DEVELOPMENT OF THE CONSTRUCTION PROGRAM IN THE EASTERN REGIONS OF THE USSR

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01141A001200110002-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 48
• Document Creation Date: December 23, 2016
• Document Release Date: July 19, 2013
• Sequence Number: 2
• Publication Date: November 7, 1958
• Content Type: REPORT

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ti..L
ECONOMIC INTELLIGENCE REPORT
N? 3
DEVELOPMENT OF THE CONSTRUCTION PROGRAM
IN THE EASTERN REGIONS OF THE USSR
-
CIA/RR 153
7 November 1958
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
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WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USD, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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ECONOMIC INTELLIGENCE REPORT
DEVELOPMENT OF TEE CONSTRUCTION PROGRAM
IN THE EASTERN REGIONS OF TEE USSR
CIA/RR 153
(ORB Project 47.1787)
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
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CONTENTS
Summary and Conclusions
I. Introduction
.II. Capital. Investment.
Page
1
4
6
A. Fourth and Fifth Five Year Plans (1946-55)
6
B. Sixth Five Year Plan (1956-60)
6
1.
Original Plan
6
2.
Indications of Nonfulfillment of the Plan
.7
3.
Possible Revision of the Developmental Plan
for the Eastern Regions
8
4.
Prospects for Future Growth of Investment .
8
III..
Progress of Construction by Industrial Sectors . .
13
A. Heavy Troustry
13
l'.
Ferrous Metallurgy
15
a. New Combines
15
b. Expansion of Existing Combines
17
c. Facilities for Mining Ore
18
2.
Nonferrous Metallurgy
16
a. .Aluminum Plants
19
b. Other Facilities
20
3,
Chemical Industry
20
a. Mineral Fertilizer Plants
20
b. Plastics and Synthetic Fibers
21
c; Chemical Enterprises in East Siberia
22
4.
Construction of Electric Power Facilities
22
a. Thermal Electric Power Stations
22
b. Hydroelectric Power Stations
23
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(1) Region VIII (Urals)
2) Region IX (West Siberia)
3) Region Xa (Kazakhstan)
(4) Region Xb (Central Asia)
(5) Region XI (East Siberia)
(6) Region XII (Far East)
Page
23
24
24
24
25
26
5. Machine Building
26
6, Coal Mining
27
7. Petroleum. Industry
28
a. Survey
28
b. Refineries
29
8. Construdtion Materials Industry
30
a. Survey
30
b. Cement Plants
31
B.
Transportation
32
C.
Rousing
33
IV.
Construction Industry in the Eastern Regions
35
A.
Labor Force
35
B.
Mechanization
36
C.
Cost of Construction
37
Appendix A. Methodology
Appendixes
39
Tables
1. Planned and Estimated Distribution of Capital In?
vestment in the Eastern Regions of the USSR, Fifth
and Sixth Five Year Plans, 1951-60
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Page
2. Estimated Capital Investment in Kazakh SSR, 1951-65 . 14
3. Volume of Precast Reinforced Concrete Used per Mil-
lion Rubles of Construction and Installation Work-in
the USSR, 1957 37
4. Comparison of the! Index of Wage Levels in Areas of
the USSR, 1956 38
Map
Following Page
USSR: Areas Planned for Major Industrial Development
in the Eastern Regions, 1956-60 6
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RR 153 S-E-C-R-E-T
(Project 47.1787)
DEVELOPMENT OF THE CONSTRUCTION PRCGRAM
IN THE EASTERN REGIONS OF THE USSR*
Summary and Conclusions
The directives of the Sixth Five. Year Plan (1956-60) called for the
nearly simultaneous development of a number of large industrial "islands"
scattered throughout the Eastern Regions** of the USSR, with the greatest
concentrations in Kazakhstan, West Siberia, and East Siberia. The aims
of the program were to open more rapidly for exploitation the natural
resources of the eastern part of the country, to build in those areas a
number of heavy industrial enterprises, and to limit the further con-
struetion of fuel and power consuming industries in the European USSR
and in the Urals. The plan included expansion and improvement of the
railroad system, development of an interregional power grid, and con-
struction of all ancillary facilities needed to support the planned in-
dustrial.growth. The greatest increases in capital investment were
scheduled for East Siberia, Kazakhstan, and West Siberia, respectively,
whereas one of the smallest planned increases is believed to have been
scheduled for the Urals, although it is an integral part of the Eastern
Regions.
