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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual collections.
Collection: Matlock, Jack F.: Files
Folder Title: Background Material for the
President - Extra Copies & Incoming Material (1)
Box: 21
To see more digitized collections visit:
https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories visit:
https://reaganlibrary.gov/document-collection
Contact a reference archivist at: [email protected]
Citation Guidelines: https://reaganlibrary.gov/citing
National Archives Catalogue: https://catalog.archives.gov/
WITHDRAWAL SHEET
Ronald Reagan Library
Collection Name MATLOCK, JACK: FILES
Withdrawer
JET 4/24/2005
File Folder
BACKGROUND/MATERIAL/FOR THE PRES EXTRA
FOIA
COPIES + INCOMING 1/3
F06-114/6
Box Number
21
YARHI-MILO
2105
ID Doc Type
Document Description
No of Doc Date Restrictions
Pages
8878 MEMO
MCFARLANE TO PRESIDENT REAGAN RE
2
ND
B1
PAPERS ON THE SOVIET UNION: SOVIET
INSTRUMENTS OF CONTROL
R 12/13/2007 F06-114/6
8882 PAPER
THE SOVIET POLITICAL POLICE
5
ND
B1
R 12/13/2007 F06-114/6
8883 PAPER
THE SOVIET MILITARY
5
ND
B1
R 12/13/2007 F06-114/6
8879 MEMO
MCFARLANE TO PRESIDENT REAGAN RE
6
ND
B1
PAPERS ON THE SOVIET UNION:
GORBACHEV'S DOMESTIC AGENDA
PAR 12/22/2015 M554/1
8880 PAPER
THE SOVIET ECONOMY IN PERSPECTIVE
6
ND
B1
R 12/27/2012 M554/1
8881 PAPER
USSR: THE ROLE OF FOREIGN TRADE IN
9
ND
B1
THE ECONOMY
PAR 12/27/2012 M554/1; UPHELD 11/16/2015
F06-116/6 #8881
Freedom of Information Act - [5 U.S.C. 552(b)]
B-1 National security classified information [(b)(1) of the FOIA]
B-2 Release would disclose internal personnel rules and practices of an agency [(b)(2) of the FOIA]
B-3 Release would violate a Federal statute [(b)(3) of the FOIA]
B-4 Release would disclose trade secrets or confidential or financial information [(b)(4) of the FOIA]
B-6 Release would constitute a clearly unwarranted invasion of personal privacy [(b)(6) of the FOIA]
B-7 Release would disclose information compiled for law enforcement purposes [(b)(7) of the FOIA]
B-8 Release would disclose information concerning the regulation of financial institutions [(b)(8) of the FOIA]
B-9 Release would disclose geological or geophysical information concerning wells [(b)(9) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed of gift.
7796
NATIONAL SECURITY COUNCIL
WASHINGTON D.C 20506
SECRET
September 30, 1985
ACTION
MEMORANDUM FOR ROBERT C. MOFARLANE
FROM:
JACK MATLOCK Jam
SUBJECT:
Papers on the Soviet Union: Instruments of
Control
Attached is the next group of papers on the Soviet Union, which
deals with the instruments by which the regime exercises its
totalitarian control of Soviet society.
RECOMMENDATION
That you sign the Memorandum to the President at TAB I.
Approve
Disapprove
Attachments:
TAB I
Memorandum to the President
Tab A
The Communist Party of the Soviet Union
Tab B
Nomenklatura: The USSR Patronage System
Tab C
The Soviet Political Police
Tad D
The Soviet Military
DECLASSIFIED
While House Guidelines, August 26, 1007
By smp NARA, Date 6/7/02
SECRET
Declassify on: OADR
TAB I
2
3
7796
THE WHITE HOUSE
WASHINGTON
SECRET
INFORMATION
MEMORANDUM FOR THE PRESIDENT
FROM:
ROBERT C. MCFARLANE
SUBJECT:
Papers on the Soviet Union: Soviet Instruments of
Control
You have previously read two groups of papers, dealing with the
sources of Soviet behavior and the problems of Soviet society.
Those attached here deal with the principal instruments by which
the top Communist Party leadership controls the society.
The Soviet Union, of course, has a governmental structure which
in theory is not much different from that in other countries,
except that there is literally no private sector. Everything,
from farms to schools to factories to banks to sporting clubs, is
administered by the government. The government even has a
department which oversees those churches which are allowed to
operate legally. The formal government, however, though
omnipresent, merely administers the country. It is in fact
subordinate to the Communist Party, which uses it to implement
policy the Party sets, and in fact is run by persons who are
themselves Party members and subject to Party discipline. The
whole country is run by a chain of "interlocking directorates"
which receive decisions from above and are expected to implement
them with total discipline.
The lines of real authority, therefore, run top-down from the
Communist Party leadership, with the ultimate policy makers being
the thirteen full members of the party Politburo. Though the
Communist Party calls itself a political party, it is of course
totally unlike anything we would call a political party. It is
not made up of private citizens who join together to campaign and
try to win elections, but of a co-opted elite group, selected on
the basis of loyalty and discipline, whose function is to see to
it that the policies set by the top leadership are implemented
throughout the society. Even the Soviet Constitution, which
sounds very liberal in theory, provides that the Communist Party
will be the "leading core" of all organizations, whether
governmental or "non-governmental." Not even a sporting society
or a chess club can be organized without the sufferance and
supervision of Communist Party officials.
DECLASSIFIED
SECRET
NLS F06-114/6*8878
BY has NARA, DATE 12/13/07
4
SECRET
2
7796
The paper at Tab A describes how the Communist Party is organized
and how it applies its control to the society. Over the decades
of communist rule in Russia, a new controlling elite has formed
under Communist Party auspices, usually called the nomenklatura:
those persons who occupy supervisory, influential or prominent
positions, and whose appointment therefore requires the approval
of higher party authority.
The nomenklatura forms the privileged class in the Soviet Union,
those who enjoy a significantly higher standard of living than
their compatriots, and also the trappings and perquisites of
authority. It shows a tendency of becoming heriditary, since
members use their connections to get their children into the best
schools and into nomenklatura jobs. It also has an international
aspect, since similar elite classes have been created in those
countries under Soviet domination, with the result that -- for
example -- the nomenklatura in Czechoslovakia tends to identify
its interests with the nomenklatura of the Soviet Union, not with
their fellow Czechs and Slovaks. (It is a bit like the
aristocracy in seventeenth and eighteenth century Europe, which
tended to support each other across national boundaries if there
was a challenge from within to the rule of the aristocracy.)
The paper at Tab B describes how it is organized and how it
operates in the Soviet Union.
In many ways, the Soviet Union is run more like an organized
criminal organization in the West than like a government. Using
this analogy, one can say that if the Party forms the control
elite, the secret police (KGB) and the military are its
"enforcers," the first in a direct sense, and the second as a
reserve if things ever threaten to get out of hand. Both
institutions are totally controlled by the Communist Party, and
provide the muscle if physical coercion is required. Papers
describing these two institutions are at Tabs C and D.
Recommendation
OK
No
That you read the papers attached as
general background for your upcoming
meeting with Gorbachev.
Attachments:
Tab A
The Communist Party of the Soviet Union
Tab B
Nomenklatura: The USSR Patronage System
Tab C
The Soviet Political Police
Tab D
The Soviet Military
Prepared by:
Jack F. Matlock
CC: The Vice President
SECRET
TAB A
5
LIMITED OFFICIAL USE
THE COMMUNIST PARTY OF THE SOVIET UNION
The Communist party is the core institution of the Soviet
political system, focus of the levers of power and prestige in
the USSR. Every branch of the bureaucracy--state, economic,
military and police--is subordinated to its control. At the same
time, the party is the guardian and interpreter of Marxist
ideology and responsible for indoctrinating the population with
the ideas and values of Soviet-style communism.
The CPSU now numbers over 18 million members (including 700,000
candidates, i.e., probationers), encompassing about 6 percent of
the adult population. The party does not solicit adherents; it
chooses its members. Prospective candidates are carefully
screened. Each must be recommended by three persons who have
already been party members for at least five years. White-collar
workers are prime targets for recruitment. They made up close to
half of the membership in 1983, even though accounting for only a
quarter of the general population.
Party members all belong to a party organization at their place
of work. There are 426,000 of these primary party orgnizations
in the Soviet Union, and they exist in every factory, office,
farm, school, military unit -- in short, in every organized unit
in the society. Each party member is expected to stimulate
production within his own primary organization; these units in
turn provide the central authorities with a vehicle for constant
pressure on lower echelon officials.
Every member has the duty to "master Marxist-Leninist theory,
raise his ideological level, and contribute to the molding and
rearing of the man of communist society." The political training
of communists ranges from short-term evening and correspondence
courses to the university-level Higher Party School in Moscow
which has a regular four-year curriculum. Training at fulltime
party schools is regarded as so important that middle-aged
officials holding responsibilities as great as those of the
governor of an American state are sent to the schools before
being given new assignments.
