CAN ANDROPOV CONTROL HIS GENERALS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85M00364R001001580066-8
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 20, 2016
• Document Release Date: November 26, 2007
• Sequence Number: 66
• Publication Date: August 6, 1983
• Content Type: OPEN SOURCE

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Can Andropov.control his
generals.?
The Soviet Union does not have a militaryindustrial complex; it is one.
If Mr Yuri Andropov Is to get the Soviet economy moving again, he
needs to break the generals' control over the country's resources.
The Soviet Union is a military giant but
an economic weakling. Its leader,. Mr
Yuri Andropov, was hoisted to power.
nine months ago in the expectation that
he could put new muscle into the ailing
economy. The Soviet Union is a super-
power because of its military strength.
This needs a strong economic base, But
the base is crumbling under the increas-
ing weight of the military burden it has to
carry.
Defence spending is still rising by a real
4-5% each. year, outstripping gnp growth,
which has slumped from an annual rate of
about 4% in the 1970s to barely 2%
today. Nobody knows for certain what
the total defence budget is, but its share
of the national cake is rising. The Rus-
sians say defence accounts for only 3% of
gnp, which is obviously untrue. The
American CIA reckons the figure is over
16% of g*cp, which is probably closer to
the mark.
In his latter years, Brezhnev paid the
military bill by cutting back on industrial
investment. The slump in the growth of
investment from over 7% a year in the
mid-1970s to an average of barely 2% in
the past two years has had a dampening
effect on . an already declining growth
rate. Because of the time lag between
new investment and a visible return, this'
starvation diet will hit harder as the 1980s
wear on. Under Mr Andropov's new
management, investment is planned to
grow by 4% this year and by more in
1984. But to achieve this Mr Andropov
will have to cut resources from else-
where: either out of consumer spending
or, less likely, out of defence.
The defence effort has 'not merely
drained cash from the civilian economy.
It has also distorted economic develop-
ment. For example, in the past 40 years,
productivity in the food industry and light
industry has increased only about four
times; but in the machine-building, met-
allurgy and -chemical industries, all of
which devote a large chunk of their
output to defence, productivity has risen
over 15 times. The Soviet Union has been
remarkably efficient at producing guns
and-partly as a consequence-patheti-
cally inefficient at producing butter.
How they got there
Twenty years ago the -Soviet Union's
strategic missile forces barely, existed;
today they are a match, and maybe more,
for the best a far richer United States can
produce. Improvements in naval, air and
land forces have been no less spectacular.
The Soviet Union now boasts the world's
largest submarine force. According to
American government figures, Soviet
tank production in recent years has out-
numbered Nato's by three to one, its
production of fighter-bombers by three to
two, and its production of surface-to-air
missiles by about seven to one. This
build-up has been achieved by the follow-
ing policies:
Absolute priority to defence. The Sovi-
et system of central planning is tailor-
made to suit generals. Raw materials or
parts in short supply can be redirected to
priority tasks, and military industry al-
ways has top priority. All branches of the
economy are obliged to satisfy military
demands first; civilian factories have to
make do with what is left. If supplies run
out, factories working on military con-
tracts can simply take what they. need
from civilian factories. Party officials
have instructions to make sure that they
get it. -
Special favours for key workers. De-
fence industrialists have been known to
stay in the same job for 20 years or more.
Weapon design teams under such.famous
names as Korolev, Yangel, Ilyushin and
Antonov span more than one generation.
There is no shortage of funds or research
facilities and research teams can call on
the assistance of a battery of research
institutes attached to the Soviet academy
of sciences.
Brain drain: The best manufacturing
brains and skills go into defence. Talent-
ed managers head for missile plants rath-
er than factories making refrigerators.
And the best workers follow the best
managers. An engineer can earn between
20% and 50% more in a military enter-',
prise than in a civilian one. There are
other benefits too: easier acctssto educa-
tion for children, better housing and
better-stocked factory shops.
Consumer control. Unlike the ordinary
Soviet consumer, who has to put up with
If the soldiers want Andropov to,get things moving, they've got to move too
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whatever second-rate goods are avail-
able, the generals order what they want.
