The regime appears to have reevaluated its bloc diplomatic requirements and instituted a policy of assigning to bloc countries men with party or government administrative experience, rather than men. trained in the diplomatic service. In a number of cases the necessity to exile some party or government figure from the arena of power struggle and policy controversy coincided with a need within the Ministry for someone with party or government experience. Most of the "outsiders" were assigned to bloc countries or the headquarters staff of the Ministry. A few, however have been assigned to nonbloc countries-notably Menshikov to India, and then the United States, Pegov to Iran, and Ryzhov to Turkey. Revitalization of the ministry since Stalin's death has been accompanied by an enhancement in the prestige of diplomatic service. To a certain extent this was a by-product of the assignment of high-level party officials to the ministry, but it has also been fostered as deliberate policy by the regime. In Stalin's time comparatively few Soviet diplomats were members of top party bodies. At the time of his death only eight were so honored, and of these only Vyshinsky was a full member of the Central Committee. Six were named full members at the 20th Party Congress in February 1956, and today 19 enjoy the prestige of high party rank-9 of them as full members of the Central Committee Major personnel assignments within the ministry are the prerogative, not of the ministry itself, but of the party, and are exercised by the foreign departments in the staff of the Central Committee Secretariat. The most important assignments undoubtedly receive the direct attention of Khrushchev and the party presidium. The usual procedure is for the ministry to propose a candidate to the Secretariat for consideration. If the candidate is unacceptable to the party department concerned, Gromyko can appeal the decision to the party presidium. Ambassadors and ministers plenipotentiary, since they are legal representatives of the Soviet state, are formally appointed by decree of the Supreme Soviet Presidium. Decrees on other top assignments in the ministry are issued by the Council of Ministers. The Soviet diplomatic service has apparently been divided into two parts-bloc and nonbloc. Personnel rotate within each service but seldom go from one to the other. All top positions in the bloc service are staffed by former party and government officials, and all but three of these Molotov, Ambassador to Mongolia; Terenty Shtykov, Ambassador to Hungary; and Yury Prikhodov, Ambassador to Bulgaria entered the Foreign Ministry after Stalin's death. Desk chiefs and in some cases deputy desk chiefs have the same rank as foreign mission chiefs, and it appears to be a matter of policy to rotate top personnel from one position to the other. Soviet career diplomats are generally trained as area specialists, but an effort is made to broaden their experience. During the course of their careers they may expect assignments in several different parts of the world, interspersed with varied headquarters responsibilities. Soviet diplomats carry their ranks with them and collectively form a pool of talent available for specific assignments as the need arises. Quite often a high-ranking diplomat will be reassigned to Moscow and not be identified for many months or even several years, only to reappear subsequently in a new post with no apparent diminution in status. It may be assumed that his services have been utilized on special commissions, ad hoc committees, or in other ways which are not normally reported. CHAPTER 3. STATE COMMITTEE FOR FOREIGN ECONOMIC RELATIONS The State Committee for Foreign Economic Relations has ministerial rank and operates under the aegis of the U.S.S.R. Council of Ministers. It was created for the establishment and development of economic contacts with all foreign countries, as well as for the supervision of technical and economic assistance and cooperation, scientific collaboration, aid in the construction of enterprises abroad, training and provision of specialists, and grants of credit. Organization The committee is organized both geographically and functionally. Its departments include: Administration for Construction of Enterprises Abroad; Main Engineering Administration; and Administration for Matters of Scientific-Technical Cooperation, the latter being composed of country commissions for bloc countries as well as for Yugoslavia and Finland. The committee oversees the operations of its four all-union associations which are responsible for the construction of installations abroad. These four associations, whose operations are to a certain extent similar to the associations under the supervision of the Ministry of Foreign Trade (see below), in that they export and import, also perform additional functions including the furnishing of Soviet experts and the training of native personnel for work in the enterprises built under Soviet supervision. Three of the associations construct specific types of installation and confine their activities to bloc countries. The fourth-"Tekhnoeksport"-however, functions in countries outside the bloc for all types of installation. Functioning Although the committee ranks administratively with the Ministry of Foreign Trade, its function of establishing and expanding economic contacts with foreign countries appears to place it in a higher capacity than the latter, which is concerned more with the implementation