Mass Organizations
Several mass organizations exist outside the party framework, but
operate under its close and direct supervision. The Communist
Youth League, Komsomol, is the most important of these. Its
41-million membership includes a majority of the country's
adolescents (aged 14-18) and a substantial minority of the 19-26
age group. The Komsomol not only serves to indoctrinate the
youth but it is also a testing and screening agency for
prospective CPSU members. Furthermore, the Youth League
exercises tutelage over the Pioneers, the organization to which
all children of primary school age (10-15) belong.
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The Soviet trade unions, with some 130 million members, serve the
party by stimulating production and prompting "socialist
emulation," competitive campaigns aimed at raising productivity.
They also administer social insurance funds, and to a limited
extent defend worker rights. Other mass organizations
effectively run by the party include the Knowledge Society
(Znaniye), an adult-education body with over 1 million members,
and DOSAAF (Volunteer Society for Cooperation with the Army, Air
Force, and Navy), which fosters military-type sports for
civilians and school children.
Party Structure
Theoretically, the CPSU's sovereign organ is the Party Congress
which, by statute, meets every five years. It is a gathering of
some 5000 delegates which, among other functions, elects the
Central Committee, which is responsible for policymaking in the
interim between congresses. The Central Committee (470 members -
319 full and 151 alternate) in turn formally elects the members
of smaller executive bodies to handle the day-to-day matters --
in particular the Politburo for policy decision, and the
Secretariat to oversee and control party and government
operations.
In practice, however, these two latter bodies are the decision
making organs of the party, the peak of the CPSU's nearly perfect
bureaucratic pyramid. The Politburo and Secretariat control the
appointment of the regional secretaries throughout the country
and, through them, the lesser secretaries down to the lowest
echelons. The Secretariat sends binding "recommendations" for
major personnel changes to the non-Russian republics or
regional-level party offices, and often has its executives
monitor the electoral plenums at those levels which implement its
"recommendations."
The whole process of electing the party committees that choose
the secretaries at each level is actually controlled by the very
secretaries who are supposed to be elected by those same sub-
ordinates. Each non-Russian republic or regional party head-
quarters has an Organizational Party Work Department to manage
the process. And the top leadership in Moscow controls the
election of delegates to the sovereign party congress, which,
through the Central Committee it elects, technically elects the
General Secretary.
In the 5-year intervals between congresses, supreme authority in
the CPSU is formally delegated to the Central Committee to which
most of the important officials of the USSR belong. They are
drawn from all segments of the bureaucracy, but most come from
the party apparatus itself. (The party apparatus is the body of
fulltime officials that arranges implementation of decisions,
manipulates elections and controls discussions in party
meetings.)
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The Central Committee's brief and infrequent plenary meetings
(two-three per year) rule out its management of day-to-day
decision-making. Consequently, the real focus of Soviet power is
the Politburo. It is now composed of 13 voting members and 5
alternates, and meets weekly (usually on Thursday afternoons) to
discuss and decide on major issues. The General Secretary
(Gorbachev) is de facto chairman of the Politburo, which in
recent years has seemed to reach most of its decisions by
consensus.
The Party Secretariat -- a sort of NSC staff estimated to have as
high as 10,000 employees -- sets the Politburo agenda, provides
the requisite documentation and oversees implementation of
Politburo decisions. Of the 11 Secretaries, Gorbachev, Ligachev
and Ryzhkov are full Politburo members; 2 of the 5 Politburo
alternates are also central party Secretaries. (Six Party
Secretaries hold no status in the Politburo).
With the exception of the General Secretary, each of the
Secretaries exercises supervision over a specific sphere of
operations. He does so via departments of the Secretariat which
run parallel to all major state bodies and administer key areas
of Soviet society and foreign affairs. A crucial function of the
Secretariat's Organizational Party Work Department, for example,
is controlling the assignments of the high and medium-level
personnel to party and Komsomol organizations, as well as to
State and trade union agencies.
Equally close to the heart of party operations are the
Secretariat departments for ideology and indoctrination. These
include the Propaganda, Culture, and Science and Educational
Institutions Departments. Their function is to assure that every
medium for conveyin ideas is actively and properly promoting the
objectives of the regime.
Personal rivalries and frictions permeate the CPSU. Corruption
is known to be rife from top to bottom. And there has been an
increasing tendency among the youth to regard the Komsomol as a
boring and restrictive institution. Nevertheless, the CPSU has
succeeded in creating a strong amalgam of self-interest and pride
in achievement which binds many to the Soviet system. Gorbachev
is clearly eager to overhaul the party apparatus to make it more
responsive to economic management, committed to reform and to
rejuvenate its ranks. But neither he nor the apparatchiki have
any intent of introducing changes that threaten to loosen their
present grip on every facet of Soviet life.
Prepared by:
SPloss
Department of State
9
TAB B
10
LIMITED OFFICIAL USE
NOMENKLATURA: THE USSR'S PATRONAGE SYSTEM
Structure
The Soviet institution of nomenklatura amounts to an encyclopedia
of "plum books.' Its rules dictate that all key jobs throughout
the USSR -- in the party bureaucracy, government, economy,
cultural life, military or academic establishments, even
agriculture -- be reserved for candidates picked and approved by
the supervisory party organ. Stalin developed this system of
personnel patronage as a vehicle for gaining control of both
party and society. His successors have enlarged on it to such an
extent that it has no real parallel in the noncommunist world.
the Soviet party machine has greater power in co-opting, black-
balling and ejecting personnel than does the most exclusive club
in the west. Inside, one is entitled to a lifestyle befitting
the position; outside, one is relegated to the "masses," to
scramble as the average Soviet for an existence. Ousted from the
system one is excluded from even marginal benefits available to
the masses.
The so-called nomenklatura are the elite of the USSR, the most
prominent and best rewarded people in each professional group,
all the decision and policymakers. They fall into various
categories:
a) The political elite, consisting of the leaders of the party
apparatchiki.
b) The managerial elite, who actually operate the government,
the economy, the armed forces, the police apparatus, and other
parts of the Soviet system.
c) The cultural and scientific elite, the artists, scientists,
writers, performers, and scholars.
These groups differ in political influence, social status,
prominence, and rewards. The political elite are those in the
Communist hierarchy who enjoy decisive influence. The managerial
elite, though not without political power, essentially occupy
nonpolitical career tracks. Although the cultural and scientific
elite wield relatively little political influence; they enjoy
greater prominence: members of this group are often more visible
and better paid than are the managers or political leaders.
The political and managerial elite are known in Soviet parlance
as "leadership cadres". All in all they are estimated to number
around 4 million. About 500,000 are top-level
bureaucrats, half of them in the party apparatus itself. Another
500,000 hold government positions. Some 2 million are the
economic managers who are regarded as the cream of the economic
and technical intelligentsia. The rest occupy management or
supervisory positions ranging from shop stewards to kolkhoz
chairmen.
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Getting Ahead
Ability and expertise are only one element in getting to the top
in Soviet society. Conformity with the current party line and
mastery of the techniques of maneuvering within the system on the
one hand, plus personal patronage from within the nomenklatura
itself on the other, are the aids on which the ambitious rely.
The leaders of the USSR have long viewed economic efficiency and
consumer satisfaction as matters of secondary importance. Their
primary objective has always been a maximization of the national
power of the USSR. And the consolidation, expansion and
preservation of their own power is justified as a means to that
end. That in turn justifies the higher income and perquisites of
the ruling class.
Life Style
The nomenklatura by and large enjoy a life style well above the
drab level of reality faced by the average Soviet citizen. The
upper crust has its cars and special access to goods and
services. Its members move in a tight, private universe of
suburban dachas, downtown co-operative apartments, exclusive
clubs and vacation resorts. The sons and daughters have
preferred access to the better schools and often intermarry.
Those further down the pecking order have similar special stores,
housing, resorts and benefits befitting their rank.
Money income is the least important advantage of making it in the
USSR. The real boons derive from a compendium of tangible and
intangible privileges: greater freedom, better medical care, the
opportunity to travel abroad and ready access to domestic and
imported goods unavailable to the average citizen at any time.
Many in the ruling class experience such a sheltered existence
they have not the faintest idea how the rest of the country
really lives. Others -- the collective farm chairmen for example
-- are more directly exposed but still are far better off than
their non-nomenklatura associates. Gorbachev has spearheaded a
drive against the isolation of the apparatchiki from the masses,
but the privileges of the Gorbachevs will unquestionably remain
palatial by Soviet standards. Nor is there any real popular
resentment of the advantages enjoyed by Raisa and the other
"wives of" since their life style is not flaunted before the
public. The gap between the elite and the masses is studiously
ignored by the media.
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Other Side of the Coin
The material advantages enjoyed by the power elite would be
reduced if a larger share of the national product were to be
allocated to economic investment and mass consumption. As a
result, the economic managers' advocacy of greater recognition of
economic factors and for greater professional autonomy constantly
runs into opposition from the political decision makers.
