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C00002 00002	%soviet[f88,jmc]	Terms for Soviet access to Western computer technology
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C00028 00004	\smallskip\centerline{Copyright \copyright\ 1989 by John McCarthy}
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%soviet[f88,jmc]	Terms for Soviet access to Western computer technology
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\title{TERMS FOR SOVIET ACCESS TO WESTERN COMPUTER TECHNOLOGY}

	The object of this essay is to suggest that the United
States and its allies undertake to set terms for substantially
increased Soviet access to Western computer and other electronic
technology.  We will also have to sell the Soviets on changing
their ways of importing technology and on the advantages of paying
the high price we should ask.

	Here are some considerations.

	1. The Soviets are far behind in these areas.  They have been
behind ever since the computer industry started and are not catching up.

	2. The Western countries through the Cocom consortium restrict
technology exports to the Soviet Union for defense reasons.  In the
computer area the newest technologies are restricted, but the restrictions
on any particular technology are usually removed after some years.

	3. The Soviets import some Western computer technology in
compliance with the restrictions.

	4. The Soviets steal other technology, chiefly through getting
unscrupulous Western businessmen to set up dummy companies, purchase
the computers and smuggle them.  Every so often Western countries catch
someone at it and arrest them.  Only small numbers of computers are
illegally imported.  Probably they are mainly imported to be copied
rather than just for use.  The Soviets copied the IBM 360/370 line starting
in the middle 1960s with only moderate success.  In the middle 1970s
they started making computers compatible with the D.E.C PDP-11 and
more recently the VAX.  This hasn't been very successful either.

	5. Theft as a means of getting technology has serious disadvantages
for the Soviets.  Information about this is available from emigrants
from the Soviet Union and other Soviet bloc countries.  Here are some of
the disadvantages.

		a. The normal use of computer technology involves continued
communication between the users of the hardware or software and the
suppliers.  This communication involves correcting users' mistakes, resolving
ambiguities and incompleteness in the documentation, getting bugs that
have affected the users' work corrected, and getting information about
projected improvements in the software and hardware.  The Soviets and
their allies have no reliable way of communicating with the suppliers
of the technology they steal.  As a result initial compatibility with foreign
technology is often lost when the Soviets have to improvise a solution to
a problem that arises.  Their solution is likely to be incompatibile with
the supplier's own subsequent solution to the problem.  This means that
software or auxiliary equipment acquired later requires expensive
and time-consuming modification.

		b. The documentation obtained often doesn't agree with the
hardware.  One might suppose that documentation is even easier to steal
than hardware, but apparently the KGB isn't equipped to steal exactly what
is wanted.  Maybe it is hard to say exactly what is wanted.
Documentation obtained opportunistically is especially likely to be
incompatible with equipment obtained earlier.

		c. The KGB or whoever steals the technology insists that
the technology be kept under wraps, and this interferes with communication
within the Soviet Union.

		d. Institutions with stolen technology are restricted
in their communication with foreigners.

	6. Very likely the KGB doesn't understand the difficulties
their methods make for their Soviet customers.  Most likely they are
proud of their intelligence coups.  Our intelligence people are chagrined
at the KGB's successes but may not be in a position to analyze
accurately how much use Soviet industry gets from it.

	7. The Cocom restrictions have important effects in
limiting Soviet computer technology.  Requiring separate export
licenses for maintenance and service doubtless plays a role.
However, Western restrictions often hinder Soviet use of Western
technology less than the effects of the Soviets' own restrictions.

	a. They have restricted foreign travel by their own
scientists and engineers far beyond the restrictions imposed by
their shortage of foreign currency.  While they get all the
important foreign scientific journals in their central libraries,
distribution throughout the country is weak, and there are very
few individual subscriptions.  This makes use of foreign ideas
difficult, and encourages complacency about how well they are
doing.  It is still not clear whether {\it perestroika} is changing
this situation fundamentally.

	b. When they do buy foreign computers legally, they usually
restrict their contacts with the service organizations of the
companies from which they purchase.  For example, they don't
let them set up service organizations within the Soviet Union.
This makes service calls very difficult.

	8. The Gorbachev reforms are making the Soviet Union
more congenial to many people all over the world.  Lots of
people didn't see the defense importance of observing Cocom
restrictions in the past, and this number will increase.  The
number of countries that can supply computer equipment and software
has increased, and many are not members of Cocom.  The Cocom
system may weaken considerably.

