40. Rumania’s divergence, therefore, from Soviet requirements is neither dangerous to the Soviet Union nor, in the post-invasion atmosphere, particularly infectious. The Soviet Union will try to obtain the maximum benefit from its display of military power to intimidate the Rumanians and isolate them from their neighbours, with the long-term intention of subverting the present Rumanian leadership. The latter will concentrate on maintaining the ground already won in foreign and economic policy, while playing down points of disagreement with the Soviet Union on issues where Rumanian interests are not directly concerned. They may judge it wise to cooperate with their allies in holding Warsaw Pact exercises, and perhaps reforming CMEA, where this can be done without undermining the principles on which Rumania’s independent stand is based.
Yugoslavia
41. Yugoslavia’s reaction to the Soviet occupation of Czechoslovakia was one of violent hostility caused partly by the resurrection in Yugoslav eyes of Soviet demands for hegemony over Communist countries which precipitated the 1948 Soviet-Yugoslav split, partly by the feeling in Belgrade that Czechoslovakia was consciously following the Yugoslav model, and partly because the Soviet action confronted the Yugoslavs with a series of political, military and economic problems which they had successfully evaded for years.
42. There is no evidence that Soviet policy towards Eastern Europe involves military action against Yugoslavia in present circumstances. But it is now more difficult to say with any certainty what developments in Yugoslavia or in her relations with the West might be regarded by the Russians as provocative. Though neither side seems to want a complete break in relations, a prolonged period of mutual recrimination seems to be in prospect, possibly accompanied on the Yugoslav side by efforts to expand trade with the West. A reconciliation does not seem likely unless the Russians can satisfy the Yugoslavs that they are prepared to abandon the definition of sovereignty for Communist states laid down in the “Pravda” article of 26th September 1968.
43. It is unlikely that the Soviet Union would find any reliable basis for internal pro-Soviet subversion in Yugoslavia as long as Tito is in power. If his death was followed by a struggle for power among contenders for the succession, the Soviet Union might try to exploit the situation to its own advantage.
Albania
44. Albania followed the Chinese lead in attacking the Soviet invasion of Czechoslovakia, while criticising the Dubcek regime as “capitulationist”. Albania has announced her withdrawal from the Warsaw Pact, and has made tentative moves towards an improvement of relations with Yugoslavia. There is no reason to believe that Soviet policy towards Albania will change, or that Albania’s pro-Chinese alignment will alter to the Soviet Union’s advantage.
THE MILITARY OUTLOOK
Basic Concepts
45. Much of the material which the Soviet Union and its Warsaw Pact allies have published in their attempt to justify the invasion of Czechoslovakia has concentrated on the alleged military threat from NATO, particularly from West Germany. Before assessing the military outlook in Eastern Europe, in the wake of the invasion of Czechoslovakia, it may be useful to look at Soviet military and strategic concepts for war in Europe and at the organisation of the Warsaw Pact.
46. In the formal Soviet view, general European war would begin with a NATO attack on Eastern Europe, followed by a rapid counter-offensive westwards by Warsaw Pact forces. Whether or not the Russians seriously attribute aggressive intentions or capabilities to NATO, the important feature of their military doctrine is the seizure of the initiative at the earliest possible moment, retaining all options open on the level of the conflict and the types of weapons used, at least at the outset. The Warsaw Pact ground and air forces would engage NATO forces on a broad front, manoeuvring swiftly and boldly, considering speed and continuity of action as the main manoeuvre assets. It is probable that in the main these tactics would be used both in conventional and nuclear supported operations, and they imply the probability of thrust and counter-thrust in great depth, with a battle zone extending over very large areas. If the fighting is not to intrude into Soviet territory, the initial deployment of forces must be well to the west of the Soviet frontier. Thus the right to deploy Soviet forces in peacetime on the territory of the East European countries is fundamental to Soviet defence policy.
The Warsaw Pact
47. Some of the Soviet preparations and measures to fulfil these military requirements are co-ordinated through the Warsaw Pact, while others, for example, in air defence, are the subject of even more direct Soviet command and control. For the first five or six years of its existence, from 1955 to 1960–61, the High Command of the Warsaw Pact existed only as a Directorate of the Soviet General Staff, and the Commander-in-Chief was at the same time the Soviet First Deputy Minister of Defence. The Secretary-General of the Organisation held three posts: Secretary-General, Chief of Staff of the Pact’s forces and First Deputy Chief of the Soviet General Staff. During the reorganisation of the Soviet forces in 1960–61, the Main Staff of the Warsaw Pact was apparently separated administratively from the General Staff and established in effect as a “Chief Directorate” of the Soviet Ministry of Defence with responsibilities for liaison with the non-Soviet Warsaw Pact armies, for training and, since February 1966, for the co-ordination of the defence industries of the member-nations (see Appendix A for the contribution of the non-Soviet Warsaw Pact countries to armaments production for the Warsaw Pact).
