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scientific weaponry, research and development adds such burden that the Soviet economy becomes simply unmanageable. Consequently, little remains of life's material goods for Soviet citizens.
In stark contrast to this gigantic Soviet military allocation of GNP, the United States currently devotes just 6 percent of its gross national product to military purposes. West European countries are now working to devote up to 5 percent of their GNP to such purposes, compared to 2 percent and 3 percent previously.
The only way the Soviet regime can continue to maintain its position of dominance over its own people is by continued mass regimentation, discipline and control, with propaganda and indoctrination remaining as much a part of daily life as bread, vodka and cabbage.
In the main, the long-promised better, freer, more affluent tomorrow continues to hover somewhere around a yet unseen corner. The official alibi is, of course, that the Soviet military burden is necessary as protection against the capitalist aggressiveness of the United States.
So, in 1972, history repeated itself. Once again, the inevitable fruit of this Soviet policy was the threat of starvation for the Soviet citizens.
With such usual external food grain sources as Canada and Australia unable to meet the massive Soviet need, an uneasy and fearful Soviet leadership donned, once again, its mask of smile long enough to seek, and get, foodstuffs necessary to prevent serious upheaval among their people.
These Soviet leaders were, of course, well aware of Lenin's warning that revolutions were born on empty stomachs. To eliminate the problem with the program of planned death by starvation which Stalin once imposed would be difficult-and embarrassing. These leaders had denounced Stalin for that very practice. Further, the voices of such Soviet writers as Solzhenitsyn and Sakharov were being heard throughout the world; Kremlin efforts to restrain them notwithstanding.
So it was that, for instant treatment of their again irritated Achilles' heel, the Soviet leaders turned to Washington. And Washington responded with a favorable decision which gave low priority to traditional economic considerations.
Now, so enriched with our wheat that they have been able to sell it elsewhere, at a profit, the Soviet leaders have returned to their more traditional, tougher stance in such critical matters as SALT II.
Having purchased time via the U.S. filling of the stomachs of the Soviet citizenry, these Soviet leaders are intensifying their efforts to gain more and more U.S. goods with obvious economic and military use.
For example, vehicles assembled at the American built Kama River truck plant, ostensibly to carry crops from the field, also can carry troops and munitions into battle.
A pet ro-chemical plant purchased ostensibly for peaceful purposes can also manufacture plastics and chemicals for military use.
Computers purchased ostensibly to assist in crop planning also can compute trajectories in intercontinental ballistic missiles with MIRT warheads.
Precision machines for manufacturing ball bearings purchased ostensibly for peaceful purposes have direct military application. Note, please, that, here in the United States, 90 percent of the product of these machines which the Soviet Union has been able to purchase from us are used for the guidance systems for ballistic missiles.
Development of the Soviet Siberian gas reserve can serve the red war machine just as easily as it can heat apartments in Moscow.
The economic grounds on which this country is entering into trade with the Soviet Union are shaky, to say the least.
During the past year, the Soviet Union imported $1.2 billion worth of U.S. goods. The Soviet Union exported to the United States $235 million worth of goods. Thus, the Soviet balance of trade with the United States is running about 51/2 to one in favor of the United States.
It takes little more than common business judgement to appreciate that such imbalance cannot long continue. Worse, Soviet inability to pay the yawning difference between their imports and exports with us remains a matter of serious question.
Most of the grandiose plans for American expansion of the Soviet industrial base entail financing by the United States; either through government-guaranteed loans or private sources, of $9 out of every $10 of the cost of such investment. That the shrewd Yankee trader would find himself entering willy nilly into such questionable business transactions is enough to boggle the mind.
We have not imposed what, normally, is the most fundamental requirement of any creditor: insist that the debtor reveal his net worth.
Requests to the Soviet Union for information on her gold reserves, gold production and gold consumption are met with stony silence. Such silences are justified with the rationale that, for Moscow to reveal its gold reserve might jeopardize its credit. This, the novel argument that if Moscow has too much gold in reserve, we might determine that Moscow needs no credit-and, if she has too little gold, she might not be credit worthy.
