Squeeze play on Soviet consumer
US defense intelligence officials predict a relatively bright future for the Soviet Union's production of oil and other sources of energy. In a new study that holds important foreign policy implications, the US defense Intelligence Agency (DIA) concludes that the Soviets will be capable of increasing their oil production through 1985 and again after 1990.
The DIA study sees energy, however, as just about the only bright spot for the Soviet economy. It predicts a further slowdown in economic growth in the 1980s, meaning continued shortages for the average Soviet consumer. But at the same time it sees no evidence of any slowdown in the current high levels of Soviet defense spending. And the burden of such defense spending, it says, cannot be offset by projected huge revenues from overseas sales of Soviet oil and gas.
According to the DIA, draft guidelines for the Soviets's 11th five-year plan (1981-85) indicate that the Soviet leaders have "opted for further growth in military strength as the standard of living of the population stagnates and even declines in some areas."
In releasing DIA testimony on the subject from July of this year, Sen. William Proxmire (D) of Wisconsin, chairman of a subcommittee on international economics, said the new intelligence reveals that the Soviet economy is "sinking under the weight of rising defense outlays despite remarkable gains in developing its oil and gas potential."
Maj. Gen. Richard X. Larkin, deputy director of the DIA, said that while Soviet defense spending has always had first priority for the Soviet leaders, "the cost of denying resources to the transportation, energy, chemical, agriculture, machinery, and food-processing sectors is now being felt."
In effect, DIA officials dispute conclusions reached by the US Central Intelligence Agency (CIA) in 1977 that the Soviets would run short of the oil needed to meet all their internal needs in the mid-1980s. The CIA has since then revised its estimates, indicating that the Sovets' energy problem would be less severe than it had originally predicted. But the CIA continues to predict more of an energy "crunch" for the Soviets than does the DIA.
Over the past few years, American officials have tended to imply that the Soviets, soon to be short of oil, might make a military move into the oil-producing regions of the Gulf. Speculation along these lines was particularly rife after the 1979 fall of the Shah of Iran and Soviet invasion of Afghanistan.
The DIA predicts, meanwhile, that Soviet oil production will exceed 12 million barrels a day and rise slowly through 1985, level off during the late 1980s, and then increase again after 1990. The intelligence agency estimates that the Soviets' production of natural gas will increase at a rate of 7 to 9 percent and sool will exceed the rest of the world's production. The Soviet Union is already the world's largest oil producer.
Marshall I. Goldman, associate director of the Russian research center at Harvard University, who consistently had criticized earlier CIA estimates, said he thought the DIA predictions on Soviet oil and gas production were "pretty solid."
"If I were [Soviet] President Brezhnev, the thing that I would worry about when I went to bed at night would be not oil but agricultural production," said Dr. Goldman.
Goldman said that for the first time since World War II the Soviets were about to suffer the third of three consecutive poor grain harvests. This, he said, would require massive Soviet imports of grain from overseas.
John P. Hardt, senior specialist for Soviet economics at the Congressional Research Service, says that if correct, the DIA projections on Soviet oil and gas production mean that the Soviet will be able to meet their own energy needs indefinitely, while continuing to increase their supply of oil and gas to Eastern Europe. According to Dr. Hardt, Soviet oil and gas exports will continue to add flexibility to Soviet diplomacy with nation as diverse as Brazil , Ghana, Greece, Indian, and Morocco -- all of them importers of Soviet oil.