Soviet economic woes: incentives for arms control?
Washington — Moscow's hierarchy enters arms reduction talks with the United States against the background of a Soviet economy hobbled by fetters largely of its own making.
''The best the Soviets can hope for is economic stagnation,'' says Edward A. Hewett, a Soviet affairs specialist with the Brookings Institution, ''unless there is fundamental economic reform.''
Such reforms, entailing political risks for the Kremlin, no doubt ''form part of the whole post-Brezhnev succession process now unfolding in Moscow,'' says Professor Hewett.
Meanwhile, Soviet leaders cope with an economic system burdened by a combination of factors made worse by three successive years of crop failure.
To some extent the problems are masked from the outside world by Moscow's ability to earn large amounts of foreign exchange through the sale of gold and oil.
''During the period 1970 to 1978,'' says Hewett, ''the USSR had to borrow $10 billion. But oil and gold exports earned $25 billion,'' without which Moscow would have had to borrow enormous additional sums or go without critical imports from the West.
The Soviet gold hoard is estimated at 1,900 tons, worth roughly $20 billion at today's prices, from which the Kremlin can siphon off gold to sell for hard currencies.
In 1981, according to experts, the Soviets--forced to import huge amounts of Western wheat and corn--sold about 200 tons of gold, much more than normally.
''But,'' says Hewett, ''they produce 300 tons a year. Domestic consumption is 50 tons, leaving 50 tons to add to their gold stocks.''
The steep run-up of gold and especially oil prices during the 1970s, so burdensome to oil-importing countries, produced a windfall gain for the Soviet Union.
In 1980, according to Wharton Econometric Forecasting, 72 percent of all Soviet hard currency export earnings came from sales of oil and natural gas, mostly oil.
This bonanza is shrinking, partly because the world price of oil has dropped, partly because Moscow will have less petroleum to export to the West, after satisfying both domestic consumption and oil supply commitments to Eastern Europe.
The USSR has made little progress on energy conservation. A 1 percent growth in the Soviet Union's gross national product, specialists say, still takes more than a 1 percent boost in energy consumption--a far more wasteful use of fuel than is the case in the United States, Japan, and Western Europe.
This year, experts say, Moscow's total export earnings may drop by $4 billion to $5 billion, mainly because less revenue will come from oil. At the same time the Soviet economy increasingly is burdened by subsidies paid out in differing ways to Eastern Europe, Cuba, and Afghanistan.
Moscow's support of its Eastern European allies, says Hewett, amounts to $20 billion yearly--half of which comes from the sale of oil below world market prices. Others say the bill for helping to keep Cuba's economy afloat comes to $ 8 million a day.
What Hewett calls ''systemic inflexibility'' makes it hard for the Soviets to improve productivity--output-per-manhour of work. Under the rigidly centralized Soviet economic system, for example, incentives for plant managers tend to be measured in terms of quantity, not quality.
''Soviet research is good,'' says Hewett, ''but Soviet factories either cannot or will not produce the (well-designed) goods in acceptable quality.''
Another structural problem, he adds, ''is the reduced growth rate of the labor force--about 1 percent a year. Mostly this increase in the number of workers is where they don't need them, in Asian areas.''
The Soviets, says Hewett, ''have nearly exhausted the possibility of shifting labor from farms to nonagricultural sectors.''
Given good crop years in 1982 and the period just ahead, experts say, Soviet leaders should be able to meet the modest goals of their 1980-85 five-year plan, calling for an average annual growth rate of 3.5 percent.
Down the road, however, real economic progress depends on reforms that conservative communist ideologues always have resisted, including at least a partial introduction of the profit motive.
Across the span of communist Europe only Hungary--with a much smaller, more cohesive, and better-educated work force than that of the USSR--has been able to make this transition with some success.
Economic problems, coupled with a commitment by Soviet President Leonid I. Brezhnev to increase the availablility of meat and other consumer goods, could prod at least some Kremlin leaders toward lower defense spending as a result of an arms reduction agreement with the US.