They give precise instructions to the de-
sign teams and manufacturers, and they
send their own military inspectors to
make sure their high standards are met.
Faulty equipment is discarded. Cost is a
secondary consideration.
Generals as politicians. In- the United
States, defence manufacturers and their
lobbyists press the government to buy
their arms. But they are still an outside
influence. In the Soviet Union the de-
fence lobby is lodged firmly inside the
political system. At the top, the defence
council, chaired by Mr Andropov, brings
together the most-senior party and mili-
tarv men to make important' decisions.
Farther down in the hierarchy,.defence
allocations are handled by an indepen-
dent department of the state planning
agency, Gosplan, which always puts mili
tare interests first. A military-industrial
commission acts as troubleshooter to
make sure the generals get what they
need. Nine ministries form the core of the
military-industrial complex: from the
ministry of general machine-building,
which- is in charge of the production of
Soviet nuclear weapons, to the more
aptly-named ministries of shipbuilding
and aviation. . .
Defence information monopoly. The
generals control all information on de-
fence issues. There are no civilian think-
tanks in the Soviet Union, such as Rand
or-the Brookings Institution in the United
States, to carry out independent research
into defence policy. Even civil servants
are kept in the dark. This jealous guard-
ing of military secrets has its ludicrous
side. In the Salt-1 missile talks, General
(now Marshal) Nikolai Ogarkov took an
American delegate aside and asked the
Their guns are better than their fridges
Americans not to discuss the details of
Soviet weapons in front of the Soviet
civilian negotiators, who were not meant
to know about them.
Civilian chaos
The planning that guarantees the smooth
running of the Soviet Union's military
economy creates periodic chaos for civil-
ian industry. Competing with the defence
industries, for example, is a mug's game.
A manager of a civilian refrigerator fac=
tory, offered the choice between an up-
to-date insulating material used in mili-
tary production and an old-fashioned
sort, is likely to choose the old-fashioned
one simply because his stocks are less
likely to be raided by the army.
The much vaunted scientific-technical
revolution, which was to have helped
remake Soviet industry in the 1970s, has
turned instead into a narrow military-
technical revolution. In the west new
ideas developed for military -and space
programmes-in computing, electronics
and materials science-have given extra
zip to civilian industry. In. the Soviet
Union the spin-off has led to industrial
innovation in a few cases but more often
to decline in the civilian sector and con-
surer frustration.
Recognising at least part of the prob-
lem, Brezhnev several times called on the
defence sector to devote more effort to
the production of consumer goods. In
1971, he claimed that 42% of defence
production already fed back into the
civilian economy. He gave no details but
defence factories do produce goods rang-
ing from aluminium foil and outboard
motors to baby carriages, children's toys
and vacuum cleaners.
The Russians do not go short of real
tanks and guns to produce toy ones.
The burden on Russia
Defence spending as % of gdp
01975
01982
!A$% 01 qnsi.
Military enterprises . make consumer
goods just to use up spare capacity. All
the same, the wise Soviet shopper looks
for factory codes to identify goods made
in military factories. The quality control
may not be as high as that for rifles, tanks
or aircraft, but it is often better than in
civilian factories. . . .
Andropov's choices
Before he died last November, Brezhnev
had called his top officers to the Kremlin
for a pep talk. He told them that the
Soviet Union's economic resources were
not unlimited and that the armed forces
would have to make maximum use of the
resources already at their disposal. That
-came close to saying that not all the
army's demands could be met.
. Senior military men were part of the
coalition for change that put Mr Andro-
pov in power, and he has been careful not
to trample on their interests. But that has
not stopped him echoing Brezhnev's,
warning. There are some economic facts
that neither Mr Andropov nor his mili-
tary backers can ignore: as the cut-back
in investment has shown, the choice is not
one of just guns versus butter, but of guns
versus the sort of investment in defence
industry as well as the civil sector that can
support the pace of Soviet weapon
development.
Mr Andropov has three choices. He
can slow down the growth in defence
spending and devote the extra resources
to the rest of the economy. Or he can
reform the . system of planning which
allows the generals to choke off industrial
growth. Or he can keep tinkering with
the existing economic mechanism, trying
to squeeze out greater efficiency and
higher output, and leave the defence
sector unscathed.
