensions can be expected, but
an end to the Sino-Soviet geopolitical competition or a genuine rapproche-
ment cannot.
The most likely area for improved relations would be in broadened
economic exchanges between the two states. In "Prospects for Improved
Sino-Soviet Economic Relations," we assess the likelihood of increased
bilateral trade and China's greater use of Soviet resources in reequipping
its industrial establishment. The Soviets are the likely beneficiary of
China's decision to reduce its emphasis on importing whole plants from
Japan and the industrialized West. Beijing may also see merit in drawing
upon technological areas in which the USSR is well advanced, such as
basic petrochemical technology and techniques for discovering and process-
ing nonferrous metal deposits. The recent lessening of political tensions
should facilitate economic negotiations and allow for the introduction of
greater amounts of Chinese consumer goods into the Soviet Far East as
well as Soviet timber, fertilizer, and machinery into China.
Progress is far less likely on Third World issues that separate Moscow and
Beijing, such as Afghanistan and Kampuchea. In the article "Vietnam,
Kampuchea, and the Sino-Soviet Talks," we record China's efforts to use
the talks to maintain pressure on the Soviet-Vietnamese alliance. Although
the Chinese will also keep pressing their case on the Soviet presence in
Mongolia and Afghanistan, the Soviets probably will try to focus the talks
on bilateral, territorial, and military issues.
The slightest improvement in Sino-Soviet relations would be beneficial for
both sides, allowing China to increase the price for future cooperation with
the United States and offering the USSR a reduced sense of geopolitical
encirclement. Any progress between the two powers would increase anxiety
among other states in the region, particularly in Japan and South Korea
where there would be greater interest in defense cooperation with the
United States. Sino-Soviet hostility generally leas been beneficial to
ASEAN states, and these states would be particularly concerned with a
thaw that was accompanied by a worsening of relations between Beijing
and Washington.
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Sino-Soviet Relations:
The View From Moscow
The first round of Sino-Soviet "consultations" in
Beijing last October produced little in the way of
substantive results, and the two sides apparently
continued to talk past each other to a large extent
during the recent talks in Moscow. They have suc-
ceeded in easing tensions somewhat, if only by main-
taining a dialogue and increasing trade and other
nonpolitical contacts, but seem to have made little if
any progress toward settling their main differences.
The Soviets are conscious of how far forward the
Chinese have moved over the past year, however, and
presumably want to encourage further movement in
that direction. The Soviets also are aware that a
totally uncompromising stand on the key issues risks a
breakdown in the talks or an international perception
that there is a stalemate-outcomes that they want to
avoid.
The Current Stage
The dialogue to date has improved the atmosphere,
but the Chinese have made it clear that any more far-
reaching improvement in the relationship will depend
on Soviet willingness to make concessions on at least
some of the key issues dividing the two countries. The
Soviets, while suggesting some flexibility, have not
taken any concrete steps toward meeting Beijing's
demands on these points. Soviet troops are still en-
gaged in the Afghan conflict, the USSR continues to
support Vietnamese operations in Kampuchea, and
the Soviet military buildup opposite China gives no
sign of abating.
Moscow is probably encouraged by China's expressed
willingness to discuss specific areas of difference,
rather than press for action on all grievances at once.
Moscow also may be encouraged by the fact that
Secretary of State Shultz's visit to Beijing in Febru-
ary did not resolve the Taiwan issue and by recent
Chinese criticism of US foreign policy. If such is the
case, Moscow may well believe that Sino-Soviet ties
are more open to improvement now than at any time
during the past two decades.
The main problem, from the Soviet standpoint, is to
find a way to improve relations with China without
jeopardizing other key interests. The Soviets have, to
this end, insisted that any improvement in Sino-Soviet
ties will not be at the expense of their allies. They
have, at the same time, used an article in New Times
on 14 January to urge a resumption of the border
talks with China, which were last held in June 1978.
A few well-informed Soviet figures-most notably, 25X1
Izvestiya political commentator Aleksandr Bovin,
who reportedly is a confidant of General Secretary
Andropov-also have raised the possibility of mutual
force reductions along the Sino-Soviet border.
A key question is the extent to which the USSR feels
any sense of urgency about improving relations with
China. The most recent Soviet statements-public 25X1
and private-suggest that the USSR will continue to
move cautiously and will be satisfied if it can "nor-
malize" relations with Beijing over the next few years.
Soviet Objectives
Moscow wants, first and foremost, to prevent any
further erosion of its position in the US-USSR-China
relationship. The Soviets clearly do not want antago-
nism on "two fronts" at a time of a mounting US
defense effort and ever-increasing economic problems
at home. They may hope to lessen the possibility that
China would enter a two-front war against the USSR
in the event of a NATO-Warsaw Pact conflict.
Moscow wants to exploit the deterioration in US- 25X1
Chinese ties that has occurred over the past year. The
Soviets may think that an easing of Sino-Soviet
tensions is encouraging Washington to question the
wisdom of helping China to modernize its economy
and defenses, and thus creating an environment in
which Chinese disillusionment with the United States
will continue. They certainly have long had an interest
in persuading the United States that Sino-Soviet
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Soviet Forces
The USSR has quadrupled its Ground and Air
Forces opposite China since the mid-1960s while
simultaneously modernizing these forces and improv-
ing their logistic infrastructure. Soviet ground forces
in the area now number approximately 435,000 men
in 48 combat divisions-over 25 percent of the total
manpower of the Ground Forces (see map). The
Soviet armed forces and the KGB Border Troops
together have between 600,000 and 700,000 men
opposite China. The modernization of these forces
has received new impetus since the early 1970s while
the growth in the number of combat units has slowed.
The number of tactical, fixed-wing combat aircraft
opposite China has increased from about 220 in 1965
to approximately 1,100 today. In addition, some 215
medium or light bombers are assigned to the theater-
level air army in that area. The main emphasis since
the mid-1970s has been on the replacement of older
tactical aircraft with new, more capable models. The
number of attack, transport, and general purpose
helicopters deployed along the border also has grown
substantially from under 100 in 1965 to about
1,200 at present
Chinese Forces
Despite cuts in defense spending and a reduction in
the size of the Chinese armed forces, Beijing has
steadily strengthened its defenses opposite the Soviet
Union since 1979. China now stations nearly half of
its ground and airforces-about 1.6 million men and
some 2,700 combat aircraft-in the four military
regions bordering the USSR and Mongolia.
The current buildup has added new units and result-
ed in a 30 percent increase in major weapons in the
northern military regions. Most of this effort has
been focused in the northeast, primarily in the Shen-
yang Military Region. Improvements there include:
? Creation of three new local-force garrison divisions
and one new tank division.
? Addition of armored regiments to eight garrison
divisions.
? Addition of a mechanized infantry regiment to two
main force divisions
The Beijing and Lanzhou Military Regions have
received less in the way of significant improvements,
but the Urumqi Military Region in the northwest has
received proportionately large quantities of new
weapons. Urumqi defenses also have been strength-
ened by:
? Moving an infantry division from Tibet to the
capital.
? Adding a newly formed garrison division and main-
force antiaircraft artillery division.
? Expanding two garrison units in the mountains west
Recent military developments along the Sino-Soviet
border include:
? The conversion of two motorized rifle divisions
(MRDs) to tank divisions and the activation of a
new MRD in the Far East Military District (MD).
? The introduction of T-72 tanks to Soviet forces
along the border.
? The creation of new army- and corps-level com-
mands opposite China.
? The reequipment of Soviet ground attack regiments
with SU-17 Fitter and MIG-27 Flogger fighter-
bombers and the SU-24 Fencer light bomber.
of the capital
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relations are not frozen-if only to make the United
States less confident about taking strong, anti-Soviet
stands elsewhere in the world.
Moscow probably is also hoping for an easing of
Chinese hostility toward the USSR on a wide range of
international issues, particularly on Afghanistan and
Vietnam. Even a partial thaw with China could ease
the pressure on the USSR's allies in Asia and reduce
the danger of a US-China-Japan alliance in the Far
East-a prospect that troubles the Soviets greatly. It
also could allow the Soviets to shift some military
resources in the Far East.
Possible Soviet Concessions
The Soviets have already had some success in improv-
ing Sino-Soviet atmospherics without paying any
price. Further improvement could require that they
advance their positions in at least one of the areas
discussed below.
Soviet Forces Opposite China. The Soviet military
buildup in the Far East is a major Chinese concern.
We do not rule out the possibility of a unilateral
Soviet move such as the withdrawal of a division or so
from the border or a thinning of various Soviet units
in the region. Even such token gestures, however,
probably would be highly controversial within the
Soviet leadership. The military remains deeply con-
cerned about the vulnerability of the USSR's long and
exposed eastern frontier, and many civilian leaders
probably have their own doubts that a unilateral
gesture would bring anything in return.