Capital investment in the Eastern Regions is not being carried out
as originally planned. Some large-scale construction is under way, but
the total volume of construction is far below that scheduled. Materials
and funds for the Eastern.Regions as a whole have not been allocated in
volumes sufficient to carry out the original plans. If the present rate
of.investment continues, it is estimated that investment in the Eastern
Regions during the period of the Sixth Five Year Plan will be about
32 percent of total state capital investment in the USSR as opposed to
35 percent under the Fifth Five Year Plan (1951-55). Original plans
called for about 42 percent of the total state capital investment of
the USSR to be allocated to this area in the Sixth Five Year Plan. The
investment resources which were planned for the Eastern Regions, but
never allocated, have been and are being used elsewhere in the economy.
* The estimates and conclusions in this report represent the best
judgment of this Office as of 1 July 1958.
** The Eastern Regions include the Urals, West Siberia, Kazakhstan
and Central Asia, East Siberia, and the Far East (Economic Regions VIII
through XII).
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Also, the regional distribution of new construction within the
Eastern Regions has been altered significantly. It now appears that
the Urals, northern Kazakhstan, and West Siberia (west of Novosibirsk)
will be developed at the highest rates because a greater number of the
most important and most advanced projects are located in this area.
Integrated industrialization of these portions of the Eastern Regions
will take place first, thus providing early production returns and
facilitating a subsequent expansion farther to the east. Construction
will continue on some key projects in other parts of the Eastern Regions,
but the total volume of construction will be much less than that called
for in the original plan.
?The revised pattern of development, which was in keeping with the
policy outlined by M.G. Pervukhin in the discussions of the National
Economic Plan for 1957, began to appear in the Eastern Regions in mid-
1957. Resources have been and are being allocated in increased quan-
tities to those projects most important to the economy and to those
projects nearest completion in order to bring them into production as
rapidly as possible. A 7-year program to run from 1959 through 1965,
announced in mid-1957, again emphasized the development of the Eastern
Regions. A number of national and regional problems currently facing
the economy of the USSR, however, have necessitated revision of the
original program for the Eastern Regions.
First, materials and funds have been scattered over a large number
of projects throughout the USSR in quantities insufficient to maintain
planned construction schedules. As a result the construction industry
has failed consistently to put new productive capacity into operation
on time. Responsible Soviet planners have recognized this problem for
along time, and postponing the start of construction at new projects
is one method of alleviating this situation. Projects in the Eastern
Regions scheduled to have been started in 1957 and 1958 and those with
completion dates scheduled for the period after 1960 in many cases
have been postponed or started on a token basis in order to concentrate
scarce materials and funds on key projects. Even with optimum concen-
tration of resources, it would seem that the available quantities of
resources would limit investment in the Eastern Regions to rates below
those originally planned for the period between 1956 and 1960.
Second, since late in 1956 the program for housing construction in
the USSR has received increased attention. The total volume of housing
to be built under the plan has been increased, but the unit cost of
housing construction has not been reduced as anticipated. Thus the pro-
gram for housing construction, which is concentrated in the European
USSR, is demanding more resources than were originally allocated and
will absorb most of the resources and funds which were to be conserved
by reducing the scope of the program in the Eastern Regions.
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Third, the railroad system of the Eastern Regions is inadequate and
generally overloaded, with the most developed part of the network lo-
cated in the western part of the area. Most of the construction of new
lines in the Eastern Regions under the Sixth Five Year. Plan was to have
been west of Novosibirsk, and thus even if all construction were com-
pleted on schedule, transportation east of Novosibirsk would remain
largely dependent on a single overloaded route.