	9. It would increase the Soviet standard of living
considerably over the long term to induce the West to
relax or abandon restrictions on technology transfer.  It
would be to their advantage to pay a considerable price
for this relaxation.  Running a technology race with the
rest of the world is something they can't win.

	10. The Soviet standard of living hasn't been the
dominant consideration with the Politburo in the past, and it
isn't obvious what its priority is today --- relative to military
advantage.

	11. Some Western people favor relaxing the restrictions
unilaterally to encourage Gorbachev, to promote peace, because
they consider them wasted effort, to make a profit or for other
reasons.  They have some success from time to time, but there is
no reason to suppose they will get the West to abandon the
restrictions to an extent that would remove them as a hindrance
to Soviet technology.  Therefore, the West has bargaining power.

	12. To the extent that the West is agreeable, the best
Soviet strategy is to rejoin the world technologically.  This
means buying Western products and technology from a variety of
countries using the same commercial practices as are used among
Western countries.  It means motivating Western companies to set
up sales and service organizations within the Soviet Union.  It
means letting Soviet organizations deal directly with foreign
companies, rather than only through the Ministry of Foreign
Trade.  It means letting Soviet engineers and scientists
subscribe freely to foreign publications and travel abroad freely
when it advances their work.

	13. The advantages of rejoining the world technologically
will not be obvious to organizations like the KGB, proud of their
success in stealing technology.  It also goes against the
tendency of the Party to control everything.  However, the
Gorbachev regime has been taking some steps in this
direction.

	14. The West needs to figure out how to sell the Soviets
on the advantages of rejoining the world.  Otherwise, the
negotiations will fail, because the Soviet Government and Party
won't find the price worth paying.

	15. Perhaps we should consider doing more than making
normal commercial relations possible in the computer field.
We should consider how we might help the Soviets.  Naturally,
actual help should command a higher political and defense
price than just easing restrictions.

	16. It is beyond the scope of this paper to treat
comprehensively the price we should ask.  Presumably people will
differ about this along the same lines that they have differed in
the past about relations with the Soviet Union.  However, many
will agree that our main criterion should be that any
agreement should not make us less secure from attack or increase
defense costs.  Here are some detailed considerations.

	a. The Soviets might like agreements purely in the technological
area---we exchange our technology for theirs.  However, we have
so much more that they need than vice-versa that purely
technological exchanges can have only limited scope if they are
to be even.  The areas where they are most reasonable are in
software involving advanced mathematics produced by an individual
or small group.  That's where they do best.

		b. We should imagine a sequence of successively more
comprehensive agreements.

		c. Reduction of Soviet territorial and industrial
secrecy should be part of the price.  Giving up some of the military
advantage this secrecy gives them will make disarmament agreements
more verifiable.  Some of this secrecy was pointless anyway, and
we are getting some concessions for nothing.  For example, they now
have promised the Soviet public to publish correct maps, including
a road atlas of the Soviet Union.

		d. Probably the main concessions have to be in
the military area.  They need to give up some of their conventional
armaments advantage in Europe, maybe even their draft.  Certainly
we should make sure that an agreement reducing restrictions contains
enough such concessions that our own military costs don't increase.

	17. Experts frequently have said, ``The Soviets will never
give up X'', only to be confounded by events.  We should enter
negotiations without preconceptions about what they might agree to.

	18. According to Arkady Shevchenko, the U.N. Undersecretary
who defected to the U.S. in 1985, the Soviets have never
feared an unprovoked Western attack.  This suggests that we make
no presumptions about their state of mind based on ideas of symmetry
between their situation and ours.

	19. The single most effective way for them to improve their
standard of living is to reduce military and police expenditures,
and the fastest way for them to do it is unilaterally.
However, this offers institutional difficulties, the extent of which
we cannot predict.

	20.  This paper assumes that our motivation for our
restrictions is security.  It assumes we have no desire to
keep down the Soviet standard of living either from dislike
or to try to force changes in their society.

	This paper is orthogonal to the recent report Global
Trends in Computer Technology and their Impact on Export Control
- National Research Council committee, Sy Goodman, chairman in
whose preparation I took a very small part.  In my opinion that
report does not sufficiently consider the advantages to the
Soviet Union of normal commercial relations with equipment
suppliers in contrast to the mere ability to acquire pieces of
equipment on a one shot basis.

\noindent Summary.