Any small town banker would laugh all the way to the door while ejecting any potential borrower with such logic. Such simple fundamentals seem to escape our own national leaders.
Since we are dealing with a nation whose primary consideration in development trade is political rather than economic, we will be extremely unwise if we do not take into account political factors before expanding trade.
We must appreciate that trade with the West under the thin guise of "detente," is the only device with which Soviet leaders can continue their drive for world domination at the expense of a mismanaged domestic economy.
In our own enlightened self interest, I submit that it's high time we stopped participating in this deadly game of Russian roulette.
Senator TALMADGE. Congressman, I hate to call the time on you, but the 10 minutes has expired.
Mr. BLACKBURN. I understand, Senator. We live on a 5-minute rule in the House, so I feel muchly enhanced by having a 10-minute rule.
Senator TALMADGE. I want to congratulate you on your excellent statement.
I take, from the thrust of what you have said, that you are not in favor of guaranteeing credit to the Soviet Union to develop its oil and gas industry, are you?
Mr. BLACKBURN. Oh, I definitely am not, Senator. The figures that I have seen indicate that we would end up investing perhaps as much as $48 billion in the Soviet Union to develop her oil and gas potential. If we are going to make that kind of investment, I think it would be far wiser that we made that investment here in this country where we sit on the tap.
Senator TALMADGE. I agree with you fully.
Senator Curtis has asked me to ask you this question: What is your view of granting most favored nation status to the Soviet Union?
Mr. BLACKBURN. Senator, as I understand the testimony of the Secretary of State, he stated to this committee that the proposal to grant most favored nation treatment to the Soviet Union was not different from our granting the same treatment to other nations.
Now, his statement was not completely candid. In fact, I think it was somewhat dishonest. The only basis for most favored nation is that there be a quid pro quo between this country and the other country to which we grant such most favored nation treatment. We have to keep in mind that most favored nations deals with a tariff imposed by a government to prevent its citizens from either buying too much of a foreign commodity or to raise taxes.
Now, Senator, there are no import duties to the Soviet Union. The Soviet Union is its own purchaser. When we sell, we are not exporting goods to be sold to Soviet consumers or Soviet businessmen. When we sell to the Soviet Union, the Soviet Union is buying for its own use. So if the Soviet Union attempted to impose a tariff on these imports it, in effect, would be taxing itself. So we are dealing with a completely different situation from that which exists where we are importing commodities to be sold to the citizens of a foreign country.
So what I am saying is that it is absolutely impossible for the Soviet Union to grant us a quid pro quo for most favored nations. Second, there are technical aspects of most favored nations with which the Soviet Union has not complied. For one, every nation that now enjoys most favored nation treatment is a member of GATT. They are also members of the International Monetary Fund.
In order to belong to the International Monetary Fund, it is necessary that these nations provide regularly to the whole world information on their balance of payments, their balance of trade, their gold production, their reserves of hard currency. Now, the Soviet Union absolutely refuses to comply with any of these requests.
Furthermore, one of the most fundamental concepts of International Monetary Fund membership is the convertibility of the currency. There is no convertibility of the ruble on international markets. The Soviet Union does not allow it.
So, Senator, I think it is a perfectly valid question as to how we can be proposing to grant most favored nation treatment to the Soviet Union when she is a unique country unto herself.
Senator TALMADGE. Thank you very much, Congressman.
Congressman, that was a most interesting and illuminating analysis of the most favored nation treatment you have just given the committee. I have several questions based on your testimony.
Now, I gain the impression that you do not believe that the Export Control Act is protecting U.S. security and that the Soviet Union is importing U.S. technology and goods for military purposes.
Now, I know you discussed this problem with Commerce and State Department officials. What, if anything, is being done to remedy the problem?
