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BRIEFING ON THE SOVIET UNION

TUESDAY, APRIL 3, 1962

U.S. SENATE,

COMMITTEE ON FOREIGN RELATIONS,
Washington, DC.

The_committee met, pursuant to notice, at 11:20 a.m., in room F-53, U.S. Capitol Building, Hon. J. William Fulbright (chairman of the committee) presiding.

Present: Chairman Fulbright and Senators Sparkman, Lausche, Wiley, Hickenlooper, and Capehart.

Also present: Mr. Marcy and Mr. St. Claire of the committee staff; and Frederick Dutton, Assistant Secretary of State for Congressional Relations.

Consideration of the bill (S. 2824) To amend the Bretton Woods Agreements Act to authorize the United States to participate in loans in the International Monetary Fund to strengthen the international monetary system was held over on the request of Senator Lausche. Without objection, the committee approved for report the nomination of Robert Woodward to be Ambassador to Spain.

The CHAIRMAN. The committee will come to order.

Senator Wiley, this is Ambassador Thompson, our Ambassador in Moscow. He is here for a briefing, not for any official reason—that is, no objection to be taken.

Senator WILEY. I am sure he has a lot to tell us.

The CHAIRMAN. I am, too.

We are very pleased to have you. I regret that we have several conflicting meetings this morning. Finance is meeting on the tax bill, and several others. So we won't have many members here, I am afraid. But I would like to put on the record whatever we can, so we will have it available for their information-anything you have to say.

There have been some very interesting recent developments in your part of the world.

If you will just say in your own words whatever you think is appropriate for the information of the committee, we will appreciate it very much.

STATEMENT OF HON. LLEWELLYN E. THOMPSON, JR.,

AMBASSADOR TO THE SOVIET UNION

Mr. THOMPSON. Fine, Senator. I hope the usual thing will apply. It is always unhelpful to me if any views are attributed to me outside.

The CHAIRMAN. This is an executive session. This will not be published and not be made available to the press.

Mr. THOMPSON. As you know, any predictions about the Soviet Union are very dangerous. This thing changes from day to day. You never know what is coming next. They are having a meeting of the Supreme Soviet on April 10, and I think we will get some clues then as to where they are going. There are probably going to be quite a few changes inside, in both the government and the party. And particularly in agriculture.

OPTIMISTIC OVER RELATIONS WITH SOVIETS

Overall, I think, leaving the Berlin question aside, I am pretty optimistic about the situation now. I think the Soviets are running into a lot of trouble. As you undoubtedly know, this is true particularly in agriculture. Their output in 1961 was only 1 percent over 1960, which was itself not a good year. The population is increasing. Their plan calls for an 8 percent increase.

The CHAIRMAN. Is this just agriculture you are talking about?
Mr. THOMPSON. Yes, just agriculture.

Senator WILEY. What do you mean by saying you are optimistic? Mr. THOMPSON. I am optimistic about our relations with them, because I think these internal troubles they are having are going to limit their ability to make trouble for us.

The CHAIRMAN. Make them a little more agreeable.

Mr. THOMPSON. That is right.

Their problem in agriculture I think is a long range one and a deep one. I don't think they are going to get over it in a short while. They don't have any real answer now.

MORE INVESTMENT IN AGRICULTURE

One of the things that they will obviously have to do is put more investment in agriculture, and this means they are going to have to take it away from something-at the same time that they have been stepping up their military expenditure. This means it has to come from somewhere, and it is very difficult for them to take it out of consumer goods, because this is one of the things they need to increase to deal with their agricultural problem.

In agriculture, they have to put in more investment in fertilizer, machines, better seed, but they also have to give these peasants something to buy with the money they make. A fellow was out in the new lands area last fall and told me he was being conducted around by a Russian-this was not an American-and he said they saw nothing but women in the fields. About 54 percent of their agricultural labor is female anyway, but in this case it was about 100 percent. So the Soviet officials asked the women where the men were, and they said they were in the village drinking tea. They went up to the village. The place was full of men sitting around. The Russian said, "Why aren't you out there working?" They said, "Why should we, we have money and nothing to buy with it." And for them to step up their consumer goods production in a country that big, with as many people involved as there are, is a pretty big undertaking for them.

In order to meet their 7-year plan, they have got to keep up their investment in heavy industry.

The other sector that is important is housing, which has been their greatest problem.