of foreign trade operations. Thus, a policy decision to establish or expand economic relations with any given country is translated into action by the committee. When a trade agreement has been concluded, the Ministry of Foreign Trade comes into the picture. The committee has a continuing function, of course, if an agreement for economic or technical assistance is involved. The nature of the committee's connection with the Council of Mutual Economic Assistance (CEMA) is not entirely clear. It is, however, the appropriate Soviet organ to deal with CEMA. Organization CHAPTER 4. MINISTRY OF FOREIGN TRADE The Moscow headquarters of the Ministry of Foreign Trade, composed of geographic, functional, commodity, and service divisions (called administrations), supervises the activities of (1) its domestic representatives-representatives at ports, border areas, large industrial centers, councils of ministers of union and autonomous republics, and councils of national economy-to expedite and control foreign trade operations, foreign trade inspectors of exported and imported commodities, and customs representatives; and (2) its overseas representatives officials of all-union export-import associations, permanent and temporary trade delegations, agencies and missions, and commercial counselors and attachés. There are four geographic divisions responsible for planning and supervising trade with countries under their respective jurisdictions. There are also four commodity divisions which directly supervise the import and export of specifically allocated groups of commodities and consolidate the commodity export and import plan. Functional and service divisions include the Foreign Exchange and Finance Administrations which are responsible for preparing the consolidated foreign exchange and financial plan. Other functional and service divisions include those for transport, customs, and trade agreements. Actual day-to-day foreign trade operations are conducted by the export and import associations (of which there are more than 20), with representatives both at home and abroad. These associations are legal monopolies; each usually has exclusive trading responsibility for specific commodities, although certain associations have responsibilities for all commodities for trade in specified areas. All associations are legally independent economic organizations, liable for their own actions. As a result, the government of the U.S.S.R. cannot be held responsible for debts and acts of the associations either at home or abroad, nor can the associations be held liable for actions of the Soviet Government. This is an essential difference between a foreign trade association and a trade delegation, which concludes transactions in the name of the U.S.S.R. Both organs nevertheless are responsible for their actions to the Ministry, and their freedom of operation is severely restricted. The Ministry of Foreign Trade carries out its planning, regulation, and control functions in foreign countries by means of its trade delegations abroad, the chief officials of which have diplomatic status. A trade delegation regulates and conducts Soviet foreign trade in the country concerned. It represents the export and import associations, acts as their agent, makes market surveys, and negotiates contracts with buyers and sellers for commodities offered or required by export and import associations. Where a trade delegation does not exist, such duties are handled by trade missions, agencies, commercial counselors, or attachés. Functioning Soviet foreign trade is primarily designed and executed to serve the needs of the Soviet economy as determined by the Soviet planners." Its objectives are determined by the national economic plan, rather than by market conditions as in most Western countries. In order to insure that Soviet foreign trade serves the needs of the domestic economy, trade is conducted almost exclusively by state organs. 12 Aside from insuring that the export-import plan (see below) is coordinated with the national economic plan, direct control over foreign trade is intended to insulate the Soviet economy from 11 For economic policy formulation, see ch. IV. 12 The exception is Tsentrosoyuz, the Union of Consumers Cooperatives, which conducts a limited volume of foreign trade in consumer goods. foreign influence and to give maximum protection to domestic industry. Direct control also makes possible a flexible trade policy. The Soviet Government can quickly change the direction and composition of its trade simply by dispatching orders to its export and import associations, and thereby it can take advantage of changes in economic and political conditions abroad. The bulk of Soviet foreign trade is conducted on the basis of bilateral commodity and payments agreements, by means of which the U.S.S.R. attempts to balance its imports from any given country with exports. Such agreements provide for reciprocal deliveries of goods to be carried out in accordance with commodity lists specifying the quota of goods to be delivered. These lists are agreed on between the parties for definite periods of time and are defined in special annual protocols. The rationale behind specifying what is to be exported and imported in trade with a country lies in the very nature of the Soviet economy. In this way the Soviet Union knows in advance what its exports and imports will be and can more easily integrate them into the national economic plan. The U.S.S.R. has been