Soviet officials have, in fact, insisted that any military
disengagement along the border must be a two-way
process involving some Chinese concessions. They
have told Western diplomats and other contacts that
the USSR will not dismantle its bases near China
without receiving more than just a few "promises"
from Beijing. But several well-informed Soviets have,
at the same time, suggested that negotiations could
lead to significant troop cuts on both sides.
Less dramatic and costly Soviet proposals could in-
volve advance notification of military exercises in the
area and acceptance of observers at those exercises.
Deputy Foreign Minister Kapitsa has indicated in
recent conversations with Western diplomats that the
Soviets believe the two sides will eventually reach an
agreement on such measures, which would be consist-
ent with Soviet commitments on the USSR's western 25X1
frontier. Moscow also could propose a new set of rules
governing the activities of border troops along the
frontier or limiting reconnaissance flights in that area.
The Soviets have little room for maneuver on the
Chinese demand for a complete military withdrawal
from Mongolia. They regard their military presence
there as an integral component of their policy toward
China. They may also be concerned that lessened 25X1
support for the regime in Ulaanbattar could give rise
to political instability there. The deputy director of
China's main institute for Soviet studies claims that
Izvestiya commentator Bovin-while in Beijing in 25X1
February-did, however, suggest that the Chinese
and Mongolians sign a nonaggression treaty and hint
that this could lead to a withdrawal of some Soviet
troops. The Chinese responded that this was a step
"they could not possibly undertake" while Soviet
forces remain in Mongolia. In conversations with US
officials, the Chinese continued to dodge direct ques-
tions on whether the issues of Soviet troop withdraw-
als from the Sino-Soviet border and Mongolia were
linked.
Press reports that progress has been made toward a
mutual reduction of forces along the border remain
unconfirmed. Bovin's reported comment on Mongolia,
however, is another indication that Moscow plans
some initiative on security issues. The Soviets could, 25X1
for example, offer to withdraw a limited number of
troops-possibly up to a division-in return for a
Chinese pledge not to attack Mongolia or station
troops closer to it.
The Territorial Dispute. The immediate sticking
point-from Moscow's perspective-has been the
Chinese notion that the two sides should recognize
that certain areas are in dispute, withdraw their
military forces from those areas (all of which are in
Soviet hands at present), and agree to return all
territory that rightfully belongs to the other. If Bei-
jing were to suggest some flexibility on those points,
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Disputed Areas
on the
Sino-Soviet Border
Soviet Union. Chinese claim the Soviets hold islands in
the Amur and Ussuri and areas in the Pamirs which
were not given to Tsarist Russia even by the "unequal
treaties" of the 19th century.
r~
Balkhash
oI Control+ f
India Indian Claim
Island
(Heixiazi)
Khabarovsk
r / ! rn not
C h i n a
however, Moscow probably would be willing to do
some bargaining on specific contested areas. Moscow
could propose a gradual demilitarization of these
areas as progress is made toward a settlement of the
dispute. A formal demilitarization of the disputed
islands in the Amur and Ussuri Rivers would be a
logical first step
If the two sides established some mutual basis for
compromise on these points, Moscow could offer
Beijing several concessions to help settle the territorial
Boundary representation is
not necessarily authoritative.
dispute. They could, for example, accept the main
channel as the border on the Amur and Ussuri Rivers,
while offering China compensation for Heixiazi Is-
land, opposite Khabarovsk. The Soviets already ac-
cept the "Thalweg rule"-recognition of the main
channel as the border-in principle, but have always
interpreted it to their own advantage on several key
points-most notably, with their contention that the
main channel runs south and west of Heixiazi Island,
making it Soviet territory.
BEIJING* /
South,
Korea 1
Y /~~ tsaa
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as yet
The Indochina Connection. Moscow does not regard
its support for Vietnam as a subject for negotiation in
bilateral talks with the Chinese but could temper its
backing of Hanoi to some extent in an effort to
placate Beijing. Moscow could curtail shipments of
material to Vietnam or put added pressure on Hanoi
to scale down its operations in Kampuchea. The
Soviets also could try to help arrange a face-saving
settlement, such as a coalition headed by Prince
Sihanouk, but they have shown no inclination to do so
the Soviet presence in Afghanistan.
Afghanistan. The Soviets have even less room for
maneuver on the Afghan question. But they could
make a few tactical concessions to meet Chinese
demands on this issue-such as intensifying their
professions of interest in a political settlement. They
also could consider another token troop withdrawal.
Such moves would only be gestures, but they might
give Beijing a pretext for scaling down its criticism of
Bilateral Contacts. Finally, Moscow is sure to push
for a further expansion of mutally beneficial economic
and cultural ties. Both sides seem optimistic about the
prospects for trade, which according to the agreement
signed on 10 March will increase by over 150 percent
and reach approximately $800 million in 1983, the
highest level since the early 1960s. Much of the
increase reportedly will come from larger Soviet
purchases of textiles, which Moscow may see as a
means of encouraging Beijing's dispute with Wash-
ington over restrictions on Chinese textile exports.
Moscow also probably agreed to make a greater effort
to fill Beijing's orders for timber, other raw materials,
and chemicals-items the USSR has been able to sell
for hard currency. Sino-Soviet trade would still be far
below the 1982 level of US-Soviet ($3 billion) and
Chinese-US ($5 billion) bilateral trade, however.
Soviet officials are, for the first time in years, talking
about a resumption of party-to-party contacts, and
Moscow is stressing its ideological affinities with
Beijing
tries-including China-of Brezhnev's death last No-
vember before it was announced publicly. Moscow
has, in the meantime, evidently lessened its efforts to
[:::]Moscow informed all of the Communist coun-
block Chinese attempts to expand ties with East
European countries and West European Communist
parties. 25X1
Soviet Constraints
Several factors could hinder the Soviet effort to
improve relations-among them, an apparently per-
sistent Soviet belief in "hangi$g tough" when dealing
with Beijing. Kapitsa has told Western diplomats that
the Chinese have moved forward only because the
Soviets stood firm on key issues, especially on the
matter of preconditions for talks. Soviet academicians
have expressed the same notion in recent exchanges
with US experts.
The Soviets may also be reluctant to offer much in the
way of concessions because they are not sure about
the ability of the current leaders to deliver on any
bargain
uncertainty over
Chinese internal political stability was inhibiting a
Soviet decision on force reductions along the border
with China. Then, too, the Soviets may fear that
concessions on the key issues would only whet China's
appetite for more.
The Kremlin leaders are, in any event, well aware
that any offer of a disengagement along the Sino-
Soviet border must take into account the interests of
the Soviet military. A decision to offer Beijing major
concessions on the issue of troop cuts would, even in
the best of circumstances, entail acrimonious debate
in Moscow. Such a debate would be a particularly
unattractive proposition for Andropov and other Sovi-
et leaders at this time, because the support of the
military is critical in any succession period.
The Soviets would face several problems in working
out a proposal for troop withdrawals-among them,
the difficulty of comparing a modernized well-
equipped Soviet division with a poorly equipped but
manpower-rich Chinese division. Also, the Soviets
would not want to leave strategic targets-the Trans-
Siberian Railroad, for example-or major population
centers near the Chinese border unprotected. The
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Siberian climate rules out moving Soviet troops too
far from the border region, and shifting troops to
areas nearer Japan-such as Sakhalin Island-would
upset the Japanese.
Recent signs of strains in relations between Washing-
ton, Tokyo, and Beijing probably have strengthened
the case of those in Moscow who argue there is no
need to move fast. A desire to protect other equities in
Asia-most notably, ties to Vietnam and India-
would also argue against any attempts to achieve a
sudden breakthrough with the Chinese.
Soviet Prospects
The Soviets are probably uncertain about just where
the current Sino-Soviet dialogue will lead. We doubt
that Moscow expects a full rapprochement with both
sides cooperating on a wide variety of issues and
treating each other as equals. The Soviets know that a
legacy of mutual mistrust and suspicion on both sides
will complicate any efforts in Moscow or Beijing to
build a domestic consensus in favor of improved
We believe the most that Moscow expects is a limited
detente with China-a further relaxation of tensions,
increase in bilateral contacts, and some movement on
the border dispute and related security issues. The
Soviets are, of course, mindful that this would require
significant "give" on both sides-with Beijing scaling
down its demands on Kampuchea, Afghanistan, and
Soviet military deployments opposite China. A deci-
sion to accommodate the Chinese on any of these
points would, by the same token, be extremely contro-
versial in Moscow. It could be portrayed as a contin-
uation of Brezhnev's policy, however, and there are
grounds for taking some risks, since a leader who
could ameliorate the hostility with China would sig-
nificantly enhance his own position in Moscow.