Mr Andropov would face several diff-
iculties if he tried to slow down defence
spending.- First, he would have to over-
come opposition from the generals..This
would be especially tricky if he. had made
no progress in the arms-control negotia-
tions with the Americans.
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Second, the benefits of defence cuts
would take a long time to materialise.
According to American figures*, even if
defence spending were frozen until the
end of the decade-itself a far-fetched
proposition-the annual rate of growth of
Soviet grip would probably increase by no
more than 0.2% a year. The growth in
per capita consumption could be greater,
up to 0.5% a year. But this might not
make the Soviet consumer's lot markedly
better, especially if most of the money.
not spent on defence was diverted first to
investment.
Part of the problem. is that resources
defence to the civilian sector. Factory re-
tooling costs money. On present perfor-
mance Soviet civilian industry would find
it hard to absorb extra capacity, and what
it did absorb would be plagued by the
same bottlenecks, caused by the army-
first policy, that have worn down the rest
of civilian industry.
Biting-the bullet
Without radical reform of the civilian
economy, any injection of new resources
taken from defence would be largely
wasted. So is Mr Andropov making a stab
at serious reform? Probably not.
He has tried to boost farm output by
paying farm workers by results; he has
booted out the most incompetent of his
ministers; and he has started a series of
`'experiments" to. increase industrial effi-
ciency. The latest, due to begin on Janu-
ary 1st in: two Moscow-based ministries
and selected -industries in Byelorussia,
Latvia and the Ukraine, will give manag-
ers more freedom. to take their own
production decisions.. _
When measured against 50 years of
tight central planning, none of this is
adventurous enough to make much of an
impact on the performance of the econo-
my. The signs so far are that Mr Andro-
pov is going for the third option: mud-
dling. He seems to be hoping to avoid
hard decisions, and to duck a clash with
the generals.
. But, without radical change, the Soviet
economy will enter the 1990s with the
same problems ,that dog it today. The
army's top brass had supported Mr An-
dropov as the party leader most likely to
..break the immobilising spell of Brezh-
nev's last years and to -get the country
working again. If they cannot get what
they want out of the limited changes he
has introduced so far, they may have to
bite the bullet and put their weight be-
hind real economic reform. In the end, it
could be the only way to maintain the
Soviet Union's military'might.
'Soviet Economy in the 1980s: Problems and
Prospects, Part I. Published for the joint
economic committee of. congress, 1983.
Craxi told the president he could do it
Italy
Veni, vidi
Luck favours the persistent. Italy's So-
cialist leader; Mr Bettino Craxi, this
week succeeded in his fourth attempt in
as many years to become prime minister.
On -August 4th he told President Pertini
that he had the necessary support to form
a five-party coalition made up of Social-
ists, Christian Democrats and three
-smaller parties-Republicans, Social
Democrats and Liberals. Mr Craxi will be
the first Socialist and only the second
non-Christian Democrat to be prime min-
ister since 1945.
Mr Craxi has benefited from the defen-
siveness of the Christian Democrats,
whose support fell by 5% to 33% in the
June election. The party feared that if it
.had rejected Mr Craxi the Socialists might
have gone into opposition and, eventually,
joined an alliance with the Communists.
Mr Ciriaco de Mita, the Christian Demo-
cratic leader, is comforting himself with the
thought that the prime minister's chair
could prove uncomfortable for Mr Craxi.
The installation of 112 cruise missiles in
Sicily, due to begin at the end of this year,
and the containment of runaway public
spending are issues which will severely test
any government.
The smaller parties, although uneasy
about Mr Craxi's domineering manner,
have an interest in seeing him succeed. A
defeat for the Christian Democrats is, in
some measure, a victory for them. The'
idea of having a prime minister from
outside the Christian Democratic ranks,
established by the Republicans' Mr Gio-
vanni Spadolini in 1981, will in future
seem less unusual. The Craxi ministry
reflects the strengthening of the middle
ground: .the Socialists and their three
small partners increased their share of the.
vote from 17.4% to 23.5% between 1976,
and 1983.
