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masked by what the analysts tact–
fully call "creative accounting."
The Soviet Union, moreover, has
the world's third-largest foreign
debt, owing the West sorne
US$30,000,000,000.
Despite official disclaimers, in–
flation is also a consistent problem
in the Soviet Union. And the So–
viet economic growth rate is down.
Real growth for the rest of the
I980s is projected by Western ana–
lysts to be about 2% per annum,
which is about 40% below the So–
viet growth rate in the 1970s.
Sorne analysts even believe the So–
viet economy has ceased to grow in
real terms.
lt
is no secret that the Soviet
Union provides its people with one
of the lowest l ivi ng standards
among industrial nations. What is
more, living standards have all but
stopped rising. And still harder
times may yet lie ahead.
Especially grim is the picture in
Soviet agriculture. The monumen–
tal inefficiency of the Soviet sys–
tem of collectivized agriculture,
coupled with dismal harvests stem–
ming from adverse weather condi–
tions, has rendered it impossible
for the Soviet Union to adequately
feed its own people. This despite
the fact that half its citizens still
work on farms!
Trouble in the 011 Fields
Other economic problems include
declining labor productivity (now
down to only 55 percent that of the
United States), a serious labor
shortage (because of the country's
low birthrate), and growing short–
ages of energy and raw materials
(Soviet resources are increasingly
less accessible, locked in the frozen
wastes of Siberia).
Declining production of oil-the
chief Soviet export-is of special
concern. Production has peaked at
12 million barreis a day and is
heading slowly downward.
Compounding these problems is
the huge Soviet military buildup.
According to publicly announced
figures, the Soviet military
budget in 1985 totaled
US$23,000,000,000 or 4.9 percent
of the enti re budget. Western mil–
itary experts contend that actual
Soviet defense spending may be
two or three times higher. This, of
14
course, places an enormous burden
on the Soviet economy.
It
com–
pares with 6 percent of the budget
devoted to the military in the
United States.
Taken together, these factors
have forced the Kremlin to awake
to the fact that it has a major
challenge on its hands. As Soviet
planners struggle to revive thei r
flaggi ng economy, many are asking
the fundamental question:
Why
is
the crisis occurring in the first
place?
Not a small number of Soviet
planners are centering the blame
on inefficiency, rampant waste,
lack of incentives, mismanagement
and technological backwardness
that the Soviet system seems to
inevitably create in industry and
agriculture. There is, in the Soviet
system, no direct link among per–
sonal income, worker productivity
and quality of products. No real
imperative exists to improve the
situation. The knotty dilemma fac–
ing the Soviet leadership is how to
remedy this state of affairs without
compromising basic communist
principies and ideals.
Eastem Europe-Asset or
Liabllity?
The effects of the Soviet economic
crisis will not be limited solely to
increased belt tightening at borne.
More worrisome to Kremlin plan–
ners are the potentially wide-rang–
ing
po/itical
repercussions.
Major consequences líe in store
for Eastern Europe.
In recent years, money-minded
Soviet planners have come to real–
ize that the communist bloc coun–
tries of Eastern Europe are becom–
ing more of a liability than an
asset. For years, Moscow has been
sending vast sums (most estimates
say more than US$20,000,000,000
annually) to bail out the sagging
collective economies of its six East
European satellites, whose com–
bined populations total sorne
l lO
million people. But now the Sovi–
ets-themselves caught in a wors–
ening economic squeeze-are find–
ing it increasingly difficult to be
generous to their allies.
Most of the Russian bloc coun–
tries of Eastern Europe are facing
economic stagnation. The six East
bloc count ries owe Western banks
and governments more than
US$60,000,000,000-an enormous
strain on their slumping economies.
With sources of new credit from
the West fast drying up, the satel–
lites have been requesti ng in–
creased aid from Moscow.
Moscow, however, finds itself hard
pressed to substantially boost its
outlays to keep them afloat.
Soviet economists are coming to
view Eastern Europe as an increas–
ingly severe drag on the Soviet
economy, draining scarce resources
at the expense of the Russian peo–
ple. The money and goods being
shipped to Eastern Europe have be–
come a source of growing bitter–
ness to hard-pressed Russian work–
ers.
The Kremlin has been pressing
its allies to assume a greater share
of their own financia) burdeos.
The long-standing oil price sub–
sidy to its East European associ–
ates has already been virtually
eliminated by Moscow. The con–
flict between East European eco–
nomic interests and those of the
Soviet Union will be a major
topic for discussion at the coming
Communist Party congress in
Moscow in February.
The lmplications
Highly placed observers believe
this growing crisis in the Soviet
Union might one day soon per–
suade the Soviet political Jeader–
ship that it can no longer afford the
Juxury of maintaining satellites in
Europe. They foresee a time just
ahead when economic pressures
may force the Kremlin to cut loose
the cumbersome weight on its
western flank- lest the · Soviet
Union itself go under in a sea of
red ink!
In this age of intercontinental
missiles, the nations of Eastern Eu–
rope no longer adequately fulfill
their original function as a security
buffer for the Soviet Union any–
way. Couple this with the severe
strain they place on Soviet finan–
cia! and military resources. Eastern
European satellites, therefore, may
soon find themselves dumped by a
desperate Kremlin struggling for
economic survival!
Such action might well take the
form of a Soviet-initiated political
(Continued on page 38)
The
PLAIN TRUTH