The Soviets-in our view-are mindful of the dynam-
ics of the negotiating process and of the extent to
which a key variable here is the existence in both
Moscow and Beijing of the "political will" to settle at
least some of their basic differences. They may believe
that, since both Moscow and Beijing have a list of
grievances against the United States, both sides have
an added inducement to try to settle at least some of
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The two sides can be expected to make further
progress toward a "normalization" of relations in the
coming months. The broad-based geopolitical compe-
tition of the past decade will not end, but it could take
different forms, be less acute, and possibly be accom-
panied by some instances of tacit cooperation. A full-
scale rapprochement between the Soviet Union and
China is highly unlikely, but the atmosphere will
improve and contacts will expand.
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The Chinese View of
Sino-Soviet Relations
At the 12th Chinese Communist Party Congress last
September, Hu Yaobang characterized Soviet policies
as "grave threats to China's security." Moscow's
efforts in the past two decades to play a major role in
Asian affairs are seen as an attempt to deny China its
rightful position as an Asian power and to surround it
with Soviet clients. China views Soviet activities in
Indochina, South Asia, and Mongolia as part of an
effort to encircle it and regards termination of these
activities as necessary for establishing good relations.
This concern is intensified by the Soviet military
buildup along the border, which is regarded as far in
excess of what is needed for self-defense and as proof
of Moscow's intentions to use the threat of military
force to gain political objectives. In Chinese eyes, a
major purpose of this buildup has been to coerce
China into accepting both a border settlement on
Soviet terms and the status of a Soviet client stateP
Factors Influencing New Approach
A number of factors have contributed to the recent
shift in the way China deals with this threat. Beijing
continues to regard the USSR with deep suspicion but
has concluded that China's interests are served by an
easing of tensions and by the development of contacts
in a number of functional and technical areas. F_
In the past two years China has adopted a more self-
assertive policy and has distanced itself from the
United States on some issues. As part of the process of
dissociation from the United States, the Chinese have
calculated that greater contacts with the Soviets will
serve to demonstrate independence and freedom of
maneuver. Moreover, they appear to have concluded
that political and economic gains can be achieved in
relations with both the United States and the USSR
through a more nuanced policy toward the USSR,_
Chinese commentary in recent years has pointed to
growing domestic and foreign difficulties facing the
USSR. A nearly stagnant economy, the Afghan mo-
rass, and difficulties in Poland have been cited. This
treatment of Soviet problems probably reflects a
belief that, while the USSR has not become less
threatening, it may have become somewhat more
likely to accommodate Beijing's interests. Although
recent Chinese statements do not suggest optimism
that the new Soviet leadership will be more flexible,
Beijing apparently considers it useful to maintain a
forum where Soviet willingness to compromise can be
explored during the transition period.
Finally, Beijing probably has been impelled by a
desire to reduce tensions with Moscow in order to
pursue economic modernization in a more tranquil
environment. A reduction of Sino-Soviet hostility
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could enable the regime to devote fewer resources to
defense and more to economic development. 25X1
Chinese Objectives
We believe that China is using its opening to the
USSR to ease tensions and to show progress on the 25X1
basic issues that divide them. Beijing used the first
round of talks to press the USSR on these issues and
in the process,
did not
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signal any flexi i ity.
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Beijing tied cultural and other agreements
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to Soviet concessions-a position we believe it will
slowly move away from as the talks progress.
It is in Beijing's interest to gain some alleviation of its
security concerns, and the Chinese will be anxious to
encourage any process that promises a tempering of
the Soviet threat. Beijing, moreover, almost certainly
recognizes that even small steps on the basic issues ?
will require a willingness to meet the Soviet Union
halfway. This willingness, however, will be limited by
China's belief that it is Moscow's responsibility to
remove these threats to Chinese security.
We believe that the Chinese will not be wholly
intransigent on this matter, but their concern over the
Soviet threat will lead them to demand, at the least,
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that the USSR take the first step in alleviating this
concern. Beijing
will "consider" troop withdrawals from border regions
if the Soviets first agree to reduce the number of their
forces along the border. We believe that Beijing will
become more flexible on this issue over time if the
USSR shows some willingness to accommodate Chi-
nese positions.
In adopting more flexible tactics in its dealings with
the Soviet Union and in resuming talks Beijing has:
? Opened a channel to the Soviets that can be used
during the transition period to probe for signs of
change in Soviet policies.
? Demonstrated its own desire to ease frictions in
order to concentrate on internal development.
? Gained a means of sowing discord between Moscow
and Vietnam.
? Reminded the United States that China has the
option of improving relations with Moscow.l
Chinese commentary also suggests that Beijing be-
lieves its interests are served in people-to-people con-
tacts with Soviet citizens, presumably in terms of
demonstrating the falsity of anti-Chinese propaganda.
China also considers that a more flexible attitude
toward the USSR will give it broader access to
Moscow's East European clients and greater opportu-
nities to disrupt ties between them and the Soviets.F_
in the spring of 1982
Deng Xiaoping believed that China should continue to
oppose Soviet "hegemonism" but also should reduce
tensions with Moscow. He observed that relaxing
relations with the Soviet Union would be beneficial
for Sino-US relations. In seeking both to ease tensions
with the USSR and to remind the United States that
China should not be taken for granted, Beijing has
attempted to restructure its relations with both of the
superpowers in a way that:
? Lessens the prospects for conflict with the USSR.
? Enables China to pursue economic gains from ties
with the USSR.
? Maintains those aspects of relations with the United
Chinese Expectations
China expects to be able to manage its relations with
the United States and the USSR in a way that
demonstrates China's independent status and pre-
serves the gains made through its opening to the
West. Chinese statements suggest that, in the short
term at least, Beijing believes that it will not have to
choose between East and West and that the process of
reducing tension with Moscow will move at a slow
pace that will not cause a reaction that could restrict
Chinese access to Western trade and financial institu-
tions.
China does not appear at this point to expect that its
talks with the USSR will progress rapidly to a
resolution of differences and has even stated that they
probably will be "marathon." Beijing, nevertheless,
clearly wants to position itself to take advantage of
any changes that might occur in Soviet policy and has
set in motion a process that could lead to substantial
improvements in its security. Although China will be
willing to make concessions in order to ease the Soviet
threat, past Chinese negotiating behavior suggests
that they are likely to be slow in coming and would be
made to encourage greater Soviet concessions.
Beijing appears to have used the first round of talks to
present a set of tough initial negotiating positions. We
believe that the Chinese recognize that the question of
Soviet support for Vietnamese activities in Kampu-
chea is a very difficult issue for Moscow to deal with
and that their proposals for Vietnamese withdrawal
from Kampuchea and Soviet withdrawal from
Afghanistan will complicate negotiations
As the talks progress, China may first seek partial
solutions to these problems, and it may turn to the
question of Soviet troops along the border in the hope
that a bilateral issue will prove less intractable than
those involving third parties. We believe that the
minimum that Beijing will demand is a reduction of
no less than 10 percent of the Soviet forces currently
along the border. China would, we believe, be willing
to agree to mutual force reductions to gain Soviet
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States that China regards as beneficial.
agreement to remove troops from the border.
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We believe that China will accept partial solutions to
these problems, both for their own sake and for the
momentum that they could create for further progress
on these questions. At the same time, however, Beij-
ing would consider that such solutions only partially
eased its security concerns. To the extent that these
solutions failed to satisfy its concerns, China would
continue to regard the Soviet Union as a threat and
would therefore limit the extent to which bilateral
relations were improved.
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Prospects for Improved Sino-
Soviet Economic Relations-
We believe that efforts by China and the Soviet
Union to improve relations will probably include
broadened economic exchanges between the two
states. Both sides have agreed to raise the level of
trade, and there is a chance they will agree to greater
use of Soviet resources in reequipping China's indus-
trial establishment. Because of their earlier disap-
pointing experiences with the Soviets, we believe that
the Chinese will refuse any Soviet offers to resume
economic assistance and that they will be even more
sensitive to the presence of Soviet technicians in
China than they now are to technicians from the
developed states
The Setting
Economic relations have not been at issue either in
last fall's talks or in the current round of Sino-Soviet
consultations. Both Beijing and Moscow, however,
appear to anticipate prolonged discussions, and in
these circumstances they may agree to actions in the
economic sphere that will symbolize their professed
interest in improving the relationship. We believe that
both sides, but China particularly, could gain econom-
ic advantages by expanding trade and permitting an
enlarged Soviet role in the Chinese industrialization
effort.
Sino-Soviet Trade
The Sino-Soviet trade agreement was signed in Mos-
cow on 10 March. The announcement of the agree-
ment noted that trade between the two countries will
"expand greatly," but did not specify by how much.
Although China complained last fall of Soviet delays
both in shipping exports and in accepting Chinese
goods, total trade in 1982 reportedly reached the
planned level of $300 million. Prior to the 1983 talks,
the Chinese told an East European diplomat that they
expected a 40-percent increase in annual trade-to
about $420 million. This level would still be well
below the levels that existed before 1981, the low
point for such exchanges (see table).