Even deeper is the tension between the ruling elite and the
prestigious intellectuals who advocate greater individual freedom
and more personal property. Although many cultural figures are
conformists and as jealous of their perks as the power elite,
some have advocated an easing of the internal control system
under the rubric of "de-Stalinization." One of their targets is
the party apparatus and its total domination of the elite
structure. The party ideologists for their part are determined
to keep a tight rein on the social sciences and the arts; they
see their mission as the preservation of doctrinal purity which
in turn justifies the rule of the party, and of course, their own
privileged existence.
A generational conflict has also been developing within the
nomenklatura itself, given the marked age difference between the
CPSU leadership and its rank and file. While about 40 percent
of the party's 18 million members are under 40 years of age (6.9
million), there is no one under 50 in the top leadership at all.
And while men and women are represented about equally within the
educated strata of Soviet society, only 9 women are full members
of the Central Committee. (Women makeup 27 percent of the party
membership.) Nor is any woman now included in the party's
supreme leadership.
United We Stand
The interests of the nomenklatura are diverse: there are
orthodox and pragmatic conservatives as well as moderate
reformers within the policymaking bodies of the regime. They are
frequently at odds among themselves, usually over questions which
affect the status of different groupings within the nomenklatura
itself. But there is no open opposition at any level or within
any group to the system per se. After all, careers, lifestyle,
future, and family well-being are all dependent on and a function
of that system.
For the sake of efficiency, Gorbachev apparently is prepared
to make certain concessions to dissatisfied elements of the
elite. He has urged more operational autonomy for lower
managerial personnel, and encouraged creative artists to be more
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realistic in their portrayals of life. The younger generation
and women have been promised a larger role in the conduct of
political affairs. In the field of domestic policy, the pressure
is on for less cronyism and nepotism and more specialized
knowledge and expertise as the major criteria for advancement.
But the Gorbachev-led political elite is still part of the
nomenklatura, and any basic reform of the system would threaten
its power and its perks. Whatever changes Gorbachev might
introduce -- and even the smallest will run into opposition from
some quarter -- the nomenklatura as a whole will insist on
retaining control of the social processes in the USSR. It cannot
do otherwise and still preserve communist rule in the USSR.
Prepared by:
SPloss
Department of State
LIMITED OFFICIAL USE
TAB C
hl
15
CONFIDENTIAL
THE SOVIET POLITICAL POLICE
Lenin created the "Sword and Shield of the Revolution"--the
Cheka--to crush domestic opposition and to protect the Bolshevik
party from its enemies, using any and all means, including
terror. By any standard, the Cheka succeeded brilliantly and
bloodily. Its present-day incarnation, the KGB, has become one
of the three pillars of the Soviet regime, the other two being
the party and the military.
There is no American analog for the KGB: apart from a political
role which would be unthinkable in a democracy, it has the
functions of the CIA, the FBI, the Secret Service, the Coast
Guard, the NSA, the EPS, and it has two divisions of heavily
armed troops. The KGB also controls resources and uses tactics
which in the US could only be likened to those of organized
crime. Because of strict Soviet secrecy, no accurate figure on
personnel strength is available for the secret police or even for
the regular police.
Historical Background
The Cheka has strong roots in Russian history. Stalin in his
heyday gave favorable publicity to Tsar Ivan the Terrible's
equivalent institution, the Oprichnina, which ruthlessly and
bloodily suppressed the Tsar's enemies. Although much subdued
compared to its 16th century predecessor, the Tsarist Okhrana was
the main persecutor of the Bolsheviks prior to the 1917
Revolution.
Soviet propaganda on the glamor and romance of the Cheka goes
back to its early period under Felix Dzerzhinskiy when it
launched "Red Terror" against the Bolsheviks' domestic and
foreign enemies. This was the time when Operation Trust snared
the feared British agent Sidney Reilly and when "Iron Felix" and
his underlings were hailed as the "knights of the Revolution."
Its image worsened in the 1930s when the secret police
participated in Stalin's assaults against the peasantry and
destroyed the Old Bolsheviks and the Red Army's officer corps.
Led by such men as Yagoda and Yezhov, it doomed millions to
forced labor in the GULAG forced labor camps under inhuman
conditions and with appalling casualty rates. During World War
II it conducted a successful espionage effort against the Nazis
and created a special wartime disciplinary unit known as SMERSH
(Death to Spies). The GULAG population was at a peak--an es-
timated 15 million--in the postwar reconstruction period, swollen
by captured Axis prisoners and Soviet victims of Stalin's harsh
policies.
CONFIDENTIAL
DECLASSIFIED
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NLS F06-114/6*8882
BY
Los NARA, DATE 12/13/07
16
IDENTIAL
2
The KGB's Political Role after Stalin
Following the execution of Lavrentiy Beriya after Stalin's death
in 1953, the KGB gradually became intertwined with leadership
politics and has at key moments played a role in leadership
successions.
As the agency which provides the leadership with bodyguards and
secure communications, the KGB could also isolate the top leader
at a critical moment. When the Politburo members in October 1964
chose to oust Khrushchev, the conspirators took care to prevent
Khrushchev from mobilizing his allies (as he had done in June
1957). The party secretary for security, Alexander Shelepin,
called upon his protege, the KGB chief at that time, to cut off
Khrushchev's communications from his vacation dacha to Moscow.
After the coup Khrushchev was flown back to Moscow and expelled
from the Politburo.
The KGB's resources were used in 1982 by Yuriy Andropov (who
gained the political police job after Brezhnev's successful power
play against Shelepin in 1967) to mount a campaign aimed at
capturing the succession from Brezhnev's putative heir Chernenko.
Andropov undertook in March 1982 a widely leaked investigation of
corruption on the part of Brezhnev's political supporters and
even Brezhnev's daughter Galina. Andropov's goal was to taint
Brezhnev's associates and to demonstrate that Brezhnev could no
longer protect his followers. The most publicized target was
Galina Brezhneva's association with the colorful Boris the Gypsy,
a shady figure involved in underworld jewel dealings. The
campaign was successful; Andropov left the KGB when he acquired
the party secretaryship in May. Memories of the 1930s are still
strong enough that he could not move directly from the KGB into
Brezhnev's shoes.
The Gorbachev-KGB Link
As his health declined, Andropov pushed Gorbachev as
his successor but could not determine the succession. During
Chernenko's reign, the KGB's disappointment and vexation over
having lost its moment of glory with the death of Andropov
was widely bruited. It was equally clear that the KGB as an
institution sided with Gorbachev, viewing him as Andropov's heir.
Its loyalties were repaid upon Gorbachev's accession in March of
this year. Chebrikov, brought into the KGB with Andropov in 1967
and named by him as KGB chief in 1982, was promoted to full
member of the Politburo this April, obviously as a member of
Gorbachev's ruling coterie.
Two members of the Politburo--Chebrikov and Aliyev, who was the
Azerbaydzhan KGB chief until he became the republic party
chief--have had professional experience in the KGB. Obviously,
KGB prestige and influence are now high and its relations with
Gorbachev are demonstrably supportive.
CONFIDENTIAL
17
CONF TOENTIAL
3
The KGB's Domestic Security Role
Like the party, the KGB is virtually everywhere in Soviet
society. There are KGB units on every level of government.
Every major factory and institution has its "first department"
which handles security matters, including employee clearances and
access to classified information. The KGB official who sits on
every party committee probably has the last word on security
issues, and even a republic first secretary is bound to respect
the KGB representative on the republic party bureau.
As a true political police, KGB local units have a widespread net
of informers who report on their fellow workers and neighbors.
Citizens are encouraged to report deviant speech and behavior to
the authorities. Unauthorized assemblies and publications are
searched out and terminated, sometimes with significant criminal
penalties for the participants.
The KGB has organized special units to monitor religious
organizations and nationalist activities. A voluminous
literature exists abroad on these activities in addition to the
documentation of the KGB suppression of political dissent and
control over emigration.
The political police function extends to the armed forces in
which a net of secret informants reports on moods and attitudes
among the troops. Any security incident draws the attention of
KGB investigators.
In addition to their security responsibilities, the KGB has
special police jurisdiction over cases involving large amounts of
foreign currency, gold, and jewels. This conveniently permitted
Andropov in 1982 to investigate the scandals involving Brezhnev's
daughter Galina. Otherwise, the regular police, headed by
Brezhnev's crony Shchelokov, could have whitewashed the affair.
KGB Influence over the Civilian Police
The KGB under Andropov began an extensive purge of the regular
police following the ouster of MVD minister Shchelokov
in December 1982. (Shchelokov was disgraced and reportedly
committed suicide in December 1984 to avoid a trial for cor-
ruption.) The regular police or MVD is now headed by a
former KGB official and several other KGB officials were trans-
ferred to the MVD's top leadership. In addition, a new political
administration was created in the MVD and a large number of party
members were detailed to police work in an
effort to purge and upgrade the police, which is now playing
a larger role in Gorbachev's anti-corruption and anti-alcohol
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4
campaigns. There is no question about the superior status of
the KGB compared to the MVD and its ability to intervene in the
jurisdiction and processes of the MVD and the courts, but there
is also a strong history of bad relations between the two police
agencies which occasionally erupts in ugly incidents.