turning more to the use of long-term agreements, which have been a regular feature of Soviet trade with the bloc countries for a number of years. In the last 2 years long-term trade agreements have been concluded with almost all major Western countries (usually for 2 to 3 year periods). Soviet foreign trade with the bloc countries is conducted more or less on the basis of world market prices; that is, the prices charged other bloc countries for Soviet exports or prices paid by the U.S.S.R. for goods from other bloc countries are determined in trade agreements for the coming year on the basis of prices prevailing in free world markets in the current year. World market prices are employed because Soviet foreign trade prices and internal prices are unrelated. (Most Soviet domestic prices are set arbitrarily by the planners to absorb excess market demand and to encourage the use of some commodities while discouraging the use of others.) This gap is in fact deliberate, since the Soviet foreign trade mechanism is intended to isolate the planned internal economy from foreign influence. In conducting foreign trade operations for the state, the Ministry of Foreign Trade deals with a number of Soviet organizations. Because the export-import plan must be integrated with the national economic plan, it is drawn up with approval of Gosplan and receives final approval by the Council of Ministers. Foreign trade questions are also resolved with the participation of the Ministry of Foreign Affairs and other state organs. Financial questions dealing with foreign trade are decided with the participation of the Ministry of Finance, and foreign exchange questions in participation with the state bank. All financial transactions with foreign countries go through Gosbank and its subsidiary, the Bank for Foreign Trade, which handles certain noncommercial accounts. In planning and engaging in foreign trade activities, the Ministry of Foreign Trade deals with the sovnarkhozes and the various Republics. Within the context of the overall export-import plan, export and import quotas are assigned to various sovnarkhozes and supply organizations in the Republics by the Ministry. Actual day-to-day transactions are conducted between the sovnarkhozes and their industrial organizations on the one hand and the export-import associations. on the other. The foreign trade plan Foreign trade planning is an integral part of Soviet economic planning. The purpose of the foreign trade plan is to determine what is to be imported during the coming year in accordance with the requirements of the national economy and what goods will be set aside for exports in order to provide the foreign currencies needed for the payment of imports. The U.S.S.R. seeks to export only as much as it needs to pay for imports. A major component of the foreign trade plan is the foreign exchange plan, which envisages the receipts and payments of the U.S.S.R. in foreign currency for the year ahead. The foreign trade plan is drawn up annually and is corrected semiannually and quarterly. The chief consideration in planning exports and imports is normally availability (for export) and domestic need (for import) in physical terms. Secondary consideration is given to other factors: e.g., long-term market prospects for a given commodity, amount, and type of currency to be earned or expended, etc. Such considerations are, of course, necessary in working out the foreign exchange plan. Therefore, when it has been determined what goods are to be imported and what goods can be spared for export, the U.S.S.R. will sell in the most expensive market and buy in the cheapest market with the aim of maximizing export earnings and minimizing cost to the domestic economy. The principle is often modified, however, by political considerations. The centralized control of trade which makes it possible for the U.S.S.R. to switch its markets rapidly for economic reasons also enables it to use its trade in support of political objectives. Thus in 1955, when the Burmese Government appeared to be taking a neutralist course, the U.S.S.R. and other bloc countries concluded agreements to purchase annually 750,000 tons of Burmese rice-a commodity then surplus in Burma, but never imported in large quantities by the bloc prior to this time. By 1958, with a pro-Western government in Burma, the bloc had reduced its purchases to only 100,000 tons. To establish Soviet influence in Ghana following its achievement of independence in early 1957, the U.S.S.R. increased its imports in that year of Ghana's chief export-cocoa-400 percent above normal purchases. As it became apparent that Ghana did not intend substantially to reduce its ties with the West, in 1958 the U.S.S.R. withdrew almost completely from Ghana's cocoa market. Its purchases have since remained well below those made prior to Ghana's independence. CHAPTER 5. COUNCIL FOR MUTUAL ECONOMIC ASSISTANCE The Council for Mutual Economic Assistance (CEMA) is the consultative organ coordinating the domestic and foreign economic policies of the U.S.S.R. and the European satellite countries. Communist China, North Korea, North Vietnam, and Outer Mongolia are not members of CEMA, but they are represented at important meetings as observers. Formally, the participating countries in CEMA enjoy equal rights, and the decisions of the Council require unanimous approval of the countries affected. Actually, however, the relative power position of member countries within the bloc |