Fourth, skilled construction workers exhibit a growing reluctance
to leave voluntarily the relative comforts of the European USSR for
pioneer living in the east. The lack of skilled workers has been re-
ported from all parts of the Eastern Regions, but no great movement of
workers to fill this need has occurred in spite of frequent appeals in
the press.
By 1957 it was evident that the industrial construction program in
the European USSR was requiring more resources than originally planned.
The concurrent decision to emphasize housing construction, which is
concentrated in the western area of the country, further increased the
demand for construction resources in the west and thus precluded any
large-scale flow of resources to the Eastern Regions.
It must be assumed that the Soviet planners were aware that the
program for development of the Eastern Regions as originally outlined
would require ultimately a high percentage of nonproductive investment.
It is possible that they intended to minimize nonproductive investment
in the early years of development by following the previous Soviet
practice of building the basic industrial projects on a high-priority
basis while building nonproductive facilities at a much lower rate.
The higher priority given to housing construction since 1957, however,
required that housing be built before or parallel with the industrial
construction. The increased volume of nonproductive investment re-
quired by the higher priority given housing construction plus the
difficulties encountered in the program of industrial construction
throughout the country left two alternatives: large-scale diversion
of resources from the west to the east (which would have threatened
the construction prbgram in the west) or a downward revision of the
program in the Eastern Regions (which was in the early stages of
development). The second alternative has been followed.
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I. Introduction.
Plans for development of the Eastern Regions of the USSR have been
in existence since the early 1930's, but those plans have consistently
exceeded the amount of construction resources available for implementa-
tion of this development. In the Fifth Five Year Plan, for example,
relatively modest plans for industrial construction were not fulfilled,
and construction for almost all branches of heavy industry was severely
criticized. li* Numerous plants scheduled for completion or partial
completion in the Fifth Five Year Plan were left uncompleted, and some
are still under construction.
In spite of the poor record of the construction industry in the
Eastern Regions under the Fifth Five Year Plan and of the continued
shortage of construction resources in the area, the directives of the
Sixth Five Year Plan and subsequent commentaries on it stated the
apparent intention of pushing ahead rapid, large-scale industrialization
of the region. Under the Sixth Five Year Plan, capital investment** in
the Eastern Regions was scheduled to increase by 100 percent above the
volume carried out under the Fifth Five Year Plan. g/ In the country
as a whole, capital investment was to increase by about 67 percent. 3/
The increase in capital investment was backed up by the announcement of
the intention to initiate or to continue construction in the Eastern
Regions of a number of specific industrial enterprises, including 4 new
ferrous metallurgical plants, a ferroalloy plant, 3 major iron ore mining
and concentrating facilities, 4 large aluminum plants, 10 hydroelectric
stations (including the largest two in the world), 100 machine-building
plants, 8 oil refineries, 17 cement plants,*** and about 4,900 kilo-
meters (km) of railroad (75 percent of total railroad construction
planned for 1956-60). The implementation of this program of develop-
ment would have intensified each of the problems facing the Soviet
economy. Materials and funds would have been scattered over a greatly
increased number of projects, many of which were not even planned to be
in production until after 1960; the cost of construction per unit of
productive capacity probably would have been the highest in the USSR
because of the need for large amounts of nonproductive construction
(particularly housing), railroad transportation would have been con-
siderably worsened, and skilled workers inevitably would have to have
been coerced (either physicslly or economically) into moving east. In
short, an attempt to implement the original plan would have led to the
intolerable situation of either having to admit failure of the plan for
the region or having to make large-scale reallocation of resources from
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** Throughout this report, all references are to state capital invest-
ment unless otherwise noted.
xxx For detailed discussion and documentation, see III, A, p. 13, below.
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the west, thus endangering plans for over-all construction in the USSR
as a whole.
