A new U.S. intelligence report showing the Soviet Union's economy was stagnant last year suggests a rocky road ahead for the reforms of Mikhail Gorbachev.
"Soviet citizens will need to see some improvement in living standards if (Gorbachev) is to achieve necessary gains in worker productivity and avoid widespread discontent," warns the annual report to Congress's Joint Economic Committee from the CIA and the Defense Intelligence Agency.Without such improvement, it adds, "Bureaucrats will become increasingly frustrated by loss of privileges and status and by demands that they show greater initiative. Military leaders are likely to become more and more uneasy if benefits from the industrial modernization fail to materialize."
The report, released Sunday by Sen. William Proxmire, D-Wis., concluded that although Gorbachev "appears to be working against no set timetable, failure to head off these tensions would, at a minimum, make it more difficult to pursue his economic program vigorously and could, ultimately, call into question his strong political position at home."
Proxmire, chairman of the joint committee's National Security Economics Subcommittee, noted the Soviet economic showing "was as impressive in 1986 as it was disappointing in 1987, and the economy seems to be doing better so far this year." Therefore, he said, "It is still too soon to pass judgment on the reforms or on Gorbachev's leadership."
The report estimated the Soviet gross national product in 1987 grew just 0.5 percent, with agriculture off 3.1 percent and industrial production up merely 1.5 percent, a slowdown from 1986. Per capita consumption rose 0.7 percent.
Among the reasons given for the poor economic performance were harsh winter weather, backsliding on worker discipline, shortcomings in the construction industry, confusion over the reforms at the enterprise level and a decline in imports of Western machinery and equipment.
The report said because of the Soviet economic difficulties, "the short-term outlook for Gorbachev's economic program is not good." It projected an annual GNP growth of 2 percent or less in the final three years of his five-year plan, though that could fluctuate from weather and other external factors.
Under the projected circumstances, if the Soviet leadership continues its strategy of large investment in modernization and provides some increase in consumer goods to motivate workers, it will have to tap resources now allocated to defense, other domestic sectors or resources from abroad.