The price Mr Craxi has had to pay for
Christian Democratic and Republican
support is an agreement to introduce the
policies of economic restraint they fa-
vour. The Socialists now 'seem to accept
the logic of that. Party officials say that
Mr Craxi is considering cuts in public
spending, particularly pensions and
health benefits. He is also said to favour a
curb on tax exemptions and evasion,
more restrictions on the scala mobile
(wage indexation) and strict price con-
trols as methods of -containing a 16%
inflation rate and a public-sector borrow-
ing requirement that is heading for 100
trillion lire (#42} billion) this year, some
18% of gdp. The new government will
aim to reduce inflation to 7% by the end
of 1984. A two-year programme to create
jobs for 200,000 young people may, how-
ever, be included as a concession to
Socialist and Social Democratic concern
over-, unemployment.
The Christian Democrats had also
wanted a commitment from Mr Craxi
that he would gradually ease his party out
of its alliances with the Communists in
many of Italy's major cities. Mr de Mita
wanted an insurance against a possible
future Socialist alliance with the Commu-
nists at the national level, should the
proposed coalition of the centre-left fail
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EUROPE .-
to ;prove any more stable than its prede-
cessors were during the previous parlia'
ment. Mt Craxi regarded this demand as
unreasonable, although he seems to have
given some vague promise that he would
avoid joining new coalitions with the
Communists in the cities.
Assuming that Mr Craxi wins a parlia-
mentary vote of confidence next week, he.
will soon be gazing down from the terrace
of his top-floor suite in the Hotel Raphael
ors modern and imperial Rome, having
conquered the political capital which
spurned him so often. in the past.
Immigrants-
Enoch Chi.rac..
Long; hot summers are traditional en-
emies of good race relations. France is no
exception.. The past month has seen a
series of shooting attacks on immigrants
and a tear-gas- assault on a block of flats
occupied mainly by Turks in the normally
peaceful Auvergne town of Bourganeuf.
The incident which caused most anger
was the shooting, on July 9th, of a 10--
year-old Algerian-boy; Toufik Ouannes,
as he let off. fireworks to celebrate the
end of Ramadanrin a Paris suburb.
The. fact that the. victims were. from
Africa and the Caribbean has revived a
debate about how 'France can best cope
with its _ 4.3m- immigrants who do not
qualify for - French nationality-parti-
cularly the 1.4m. Arabs, and the 106,000
from black Africa. The less visible though
larger immigrant populations from Por-
tugal,. Italy and Spain are rarely men-
tioned, and understandably keep their
heads down.
Extreme right-wingers, who did unex-
pectedly well, in municipal elections in
March, say that if France booted out its
2m immigrant workers unemployment
would disappear, ignoring the, unwilling-
ness of most Frenchmen to take the dirty,
poorly-paid jobs immigrants perform. At
the. other extreme, some of the more
emotional mourners at Toufik Ouanni s's
funeral vowed to turn the housing estate
where he died into an immigrant fortress
which no policeman would dare enter.
The Socialist government is well aware
of the potential explosiveness of the im-
migrant issue, and is somewhat embar-
rassed by it. Left-wingers would like to
see France as an open-hearted country
ready to receive the poor and downtrod-
den. The realities of office have forced
them to introduce measures to cut immi-
gration to a trickle and to crack down on
illegal immigrants who failed to register
during.a grace period last year:
The trouble is that?nobody is convinced
The fires in the south
The. chunky yellow aircraft scud over
lagoons and calm patches of sea, scoop-
ing, up water.. Then they swing inland,
skimming over flaming ridges or probing
into smoke-filled valleys. They release
their cargo, return for more water, and
come back to the hills-hour after hour.
Thee headquarters of the busiest of
these aerial fire-brigades is near Mar-
seilles. It controls 22 firefighting aircraft;
four reconnaissance aircraft and nine
helicopters, and can call out 1,000 spe-
cially trained troops. Since mid-July the
force has beew in action in Corsica;
where fires have devoured more- than
40,000 hectares of woodland and scrub,
in French and Spanish: Catalonia- where
over 20,000, hectares of -pine and cork
oak were lost, and on the Cdte d'Azur.