Trade between the Soviet Union and China accounts
for less than 1 percent of either country's total
Chinese
Exports
Chinese
Imports
Total
1978
257.3
242.2
499.5
1979
240.7
268.1
508.8
1980
229.9
293.5
523.4
1981
131.7
115.9
247.6
1982 a
150.0
150.0
300.0
a Estimated. Details on exports and imports are unavailable, but
trade protocols in past years have aimed at achieving a rough
balance.
trade-thus the potential for long-term expansion is
sizable. The present markets in the Soviet Far East
for Chinese textiles and other consumer goods and in
China for Soviet timber, fertilizer, and machinery
provide ample room for expanding total trade to at
least the 1980 level and, perhaps within a few years,
to the $1 billion level. Soviet nonoil exports have faced
sluggish markets throughout the world for the past
few years, and the USSR clearly has the capabilities
for greatly increasing its exports to China. We esti-
mate that China could similarly increase its exports to
the USSR without seriously affecting its sales to the
non-Communist world.
China's policy of maintaining an "open door" to
imports from the developed countries has been repeat-
edly affirmed over the past year. While Beijing will
try to avoid any trade commitment to the USSR that
might constrain its ability to increase its exports to the
United States, Japan, and Western Europe, we be-
lieve growing import restrictions on Chinese goods in
those countries could make the Soviet market more
attractive.
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A Greater Soviet Role in Chinese Industrialization?
Since the Sino-Soviet break in 1960, Beijing has on
several occasions refused Soviet offers for a resump-
tion of economic and technical assistance. For exam-
ple, during the talks in 1979, China was unreceptive
to Soviet offers of increased trade and economic
assistance. At that time, Chinese industrialization
policies were heavily focused on importing large num-
bers of complete plants and state-of-the-art technol-
ogies from the West. Further, China had arranged
some $30 billion in Western credits to help finance
the effort. Beijing clearly viewed Soviet capabilities
for providing advanced technologies as limited.F__
megawatts and facilities for manufacturing such
equipment-areas in which the USSR is among the
world's leaders
In sum, we believe that Sino-Soviet trade will pick up
over the next few years and that there is a good
chance that China will agree to import, at least
selectively, Soviet machinery and equipment. Al-
though such arrangements could be useful in China's
industrialization, they will not play the major role as
long as China continues to view its modernization as
primarily a matter of learning from and eventually
catching up with the technologically advanced coun-
Changes in China's industrialization policies since
mid-1981, however, have enlarged the possibilities for
a Soviet role in Chinese modernization. First, Beijing
has reduced its emphasis upon importing whole plants
from Japan and the industrialized West and has
placed greater emphasis on upgrading and reequip-
ping its 400,000 industrial plants. While China has
continued to import selected equipment and processes
from developed countries, it has increasingly relied on
its own domestic investment resources for upgrading
plant and equipment. Second, Beijing now recognizes
that reequipping these existing plants, including some
200 major facilities originally built with Soviet assist-
ance in the 1950s, does not require the latest technol-
ogies to make them more productive. The Chinese
may now believe that the Soviet Union can provide
industrial processes and equipment which, while they
may not be as advanced as those available in the
West, could improve industrial performance without
the expenditure of hard currency. Under these cir-
cumstances, the Chinese might now be more receptive
to a Soviet offer to modernize a number of plants built
with Soviet help in the 1950s.
Whether modernizing existing plants or planning new
ones, Beijing may see merit in drawing upon Soviet
techniques for discovering and processing nonferrous
metal deposits, basic petrochemical technology-for
example, polyethylene and polyester production ca-
pacities, which are important to the expansion of
China's synthetic fiber industry-and high-voltage
(above 500 kilovolts) transmission technology. Given
China's strong interest in developing its hydropower
potential, we believe it might be interested in acquir-
ing Soviet hydrogenerators with capacities above 500
tries of the non-Communist world.
The Question of Soviet Aid
We doubt that a Soviet aid program would be part of
an expanded economic relationship with China. Pre-
sent Soviet programs are directed to supporting such
client states as Vietnam, and Moscow offers few
economic concessions even to its East European allies.
Moreover, China's foreign payments position is now
far stronger than it was in the 1950s, when a Soviet
loan of $1.4 billion provided the backbone of Chinese
economic development, and China can readily pay for
Soviet imports through exports. More important,
Beijing would want to avoid any arrangement that
could revive memories of the dependency marking
earlier relations with Moscow. The Chinese leadership
has for many years attributed a major part of its
economic difficulties to the influence of Soviet eco-
nomic doctrine in the 1950s and to the "perfidious"
withdrawal of Soviet technicians and assistance in
1960J
Beijing's desire to minimize the appearance of
dependency on the USSR and its continuing uneasi-
ness over the presence of other foreign technicians
now working in China will rule out the return of
Soviet technicians on the scale of the 1950s (some
2,000 Soviet technicians and advisers were withdrawn
in the early 1960s). Nevertheless, almost any Chinese
movement toward greater use of Soviet resources in
the economic sphere will entail accepting a larger
Soviet presence in China. This would be easier for the
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Chinese leadership to accept-and defend-if the
return of Soviet experts were part of an agreement
calling for reciprocal cultural, educational, and tech-
nical exchanges with the USSR. Beijing could then
present the turn to the Soviet Union as an arrange-
ment that parallels those already existing between
China and the United States, Japan, and a number of
West European countries.
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Secret
Vietnam, Kampuchea and
the Sino-Soviet Talk
Vietnam continues to show concern that its position in
Kampuchea could be undermined by a Sino-Soviet
accommodation despite Soviet assurances. Since late
last year, top Vietnamese officials have exploited
every occasion to ascertain Soviet attitudes toward the
talks. Vietnamese Deputy Foreign Minister Vo Dong
Giang met with Soviet Deputy Foreign Minister
Mikhail Kapitsa in January to discuss Kampuchea
and Soviet strategy for the second round of Sino-
Soviet talks. One month later, after visiting some
ASEAN states, Kapitsa stopped in Hanoi to reiterate
Soviet support for Vietnam.-Earlier, in the annual
Bolshevik Revolution anniversary speech, the CPSU
promised to do all in its power to support Vietnam.
Vietnam's senior leader, Le Duan, met with General
Secretary Andropov on 23 December in an atmo-
sphere of "complete mutual understanding," and a
Vietnamese Communist Party secretary later said the
USSR had promised that it would not discuss third-
country interests in the Sino-Soviet talks.
Vietnamese concerns are threefold. A Sino-Soviet
accommodation that involved a cutback in Soviet
military and economic aid to Vietnam would compli-
cate Hanoi's efforts to control Kampuchea and would
further strain the Vietnamese economy. We believe
Vietnamese leaders also fear that loss of Soviet
support would tip the military balance of power
toward China, forcing Hanoi to deploy even more
troops along its northern frontier and possibly increas-
ing the risk of Chinese military action there.
Vietnam in the Sino-Soviet Talks
Although Moscow has sought to focus the Sino-Soviet
talks primarily on bilateral issues, Beijing has seized
upon them in part to try to divide Moscow from
Hanoi. According to diplomatic re-
ports, China presented to the USSR in the opening
round a plan on Kampuchea that included:
? Vietnamese withdrawal from Kampuchea as one
condition for improved Chinese economic and cul-
tural relations with the USSR.
? Chinese discussion of normalizing relations with
Vietnam after "some regiments" have begun a
phased withdrawal.
? An end to Hanoi's "anti-Chinese policies."
? UN-supervised elections for all Kampuchean fac-
tions and international guarantees of Kampuchea's
independence, neutrality, and nonalignment.F 25X1
The USSR replied that it would not discuss issues
involving third parties like Vietnam, and it has public-
ly called the Kampuchean situation irreversible. Beij-
ing probably calculated that it would be rebuffed, but
it hoped to highlight Moscow's role in supporting
Vietnamese aggression in Kampuchea. China might
also hope to stir controversy within the Soviet leader-
ship over the wisdom of continuing to support Viet-
nam in policies that are expensive to Moscow both
diplomatically and economically
Near-Term Progress Unlikely
China has offered little to the Soviets that would
offset the present advantages they enjoy from their
relationship with Vietnam. By bolstering Vietnam,
the USSR diverts Chinese attention from the Soviet
border and helps obstruct Chinese influence in South-
east Asia. Soviet naval forces use Vietnamese facili-
ties to support aerial surveillance and intelligence
collection over the South China Sea and the western
Pacific, as well as Soviet naval deployments in the
Indian Ocean.
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Soviet media continue to attack the Chinese for their
refusal to accept the Heng Samrin regime in Phnom
Penh and have stated that "third party" interests
would not be sacrificed to achieve an agreement.
the Soviets are still deliv-25X1
ering to Vietnam trucks, tanks, armored vehicles, and 25X1
artillery that are being used in Kampuchea.