Foreign Intelligence and Counter Intelligence
Abroad, the KGB is especially active in intelligence col-
lection--political, military, technical--under diplomatic,
journalistic, and business cover. It is without doubt the
world's largest and most active intelligence service, and it also
draws upon the resources of its Warsaw Pact allies to complement
its intelligence effort abroad.
KGB foreign reporting goes independently of foreign ministry
reporting to Moscow where it is coordinated and submitted to the
Politburo. KGB activities and reporting partly parallel and
duplicate those of the Defense Ministry's Main Intelligence
Administration (GRU) and inevitably there is rivalry between the
two.
The KGB also engages in covert action "active measures,"
agent-of-influence operations, clandestine support of foreign
political parties, and forgeries and bribery to get press place-
ment of Soviet materials.
KGB counterintelligence work most often shows up in public
accounts of agent arrests and the declaration of foreign
diplomats persona non grata, but some of the counter-intelligence
materials published in the Soviet press must be put into the
prophylactic propaganda category, aimed primarily at Soviet
citizens. However, Western diplomats in Moscow and Leningrad
are primary, but not sole, targets of KGB counter-intelligence
efforts. Heavy surveillance, active attempts to penetrate the
staff and buildings, and the creation of effective obstacles
between Soviet citizens and foreigners are permanent elements
in the KGB's operations.
Soviet Views of the KGB
While Soviet dissidents who have faced KGB harassment see it as
the regime's arm of repression, most Soviet citizens seem to
regard the KGB as a necessary part of a well-ordered state.
While Soviet citizens -- are skeptical regarding their media, the
flood of books, films and TV glorifying the KGB's exploits in
counter-intelligence and intelligence leaves its impression.
But the public's respect for the KGB still rests mostly on fear.
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Careerists look upon the secret police as an avenue for upward
mobility. The KGB successfully recruits the cream of university
graduates for careers in overseas intelligence work, careers
often under diplomatic and journalistic guise which are regarded
as more rewarding and interesting than most.
Prepared by:
DGraves
Department of State
CONFIDENTIAL
21
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THE SOVIET MILITARY
Civil-military relations in the Soviet Union are replete with
paradox. The military as an institution is a dominant force in
national security decision-making, yet it is also under firm
party control.
Civilian authority sets the broad outlines of defense policy but
relies almost exclusively on military expertise to elaborate the
military-technical side of strategy and doctrine. On military
planning and technical assessments, there is no civilian counter
weight to the General Staff.
Despite its internal bureaucratic politics, interservice
rivalries, and long history of alliances and intrigues between
individual military and civilian leaders, there is no evidence
that the military has ever plotted to take power. The military
as an institution has not aspired to rule. Nevertheless, it has
sought to protect its own interests and professionalism.
In recent years, military figures have been much in the
limelight. It has been primarily the arms control process and
the civilian leadership's need for expert opinion which has put
them there.
Anti-Bonapartist Tradition
There is a longstanding tradition of the importance of military
power in Soviet life. Externally, Russian and now Soviet
security and position in the world have rested primarily on
military strength. Domestically, both Tsars and General
Secretaries have played up military values and, when possible,
their own military careers in order to buttress personal and
regime authority.
Yet the military establishment itself is subject to more rigorous
political controls than any other institution in the Soviet
system. In both pre-and post-revolutionary societies, the
military has been subservient to political authority.
This seeming inconsistency -- on the one hand, the Soviets
emulate military values and, on the other, distrust the military
as an institution -- reflects an anti-Bonapartist tradition in
Soviet and Russian history. Indeed, the Bolsheviks who took
power in 1917 frequently used analogies to the French revolution
to discuss political developments in Russia, including the danger
of a man on horseback taking over the revolution.
This wariness of the military stems in part from traditional
revolutionary distrust of standing professional armies. Marx and
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Engels viewed standing armies as the tools of the 19th century
monarchic-bourgeois states. Although their doctrine eventually
evolved to strongly supporting the idea of a class-based revolu-
tionary force, they left undefined the role of the armed forces
in a post-revolutionary socialist society.
Lenin did not reconcile himself to the need for a standing army
until after the 1917 revolution, and even then the Bolsheviks'
first order of business was to destroy the old army. The early
Bolsheviks moved cautiously in building the new Red Army,
emphasizing the principles of voluntary recruitment and elected
commanders -- thus nullifying efforts to turn the new army into
an effective fighting force. When War Commissar Trotsky, with
Lenin's approval, finally undertook to transform the Red Army
into a centralized, efficient professional force, he also
incorporated the idea of political officers at every rank who
could check the actions of their military counterparts.
Checks and Balances
Today, a set of extensive institutional arrangements is in place
intended to ensure civilian control over the military.
--The Main Political Administration (MPA) is the party's
political watchdog in the armed forces. As Trotsky envisaged,
political officers are assigned to every level down to battalion
and in general act as representatives of the party. Although the
MPA reports to the Ministry of Defense, it also functions as a
distinct department of the CPSU Central Committee and is ultimately
accountable to the Politburo for the military's political re-
liability.
--In addition to the MPA network, party and Komsomol member-
ship is encouraged and widespread -- over ninety percent of
officers and enlisted men belong to one or the other of these
bodies.
--On top of all this, the KGB maintains its own secret
agents throughout the military establishment.
These arrangements underscore the continuing importance for
Soviet leaders of political loyalty over military interests. The
gravest charge made against Marshal Zhukov before his fall from
grace in 1957 was that he had sought to eliminate party control.
More recently, Marshal Ogarkov's demotion from Chief of Staff a
year ago was accompanied by intimations that he harbored "unparty-
like tendencies."
Civil-Military Interaction at the Top
Even though it is under Party Control, the military is one of the
most highly organized and influential interest groups in the
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USSR. It has effectively used this influence to protect its own
general interests (with regard to resource allocation, for
instance) and professionalism.
Nevertheless, the military has only played an ancillary role in
Soviet leadership consideration of broader policy questions.
This is partly attributable to the fact that in upper levels of
the party, the military carries relatively little weight. Only
two professional military leaders have been full Politburo
members: Zhukov (1956-57) and Grechko (1967-76). Ustinov, who
succeeded Grechko as Defense Minister in 1976, was a civilian
Politburo member who had spent his entire career dealing with
defense production and was only given the military rank of
Marshal when he became Defense Minister. The present Defense
Minister, Marshal Sokolov, is a long-time career military
officer. He was promoted to candidate member of the Politburo in
April 1985, but is widely regarded as a transitional figure with
little political clout.
Likwewise, the military's representation on the Central Committee
is minimal. In 1981, only 30 professional military officers were
candidate or full members, about six percent of total Central
Committee membership.
The party's predominance over the military has allowed civilian
leaders to meddle in military affairs at times. Stalin of
course, decimated the high command in the purges of the late
1930s, and after WWII moved quickly to reduce Marshall Zhukov's
stature.
Zhukov later regained his influence under Khrushchev. In 1957,
Zhukov as Defense Miniser was instrumental in helping Khrushchev
put down a challenge from his colleagues in the Politburo.
Khrushchev, however, soon ousted his erstwhile ally and undertook
to overturn measures instituted under Zhukov to bolster profes-
sional autonomy within the armed forces. Khrushchev even sought
to intervene personally in the formulation of military strategy,
though he did not attempt to create an institutional rival to the
General Staff.
Gorbachev Continues the Tradition
Gorbachev presumably assumed the function of chairman of the
Defense Council (where actual decision-making on national
security issues -- including arms control -- appears to be
centered) and, in effect, supreme commander-in-chief when he
became General Secretary. Events over the past year do not
suggest that the military has enjoyed greater than usual
influence as a result of the civilian leadership transition.
Although Gorbachev has pushed for increased industrial investment
as the number one priority in the next five-year plan (1986-90),
he has also spoken out against cutting defense programs. At a
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June Central Committee meeting, he reaffirmed that "requisite
funds" for the country's defense would be maintained. In his V-E
Day address, Gorbachev stated that the importance of a "military-
political" upbringing for Soviet citizens was growing.
Following the July 1 removal of Grigoriy Romanov as the CPSU
Secretary responsible for military affairs, Gorbachev has moved
vigorously to assert his leadership in this sphere. On July 10
he delivered an address to an unsual meeting of top military
officers in Minsk and immediately afterward a number of key
changes in military personnel began surfacing. Following the
pattern of his personnel appointments in the civilian sphere, he
replaced several older military leaders with younger -- in some
cases relatively junior -- people.
The Soviet Military: Coming of Age
The military has gradually assumed a more important role in
national security decision-making over the past two decades and,
in the process, has assumed a higher public profile. This has
largely been due to the arms control process and increasingly
sophisticated weaponry which have generated the civilian leader-
ship's need for more military expertise and advice. The military
has consequently also become more involved in decision-making on
arms control itself. Because of the General Staff's technical
expertise and its function, in effect, as executive secretariat
to the Defense Council, the military is well positioned to argue
its views and try to shape the internal debate in this area.
