THE question of alternatives to a defense-based economy is mounting in Colorado where defense accounts for 20 percent of gross state product and one-third of all manufacturing. In Colorado Springs, the second largest city in the state, 50 percent of the local economy is defense-related. On the northern outskirts of Denver, 6,000 Coloradans produce plutonium triggers for nuclear warheads at Rocky Flats. Half the employees are production workers with specialized skills and an average salary of $30,000 a year.
The facility is a constant target of environmental, public health, and peace activists. But no one has come up with a plan for alternative employment.
``We know military reduction is a long-term trend,'' said John Piotrowski, a retired US Air Force general. ``All we're really talking about here is the scope and pace of it. But what are our alternative industries? The real issue facing this country in defense conversion is where else to go.''
Gen. Piotrowski was among two dozen United States industrialists, economists, military and political figures joined by four senior Soviet officials at a suburban Denver conference center June 11 and 12 to consider how a post-cold war economy might work.
Aerospace may offer some prospects for conversion. About 15,000 Coloradans work for the Martin Marietta Corporation - mostly in aerospace technology.
Both Martin and Ball Aerospace, another defense contractor in Colorado, are exploring commercial applications in software development and satellite communications.
Norman Augustine, chief executive officer of Martin Marietta, cautioned that the coming transition will be painful, however. The corporation has a $13 billion dollar backlog in government defense contracts, but with 70,000 employees on the payroll, expenditures average $1 million every 20 minutes.
Mr. Augustine believes it's ``probable that millions of people will lose their jobs through the downsizing of defense. And the most difficult group to retrain will be the technical specialists. If you're a truck driver in defense, you can take that skill somewhere else. But what if you're a specialist in rocket propulsion?''
The Soviet delegates shared concerns over what to do with unemployed uranium miners in the Ural mountains: How to convert defense plants to the manufacture of television sets.
``Is that really in the interests of the Russian people?'' cracked one American.
THE Soviets complained about a recent decision by COCOM, a 17-nation body that monitors military-senstive technology for the West. COCOM has rejected a proposal to lay fiber optic cable across the Soviet Union. It's a project cosponsored by US WEST, the Denver-based regional phone company.
Former Colorado Sen. Gary Hart, whose law firm represented US WEST in the fiber optic project, believes the project isn't dead.
James Galbraith, professor of economics at the University of Texas and John Kenneth Galbraith's son, believes the decision against sharing fiber optic technology is one more evidence of waffling over the cold war. ``We have to decide: either it's over or it's not,'' he says.
The conference raised questions Americans and Soviets are just beginning to ask: whether the peace dividend is real, for one thing.
``Politically, in Washington, it has been spent four or five times already,'' says Kenneth Adelman, former US arms negotiator.
Mr. Galbraith disagrees. He believes the dividend has yet to be seen. ``One-third of the current US military budget is taken up defending Europe,'' he says. ``That's an obvious place to save money, cutting troops.''
Piotrowski was quick to suggest that reducing ground forces will simply require more military investment in space. Surveillance is the new frontier in defense, he indicated. Not just watching the Soviets, but keeping an eye on drug traffickers as well.