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The Chinese at this time would be extremely reluctant
to agree to a settlement in Indochina that recognized
the primacy of the pro-Vietnam group in a Kampu-
chean coalition government. On the political front,
resistance to the Vietnamese occupation of Kampu-
chea has allowed Beijing to find common cause with
the five ASEAN nations, which historically have been
more wary of Chinese than Soviet or Vietnamese
intentions in Southeast Asia. ASEAN's support has
provided the Chinese-backed, anti-Vietnamese resis-
tance group in Kampuchea the international recogni-
tion otherwise denied it and prevents Vietnam from
consolidating its positions as a major regional power
and virtual overlord of Indochina. Diplomatic reports
indicate that the Chinese want to give the resistance
groups time to strengthen their forces before they
consider any negotiated solution in Kampuchea
Even if Moscow and Beijing were to reach some form
of agreement on Indochina, Hanoi probably would not
cooperate-a fact that inhibits Soviet efforts to make
any deal to which Hanoi might strongly object. As
indicated in many public statements, the Vietnamese
believe a client regime in Phnom Penh is necessary to
their security. In our opinion, Hanoi believes that
were Kampuchea not under Vietnamese control, it
would fall under Chinese influence. Furthermore,
Kampuchea is the only major policy success for the
Vietnamese leadership since unification of Vietnam-
one Hanoi is unlikely to let slip.
Vietnamese Political and Military Options
Should Hanoi sense some movement toward a Sino-
Soviet accommodation further down the road, it has
some military and political options of its own. It could
stage a large-scale provocation along the Sino-
Vietnamese border, the Thai-Kampuchean border, or
among the South China Sea island groups that Hanoi
disputes with Beijing. Such an action would be aimed
at forcing the Soviets into supporting Vietnam.
On the political front, Hanoi might try to prevent a
Sino-Soviet arrangement on Kampuchea by initiating
negotiations to create a coalition government between
the Hanoi-backed Heng Samrin forces and the non-
Communist resistance in Kampuchea-thus isolating
If the Vietnamese were to face a total loss of Soviet
military aid, they might sharply escalate their mili-
tary activities in Kampuchea in an attempt to cripple
the resistance before the supply pipeline closed. This
would require the transfer of several divisions from
the Chinese border. To be assured of success, the
Vietnamese would also have to use air power-used
only sparingly in the past-and mount extensive
operations inside Thailand against supply caches,
refugee concentrations, retreating guerrillas, and per-
haps Thai military and administrative personnel. This
scenario seems unlikely, however, since Hanoi knows
that the Kampuchean resistance could be resupplied
while Vietnam could end up weaker-and in a poor
position to face US aid to Thailand if Thailand were
drawn into the war by Vietnamese attacks.
The Need for Aid
Moscow's ability to influence Vietnam depends main-
ly on the effectiveness of military and economic aid as
a lever. Soviet data show that Moscow provided about
$2.3 million per day in economic aid to Vietnam in
1981-82. The costs of oil supplies-about 30,000
barrels per day-and of the Soviet-financed grain
shipments probably account for the bulk of this
amount. In addition, some $2.2 billion of military
equipment was shipped to Vietnam during 1979 and
1980 to strengthen defenses against China and to
supply Vietnamese forces in Kampuchea.
Soviet reduction or elimination of military aid would
have little immediate impact on Hanoi's military
operations in Kampuchea. Vietnam has ample stock-
piles of military equipment, and we believe the Viet-
namese still have the capability to manufacture the
small-arms ammunition necessary to maintain the
effectiveness of their army-mostly light infantry-
for several years. Over the longer haul, Vietnam's
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Secret
USSR: Economic and Military Aid million current US $
to Vietnam
Total 304
335
301
400
1,772
1,372
1,270
1,070
Economic 229
305
291
335
572
417
900
800
Military 75
30
10
65
1,200
955
370
270
ment is deployed.
poor record of maintaining more sophisticated equip-
ment and the inevitable shortages of spare parts
would limit the military's flexibility. A Soviet aid
cutoff would also, in time, erode the capabilities of the
units assigned to the northern border against China,
where most of the more sophisticated Soviet equip-
larly for Vietnam's domestic economy
A cutoff or reduction of Soviet oil deliveries to
Vietnam would have a more serious impact, particu-
~e estimate that the Vietnamese
have a 30-day supply of fuel in Kampuchea. Once this
was exhausted, the mobility of Vietnamese forces
there would be sharply curtailed, and we would expect
a slow but steady deterioration in the security situa-
tion in the interior of the country. In addition, the
Vietnamese would have to abandon the large-scale
combined-arms operations employed successfully in
the last dry season (November 1981 through May
1982) along the Thai-Kampuchean border-but not
repeated on the same scale this season. We believe,
however, neither the loss of mobility nor the cutback
in large operations would weaken the Vietnamese
position enough over the short term to compel a
withdrawal or reduction in forces
Prospects
The USSR has only limited options for trying to
pursue reconciliation with China yet preserve an
alliance with Vietnam. We believe Moscow will seek a
middle course. It might reduce both military and
economic aid, saying it was continuing to help Viet-
nam defend itself and develop its economy rather than
supporting the Kampuchean war effort. It might also
launch new diplomatic efforts to resolve the Kampu-
chean problem, rather than just endorsing Vietnamese
proposals, and urge Hanoi to moderate criticism of
China and to restrain military operations in Kampu-
chea
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Such temporizing would probably satisfy neither Beij-
ing nor Hanoi. Although Sino-Soviet relations might
improve somewhat, the continued clash of Soviet and
Chinese interests in Asia will reinforce Moscow's
reasons for supporting Hanoi. The USSR probably
also would be careful not be to seen as coercing or 25X1
abandoning an ally because of the potential problems
with other present or prospective clients. Nonetheless,
so long as the USSR continues talks with China,
Hanoi will worry about being sold out.F 25X1 1
2on"I
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Other Topics
Soviet Military Assistance
and Support for Nicaragua
The USSR gradually expanded its military and secu-
rity role in Nicaragua in 1982 to help entrench the
pro-Soviet Sandinista regime. During the year, mili-
tary and security relations between the USSR and
Nicaragua became closer and more formal, and Nica-
raguan Defense Minister Ortega and Interior Minis-
ter Borge visited Moscow for consultations.
Military Deliveries
The Soviets have for the most part continued to use
Cuba and other third parties to supply military
assistance to Nicaragua in order to avoid provoking
US countermeasures against either Nicaragua or the
USSR. Military equipment funneled through Cuba,
Algeria, and other third parties in 1982 included 20
T-54/55 tanks, 12 truck-mounted multiple rocket
launchers, and one patrol boat. The rocket launchers
and the patrol boat were sent from the USSR to
Algeria and transshipped to Nicaragua
In funneling arms through the Algerians and in some
cases the Cubans, the Soviets have usually shipped
equipment on their own carriers from the USSR to
these countries. The equipment has then been re-
loaded aboard Algerian and Cuban ships for transfer
to Nicaragua
One significant delivery in 1982, by a Bulgarian ship
that arrived in Nicaragua in November, may be an
exception to this pattern. The T-54/55 tanks involved
may have been drawn from Bulgarian inventories, but
in our judgment the delivery was almost certainly
made at Soviet behest.
Although the bulk of significant Soviet military
equipment has come through these intermediaries, the
Soviets have directly delivered MI-8 helicopters,
AN-2 transport aircraft, and trucks. These deliveries,
at least some of which originated in Leningrad, have
been made at the port of Corinto on the Pacific coast.
Corinto is the only Nicaraguan port capable of han- 25X1
dling major oceangoing vessels. So far this year, the
Soviets have delivered four armed MI-8 helicopters
directly to Corinto and have shipped two AN-26
transport aircraft to Cuba for eventual transshipment
to Nicaragua.
We estimate that Soviet military agreements with
Nicaragua-including both direct and indirect ship-
ments-totaled about $120 million through 1982. We
believe most of these agreements were made in 1981
and estimate that new agreements worth about $10
million were made last year (see table for information 25X1
on deliveries).
Other Military and Security Support
Moscow has between 75 and 95 military and security
personnel in Nicaragua 25X1
an undetermined number of Soviets 25X1
are attached to the Nicaraguan General Staff, where 25X1
they are assisting in the preparation of military
contingency plans and probably providing intelligence
support. Soviet 25X1
military advisers are involved in plans to reorganize
and improve various Nicaraguan military services,
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Secret
Estimated Deliveries of Major Soviet
Military Equipment to Nicaragua a
Number of Items
1981
Jan 1982 to
Feb 1983
MI-8 helicopters
AN-2 transports
Ground/air defense weapons
T-54/55 tanks
25
20
BTR-50/60 armored
personnel carriers
13
BM-21 truck-mounted
multiple rocket launchers
ZPU 23/2 antiaircraft guns
152-mm field gun/howitzers
GSP heavy ferrys
122-mm field gun/howitzers
Naval Craft
Zhuk patrol boat
Other
Full House intercept and
direction-finding system
Unknown ...