In the early days, the role of the military in the arms control
process appeared to be limited to exercising a veto option over
any given proposal, after which it stepped back. In the first
SALT negotiations, sensitive information on the Soviet side
appeared to be strictly compartmented and there was little
interaction between military and civilian elements. When Ogarkov
was a member of the Soviet delegation in the early 1970s, he once
appealed to an American negotiator not to discuss classified
information in front of Soviet civilian team members,
In recent years, however, the Soviets seem to have adopted more
of an American style in the internal arms control process. Now
the military is much more involved in interacting on an ongoing
basis with other components of the Soviet national security
structure both in Moscow and on the various negotiating teams in
Geneva, Vienna, and Stockholm. The Ministry of Foreign Affairs
has its own stable of arms control experts, and the major Soviet
negotiating teams are all led by diplomats with many years of
negotiating experience. Nevertheless, the Soviets have no
counterpart either to ACDA or the oversight of Congressional
committees. Few, if any, civilians would dare challenge the
professional military analysis of their requirements.
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The military has also assumed a more prominent role in explaining
and advancing Soviet positions on military matters, particularly
with regard to the arms control process. By the beginning of the
INF period, it was Defense Minister Ustinov who in October 1979
in Pravda began to lay out the public argument that an INF
balance already existed. Much of the Soviet INF argument since
then has been framed around the assertion that the American
deployment would upset this balance, with Defense Ministry
officials taking the lead in its public formulation.
Both former Chief of the General Staff Ogarkov and now his
successor Akhromeyev, as well as Col. Gen. N.F. Chervov, head of
the Defense Ministry's arms control directorate, have been active
public spokesmen for Soviet positions. Far from staying in the
background, as would have been traditionally expected, they have
been at the cutting edge of publicly developing and explicating
Soviet positions.
Prepared by:
JParker/KPuschel
Department of State
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NATIONAL SECURITY COUNCIL
WASHINGTON, D.C. 20506
LIMITED OFFICIAL USE
October 30, 1985
MEMORANDUM FOR JOHNATHAN MILLER
FROM:
JACK F. MATLOCK Jan
SUBJECT:
Soviet Films for the President
I think it would be extremely useful for the President to see
two Soviet films before his November meeting with Gorbachev. The
first has been selected to help give him a feel for everyday life
in the USSR. The second will focus on Soviet perceptions of
World War II.
I recommend that the President look at "Moscow Doesn't Believe in
Tears" this weekend at Camp David. It traces the marriages of
three young women and, in the process, provides a rare look at -
the social pretensions and prejudices at work in Soviet society.
It runs 2 hours 45 minutes. The 35 mm reels are in the East Wing
projection room.
Attachment
Synopsis of "Moscow Doesn't Believe in Tears"
LIMITED OFFICIAL USE
smf
4/7/02
27
MOSCOW DOESN'T BELIEVE IN TEARS
This film traces the romances and marriages
of three young Soviet women. In the pro-
cess it is unusually frank in its portrayal
of Soviet life - revealing many of its pre-
tensions and prejudices. The story's
heroine ríses from simple factory worker
to plant manager (a Soviet Horatio Alger)
despite the burdens of being a single
parent.
28
7991
NATIONAL SECURITY COUNCIL
WASHINGTON, D.C. 20506
SECRET
October 7, 1985
ACTION
MEMORANDUM FOR ROBERT C. MCFARLANE
FROM:
JACK F. MATLOCK Asm
SUBJECT:
Papers on the Soviet Union: The Domestic Agenda
Attached is the next group of background papers for the President
on the Soviet Union. It deals with Gorbachev's domestic
agenda, particularly the economic challenges he faces.
RECOMMENDATION
That you sign the memorandum at Tab I forwarding the papers to
the President.
Approve
Disapprove
That you approve Bill Martin's sending copies of the papers to
Secretary Shultz and Don Regan.
Approve
Disapprove
Attachments
Tab I
Memorandum to the President
Tab A
Gorbachev's Domestic Agenda
Tab B
The Soviet Economy in Perspective
Tab C
USSR: The Role of Foreign Trade in the Economy
Tab II
Memorandum Martin to Platt
Tab III Memorandum - Martin to Chew
DECLASSIFIED
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By
smp NARA, Date 6/7/02
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7991
THE WHITE HOUSE
WASHINGTON
SECRET
INFORMATION
MEMORANDUM FOR THE PRESIDENT
FROM:
ROBERT C. MCFARLANE
SUBJECT:
Papers on the Soviet Union: Gorbachev's Domestic
Agenda
You have previously read three groups of papers on the Soviet
Union. They dealt with the sources of Soviet behavior, the
problems of Soviet society, and the instruments of control. The
attached group looks at Gorbachev's domestic agenda, focusing
particularly on economic concerns.
Gorbachev's domestic priorities can roughly be divided into three
categories: consolidating his power, restoring public
confidence, and revitalizing the economy. He has moved quickly
in the first two areas, concentrating first and foremost on
getting his people in key positions. By July, after only four
months in office, he had already appointed more new people to the
Politburo than either of his two immediate predecessors. This
process is still underway.
To help restore public confidence in a leadership which had
become tainted with corruption in Brezhnev's declining years,
Gorbachev has vigorously carried on the anti-corruption drive
begun under Andropov and supplemented it with an anti-alcohol
campaign. In addition, he has carefully tailored his public
appearances and meetings with the Soviet man-in-the-street to
give the appearance of knowing and caring about the life of the
average citizen.
Revitalizing the economy may well be the toughest challenge of
them all - and if he does not succeed, he will be unable in the
long run to restore public confidence in the Soviet leadership.
Gorbachev has begun by replacing long-tenured, complacent
bureaucrats in the Party's Central Committee and in the Council
of Ministers. Only recently, on September 27, TASS announced the
removal of the Council's Chairman, Nikolay Tikhonov, and his
replacement by Gorbachev protoge Nikolay Ryzhkov.
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Such personnel changes mean more in the Soviet context than they
would in a market economy. The Soviet economy is a centralized,
command economic system in which the Politburo acts much like the
board of directors of an enormous conglomerate. The Council of
Ministers runs a huge government bureaucracy which sets specific
output goals, determines wages and prices, allocates manpower and
regulates incentives.
Personnel changes alone, however, are not likely to revitalize an
economy plagued by low industrial productivity, declining
efficiency of investment, rising consumer expectations,
inefficient agriculture, and an outdated technological base.
Gorbachev has publicly spoken of the need to "re-equip" the
economy with technologically up-to-date machinery. This will
require sharp increases in investments in machinery production.
Gorbachev is likely to reveal further details of his economic
thinking when he unveils the 12th five year economic plan at the
Party Congress in February.
In financial terms, East-West trade is a relatively small factor
in the Soviet economy, with the notable exception of Soviet
imports of Western grain. The USSR continues to be the single
largest buyer of grain from the United States. Soviet machinery
imports, however, come largely from the East bloc, and in return
the Soviets provide Eastern Europe with raw materials,
particularly oil. The single greatest factor limiting Soviet
purchases in the West remains Moscow's chronic lack of hard
currency. Legal and illegal acquisition of advanced Western
technology, however, is critically important to modernizing the
Soviet technological base, particularly in the military area -
which traditionally has absolute precedence over civilian
industry.
Recommendation
OK
No
That you read the attached papers as
background for your upcoming meeting
with Gorbachev.
Attachments:
Tab A
Gorbachev's Domestic Agenda
Tab B
The Soviet Economy in Perspective
Tab C
USSR: The Role of Foreign Trade in the Economy
Prepared by:
Jack F. Matlock
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GORBACHEV'S DOMESTIC AGENDA
Since coming into office four months ago, Mikhail Gorhachev has
made rapid progress toward what historically has been every new
party chief's foremost goal--the expansion of his political
power. He is also off to an excellent start on another high
priority task--the reinvigoration of the party and state
apparatus. Much more, however, remains to be done to realize
his most difficult domestic tasks--the acceleration of Soviet
economic growth and the improvement of quality and performance
throughout the Soviet economy.
I. Expanding and Consolidating Power
Gorbachev has initially concentrated on expanding and consolidat-
ing his political power. To realize the full potential of his
office, the General Secretary must enjoy the active support of
other members of the ruling Politburo and be master of the
Secretariat, the party's principal executive agent.
In April, Gorbachev engineered the promotion of three of
his closest allies--Yegor Ligachev, Nikolay Ryzhkov, and KGB
chief Viktor Chebrikov--to full Politburo status. In July, he
ousted erstwhile rival Grigoriy Romanov from the Politburo and
Secretariat and elevated Georgian party boss Eduard Shevardnadze
to full Politburo membership. Shevardnadze was then quickly
appointed Foreign Minister. Former Foreign Minister Andrey
Gromyko was promoted to the largely ceremonial post of head of
state.
After only four months in office, Gorbachev has already engineered
a greater number of promotions to, 1 the Politburo than either Yuriy
Andropov or Konstantin Chernenko. He has also appointed as many
party secretaries 2 as were named during Andropov's entire fifteen
months in office.