In: the same period an inferno 130 kilo-
metres wide charred Sardinia; and major
fires broke.- out in Calabria and
Jugoslavia.
Most fires are attributed to the care-
lessness of smokers, picnickers and oth-
ers, but deliberate fireraisers are surpris-
ingly. - numerous. - They include
speculators wishing to acquire land
cheaply, shepherds who want more pas-
ture, children eager to see firemen at
work, people with a grievance, and ter-
rorists. In Corsica last week 14 fires were
started deliberately in one day. Few fires
are ignited by natural phenomena such
as lightning. Their spread is helped by
the neglect of woodland resulting from
the rural exodus: too many woods are
choked by undergrowth that flares up at
the drop of a spark.
The French are the most efficient
firefighters in the Mediterranean region
and they pay more attention than their
neighbours to preventive. measures.
the government's measures are working.
Second thoughts about some of the more
arbitrary regulations, together with diplo-
matic pressure from former colonies in
north Africa, have created loopholes. A-
move to have expulsions dealt with by the
courts, rather than by police or officials,
is causing a big backlog of cases.
Illegal immigrants still trek over the
mountains into France: 1,186 were
caught crossing the eastern Pyrenees last
year. Since West Germany decided to
reduce its immigrant worker population
(see next article), clandestine human traf-
fic into France from the east has in-
creased. One favoured route lies through
a cemetery in Saarbrucken which is con-
veniently close to the frontier. Other
people from former British colonies, who
claim right of entry under EEC freedorn-
of-movement rules, have come to France .
from Britain. Indeed, worry about .black
immigration from Britain may explain
Some local authorities in France are
financing the clearing of undergrowth
and even encouraging shepherds to
graze their flocks in woodland from
which they were. once barred because
they damaged saplings. A French. firm
has designed a six-wheeled tractor which
rips up undergrowth and crushes it into
bales of saleable fuel. -
In Spain, firefighting :has improved
since the late 1970s, when an industrial
city of 100,000 inhabitants had, only four
fire-engines. But a recent fire near Gir-
ona, which left a. vast. regional park-a.-
desert-of ash and black treetrunks, re-
vealed inadequate equipment and poor
co-ordination between the central gov.'
ernment, which controls Spain's 12 fire-
fighting aircraft, and the Catalan-author-
ities, which operate other fire services.
Inadequate equipment. hampered effi-
ciency in Sardinia, too, and the Italian
government asked its EEC' partners to
help.. Efficient firefighting is, of course,
expensive. One hour's flight by a DC-6
costs the taxpayers $34,000.
Since 1970 some 1.3m hectares have
been destroyed by fire in Spain, repre- -
senting . a loss of over $100m. Spanish
Catalonia. has lost a tenth of its wood-
land in eight years. And in France some
100,000 hectares have been ravaged in
the past three years. In Spain and some
other Mediterranean countries more
trees are burnt each year than are plant-
ed. Yet attempts to reafforest devastat-
ed areas with trees which are less flam-
mable than the fragrant Mediterranean
pine are- sometimes resisted. In Spain a
new plantation of deciduous trees was
cut down one night by self-styled ecolo-
gists. They -said they were preirenting
"ecological imbalance".
why coachloads of West Indian day-trip-
pers were not allowed to enter Calais or
Boulogne last weekend: a decision which
provoked an official protest from the
British foreign office. .
The French government is promising
fresh measures against illegal immigrants,
now estimated at 300,000. But the real
running on the issue is being made by Mr
Jacques Chirac, mayor of Paris and lead-
er of the opposition Rassemblement pour
la Republique (RPR). While stressing
how much be abhors racism, Mr Chirac
reckons that "the tolerance level has
-been passed" in some areas of the capital
where more than half the primary school-
children are foreigners.
Mr Chirac plans to make life tougher
for illegal immigrants by imposing more
stringent tests of the.. documents they
have to produce to show that they are in-
France legally. He also. wants to ,ensure
that social services and health care in
THE ECONOMIST AUGUST 6. 1983
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