48. Although the Defence Ministers of the non-Soviet Warsaw Pact countries are Deputy Commanders-in-Chief and liaison officers of each country are attached to the Main Staff in Moscow, these are largely titular appointments, and all key posts in the military structure are in Soviet hands. All important plans and policies are Soviet, and standardisation of equipment and material to Soviet specifications contributes towards the dominant influence of the Soviet Union. In wartime, given the present structure, the chain of command would almost certainly by-pass the Warsaw Pact organisation and run from the Soviet Supreme Headquarters through Soviet “Front” commanders to the commanders of the Soviet and non-Soviet Warsaw Pact armies in the fields.
The Czechoslovak Crisis and its Aftermath
49. The Soviet military leaders probably feared, as a result of the Czechoslovak reform programme, that a serious gap in the Warsaw Pact defence structure would develop, either through Czechoslovakia’s defection from the Pact or a decline in the efficiency of her armed forces. In the first place, the Dubcek leadership removed a number of tried pro-Soviet military figures including the Minister of Defence, General Lomsky, two of his deputies, the Chief of the General Staff and the Head of the Political Directorate of the Armed Forces, and replaced them by officers whose military abilities and political reliability the Russians may have doubted. Secondly, the Soviet military authorities made specific criticisms of the performance of the Czechoslovak Army in the Warsaw Pact exercise “SUMAVA” in June 1968, and commented on the shortage of tank divisions within the force which the Czechoslovaks proposed to use for the defence of their frontier with West Germany in the event of war. There were reports that in the light of their doubts the Russians made – and the Czechoslovaks rejected – a request to station Soviet troops in Czechoslovakia. If these reports were true, the Czechoslovak refusal may have contributed to a growing Soviet belief that in spite of Czechoslovak assurances of complete loyalty to the Warsaw Pact, in the longer run Czechoslovak loyalty to and interest in the Warsaw Pact could not be taken for granted by the Soviet Union.
50. There has been a steady run-down of Soviet ground and air forces in Czechoslovakia, subsequent to the signing of the Status of Forces agreement on 16th October. The scale of reduction gives credence to Premier Cernik’s statement concerning the agreement, that the Czechoslovak forces are to have responsibility for the defence of the Western frontier of their country returned to them.
51. Although the Czechoslovak forces would doubtless fight loyally in defence of their own country, the Soviet leadership must
retain some reservations as to their effective potential for offensive operations and it is clear that the Russians intend to maintain at least substantial ground forces on Czechoslovak soil. Hence their operational plans will presumably have to be reassessed in the light of the extension of their own military commitments and of any adjustments which NATO may decide to make in its plans or deployments.
52. In consequence of the Czechoslovak crisis future proposed Warsaw Pact exercises are likely to become extremely delicate political issues. However, in the longer term, the Soviet government is likely to seek ways of establishing a better structure for the Warsaw Pact than was formerly the case. Politically the Soviet government may offer concessions to the non-Soviet members of the Pact in the field of national representation and consultation. Militarily, however, the Soviet Union may insist upon even tighter Soviet control over the East European armies, including, perhaps, increased Soviet participation at the lower levels of command (e.g. Army Group and Army) which up to now have been wholly national.
THE ECONOMIC OUTLOOK
53. The effect of the Soviet invasion of Czechoslovakia on the economic outlook in Eastern Europe may best be assessed by looking first at CMEA’s methods of operation and some of the criticisms which have been levelled against it within Eastern Europe, and then at the evidence relating to the interdependence in trade of the Soviet Union and the East European countries. The detailed figures supporting this evidence are in the Tables in Appendix B .
The Council for Mutual Economic Aid (CMEA)
54. The basic task of CMEA – once the concept of supranational planning as put forward by Khrushchev in 1962 had been finally rejected – reverted to the co-ordination of the long-term economic plans of member countries. Specialised agencies are responsible for drawing up preliminary balance sheets of individual countries’ estimated requirements for raw materials and basic equipment over a given period, and these are discussed first on a bilateral basis and then multilaterally prior to the formation of the national plans. In the course of these consultations agreement is reached in principle on the types and quantities of goods to be exchanged between member countries in order to cover their investment and other requirements. The work of co-ordination is thus a lengthy and complex process, involving the co-operation of numerous national and international bodies. So far there are no indications of a break in the established pattern of this activity. Preparatory work has begun on the co-ordination of economic development plans for 1971–75 and at the meeting of the Executive Committee of CMEA in September 1968 (at which Czechoslovakia was represented as usual) preliminary estimates of the fuel and energy balance of member countries up to 1980 were submitted, and recommendations on various aspects of economic co-operation, including expansion of mutual goods exchanged over the 5-year period, were approved.
