Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, April 21, 1990 TAG: 9004210138
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: METRO
SOURCE: The New York Times
DATELINE: WASHINGTON LENGTH: Medium
A "single major event" such as a prolonged strike or new ethnic unrest could lead to economic chaos, the agencies said.
In their annual report to the Congressional Joint Economic Committee, the Central Intelligence Agency and Defense Intelligence Agency said Moscow had cut military spending 4 percent to 5 percent last year, the first such cuts since Mikhail Gorbachev became leader in 1985, and further cuts are likely this year and next year.
The agencies said the reductions do not meet Gorbachev's pledge to reduce military spending by 14 percent and weapons production by 19 percent.
The report is always read closely by students of the Soviet Union, and is crucial to American policy makers. This year's is an unusually grim picture of rising prices and empty shelves, policies gone awry and bureaucratic intertia.
"The prospect of even a modest economic recovery appears to be remote at best," said John Helgerson, CIA deputy director.
"The most likely outcome for 1990 is that the Soviet economy will stagnate or decline slightly, that inflationary pressure will remain strong and that widespread shortages will persist," he said.
Analysts cited statistical data including these:
Total energy production fell last year for the first time since 1940. Oil output, for example, dropped 2.5 percent.
A small per capita increase in consumption was due largely to a sharp rise in sales of alcoholic beverages and imported consumer goods. The production of alcoholic beverages increased 20 percent after controls on vodka sales were eased.
An improvement in agricultural production after a two-year decline was offset by widespread breakdowns in the transportation and distribution networks. Freight shipments fell by 116 million tons, one of the worst annual performances in years.
Assessing Soviet military changes, Dennis Nagy, acting deputy director for foreign intelligence at the Defense Intelligence Agency, said Moscow was well on the way to accomplishing the unilateral troop reductions and conventional arms cuts Gorbachev promised.
On the other hand, Nagy said, the modern equipment being withdrawn from Eastern Europe and the country's eastern and southern borders is being stored, not destroyed.
He also said cutbacks in conventional strength are not matched by nuclear forces.
by CNB