1
Under Andropov three officials--Geydar Aliyev, Mikhail
Solomentsev, and Vitaliy Vorotnikov--became full Politburo
members and Chebrikov was given candidate member status. There
were no promotions to the Politburo during Chernenko's tenure.
2
Ligachev, Ryzhkov, and Romanov became party secretaries
under Andropov. There were no promotions to the Secretariat
under Chernenko.
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2
Despite this impressive display of power, there are hints that
Gorbachev does not enjoy the unqualified support of all
his Politburo colleagues. In a speech in Leningrad in May,
for example, Gorbachev criticized the Politburo for being too
timid in making a recent decision on agriculture. His criticism
suggested that he had favored a bolder approach to the question.
There also have been some unusual delays in the publication
of major Gorbachev speeches--another possible indication of
leadership disagreement. If Gorbachev's policies are indeed
encountering opposition, the remaining members of the Brezhnev
"old guard" are the most likely sources. Both former Premier
Nikolay Tikhonov and Moscow city party boss Viktor Grishin are
rumored to have opposed Gorbachev's accession to power.
II. Rebuilding Public Confidence
Rebuilding public confidence in the leadership and in officialdom
is one of Gorbachev's major objectives, and he has skillfully
tailored his public appearances and his media image to this end.
He takes great care to orchestrate his meetings with the public,
giving the appearance of knowing and caring about the life of
citizens.
In addition, he has continued Andropov's anti-corruption drive
and supplemented it with the anti-alcohol campaign.
The uniformed police have been bolstered by a new political
administration, and some 55,000 party members have been assigned
to the police. While the results cannot be measured, there is
evidence that Soviet officials are now far more careful about
bribe-taking or other illicit activities. Accounts of arrests
and massive sweeps of rural areas, however, suggest that
priority has now shifted away from corruption to the anti-alcohol
campaign. In any event, despite significant public approval
for the struggle against drinking and corruption in principle,
Gorbachev. faces a long, difficult struggle before he can claim
significant results in either area.
III. Revitalizing the Economy
A. Shaking Up the Party and State Apparatus
Gorbachev has also set himself the formidable task of
reinvigorating the party and state apparatus through the
replacment of long-tenured and complacent bureaucrats, including
members of the Party's Central Committee. People on the Central
Committee occupy critical posts in the party and state machinery;
without their energetic support Gorbachev S domestic policy
initiatives would be nothing more than paper proposals.
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During the 1970s, Brezhnev's policy of cadre stability--a
reaction to the frequent, often capricious personnel changes of
the Khrushchev years--gave the members of the Central Committee a
virtual guarantee of lifetime tenure. The resulting complacency
and inertia contributed to a decline in economic growth and a
rise in corruption.
Andropov launched a major campaign to replace incompetent and
corrupt officials. His efforts, however, were cut short by his
death. Under Chernenko, a champion of the Brezhnev old guard,
personnel turnover slowed.
Gorbachev has picked up where Andropov left off. He has already
replaced three heads of Central Committee departments, who play a
major role in overseeing domestic policy, and appointed new party
chiefs in the Georgian republic and Leningrad. The leadership of
thirteen other regional party committees has also changed
hands--more than during Chernenko's entire tenure.
Gorbachev has devoted particular effort to replacing poor
performers among economic officials in the Council of Ministers.
A deputy premier and ten ministerial-level officials have been
replaced, several after humiliating public criticism. And only
last week, on September 23, Tass announced that the Chairman of
the Council of Ministers, Nilokay Tikhonov, had resigned --
allegedly for reasons of poor health.
Still, some of the most powerful bureaucratic posts remain in the
hands of Brezhnev-era holdovers whose approach to their
assignments is the antithesis of Gorbachev's activism. Nikolay
Baybakov, for example, Chairman of the State Planning Committee
(Gosplan) is an elderly Brezhnev-era holdover likely to oppose
change in his powerful bureaucratic empire. Until he and many
others like him are removed from their posts, they are likely to
obstruct Gorbachev's campaign to transform the creaking state
machinery into an engine for change
B. Improving Performance
Even sweeping personnel changes, however, will not be enough to
achieve the most difficult domestic goals that Gorbachev has
set--the acceleration of Soviet economic growth and higher
standards of quality and performance throughout the Soviet
economy. Gorbachev has acknowledged that this will require a
long-term effort.
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The centerpiece of Gorbachev's economic strategy is a call
for re-equipping Soviet factories and farms with state-of-the-art
machinery--an effort that will require a major increase in
investment in the machine building sector. He apparently
recognizes that previous attempts to shift investment resources
have been frustrated by entrenched bureaucratic interests. To
avoid such problems he has indicated that a reorganization of the
economic bureaucracy will be a major part of his strategy.
Gorbachev is also banking on a stepped-up labor discipline
campaign to bolster economic growth while waiting for the more
long-term benefits of his modernization program and his
organizational changes. He is using the threat of penalties for
poor performance and a pledge to increase material rewards for
good performance, to encourage better labor productivity.
Gorbachev's economic strategy has much to recommend it.
Increased investment in the machine building sector is long
overdue and the economic apparatus is badly in need of change.
The outlook for his critically important industrial modernization
program, however, is problematical. Implementation would require
a degree of innovation in manufacturing that historically has
been lacking. In addition, there is the risk that stepped-up
investment in machinery manuacturing could divert resources from
consumer and defense industries to an extent the regime would
find unacceptable. Moreover, the increasing inaccessibility of
domestic oil, coal and iron ore could hamper prospects for
achieving high growth targets.
Gorbachev's achievements in expanding his power and in at
least partially reinvigorating the party and state machinery
should enhance his chances of pressing through with his economic
program, but will not guarantee the program's success. Like
previous Soviet party chiefs, he may discover that bureaucratic
obstructionism, though it may yield for a time, tends to
reemerge.
Prepared by:
CIA and
Donald Graves, Department of State
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CONF IDENT
THE SOVIET ECONOMY IN PERSPECTIVE
The Soviet economy, the second largest in the world,
has grown since 1950 from about one-third to more than
one-half the size of the US economy. The basic tenets of
Soviet growth strategy have been:
a high rate of investment in heavy industry,
fuels and power, and construction; a lower
DECLASSIFIED
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rate in consumer goods and agriculture;
emphasis on modern, capital-intensive tech-
nology in the favored sectors; use of old-
fashioned, labor intensive methods in the low
priority sectors;
large expenditures on education and science
to raise the technical skills of the popu-
lation;
acquisition of advanced Western technology
and equipment in exchange for raw materials.
Making and Implementing Economic Policy
This is a "command economy". Basic economic decisions
are made by central administrative fiat rather than in the
market place:
The Politburo of the Communist Party makes
the major economic decisions.
A huge bureaucracy -- headed by the Council
of Ministers -- sets specific output goals,
allocates manpower and materials, fixes wages
and prices, and regulates incentives.
Lower down, state-owned industrial facilities
and collective farms translate the economic
plans into action.
The Politburo -- the highest executive arm of the
Central Committee of the Communist Party -- acts much like
the board of directors of an enormous conglomerate. As
chairman of the board, General Secretary Gorbachev presides
over weekly Politburo meetings where decisions on general
economic priorities are reached. It is the Politburo that
decides on the division of resources between military and
civilian use and the distribution of investment between
industry and agriculture.
The Council of Ministers -- the government's highest
executive body -- can be likened to a senior management team
CONF IDENT TAL
36
CONFIDENTIAL
2
of the conglomerate. The new Chairman of the Council,
Nikolay Ryzhkov, has final responsibility for determining
the output of all major commodities, distributing resources,
and ensuring that plans are fulfilled. The organization
under the Council includes the State Planning Committee
(Gosplan), more than 50 functional economic ministries (such
as ferrous metallurgy, foreign trade, and agriculture), and
a host of state committees and main administrations
concerned with finance, prices, supply, and the like. The
State Planning Committee is now working on the Twelfth
Five-Year Plan for 1986-90.
Strengths
The Soviet economy has great crude economic strength,
based on a wealth of natural resources, a labor force half
again as large as that of the United States, a large and
growing stock of industrial facilities, and an unchallenged
leadership dedicated to continual expansion of industrial
and military might. Growth has been maintained by the brute
force method of allocating about one-third of national
output to investment and by extracting as large a work force
as possible out of the populance. This growth formula has
enabled the Soviets to amass an ever increasing arsenal of
sophisticated weapons, to continually expand their indus-
trial base, and to provide some increase in living standards
each year.
Weaknesses
A number of persistent problems that have plagued the
Soviet system for years have become particularly troublesome
since the mid-1970s.
Low productivity and the declining efficiency
of investment. Despite a growing volume of
investment per worker, labor productivity in
Soviet industry is only about half the US
level. This is particularly serious since
annual additions of men and equipment are
becoming smaller, and productivity gains must
be the future source of growth. An added
difficulty is the gradual exhaustion of
easily accessible natural resources and the
rising cost of exploiting new resources, many
located in remote and frozen areas of
Siberia.