12 ...
4
8
particularly the Air Force where they have apparently
displaced the Cubans as the key advisers. Some are
also pilot-instructors and technicians sent with the
MI-8 helicopters and AN-2 transports to provide
training and logistic support for Sandinista counterin-
surgency efforts)
The continuing expansion and improvement of some
Nicaraguan airfields coupled with reported training
of Nicaraguan Air Force personnel in Cuba, Bulgaria,
and elsewhere in Eastern Europe suggest that Mos-
cow originally intended to send fighter aircraft to
Nicaragua
he Nicaraguans are maintaining MIG-21s-
per aps 12 to 20-along with trained pilots in Cuba.
This may well represent a Soviet-Cuban effort to
circumvent US warnings to Moscow against the intro-
duction of fighter aircraft into Nicaragua.
Moscow's efforts last year to strengthen the Nicara-
guan military suggest, a special emphasis on bolstering
Sandinista ahility to cone with insureencv.F
Nicaraguans are being trained in the USSR to oper-
ate MI-8 helicopters. The recent deliveries of armed
MI-8s by the Soviets and MI-2s by the Libyans are
primarily to strengthen Sandinista counterinsurgency
assistance and training
We also believe that during the past year Moscow has
continued to encourage its allies to support Nicara-
gua. Growing East European military cooperation
with the Sandinistas is almost certainly undertaken at
Soviet behest, and the Soviets probably also encour-
aged such countries as Libya to provide military
Moscow's Strategic Commitment
The Soviets see the survival of the leftist regime in
Managua as the centerpiece of their general efforts to
exploit and encourage revolutionary changes in Cen-
tral America and undermine US influence there.
Moscow hopes that revolutionary ferment in the area
will divert US attention and resources from more
distant problems, strain Washington's relations with
its allies, and undercut US credibility in the eyes of
the Third World countries. To these ends, the Soviets
and their allies have made a special effort to build up
the Nicaraguan military and security establishments.
Moscow no doubt hopes that this assistance will
discourage outside efforts to topple the Sandinista
25X1
25X1
25X1
'25X1
2~DAI
25X1
25X1
25X1
25X1
25X1
'25X1
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Secret
regime and intimidate Nicaragua's neighbors into
accepting Managua's leftist pro-Soviet orientation.
not tied to the fate of the current regime in Managua.
Despite its support and expanding involvement, Mos-
cow has been careful to play down its direct commit-
ment to the Sandinista regime. Moscow and Managua
do not have a "friendship" treaty, and over the past
year statements dealing with Soviet-Nicaraguan rela-
tions by senior Soviet Politburo members such as the
late President Brezhnev and Victor Grishin fell well
short of representing a defense commitment. The
USSR's continuing reliance on intermediaries in pro-
viding the bulk of its military assistance is also
intended in part to ensure that Moscow's prestige is
At the same time, Moscow has intensified efforts both
through diplomatic channels and through the KGB to
stimulate international support for the Sandinista
regime. The visits to Managua over the past year by
high-level Bulgarian, Czechoslovak, and Hungarian
officials as well as by the top leaders of the pro-Soviet
Third World countries of South Yemen and Mozam-
bique no doubt were undertaken with Moscow's en-
couragement to shore up Managua's international
credentials. The Soviets also showed particular inter-
est in promoting opposition to US policies in Central
America at the Nonaligned Coordina
meeting held last month in Managua~ 17
Subsequent Soviet commentary on the Ma-
nagua gathering suggests that Moscow was pleased
with the results. If international support for the
Sandinistagovernment grows, Moscow's stakes in
Nicaragua may rise and it could feel compelled to be
even more responsive to the regime's security needs.
25X1
25X1
25X1
25X1
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Secret
The Soviet Labor
Discipline Campaign
run out of gas.
A crackdown on workers to reduce shirking on the job
has been General Secretary Andropov's major initia-
tive thus far to increase production and improve
Soviet economic performance. The labor discipline
campaign aims at punishing workers or depriving
them of rewards because of absenteeism, tardiness,
excessive job turnover, and alcoholism. The campaign
was initially well received by the public and seems to
be boosting production so far. If greater worker effort
is not rewarded by an increase in consumer goods and
services, however, the discipline campaign is likely to
ity at the primary production level.
Origins of the Campaign
The discipline campaign is clearly a key element in
Andropov's strategy for stimulating a faltering econo-
my. His strategy began with the use of "administra-
tive measures" to enforce discipline: "Although every-
thing cannot be reduced to discipline," he said, "it is
with discipline that we must begin, comrades." This
tactic was intended to get laggards off the streets and
back on the job. The regime hopes for a response in
production large enough to provide incentives for
boosting productivity. At the same time, Andropov is
promoting two additional tactics designed to reinforce
labor's commitment to better job performance: (1)
linking wages and bonuses more directly to'production
results and (2) granting more managerial responsibil-
The keynote of the current campaign was Andropov's
speech at the Central Committee plenum on 22 No-
vember, in which he noted that poor performance
should have "an immediate and unavoidable effect on
the earnings, official status, and moral prestige of
shoddy, inactive, and irresponsible workers." Since
mid-December, when a Politburo meeting focused on
letters from workers complaining about the lack of
law and order and discipline, the campaign has picked
up steam. At a meeting on 24 December, representa-
tives of Moscow enterprises called for a reduction in
absenteeism and turnover and demanded an increased
use of firings to enforce labor discipline. That meeting
has been followed by a daily barrage of articles,
exhortations, and exposes in the central and regional
press reinforcing these themes.
While malingering workers are the prime targets for
punishment, laggards in management-including par-
ty, trade union, and enterprise authorities-are under
pressure to shape up as well. For example, in late
December, Pravda published an open letter from
dissatisfied workers in a heavy construction enterprise
to the Minister of Ferrous Metallurgy complaining
about nondelivery of supplies and demanding im-
proved performance by the Ferrous Metals Ministry.
25X1
The police reportedly have raided stores, restaurants,
theaters, and public transportation to check docu-
ments. These tactics appear to have been successful.
Queues at shops are said to be shorter, and the US
Embassy in Moscow reports having heard of numer-
ous cases of workers being dismissed for being absent
without leave.
Popular Reaction
Many Soviets have expressed satisfaction with the
discipline campaign as something that is long overdue
and will get the economy moving again. Indeed,
IMEMO Deputy Director Ivanov noted that the
campaign and followup Politburo meetings were
touched off by an outpouring of workers' letters
calling for such a crackdown. But even if the average
Soviet worker puts in a larger share of the scheduled
workweek on the factory floor, he still would not
expect to work harder while he is there
Because the Soviet system can implement coercion
more quickly and easily than it can change en-
trenched bureaucratic procedures, the labor discipline
campaign runs the risk of being carried too far too
fast. Indeed, in a manner typical of Soviet-style
campaigns, the police have been heavyhanded and
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Secret
indiscriminate in cracking down on absenteeism. A
continuation of this tactic could foster an atmosphere
of resentment and fear throughout the work force.
Because of widespread use of shift work in industrial
centers, many workers are on the streets during
normal working hours. Such workers reportedly are
becoming annoyed and frustrated by delays involved
in waiting for document checks
Perhaps recognizing that too much zeal in carrying
out the discipline program could further alienate the
work force, the Politburo, at a meeting in mid-
January, evidently examined other measures to keep
workers on the job. The Council of Ministers issued a
resolution providing flexible work hours for the serv-
ice sector and expanding consumer services such as
shoe repairs, laundries, and retail food outlets at
factories. This would reduce the pervasive pressures
on workers to leave work for long stretches during the
day to attend to personal business. The deadline set
for implementation of this decree is 1 April 1983. The
US Embassy in Moscow reports that a number of
stores are already adopting evening hours in response
to the resolution.
Impact on Production
The campaign seems to be boosting efficiency and
production. East European diplomats have reported,
for example, that the tempo of work in the Soviet
institutions with which they do business has picked up
markedly. Moreover, some of the nearly 6-percent
increase in industrial production in January, com-
pared with January 1982, may have been the result of
better work habits. January 1982, however, was a
particularly poor month for Soviet industry, and we
have no way of determining how much of the January
1983 rebound was due to tighter discipline.
The intensity and harshness accompanying the cur-
rent campaign represent a departure from behavior
during the Brezhnev years. In the last major discipline
campaign, in the winter of 1970, labor placement
bureaus were supposedly given a greater role in
controlling workers. Violators of labor discipline were
to lose their bonuses for three months and were to be
assigned to lower paid employment regardless of their
qualifications. Unnamed leaders who failed to fulfill
plans were reprimanded. But the police were not used,
nor were there calls for firings as in the current
campaign.
