THE OTHER OIL DRAMA

Meanwhile another significant drama may have been taking place behind closed doors at the Comecon (Eastern trading bloc) meeting in Moscow in mid-June.

It was the first meeting since 1971. The viceroys in the colonies have become too independent for Moscow: East Germany sells to West Germany for hard currency rather than to the Soviets for inconvertible roubles;

Hungary is trying a few free-market tactics. Now both the central power and the colonies of the Soviet Empire are in a bind, and the reason is oil.

With an output of 12.2 million b/d, the USSR is the world's largest oil producer, and needs to be: it is their prime income of hard Western currency. But this output is 400,000 b/d less than the bureaucrats decreed in the current Five-Year Plan. Their Siberian off fields, in which they had put much hope, particularly the one at Tyumen, are falling behind. Pravda (4/3/84) reports power-shortages, pipeline shortages, labor shortages, and rampant bureaucracy (an oil producing unit is required to file some 200 reports containing almost 300,000 indicators annually, says the article).

In 1982, the Soviets cut the colonies' allocation by 10% and raised the price by 29%; in 1983, when world prices were falling, they raised them by another 17%. This caused unusual hardships in the colonies, and having made it through a bitter winter with insufficient energy, they can now expect more price increases, but no additional allocations. Instead, they will be pressured to supply technology and even skilled labor if they want raw materials. However, as both the Soviets and their viceroys well know, the revolts in Hungary, Czechoslovakia and Poland began with economic hardships, and after they were put down, the Soviet tactic was to placate the population by economic concessions (such as more consumer goods).

Now the natives will be getting restless and there will be nothing to placate them with. Do you see how important it would have been to deny the Soviets the credits and technology for the gas pipeline two years ago?