Mr. BLACKBURN. Senator, as far as I can determine nothing is being done to remedy the problem. The export control desk at the Commerce Department at one time comprised some 135 people. Today it has been reduced to perhaps eight or nine people. In fact, instead of having an Export Control Office there to prevent the export of militarily useful technology or capital goods, there has been a substitution of several missions here in this country and abroad with the avowed purpose of encouraging American sales to the Soviet Union.
For example, we have just learned, from the Export Import Bank Bulletin, that we made a sale of a scientific computer to Poland, a member of the Warsaw Pact. We have to keep in mind that the goods sold to any Warsaw Pact nation are available to the Soviet Union, as if we were selling them to Moscow. But Ex-Im Bank announced that it has approved a credit to Poland of $1,236,000 to finance 45 percent of the total U.S. cost of a Cyber 72–16 computer system costing $2,747,000. Banker's Trust Co. in New York will also provide the credit for another 45 percent. The Polish Government will pay 10 percent, or $274,000.
Senator, these Cyber computers are the absolute latest in computer technology. I think no one challenges the fact that no nation could ever develop an intercontinental ballistic missile system without the use of computers. It is beyond human capability to develop these systems. Certainly, it is beyond anyone's capability to develop the MIRV warhead without advanced computer systems. The Soviets have never been able to develop computer technology on their own. The only computer technology they have is computer technology which we have sold them, or which American subsidiaries have sold them on behalf of American companies.
Senator BYRD. Are there no restrictions on the exporting of such vitally important military
Mr. BLACKBURN. There is no effective restriction on it, as far as I can determine. What is so ludicrous about this is that it is stated that the sale to Poland by Control Data Corp. is for the use of the Krakow high school and scientific institute.
There are 10 installations of this type in the United States, and they are confined to the Atomic Energy Commission and the National Security Agency. I hope the Pentagon has a similar type of installation. Here in a country with over a trillion dollar economy, we only
have about ten such installations, and they are generally confined to the highest echelon of our scientific and defense mechanisms. Yet, now we are proposing to sell one to Poland, supposedly for high school use.
It would just be absurd on the face of it. It is absurd on the face of it.
We sold them 164 centilign last generation machines of a type of which we have about 70 in this country. Ninety percent of the production of those precision miniature ball bearing manufacturing machines in this country go to military uses.
Senator BYRD. Ball bearings are a vital material product to carry on war. I was interested in recollecting Dean Acheson's testimony, the former Secretary of State, when he testified before the Foreign Relations Committee several years ago to the effect that we should not be dependent upon Russia for any critical material. He was then speaking of chrome. But he mentioned this, he mentioned ball bearings. And he said—and I am quoting from his testimony now, "When you get a matter such as we had at the end of the last war, the German reliance on Sweden for ball bearings, this was a critical item, and once we cracked that business, we cracked the German munitions industry.” So ball bearings is a vital war material.
Senator, there is no question about it. I think it is a right interesting observation that we first sold them these miniature ball bearing manufacturing machines in 1972. That was shortly after the signing of the SALT I agreement, which was a disaster as far as this country's defense was concerned, at that time, the Soviet Union began testing MIRV warheads.
These ball bearings are used in guidance systems for intercontinental ballistic missiles and for guidance systems in MIRVs. The Soviets could not develop them without these ball bearings.
Senator BYRD. Just one additional question, if I may, Mr. Chairman.
When did this country first begin to export such strategic materials as vou have been mentioning in your statement today!
Mr. BLACKBURN. The first transfer of the Soviets of a computer system was in the early 1950's. That was done by a British subsidiary of General Electric. It was in the mid-1950's that we first sold them machines for manufacture of miniature ball bearings.
The real big expansion of American trade involving transfer of what I consider to be strategic technologies began in the early 1960's. It was in the late 1960's that it began to reach the unprecedented rate at which it continues today.
Senator BYRD. Thank you.
Senator TALMADGE. Thank you very much, Congressman Blackburn. We appreciate your contribution.
Mr. BLACKBURN. Thank you, sir.
[The prepared statement of Congressman Blackburn and a subsequent letter follows: