There should be plenty of red faces these days at the Central Intelligence Agency. When it comes to analyzing the state of the Soviet economy, the CIA has been caught with its statistics down.
For years, the CIA has been painting a relatively rosy picture of what used to be called the Worker's Paradise. According to intelligence figures, the Soviet economy was second largest in the world, with a gross national product about 60 percent the size of U.S. output. From 1981-88, the Soviets' GNP grew more rapidly than that of either West Germany or France, according to the CIA. Moreover, said the CIA, perhaps 15 percent of Soviet GNP was devoted to fueling the country's war machine, an estimate far below the one made by American hard-liners.A few days ago, a group of Soviet economists came to Washington to set the record straight. Their views surprised even those who were skeptical of the CIA figures.
The Soviet economy, said these economists, is in reality between 14 to 28 percent the size of ours - smaller even than Italy's. It has probably been shrinking since the beginning of the 1980s, and the contraction may be accelerating. "During the first quarter of 1990," Scripps Howard News Service quotes one researcher as saying, "the industrial production in the USSR decreased at a minimum by 5-6 percent." The Soviet standard of living, they estimate, is now somewhere below Brazil's.
What's one to make of the new image of a purportedly weaker Soviet economy? Does it mean the Kremlin is not much of a threat to the world after all? Or could it be that the Soviets are trying to lull the Free World into a false sense of security?
The answer would seem to be: None of the above.
By the Soviet economists' own admission, Soviet military spending has at least held steady, if not increased, and now absorbs more than a quarter of the country's economic output - far more than the CIA ever thought.
The economists were being more candid than their own government, even in this age of glasnost. For example, one Soviet economist said the official Soviet statistics overstate meat production by 100 percent and grain production by tens of millions of tons.
An over-reliance on those official statistics partly explains the CIA's grievously deficient estimates. The CIA also had an inadequate grasp of the distortions a socialist economy produces. Because the Soviets have a larger work force than ours, and a comparable education level, CIA economists could not imagine that Soviet GNP could be less than 50 percent U.S. levels. But it was.
The lesson: Never underestimate the disaster of socialism. But never underestimate the Soviet Union's potential threat either.