55. It may be that, in the post-invasion circumstances, the possibilities for making CMEA a more efficient organisation have been to some extent strengthened. Criticism of its workings had been widespread, although seldom openly voiced, for some time. Hungary, Czechoslovakia and Poland had all at various times criticised the lack of progress made in production specialisation within CMEA, the tendency being for each country to maintain a wide production range which was basically uneconomic. The divergence of views amongst CMEA members as regards specialisation spring [sic] from the differing stages of economic development of each country, and the consequent problems which they have to face. Thus, Czechoslovakia had long been pressing for a reduction in the wide range of engineering goods she produces to meet CMEA requirements, so that she could concentrate on a narrower range of highly specialised products. Poland, on the other hand, has been keen to expand her production range in order to be able to compete with the products of the more developed member countries such as Czechoslovakia and East Germany. So far a very great number of recommendations have been put forward covering production specialisation within CMEA in the fields of machinery and equipment and the chemical industry. How far these proposals have been implemented however, is difficult to assess. In general, it seems that little real specialisation has yet been achieved. Another problem which products a conflict of views within CMEA is that of pricing. Thus when an up-dated price base for goods exchanged in intra-bloc trade was introduced in 1965 the Soviet Union was severely critical of the new (lower) prices now obtaining for raw materials, claiming that the revised price-base worked in favour of exporters of machinery and equipment whilst discriminating against raw materials suppliers (the USSR is the main such supplier within CMEA). The Soviet argument was that the high costs of producing raw materials are not compensated for by the prices received from the buyers. At the same time the Soviet Union claimed to be paying world market prices for most East European machinery and equipment which was not up to world standards. A further point of issue concerned the method of settling intra-bloc payments. Some member countries, notably Poland and Czechoslovakia, have in recent years accumulated large surpluses in transferable roubles in their trade with each other. The inability to convert these transferable rouble balances into other currencies, or even – because of the general shortage of acceptable goods within the area – to offset them with additional commodity deliveries from debtor countries has led to pressure from those countries most concerned for even partial conversion of the transferable rouble.
56. Against the background of all these problems, leading economists from some of the more industrially developed member countries of CMEA – notably Czechoslovakia, Poland and Hungary – have for some time been suggesting various ways to improve the working efficiency of CMEA. In the past, progress on joint capital projects had frequently been halted due to the exercise by one or other member states (most often, Rumania) of the right of veto of proposals for co-production or division of production. This was based on the principle of unanimity written into the Basic Charter of CMEA, according to which all decisions or recommendations of the Council, to be binding, must have the consent of all members, and any country has the right to disassociate itself from proposed projects which it considers are not in its national interest. However, gradually the view has been increasingly gaining ground that voluntary bilateral arrangements are proving more effective than multilateral co-operation agreements dictated by CMEA. Emphasis has recently been laid on the need for wider co-operation between member countries in informing each other in more detail of their respective investment programmes, so that the coordination of investment plans for the whole area can be carried out more effectively on a long-term basis.
57. The future development of CMEA will depend to a large extent on how the Russians react to these views and trends. It seems unlikely that the Russians will agree to suggestions that the surpluses of “transferable roubles” should be made convertible. But the Soviet Union may decide that, in the longer term, the cohesiveness of the Bloc demands more attention to national economic ambitions and a more realistic appreciation of existing economic differences between the members of CMEA.
Trade Interdependence General
58. In 1967 the Eastern European countries accounted for some 56 per cent of the Soviet Union’s total trade (58 per cent including Yugoslavia). The share of the Soviet Union in the total trade of each of the six East European countries varied from over 50 per cent for Bulgaria to 28 per cent for Rumania (12 per cent for Yugoslavia). Soviet deliveries cover one-third of Eastern Europe’s import requirements for machinery and equipment, while the Soviet Union takes almost half of these countries’ exports of machinery and equipment (mainly from East Germany and Czechoslovakia). Next to machinery the Soviet Union imports from Eastern Europe mainly consumer goods – chiefly footwear, clothing and furniture. As regards raw materials, East European dependence on the Soviet Union is shown by the fact that Soviet deliveries cover East European import requirements for crude oil and pig iron by nearly 100 per cent, for iron ore by about 85 per cent, for cotton on an average by about 60 per cent, and as regards grain by some two-thirds to three-quarter
s for East Germany and Poland respectively, whilst nearly all Czechoslovakia’s grain imports come from the USSR (See Table V). Under the current (1966-70) 5-year trade agreements between the Soviet Union and the six East European countries, in all cases except for Rumania, the Soviet sector in these countries’ trade is planned to increase at a higher rate than their total trade.
59. Apart from trade, the East European countries and the Soviet Union are linked by numerous joint investment projects, involving two or more countries. Under these agreements machinery and equipment are supplied on long-term credit, the recipient repaying through long-term deliveries of the finished products. A recent example of this type of joint project is the Soviet-Czechoslovak oil exploration agreement. Another example is the Soviet-Hungarian agreement on aluminium, under which Hungarian alumina is delivered to the Soviet Union for processing, and then sold back to Hungary as aluminium.
Czechoslovakia
60. Over a third of Czechoslovakia’s foreign trade in 1967 was with the Soviet Union and a further 36 per cent with other East European countries. The Soviet Union supplies by far the largest proportion of Czechoslovak imports of fuels, raw materials and foodstuffs, including practically all the country’s oil requirements and about three-quarters of her wheat imports. Machinery and equipment imports from the Soviet Union include agricultural machinery, cars, diesel locomotives and aircraft.
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