Early in 1957, M.G. Pervukhin pointed out the dangers inherent in
such a program and emphasized the need to concentrate all available
resources on projects already under construction and planned for early
completion and pointed out the consequent need to limit starting new
projects. V This policy was iterated even more strongly in April 1958
at the All-Union Construction Conference by V.A. Kucherenko, who, after
praising the recent improvement in the work.of the construction industry,
went on to say
And yet there are serious shortcomings in construction and
tremendous unutilized reserves. One of the great difficulties
in construction is the fact that funds are disperse 4 over many
construction projects, with the result that considerable amounts
of money are frozen and the volume of unfinished construction
grows. ... We must begin a limited number of first priority
projects and supply them with all the material and money they
need, and we must strictly observe the established construction
schedules. If there are not enough funds to complete within
the specified times all the projects that have been started,
it would be better to cease work on certain second line projects
for two or three years than to shut down all the projects, in
effect, and thus tie up state resources, by allotting all of
them funds for the sake of appearances, but in amounts that are
clearly inadequate.
? Detailed study of the progress of construction at individual projects
included in the Sixth Five Year Plan* clearly shows the difficulties which
have been encountered at sites throughout the Eastern Regions and the
growing trend toward the concentration of resources on key projects which
promise to yield the earliest possible production. This trend has brought
about a concentration of development in the relatively compact area of
the Urals, northern Kazakhstan, and West Siberia (west of Novosibirsk).
Some idea of the extent of concentration can be seen from a comparison
of the areas scheduled for intensive development under the original and the
revised Sixth Five Year Plan.**
* See III, A, p. 13, below.
** See the map, following p. 6.
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II. Capital Investment.
A. Fourth and Fifth Five Year Plans (1946-55).
Following World War II and during the reconstruction of Soviet
industry under the Fourth Five Year Plan (1946-50), the idea of expand-
ing the industrial base of the Eastern Regions of the USSR received
considerable publicity, but little was accomplished because most of the
resources were concentrated in rebuilding the installations destroyed
or damaged by the war. Less than 30 percent of the capital investment
of the USSR under that plan it estimated to have been allocated to the
Eastern Regions.
During the. Fifth Five Year Plan (1951-55), particularly during
1954-55, investment in the Eastern Regions was increased; about 35 per-
cent of the Soviet capital investment (about 218 billion rubles*) was
allotted to that area. p.1 Nevertheless, construction lagged behind the
plan, and almost all types of industrial construction were sharply
criticized. Construction of oil refineries, ferrous and nonferrous
metallurgical plants, machine building enterprises, and coal mines
were all criticized and specific examples of poor construction were
publicized. 2/ The new railrbad construction program, vital to this
area, was fulfilled only 55 percent in terms of kilometers of line
completed.
B. Sixth Five Year Plan (1956-60).
1. Original Plan.
The original goals specified in the Sixth Five Year Plan
(1956-60) for the development of the Eastern Regions of the USSR called
for an increase of 100 percent in capital investment above the level
of that of the Fifth Five Year Plan. The greatest increases were
planned for West Siberia (2.5 times), East Siberia (2.8 times), and
Kazakh SSR (2.7 times). al/ Capital investment in the Eastern Regions
under the Fifth Five Year Plan was 218 billion rubles 12/; thus the
capital investment originally planned for the Sixth Five Year Plan is
estimated to have been about 436 billion rubles, or about 42.5 percent
of the capital investment in the USSR.
In November 1956, N.K. Baybakov, then Chairman of Gosplan,
USSR, in a speech on "Some Problems of Long-Range Planning" stated that
the draft directives of the Sixth Five Year Plan provided for an increase
* Investment figures are in 1 July 1955 rubles converted to new unit
valuations. Investments in 1 July 1955 rubles have been multiplied by
a factor of 103.3 tp obtain the new valuations. 1/
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USSR: Areas.Planhed foi Major Industrial Development in. the Eastern Regions, 1956-60
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