The best the Soviets can probably hope for from the
present campaign is a gain in production per worker
corresponding to an increase in the hours actually
worked. The payoff ends when downtime is reduced to
the level dictated by machine breakdowns, interrup-
tions in material supplies, and the like. This benefit
could be offset by growing resentment if greater
worker effort is not rewarded by an increase in the
supply of consumer goods and services.
The discipline campaign will have tough sledding for
a variety of reasons. Until allocational priorities
change there is little hope for large increases in the
supply of consumer goods and services. Public toler-
ance of a tough discipline drive, 30 years after Stalin,
is likely to be tenuous and transitory. Moreover, in the
current tight labor market, management will be reluc-
tant to crack down on workers, who can easily quit
and get jobs elsewhere, often at higher pay. Moreover,
it has been standard managerial practice to hoard
labor "reserves" to meet erratic work schedules or
provide temporary help for the harvest from the pool
of nonfarm workers. Finally, firing workers goes
against the grain of Soviet society, which believes a
worker has the right to a job, and even to the job he
now holds.
The campaign's aim of reducing excessive job turn-
over will have a particularly heavy impact on young
workers and could be counterproductive. In an era of
a tightening labor market, geographical and intersec-
toral mobility is at a premium. Workers under 30
years of age are responsible for about 60 to 65 percent
of all turnover, and 75 percent of those leaving their
jobs have worked less than three years. Instead of
arbitrarily curbing job turnover, some of the factors
that contribute to high rates of turnover should be
alleviated. These include dissatisfaction with working
conditions (dangerous duty, boring work assignments,
and erratic work schedules-frequent periods of idle-
ness followed by episodes of "storming") and inade-
quate living arrangements (poor housing and a lack of
'25X1
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Secret
leisure activities).
consumer services, child-care facilities, and social and
considered.'
Soviets Recognize Limits
Some Soviets recognize these points. Trade Union
chairman Shalayev, while endorsing the need for
greater discipline at the plenum held in January,
seemed to stress the unions' role as defender of
workers' interests by promoting incentives such as
improved working conditions and greater use of the
brigade system of labor organization. The chairman
of the Metallurgical Industry Workers Union sup-
ported this position, noting that violators of labor
discipline "cannot be fired; they have families to be
Several recent articles have suggested that improve-
ments in economic management rather than harsh
measures to change poor attitudes and habits among
workers hold the key to higher productivity. V. Kosta-
kov, a sector head at Gosplan's Institute for Economic
Research, recently wrote in Literaturnaya gazeta that
"it is necessary to infuse the struggle for strengthen-
ing discipline with the understanding that we should
have in mind the whole productive chain. This matter
should not be reduced only to a struggle with idlers."
Andropov himself, in his much publicized recent visit
to a Moscow machine-tool factory, stressed the long- 25X1
term nature of the task and collective responsibility in
carrying it out, beginning at the ministerial level. He
may have been signaling the police to back off
somewhat by emphasizing the risks in getting bogged
down in "trivialities like coming a few miniitae Into-
for work or taking too many breaks.
25X1
25X1
25X1
Two liberal economists were cautiously optimistic
about the outlook for change, but stressed the bureau-
cratic and popular resistance to reform. In discussing
why a 15-year experiment in improving labor produc-
tivity-the so-called Shchekino experiment-has not
been more widely introduced, the economists noted
that "we cannot simply uproot people and force them
to find employment in other places. We can try this in
individual factories, but you can imagine the chaos if
whole oblasts started to do it."
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Secret
Coping With jhortages
in the USSR
Changes in food supplies are the Soviet citizen's
leading barometer of his standard of living. Food
accounts for the largest share of his family's budget,
and shortages must be coped with on a daily basis.
Since the late 1970s, after a decade of substantial
improvement in the Soviet diet, three notable changes
have occurred in the food supply:
? The per capita provision of most quality foods, as
well as some staple foods, has stagnated or declined.
? A growing share of food in short supply is unavail-
able for purchase by the general public but available
through a variety of special distribution schemes.
This has led to greater tautness in the supply of food
in state-operated retail markets, making shortages
appear worse than they are in the aggregate and
leading to increased rationing.
? The quality of many food products has declined as
farms and processing enterprises, in an effort to
reach output targets, strive for quantity at the
expense of standards.
10 percent between 1979 and 1982.
Meanwhile, prices for perishable foods in the collec-
tive farm market, which vary according to supply and
demand, rose in Moscow at an average annual rate of
foods may be targeted for price increases this year
In the face of pervasive consumer dissatisfaction, the
regime has taken steps to limit the dangers. It is
stressing measures that minimize the impact of food
shortages on worker morale and productivity by shift-
ing the worst effects from workers to those in Soviet
society less able to mount effective protest. The
leadership so far has stuck to its basic policies relating
to food supply and demand, like its predecessor
counting on a better agricultural performance to
increase supplies. Some signs have appeared, however,
that the Andropov regime is giving greater consider-
ation to the alternative of price increases in state
retail outlets to contain consumer demand. Selected
Slower Growth in Food Supplies
While Soviet citizens receive enough calories, the diet
is inferior in nutritional quality and variety to that of
developed Western countries and most East European
countries. In the first 10 years of its tenure, the
Brezhnev regime improved the bland and starchy diet.
The consumption of starchy staples declined from 54
percent of caloric intake in 1965 to 46 percent in
1977, as quality foods such as meat and dairy prod-
ucts became more available. Nevertheless, in 1977 the
share of starchy staples in the Soviet diet was still
twice as high as in the US diet; the share of meat and
fish, less than half the US level. With more rubles in
their pockets, consumers were eager for further ad-
vances.
With the exception of eggs, the per capita availability
of various quality foods peaked in the late 1970s. In
1982 per capita meat consumption was down 1 per-
cent from its 1979 peak. In comparison with peak
availability, 1981 consumption of milk products was
down 5 percent; fish products, down 3 percent; and
fruits, down 2 percent. Insult was added to injury as
potatoes, "the second bread," became scarce in 1980
and 1981 following disappointing harvests.
Without increased food imports in recent years, the
per capita availability of some major foods would
have been several percent lower. The leadership may
have decided, however, to hold the line on some
imports last year. For example, the Soviet Union's
purchases of meat declined by nearly 10 percent in
1982 despite lower prices on world markets
The evidence of a change for the worse in food
supplies obtained from Soviet production statistics is
confirmed by a special survey project carried out by
the Soviet Area Audience and Opinion Research
Division of Radio Free Europe/Radio Liberty. In the
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Secret
USSR: Collective Farm Market Prices USSR: Regular Availability a Percent of Respondents
of Selected Foods' of Selected Food Products in
State Stores
Chicken
Beef
Butter
Pork
Tomatoes
Fruit
Potatoes
Milk
Eggs
First Half
First Half
Change
1981
1982
From cities
over 1 million
Beef
15
11
-4
Beets
61
49
-12
Bread
97
91
-6
Eggs
47
44
-3
Fish
79
73
-6
Flour
55
43
-12
Margarine
86
68
-18
Milk
32
15
-17
Sugar
90
79
-11
From cities of
100,000 to
1 million
Beef
2
3
+ 1
Beets
49
17
-32
Bread
87
77
-10
Eggs
30
9
-21
Fish
75
47
- 28
Flour
46
18
-28
Margarine
70
50
-20
Milk
22
10
-12
Sugar
82
55
-27
From cities under
100,000
Beef
0
2
+2
^ Ist half 1981 ^ 1st half 1982
a Rubles per kilogram except for milk (per liter) and eggs (per unit).
Data from Soviet Area Audience and Opinion Research Division,
Radio Free Europe/Radio Liberty.
first half of 1981, 492 emigres completed question-
naires on the availability and price of 18 food prod-
ucts in state stores and collective farm markets. In the
first half of 1982, 698 emigres answered the same
questionnaire.
A comparison of data for the two periods shows that
the share of respondents reporting regular availability
in state stores for most products surveyed declined,
although part of the drop may have been caused by
statistical discrepancies. A decrease in the availability
in retail outlets of such items as eggs, fish, flour,
margarine, and potatoes-mostly staples which were
produced and/or procured in greater amounts in the
Beets
60
15
-45
Bread
75
67
-8
Eggs
21
8
-13
Fish
63
40
-23
Flour
21
8
-13
Margarine
67
35
-32
Milk
8
3
-5
Sugar
24
2
-22
first half of 1982 than in the first half of 1981- a "Regular availability" indicates the respondent consistently found
suggests an increasing diversion of these items to the food product on store shelves when shopping.
limited-access stores. Prices in collective farm mar- Source: Soviet Area Audience and Opinion Research Division/
kets continued on their upward path (see graph), also
indicating tauter food supplies. Free market prices of
such quality foods as beef, pork, and eggs are now
three to three and a half times those in state-
controlled outlets.
