A NEW REVOLUTION Russia Seeks Salvation In Chemicals

Press, Volume CIII, Issue 30390, 14 March 1964, Page 17

A NEW REVOLUTION Russia Seeks Salvation In Chemicals

[Bv ISAAC DEUTSCHERI Russia has decided to invest 42 billion roubles in chemical industry and agricultural chemistry between now and 1970. This is a breathtaking decision, even though it is not easy to translate the planned expenditure into foreign currency. At the nominal rate of exchange it would amount to nearly 45 billion dollars; but as the American and Soviet price structures are incommensurate, because the prices the Soviet Government pays its own concerns for producer goods are often lower than Western prices, the actual purchasing power of the 42 billion roubles may be higher than 45 billion dollars. We may get a more realistic idea of the scale of the planned expansion if we consider that, by current rates of Soviet expenditure, the investment in chemical industry is to amount tc not less than 20 per cent of all Soviet investments in the national economy. (Over the years, as the volume of national investment grows, the proportion spent on chemicals will decrease.) In relation to the plan for the years 1959-1965, the targets have now been raised four-fold; and in relation to actual production they are stepped up by 700 to 800 per cent. This rate is nearly double the very high rate of investment in chemicals characteristic of the most advanced Western economies in recent years. The Soviet 20-year plan of economic development, adopted in 1961, already foreshadowed such an expansion in chemicals. But the industry has been extremely slow in the “take-off” and has failed to attain its targets for the last five years, probably because heavy industry, defence, and housing have had first claim on resources. Only

under the shock of last year’s disaster in farming has the Government decided to restate the development programme, give it top priority, reassess and re-direct materials and .labour, and curtail in favour of the chemical industry the targets set for other major industries. Discreditable History In presenting his plan, Mr Khrushchev has unwittingly revealed a lamentable chapter of Soviet economic history, a chapter in which his own role has been as large as it has been discreditable. It is now nearly 10 years since he scored a resounding success over Mr Malenkov and persuaded the Central Committee to reject Malenkov’s ideas about intensive fanning and to opt instead for his own schemes of extensive cultivation, under which 40 million hectares (100 million acres) of “Virgin land” was to be brought under the plough. It is now clear that what was at stake in that controversy of 1953-1955 was not only farming policy but also the future of the chemical industry. In accepting Mr Khrushchev’s farming schemes, the Central Committee also decided to leave the greatly underdeveloped chemical industry to its own sluggish tempo—a course of action which would have been impossible if the Central Committee had decided in favour of intensive farming.

Mr Khrushchev’s success now turns but to have been a Pyrrhic victory. Not only have his triumphs on the virgin lands been short-lived; not only has Soviet agriculture again fallen badly behind the needs of the national economy; in addition, the Soviet Union is now the only major industrial nation which possesses no more than the

rudiments of a modern chemical industry. Most Western nations (and Japan) have in recent years been putting into their chemical industries 10 to 13 per cent of their total capital investments; the Soviet Union was investing not more than 3 or 4 per cent The Soviet farmer is utilising (theoretically) 62 kgs. of fertiliser per hectare, Le., onefourth of what the American farmer is using, and only one-eighth and one-twelfth respectively of what the French and British fanners are using. (The Soviet yield per hectare is less than half of the French and the American and not even a third of the British.) Effect on Living Standards What the backwardness of the Sbviet chemical industry has meant in terms of the popular standard of living can be seen from this comparison: the Soviet citizen is consuming, at best, onefourth of the plastics, and synthetic fibres that the American, the Briton, and the Italian are consuming, and only one-fifth of the West German and the Japanese consumption. Medical chemistry is 30 or 40 years behind Western Europe. The daily .life of the Soviet people, although improving, has thus notoriously lacked that bright look of affluence which plastics and synthetic fibres have brought to the masses in the West. And even the most modern of Soviet producer industries have sometimes a rather archaic aspect, because of the very limited use they are making of synthetic and plastic materials. In some of its decisive branches the Soviet economy has wasted the last 10 years. . At the recent session of the Central Committee nobody dared to draw this balance of Mr Khrushchev’s experiments with extensive farming and of the neglect of chemicals. But between the lines he himself drew the balance and then proceeded rather shame - facedly to change course, to discover the virtues of intensive farming and the merits of a modem chemical industry. No more virgin soil will be cultivated henceforth, because, under extensive farming, Mr Khrushchev now tells us, another 100 million hectares of new land would have to be brought under the plough before the nation’s needs in food would be met, and even then the result would be dubious. Saving Face Mr Khrushchev 'has tried to save his face by arguing that the experiment with virgin lands has nevertheless been worth while, because the Government has over' the years made on it a net profit of three billion roubles. But as much of the virgin soil has turned into a dust bowl, the Government’s profit has been the nation’s loss; and Mr Khrushchev himself now points out that intensive farming is about half the cost, or about twice as profitable, as extensive cultivation. In other words, for half the capital outlay spent on the virgin lands the old farming areas could have been made to flourish. Mr Khrushchev’s self-justification sounds, therefore, even less convincing than the doctor’s famous dictum that although the patient has died the operation has been successful. Mr Khrushchev has now also quietly given up his other favourite panaceamaize. He has for years repeated ad nauseam that maize is the Soviet horn of plenty and that farmers could and should grow it even in the coldest climate. Now at last the craze for maize is over. Evidently in reply to renewed attacks on him behind the scenes, Mr Khrushchev has made the most of his massive imports of grain and has done his best to turn the attention of the Soviet people from his economic failures to his solicitude for their wellbeing. Stalin and Molotov, he says, did not even think of importing grain; on the contrary, they exported it in 1947, when Russian peasants were starving or dying of hunger. There is no doubt about Stalin’s inhumanity; but the truth is that in 1947 the U.S.S.R. was suffering from the effects of the most catastrophic drought and crop failure since 1890, the year of the most terrible famine in Russian history; that the U.SB.R. exported in