Technology gap. Although the latest tech-
nology is employed in some areas -- particu-
larly in the defense and space industries --
technology in the civilian economy generally
lags far behind that of the West. The Soviet
system is particularly ineffective in moving
new ideas and products from the research and
development stage into full assembly-line
CONF IDENTIAL
37
IDENT
3
production. Moreover, Western equipment
frequently is not as productive in a Soviet
setting as it is on native ground. At the
same time that the USSR is struggling to
catch up, the United States, Western Europe,
and Japan are forging ahead with still newer
technology.
Rising consumer expectations. Though well-
fed and clothed compared with past gen-
erations, Soviet consumers are increasingly
aware of the disparity between Soviet and
Western living standards. Consumer griev-
ances are especially acute as to housing,
long queues, and the poor quality of durables
and other consumer goods and services.
Inefficient agriculture. Nearly one-fifth of
the labor force is still employed on the
farm; equipment is badly operated and main-
tained; and the cost of producing grain and
meat is far above world market prices.
Most of these problems are rooted in the Soviet system
of planning and management, which is too centralized and
clumsy for effectively managing the increasingly complex
economy. Central planning, for example, becomes more
difficult as the number of links between producers,
consumers, and suppliers multiplies.
The Soviet incentive system is especially ill-equipped
to deal with today's problems. Although it was effective in
maximizing physical output in the 1950s and 1960s when
resources and raw materials were cheap and readily avail-
able, in recent years it has led to industrial bottle-
necks, encouraged waste and mismanagement of resources,
contributed to irrational investment decisions, retarded
scientific technological innovation, and stimulated wide-
spread corruption and illegal economic activity.
As a result of these weaknesses, Mikhail Gorbachev
inherited a decade-old economic slowdown punctuated by
harvest failures, industrial bottlenecks, labor and energy
shortages, low productivity, and declining efficiency of
investment. Part of the problem has beer the result of
external factors:
Harsh weather conditions that have depressed
farm output.
Declining increments to the working age
population that have led to labor shortages.
Rising costs and increasing difficulty of
extracting and transporting energy resources
and other raw materials, which have
CONFIDENTIAL
4
38
exacerbated the squeeze on labor and capital
resources and intensified the impact of
bottlenecks already present in key sectors of
the economy.
But the key source of the USSR's economic slowdown -- as
Gorbachev himself has implied -- is systemic: existing
methods of planning and management are more and more
incapable of coping with a modern economy.
Economic Prospects Under Gorbachev
Since coming to power in March 1985, Gorbachev has
moved forcefully to place his personal stamp on economic
policy, telling managers that they must change the way they
do business or "get out of the way". His frankness illus-
trates the strong emphasis he is placing on the need for
competent personnel and for tougher standards of performance
evaluation. He seems to have a clear understanding of the
economy's problems and is determined to deal with them.
Gorbachev has described the acceleration of economic growth
as his major domestic goal and laid out a growth strategy
that includes increasing the pace of scientific and techno-
logical progress, restructuring investment, reorganizing
management and planning, and tightening economic discipline.
The key element in implementing this policy is to be
the "re-equipping" of the economy with high-quality, techno-
logically up-to-date machinery. This, he says, will require
sharp increases in machinery production and a larger share
of investment in machinery producing facilities. The other
significant known components of his plans for dealing with
the economy are essentially continuations of policies
introduced in recent years, but not effectively implemented.
These include vigorous application of Andropov's discipline
campaign which waned under Chernenko, linking wages more
closely to productivity, implementing Brezhnev's 1982 Food
Program of which he was primary architect, providing more
operational autonomy for enterprise managers, and sharply
curtailing the powers of the ministries.
Gorbachev has indicated that a reorganization of the
economic bureaucracy will be a major part of his strategy.
In a June speech he suggested that plans for such a reorga-
nization have now reached an advanced stage and that they
include the creation of superministerial bodies, starting
with agro-industrial and machine-building sectors. His
speeches also suggest that these super-ministries will be
restricted to "strategic" planning and leave operational
control of enterprises in the hands of the managers on the
scene.
Gorbachev's program could result in improved economic
performance if vigorously pushed. Priority development of
the food industry, for instance, coupled with greater
attention to transportation and storage facilities, could
considerably reduce the present enormous waste and spoilage
CONFIDENTIAL
39
CONFIDENTIAL
5
of agricultural produce. Moreover, the discipline campaign,
which was evidently a significant factor in the economic
upswing during Andropov's tenure, could again have a favor-
able impact on economic performance. Gorbachev is gambling
that an attack on corruption and inefficiency, not radical
reform, will turn the economy around. Although his approach
is risky -- previous attempts to redirect investment re-
sources and other economic initiatives generally have been
frustrated by entrenched bureaucratic interests--his pros-
pects for success should not be underestimated.
How much economic improvement occurs and how long it
lasts will depend largely on whether Gorbachev can deal
successfully with problems inherent in the economic system
itself. He has not, for example, squarely addressed such
problems as the arbitrary nature of Soviet prices, which
prevent planners from making economically rational
decisions, or the lack of sufficient consumer input into
decisions on what to produce. Nor has he explained how, in
a period of likely resource stringency, with investment to
grow at an accelerated rate and defense likely to have a
strong claim on resources, the consumer's needs can also be
addressed.
There have been hints, however, in Gorbachev's past and
recent speeches, and in the statements of some knowledgeable
Soviet officials, that the General Secretary may eventually
tackle some of these problems. In his Lenin Day Address in
April 1983, for example, Gorbachev stressed the importance
of greater reliance on prices as an economic lever. He
returned to this theme in his June 1985 address to the
Science and Technology conference, calling for a more
decisive shift from administration to economic methods of
regulating the economy. In the same address he also called
for an end to "the domination of the consumer by the
producer".
Gorbachev may well have decided to refrain from
translating such vague expressions of support for controver-
sial measures into specific proposals until he has fully
formulated his plans and/or consolidated his political
strength. A Soviet political commentator privately charac-
terized Gorbachev's current approach as one of first adopt-
ing uncontroversial economic measures while simultaneously
working on a long-range and more far-reaching program.
Alternatively, Gorbachev may have refrained from bolder
measures because he hopes that the steps he has already
proposed will be sufficient to remedy the economy's ills.
Indeed, he has made clear that he remains committed to the
basic system of central planning. In either event, the
CONFIDENTIAL
40
CONF DENTIAL
6
political momentum he already enjoys augurs well for his
future ability to take bolder steps, and the ambitious
nature of the goals he has set increases the chances that he
will have to do so. Nevertheless, he is likely to find that
real improvements will be short-lived and limited so long as
the system is kept intact.
Drafted by:
F. Douglas Whitehouse, CIA
Martin J. Kohn, CIA
CONF IDENTIAL
8881
41
SECRE
USSR: THE ROLE OF FOREIGN TRADE IN THE ECONOMY
DECLASSIFIED IN PART
NARA DATE 12/27/12
Foreign trade plays an important, albeit not critical, role
in Soviet economic development. Although the Soviet economy
is largely self-sufficient--purchases from abroad account
NLRRM554/1*8881
for only about 10 percent of GNP--imports have helped Moscow
improve consumption, boost productivity, remove industrial
bottlenecks, and modernize weapon systems.
East-Versus West as a Source of Imports
The USSR has traditionally favored its Communist allies in
its foreign trade.
About 65 percent of the USSR's machinery and
equipment imports come from its Communist
allies, mostly the East European countries.
These imports represent nearly half of all
Soviet purchases from Communist countries.
(See Figure 1)
Although East European machinery and equipment is often of
lower quality than Western equipment, it is equal to or
better than Soviet produced goods in many instances. The
USSR also looks to Communist countries for manufactured
consumer goods to supplement its own production. More than
half of such imports -- primarily clothing and furniture--
are purchased in Eastern Europe.
While relying on Eastern Europe for much of its machinery
and equipment needs, imports of Western technology and
equipment have been essential to expand selected Soviet
industries (e.g. chemicals and automobiles), despite diffi-
culties in assimilation.
Imported chemical equipment in the 1970s was
largely responsible for a doubling in the
output of ammonia, nitrogen fertilizer, and
plastics during this period.
Construction of the Kama river truck plant,
which is based almost exclusively on Western
equipment and technology, has resulted in a
roughly 100 percent increase in Soviet heavy
truck output over the past decade.
Imports from the West also have played a key role in
supporting the energy sector.
The rapid construction of the Siberia-to-
Western Europe gas pipeline would not have
been possible without purchases of Western
turbines, compressors and pipe.
SECRET
US Share of Soviet Equipment Orders, 1975-85
Percent
25
20
15
10
5
0
75
76
77
78
79
80
81
82
83
84
85
The value for 1985 is based on first half data.
SECRET
2
Deficiencies in Soviet drilling, pumping, and
exploration have prompted Moscow to purchase
almost $20 billion in oil and gas equipment
since 1975.
