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CIA REPORTS ON `ABYSMAL’ ECONOMY OF SOVIETS

SHARE CIA REPORTS ON `ABYSMAL’ ECONOMY OF SOVIETS

The Soviet economy's performance last year was the worst of the Mikhail Gorbachev era with rationing of items from soap to sausage, and things could get even worse this year, the Central Intelligence Agency reported Friday.

"Soviet economic performance was abysmal in 1989 - the worst since Gorbachev took over," CIA Deputy Director for Intelligence John Helgerson testified at a hearing of the congressional Joint Economic Committee. Gorbachev, who is both president and Communist Party chief, came to power in 1985."Industry, construction and transportation stagnated or declined" in the Soviet Union last year, Helgerson said.

"By the end of 1989 only 50 out of 1,200 basic consumer goods were readily available. Meat and sausage were rationed in one-fifth of the major cities, and soap, detergent and sugar were rationed almost everywhere."

He said economic reform plans were poorly implemented and were hurt by a legacy of overcentralized planning and bureaucracy that has left the Soviet Union far behind Western nations in computers and other advanced technology.

The Soviet Union was also hurt by natural disasters such as the Armenian earthquake and by labor and ethnic strife, which cost 7 million workdays last year, Helgerson added.

"As we look ahead, the prospect of even a modest economic recovery appears to be remote at best," he said.

"The most likely outcome for 1990 is that the Soviet economy will stagnate or decline slightly, that inflationary pressure will remain strong and that widespread inflationary shortages will persist.

"The Soviet economy's performance during the first quarter of 1990 indicates that the administrative measures taken so far to stabilize the situation have failed to take hold. At the same time, ethnic and labor unrest, if anything, have been more disruptive than in 1989," Helgerson said.

He said economic prospects were better in Eastern Europe because of political changes that have ended communism and are moving the countries toward free market economies. But he warned they face great difficulties.

Helgerson said the key to economic recovery in Eastern Europe would be the ability of the countries to attract private foreign investment, which depends on their success in creating stable political and economic environments.

"Poland is well on the way, and in some of the other countries - East Germany, Czechoslovakia and Hungary - a good start is likely by the end of the year. . . . Yugoslavia and Romania are grappling with more deeply rooted problems."