1947 only negligible quantities of grain to Eastern Europe; and that in view of the general post-war food shortage in the world, the Soviet Government could hardly hope to be able to alleviate famine at home by purchases of foreign grain. However, as a piece of demagogy the con-

trast which Mr Khrushchev drew between himself and Stalin was undoubtedly effective. 2M New Plants Soviet economists,. who have for years warned the Government ’ about the deplorable state of farming and of the chemical industry, can accept Mr Khrushchev’s new plan with a “better-late-than-never.” Till the last moment the size of the capital allocation was uncertain; it must haVe been the subject of controversy behind the scenes. But there is now no mystery about the manner in which the 42 billion roubles are intended to be used: 25 billion are to be spent on the erection of 200 new large chemical plants and the reconstruction of 500 existing plants; eight, billion will pay for the expansion of the raw material and fuel base for chemicals; 4% billion for construction works, 3 billion for fertiliser machinery, 1% billion for chemical engineering. Of the total expenditure, 10% billion (i.e., about a quarter) is to go to agricultural chemistry, the rest to the chemical industry proper. How realistic is this plan? Western experience, especially the post-war experience of France and Italy, shows that modem chemical industries can be rapidly built up, even from scratch, and that the difficulties of the take-off can be let behind and that can be left behind in a short time. But Soviet economists and engineers will have ’to make an extra effort to overcome some of their conservative habits of mind, for which the customary Soviet over-emphasis on the steel industry has to some extent been responsible. What is even more important is that the new plan requires a new order of industrial priorities and a thorough overhaul of all planning, for the next years. But of this new order of priorities, Mr Khrushchev has given only the vaguest of hints. If investment in chemicals, which has hitherto claimed only 3 to 5 per cent of all capital outlay, is to rise to 15 or 20 per cent, from where are the additional 15 dr so per cent to come? Plant from Abroad? Evidently, the expansion of the steel industry and some branches of engineering will have to be slowed down. The housing programme may have to be reduced, although the housing situation is still, 'despite the enormous scale of construction, very unsatisfactory. The urban population is swelling faster than the houses are built; and living space is still only six square metres a person. Defence expenditure will have to be cut more radically than it has been cut in the- budget for the' coming year. The astronautical programmes are being reduced; the flight to the moon has been sacrificed to the more prosaic task of supplying fertilisers to the Russian land. Finally, the plan requires imports of chemical plant from abroad if only for the purpose of technological pump-priming: that is, in order to give Soviet engineers the know-how they lack. The Soviet Premier does not hide his eagerness to shop abroad, even though he warns prospective sellers that they must not try to attach political strings to any deal or strain for excessive profits. Just how much is the Soviet Government willing and able to buy? Some reports from Moscow (inter alia a report by “Le Monde’s” Moscow correspondent of Decem-

ber 12) suggests that Moscow may be willing to purchase, over the next few years, foreign chemical plant for about 11 billion dollars. It may try to obtain abroad at least a third of all the machinery and installations required under the new plan. Payment Problems While there is no doubt that Mr Khrushchev is thinking of large-scale purchases, the prospect of deals of such extraordinary magnitude seems unrealistic. Purchases of this size would create wellnigh insoluble payment problems in the best of circumstances, even if the U.SJS.R. were greatly to expand, its exports in the immediate future and even if its secret gold reserves were as big as, say, those of the United States. Western credits to the U.S.S.R. large enough to match the immensely expanded volume of trade would presuppose a change in the international political climate far more thoroughgoing than any change that can be forecast at present, even on the most optimistic of assumptions. Nor should it be forgotten that the U.S.S.R. will go on importing grain in the coming years, though it will probably buy less than it bought last year. Even if the Russians manage to forge ahead ih their chemical industry, progress in agriculture will of necessity be much slower. Nothing is so difficult as to break the habits of Russian farmers, to persuade them to new methods of cultivation, and to accustom them to the use of chemicals. The network of agronomic services is spread rather thinly over the countryside and works unreliably. But the most important factor in the stagnation of farming is not economic but socio-political. The farmers do not feel that they are the masters in the kolkhozy; they see the bureaucrats running the show. As long as this is so, as long as the collective farms have not been transferred into autonomous and democratically-run cooperatives, almost every economic investment in agriculture is half wasted. Some years ago Mr Khrushchev seemed to be more or less aware of this; but recently he has preferred to keep silent about that aspect of the problem. He may yet achieve a paradoxic feat, if he grows old enouc... he may live to see a stagnant Soviet agriculture existing side by side with a flourishing chemical industry, producing fantastic masses of fertiliser.— World copyright reserved by Isaac Deutscher.