They were 80 percent behind the_plan_last year. The pressure from the population grows-because Mrs. Ivanovitch was willing to share her one room with an entire family, as long as Mrs. Markov was in the same boat, but now Mrs. Markov has a new flat, she wants one too. This pressure is very strong on them.

Some of our boys went to a little neighborhood meeting on this, and it got so violent, they had to break it up and close the meeting. People were shouting and waving and everything else. This pressure is very strong. They find it very difficult to cut that back.

KHRUSHCHEV PROPOSALS FOR AGRICULTURE

Khrushchev has proposed a number of things to deal with the agricultural problem. One of them is reorganization. They are going to set up committees at all levels, agricultural committees, whose main purpose will be to try to actually direct and run the collective farms. You know, they abolished the machine tractor stations a couple of years ago, and the party used to exercise its control through those stations. They didn't have enough good party members to put on all the farms, so they used these MTS stations to exercise control. Well, one of their problems is that these farmers will do what they please. It is very hard for them to make them plant what they want them to plant, and to work the way they would like them to work.

The CHAIRMAN. Even on the collectives?

Mr. THOMPSON. Yes.

One of their problems has been that the peasants' real interest is in these little private plots they have, and not in working on the collectives. If you leave aside industrial crops and grain, about half the food grown in that country is grown on these little individual plots. They spend much more time and energy on that than they do on the collective farms. This is pretty much true throughout the bloc-except for Poland, which has kept private ownership in agriculture-the collective system has generally been pretty much a failure.

The Soviets are moving more and more toward state farms now. One of the reasons is that the poorer farms, to reach any satisfactory productivity, need big investments, and the state doesn't like to turn these investments over to these farmers, so they make state farms out of them and just pay these people straight wages.

But another effort that Khrushchev has been plugging lately is to change their grass rotation system. Our people think that if this is done in a very big way, he may ruin an awful lot of land, insisting that they grow row crops and give up this grass rotation. This is all right if you have the proper fertilizer to put on it, and people know how to do it, and you have machines to do it with, but for the large part, they don't have them.

A lot of these peasants don't believe in this anyway. They lack facilities for handling it. A lot of the fertilizer gets dumped out at a way station, out in the weather, and doesn't get on in the right time of the year, and all this sort of thing. Undoubtedly this will increase some of their production-if they keep a lot of it in row

crops rather than grass. But what it will do to the land is questionable.

I think probably one of the reasons Khrushchev is doing this is not only to increase production, but to try to break these peasants of grazing their cattle and stock on collective farm land, which they are not supposed to do. As long as the grass is there, it is pretty hard to control.

But in any event, this is a real problem for them. There will be some announcement about it at the Supreme Soviet meeting. At the last meeting they had about it, they raised the problem, but didn't give the answer. They didn't say where this extra money was coming from.

One result of this is that Khrushchev's interest in disarmament should be very greatly increased, because this is the one area in which he might find the money and the resources to put in the agricultural sector.

SOVIET INDUSTRIAL PRODUCTION

Their industrial production is going much better. There again, their rate of increase is slowing down. Their goal for this year is 8.1 percent, whereas I think last year it was something like 9.1. But here again, their plan was based very largely on a great increase in productivity, and they were counting a lot on automation to accomplish this.

As we found out, this is a pretty tricky business, and I think they are going to have a great deal of trouble with it. They are not noted for their ability to maintain machines and look after them. If you have an automated line in which you have 20 machines, if each machine is 95.5 percent reliable, your line is down practically all the time. They have all got to be very reliable. As I say, their maintenance is very poor.

They shortened hours, which also made it more difficult for them to increase their productivity and output.

Senator HICKENLOOPER. Mr. Chairman, may I ask a question?

MISINFORMATION ON SOVIET PRODUCTIVITY

Mr. Ambassador, with regard to your statement a minute ago about their productivity to be 6 percent or 7 percent or something like that, I think there probably has been a tremendous amount of misinformation put out-that is, interpretation-on this matter of percentage of increase. If you start with a base of "X," a 6-percent increase of X is 6X. But if you start with a base of 10X, a 6-percent increase on 10X is a whale of a lot.

We talk all the time about the Communist countries. We see propaganda in some of our newspapers, from some of our writers, that there is this tremendous upsurge of productivity. But a percentage on a small base in total is not very great. A much smaller percentage on a big base started from is far more in volume. What is the situation there?

Mr. THOMPSON. This is bound to happen in this country. The figures they have been citing throughout the years were very impressive, but now-even China, in many ways now, will have higher rates of increase than they will, because of their low base. But cer

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