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The survey data point clearly to unevenness in food
allocations, confirming earlier indications of a high
correlation between city size and food availability: the
smaller the city, the worse the food supply. In the
survey period, supplies worsened more for smaller
cities, leaving residents of cities under 100,000 bear-
ing the brunt of the shortages (see table)
worker morale and productivity.
Special Distribution Systems
The combination of stagnant or reduced output of
quality foods, growth in per capita money incomes
(some 3 to 4 percent a year since 1975), and stable
prices in state-controlled retail outlets has led to
excess demand for these foods. Thus far, Andropov
appears to be following Brezhnev in not endorsing
broad official price increases as a means of eliminat-
ing the gap between food supply and demand. Rather,
the leadership has been calling attention to past
improvements and is promising to improve the long-
run food supply through reorganization of the agricul-
tural sector and associated branches of industry.
Meanwhile, aware of the risk of civil unrest occa-
sioned by food shortages and of the average worker's
tendency to ask "So what if the world is wide when
my shoe pinches," Moscow has taken more immediate
steps to minimize the impact of food shortages upon
Since the mid-1970s-but especially in the last two
years-a system of special distribution of foodstuffs,
considerably more extensive than the traditional spe-
cial stores for selected elites, has been developed.
Under the new approach, foodstuffs are made avail-
able at the workplace. The public catering system, for
example, has sharply increased its worker cafeteria
operations. In many factories, trade union officials
organize regular deliveries of foodstuffs prepacked
according to individual order. In others, coupons,
redeemable for supplies set aside in retail stores, are
distributed. And on the eve of holidays, special food
packages are distributed at numerous worksites.F_
These systems originally developed out of local initia-
tive-for example, that of enterprise managers who
wished to improve productivity by cutting down on the
common practice of workers leaving the workplace to
shop. The special distribution practice is now so
widespread that the Soviet press has dropped its
former reticence about the subject. The nationally
circulated labor newspaper Trud, for example, recent-
ly described in glowing detail how 260 enterprises and
institutions in Klaipeda, Lithuania, receive daily de-
liveries of food packages based on workers' advance
orders. According to the article, 100,000 people in this
city of 185,000 are served through the special distri- 25X1
bution system. However, as emigres from Klaipeda
have reported, the stores serving the general public
are generally left seriously undersupplied.
According to recent Soviet statistics, the practice of
organizing food sales at the workplace has undergone
considerable expansion. From 1977 through 1981, the
number of sites for distributing prepackaged food
supplies at industrial enterprises and construction
projects has increased 300 percent and their commod-
ity turnover has increased 700 percent. A January
1983 Council of Ministers decree ordered all types of
consumer service enterprises to expand their opera-
tions at factories and other workplaces.
Food Quality
Per capita daily protein consumption in the Soviet
Union remains more than adequate for health needs,
although it has dropped slightly since 1975, and the
share drawn from animal sources has declined. Vita- 25X1
min intake is not as satisfactory. According to studies
of various categories of the population conducted by
the Institute of Nutrition of the USSR Academy of
Medical Sciences, consumption of vitamins is inade-
quate, especially during winter and spring. The intake
of vitamins C and A was singled out as particularly
The problems with the structure and nutritional quali-
ty of the diet have been accompanied by an erosion in
the quality of individual foodstuffs. This is partly
because the quality of some agricultural products has
deteriorated in recent years, partly because increased
transportation problems have led to more spoilage, 25X1
and partly because of quality control problems in the
food-processing industry. Some specifics:
? As the average weight of animals sold to the state
for slaughter has dropped, the proportion of bone to
meat in the animal carcass has risen and consumers
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Secret
are getting a higher proportion of bone in their meat
purchases. Meanwhile, a disproportionately large
share of quality cuts has been going into the special
supply systems.
mindful also of the role of food price increases in
kindling worker unrest in Poland.
Particularly since Andropov's rise to power, however,
Moscow has become increasingly concerned about
illegal economic activity and the official corruption it
breeds, as well as the effects of drinking and low
morale on labor productivity. An anticorruption cam-
paign launched in the fall of 1981 is being taken up
with new vigor, and the Andropov regime has made
"poor labor discipline" (a code phrase for absentee-
ism, turnover, and shoddy work) a major theme. But
because poor worker performance and black marke-
teering often reflect frustration over daily hardships,
the regime has to tread a fine line between limiting
illegal activity and adding to tension in the labor
force. In recent weeks, observers have noted some
improvements in state store food supplies; the new
regime may be temporarily boosting deliveries by
releasing state-held reserves to ease the introduction
of the labor discipline campaign and to make a good
? Emigre complaints about watery milk are becoming
increasingly common. Soviet statistics show that the
fat content of milk sold to the state is down
somewhat. Both emigres and the Soviet press have
reported instances of farm workers and retail clerks
diluting milk to meet output and sales targets.
? The fat content of butter has also dropped, but more
sharply. The share of industrially produced butter
with a low fat, high water content rose from roughly
50 to 90 percent between 1974 and 1979.
? An increasing number of complaints in the Soviet
press and by recent emigres indicates that the
quality of bread and other baked goods is slipping.
According to a recent article in Kommunist,
"Alarming symptoms revealing the low quality of
the bread baked in many republics and oblasts have
appeared." In response, food industry officials cite
the delivery of poor-quality flour from the milling
industry, as well as a falling gluten content in
wheat.
Consumer Attitudes
Although some unrest has occurred-such as short-
lived work stoppages-consumers generally have lim-
ited their expression of discontent to grumbling
among friends. Consumers appear to be dealing with
long queues in ways that do not directly threaten the
regime-for example, through recourse to the much
higher priced foods in the officially sanctioned collec-
tive farm markets and through barter and black-
market activity. The increasing distribution of food-
stuffs at the workplace appears to have headed off
protest among the most volatile segment of the popu-
lation-large worker groups at industrial installa-
tions. The group left most vulnerable, the nonworking
elderly, presents little risk of violent protest.
So far, Moscow has preferred to deal with the effects
of repressed inflation rather than risk violent protest
of the sort that food price increases helped, to provoke
in the Soviet Union in 1962. The authorities are
initial impression upon the populace.
Policy Options
The Andropov regime has endorsed the Brezhnev
Food Program, which calls for increased output of
quality foods over this decade. But the Food Program
does not address several of the agricultural sector's
systemic flaws, and there is resistance to some of its
organizational aspects. A marked improvement in the
supply of meat and other quality foods to the consum-
er would require a greater increase in agricultural
production (or in imports) than we see in prospect.
Further shifts in the allocation of food, more ration-
ing, slowing the growth of money income, and prom-
ises of more quality foodstuffs can contribute little
more to contain rising consumer demand. Moscow
will have to consider other measures.
The prices of staple foods were last officially in-
creased in 1955, and those of quality foods in 1962.'
' Some food prices-especially for processed foods-have risen,
however, due to pricing procedures which allow increases for
product improvement. In practice, "improvements" often are non-
existent, or marginal. This is one cause of consumer complaints
about inflation. In addition, the prices of some so-called luxury
foods-coffee and chocolate, for example-have been included in
recent official price increases for categories of goods considered
"nonessential.'
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The population, however, is likely to view price in-
creases as infringing an implicit social contract-in
return for stable retail prices on essential goods, the
populace puts up with low wages and few amenities.
Popular displeasure, however, is likely to be propor-
tional to the degree of price increases. We calculate
that moderate price increases for livestock products
would bring per capita purchasing power for these
items back approximately to its 1975 level. If the
regime raises prices gradually over a series of years
and does not simultaneously provoke worker anger-
by imposing sharply higher production quotas, for
example-serious unrest could be avoided. The re-
gime may test the waters this year by targeting a few
foods for increases; recent evidence indicates veal and
lamb prices may already have been raised.
Some leadership waffling on the longstanding com-
mitment to stable retail prices has appeared. A
Pravda article last December on the waste of bread
included reader letters advocating bread price hikes,
and a contribution to the same article by the first
deputy minister of the food industry lacked the usual
promise of no price increases. In his well-publicized
visit with Moscow factory workers in February, An-
dropov left the door open to price hikes, saying that
"the path of rising prices ... does not suit us as a
general one, although, it must be said, we do have
certain distortions and discrepancies in prices and we
must eliminate them." Meanwhile, the regime may be
hoping that the late 1981 price increases for a broad
range of nonfood goods that pushed up the official
price index for retail trade by 3 percent in 1982, along
with some additional price increases on nonfood goods
early this year, may have absorbed sufficient consum-
er purchasing power to make broad food price hikes
unnecessary for the time being.
37 Secret
25X1
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Declassified in Part - Sanitized Copy Approved for Release 2011/12/19: CIA-RDP84T01083R000100030002-4
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Secret
Declassified in Part - Sanitized Copy Approved for Release 2011/12/19: CIA-RDP84T01083R000100030002-4