Imports of grain and other agricultural products have been
the largest component of the USSR's western trade. A series
of mediocre harvests during 1981-84 has pushed agricultural
imports to record levels -- with average annual purchases of
some $10 billion during this period. Because of the limited
ability of Communist countries to expand grain production,
Moscow has had to rely almost entirely on Western countries
to fill the gap between domestic output and requirements.
Finally, in addition to contributing to specific industrial
sectors and overall consumer well-being, acquisition of gas
and technology from the West has enhanced Soviet military
programs.
Access to specific technologies has permitted
improvements in a number of weapon and
military support systems.
Gains from trade, in general, have improved
the efficiency of the economy and thereby
reduced the burden of defense.
Composition of Soviet Exports
In contrast to its imports, Soviet exports are composed
mostly of raw materials, particularly energy. This concen-
tration of trade has become particularly prominent since the
mid-1970s as a result of rapidly rising fuel prices. By
1983, 70 percent of total Soviet exports to non-Communist
countries and 50 percent of exports to Communist countries
consisted of fuel shipments. (See Figure 2). Although arms
exports to non-Communist countries are not specified in
Soviet trade statistics, we estimate that this trade ac-
counted for some 15 percent of total Soviet exports in 1983.
Only 5 percent of Soviet exports are agricultural goods.
Soviet Trade With the Third World
Unlike Soviet trade with the developed West, which is
essentially an exchange of Soviet industrial raw materials
for technology and agricultural products, Soviet-LDC trade
consists of an exchange of Soviet manufactures--mainly
military supplies--for industrial and agricultural raw
materials. The LDCs represent Moscow's only major outlet
outside the Bloc for exports of civilian and military
manufactures.
Soviet military exports are the largest and most dynamic
element in LDC trade. Such exports totaled over $9 billion
in 1982 and 1983, an amount equal to almost 70 percent of
SECRET
Soviet Exports by Commodity, 1983
Communist Countries
Non-Communist Countries
1983 Total=37.8 Billion Rubles
1983 Total=24.9 Billion Rubles
Other
Other
Machinery
Machinery
Fuels
Fuels
Other Includes ferrous metals, agricultural
products, consumer goods and military trade.
T
SECRET
3
total Soviet exports to the LDCs. The military sales
program offers Moscow substantial benefits:
It is a major tool for establishing Soviet
presence and expanding influence in LDCs.
It provides Moscow with one of the few export
opportunities in which Soviet-manufactured
goods are somewhat competitive in price and
quality with Western products.
After credits and payments reschedulings are
netted out, it generates perhaps $5-6 billion
per year in hard currency revenues or their
equivalent.
US-Soviet Trade
With the exception of agricultural imports, Soviet trade
with the US has been relatively small. The US did
participate in the expansion in commercial relations that
accompanied East-West detente in the 1970s.
US exports to the USSR totaled only $100
million in 1970, or less than 5 percent of
Soviet hard currency imports.
By 1979, US sales totaled $3.8 billion,
nearly 20 percent of hard currency purchases.
(See Figure 3)
Following the sanctions imposed in the wake of Soviet
intervention in Afghanistan and imposition of martial law in
Poland, US-Soviet trade dwindled. US machinery and equip-
ment sales suffered the most, plunging from a peak share of
20 percent of Soviet orders in 1978 to only one percent in
1983. Despite the partial grain embargo from January 1980
to April 1981, US-Soviet agricultural trade did not decline
nearly as much. Although the Soviets have increasingly
diversified their sources of grain supplies, the US, as the
largest and most stable exporter of gain, remains an
important source for Moscow.
The USSR continues to be the single largest
buyer of grain from the US.
During the 1984-85 market year, Soviet
purchases of gain reached a record 22.7
milion metric tons.
Foreign Trade Under Gorbachev
Since taking over as General Secretary in March, Gorbachev
has made it clear that improved economic performance is his
top priority. His plan focuses on modernizing the
industrial base with more and better machinery--a
SECRET
USSR: Imports from the United States, 1970-84
Billion Current US Dollars
30
25
20
Total Hard Currency
Imports
15
10
US Share of
Imports
5
0
1970
1975
1980
1984
47
SECRET
4
strategy which could lead to an increased role in both
Eastern Europe and the West.
Gorbachev is undoubtedly hoping for an increase in the flow
of machinery from Eastern Europe and has spoken about the
need for broader and tighter intergration within CEMA.
While such rhetoric is not new--the USSR has long advocated
joint production and specialization within CEMA as a means
of getting the East Europeans to cough-up more--Moscow seems
more intent than ever on pressing its allies to make firm
commitments on this issue. In this regard,
An agreement signed by CEMA Prime Ministers
in June pledged multilateral cooperation in
designing and producing computer controlled
systems.
The agreement follows a recent call in Pravda
for a 50-100 percent increase in the rate of
growth in machine-building in CEMA countries
during 1986-90.
Moscow is probably limited in just how much it can get from
its allies. Because most East European countries are
constrained by their own resource and economic difficulties,
any sharp increase in machinery exports to the USSR would
have to come at the expense of much needed domestic invest-
ment or sales to the West that bring in hard currency. Such
a shift would risk undermining growth prospects throughout
the area which could cause serious political problems.
The limited prospects for sharply boosting imports from
Eastern Europe increases Moscow's incentive to trade with
the West. In particular, Gorbachev probably will look to
the West for imports of technology and equipment for selected
sectors--energy and electronics, for example -- where no
good supply alternatives exist. Moreover, Moscow is pres-
ently in a good financial position to increase its purchases
of Western machinery and equipment -- at least in the
near-term.
With a relatively small debt and approximately
$10 billion in assets in Western banks at
year-end 1984, Moscow can easily obtain
commercial credits to finance new purchases.
Most West European countries are also offer-
ing generous terms on government-backed
credits in an effort to balance trade with
the Soviets and spur their own economies.
Over the longer term, however, Moscow's financial position
is much less certain -- falling world prices for oil and
declining domestic production could limit Soviet hard
currency earning capacity.
SECRET
Soviet Imports by Commodity, 1983
Communist Countries
Non-Communist Countries
1983 Total=33.7 Billion Rubles
1983 Total=25.7 Billion Rubles
Machinery
Ferrous Metals
Agricultural
Consumer Goods
Other
SECRET
5
49
Looking to the US
Prospects for an expansion of Soviet purchases of US
machinery and equipment appear good -- albeit from the
extremely low levels of recent years. The share of machinery
and equipment orders going to the US during first quarter
1985 -- 10 percent -- is substantially above last year's 6
percent figure and, if maintained, would be the highest
since 1979 (See Figure 4) Moreover, the US-Soviet Joint
Commercial Commission talks in May 1985 produced a Soviet
pledge to:
Try to do more business with US firms.
Put interested US firms on bidders' lists.
Fully consider US proposals on their economic
merit.
In this regard, we have seen an improved tenor in US-Soviet
contract negotiations since the beginning of the year. The
Soviets are currently discussing major deals with US firms
for the sale of personal computers, energy equipment, and
agricultural technology. Although these negotiations may be
protracted, some signings appear likely.
Nevertheless, the vast majority of Soviet purchases from the
US will continue to be agricultural products. Under the
current long-term US-Soviet grain agreement (which expires
in 1988), Moscow is committed to purchase a minimum of 8-9
million tons of grain per year, with a value of roughly $1
billion at current world prices. In poor crop years, Soviet
purchases can be expected to be much larger.
13526
E. O. 12958
Prepared by:
As Amended
CIA
Sec. 3.5(c)
ECRET
50
7991
NATIONAL SECURITY COUNCIL
WASHINGTON, D.C. 20506
SECRET
MEMORANDUM FOR MR. NICHOLAS PLATT
Executive Secretary
Department of State
SUBJECT:
Background Papers for the President's Meeting with
Gorbachev
Attached for Secretary Shultz is a copy of the latest group of
background papers for the President on the Soviet Union. It
deals with Gorbachev's domestic agenda, particularly the economic
challenges he faces.
William F. Martin
Executive Secretary
Attachments
Tab A
Gorbachev's Domestic Agenda
Tab B
The Soviet Economy in Perspective
Tab C
USSR: The Role of Foreign Trade in the Economy
DECLASSIFIED
House Guidelines, August 28, 1997
By White sml NARA, Date 6/7/02
51
7991
NATIONAL SECURITY COUNCIL
WASHINGTON, D.C. 20506
SECRET
MEMORANDUM FOR MR. DAVID L. CHEW
SUBJECT:
Background Papers for the President's Meeting with
Gorbachev
Attached for Mr. Regan is a copy of the latest group of
background papers for the President on the Soviet Union. It
deals with Gorbachev's domestic agenda, particularly the
economic challenges he faces.
William F. Martin
Executive Secretary
Attachments
Tab A
Gorbachev's Domestic Agenda
Tab B
The Soviet Economy in Perspective
Tab C
USSR: The Role of Foreign Trade in the Economy
DECLASSIFIED
White House Guidelines, August 28, 1997
By smf NARA, Date 4/7/02
SECRET
Declassify on: OADR