The reason for the radical proposal is clear. “The Soviet Union is a military-procurement system gone mad,” says a veteran Western ambassador to Moscow. For more than two years, Gorbachev has unsuccessfully sought to reform the huge military-industrial complex that has monopolized Soviet manpower, technology and resources since the end of World War II. But shifting production from military to civilian use has proven nearly impossible. So far, only six of 430 defense plants targeted in a previous Gorbachev plan have actually been fully converted.
Gorbachev now hopes foreign business can help. He wants Western companies to participate jointly with state run industries in a $30 billion to $40 billion plan to transform his country’s defense facilities. In return for business expertise and capital, Western companies would gain access to a vast system of elite factories and research centers. Gorbachev is also ready to sweeten the deal with tax benefits and favorable licensing treatment.
The implications for the Soviet Union’s military-industrial complex are profound. The Gorbachev proposal would give a green light to economic reformers within the Soviet military-industrial sector to seek out foreign partners in the West. And in doing so, it would give the West unprecedented access to some of the Soviet Union’s most closely guarded secrets. Traditionally, the armaments industry has been so under wraps that relatives of defense-plant workers literally have no idea where their kin live. “Unjustified secrecy was a serious impediment” to investment, Gorbachev’s report says. “The Soviet side would establish for foreigners a regime of openness.”
That is sure to infuriate many of the country’s military hard-liners, already unhappy with other Gorbachev-era reforms. But the Soviet president is hoping more enlightened officers will welcome the idea as a way to gain access to superior Western technology. Soviet military reaction will also depend on just how the civilian conversion occurs. One option, according to Western defense officials, is to build new civilian production lines to run in tandem with the old defense lines. Another is to mothball defense plants in such a way that they can be revived later. A third option, clearly less attractive to the Soviet military brass, is to fully replace defense output with civilian goods. The critical question for the Soviet military is whether conversion will significantly cut the Soviet defense budget.
Because the reform plan does not specifically indicate further Soviet defense cuts, there is bound to be criticism in the West that these joint ventures could in fact provide technology that could ultimately be used for weapons production. Businesses are also unlikely to jump at Gorbachev’s offer without a guarantee that they will be able to take profits out of the Soviet Union. Another problem is that capitalist countries have had only limited success at converting defense plants on a profitable basis.
Still, Western reaction to the Gorbachev proposal was positive. In a veiled public response, British Prime Minister John Major urged that “technical assistance to the Soviet Union [should] be intensified” in the fields of energy and defense conversion. One G-7 member was eager not to miss a new opportunity. While Western leaders pondered Gorbachev’s proposal, a team of Japanese experts had already landed in Moscow last week-eager to figure out the best way to beat swords into profitable television sets, VCRs and automobiles.