	1. The West should decide on terms for reducing technological
restrictions.  Otherwise, they may just evaporate with no corresponding
gain in Western security and with reinforcement of the KGB doctrine
that the West consists of villains and suckers.

	2. We need to sell the Soviets on the advantages to their
standard of living of rejoining the world technologically.  This
will motivate them to pay the price we must ask.  The price should
be such that our security is enhanced and our defense costs reduced.

	3. We can further consider actual help and what price we
should charge for that.
\bigskip
\noindent Addendum

A two week visit to Moscow in April 1989 leads to some elaboration
of the previously made points but no fundamental change.  I showed
the previous section to many people from programmers in co-operatives
to high officials of the Academy of Sciences and encountered
only agreement with the main points about the Soviet computer
situation and the importance of normal commercial relations.

1. Soviet economic weakness is a fundamentally a lack of
commercial organization rather than a lack of technology.

2. Much of the enthusiasm for computers among Soviet administrators
and their scientific advisers is aimed at using them instead of
freer markets of reduce irrational economic behavior.  I don't
think this will work, because the irrational economics arises
much less from inability to compute (for example) correct prices
than from various groups using their power and influence
the optimize their own positions.  Computerization won't
prevent people with power from abusing it.  It won't prevent
empire building and semi-feudal hierarchies.

3. The partial freeing of some aspects of the economy via
co-operatives has led to some of them making profits that seem
enormous by Soviet standards.  Here is a well known example.

Some time in 1988 co-operatives were permitted to make barter
deals with foreign companies.  One of them arranged to barter
scrap from the Soviet lumber industry for personal computers
with a Japanese firm.  The Japanese can make wall board out
of the scrap.  They sold the computers on the Soviet market
for very large prices and made large profits.  These profits
led to complaints and a decree that co-operatives could
barter only their own products for foreign goods that they
used directly and to the freezing of the bank accounts of
some co-operatives.

This reaction, pandering to the envy that is an important
characteristic of Soviet ideology, was precisely
counter-productive.  Since there are many previously unnoticed
opportunities for barter deals with foreign companies, then
letting hundreds of co-operatives do it will benefit the economy
and bring down the profits by competition.

This example also points out that the Soviet economy will benefit
from innovative purely trading activity.

4. Soviet internal prices for Western computers and auxiliary
equipment are 30 to 100 times Western prices, given the official
exchange value of the ruble.  I apologize for the computer jargon
in this item.

A Soviet made 8086 compatible 8 mhz computer with 256K RAM, a 350kb
floppy disk from Bulgaria, a 5 megabyte hard disk with 170 ms
access time, and a text only monochrome video card costs
26,000 rubles.

An East German Robotron 100cps dot matrix printer costs 26,000 rubles.

  Here are some examples, said to
be from a Gosnab price list.  These prices are what Government
institutions are allowed to pay co-operatives for IBM XT and AT
compatible computers.

\noindent 8 or 10 mhz 8088 with 640K ram, xt, color display, 45K rubles.

\noindent 10 mhz, 80286 machine, 30mb hard disk, 1 megabyte ram, aga monitor +
epson fx80 printer, over 60K rubles.

\noindent 80386, 16mhz, 80387 coprocessor, cheap 4pen plotter, 1 meg memory 200-250k rubles
20mhz 386, 140 meg hard disk, esdi interface, 300-330k rubles.
In the West such a machine costs from \$3K to \$4K.

\noindent 4 pen plotter, 100K rubles.

\noindent HP compatible laser printer, 1.5meg bit map memory, 70-80k rubles,
 \$2,000 in the West.

\noindent 80287  coprocessor, 10k rubles, here \$100.

\noindent 1024 x 1024 monochrome display, 20-30K rubles, \$1000.

XT computers are exportable under a general license.
Others can get specific license, but it's difficult.
The Cocom restrictions are highly effective.
Only two 386 machines were offered for sale in Moscow up to April 1989.

By comparison, Soviets
can get cars for much smaller premiums.  An
3 bedroom apartment in center of Moscow costs 25k rubles
and a dacha 60-70K rubles.  A VCR costs 4K rubles vs. \$300 in
the West.


5. The commercial aspects of any agreements the West might
make to help with computer technology will be as important
as the technological aspects.

6. Commercial firms interested in making deals should avoid
large expenses up front.  Otherwise, unexpected bureaucratic
delays are likely to cause large losses.
\smallskip\centerline{Copyright \copyright\ 1989 by John McCarthy}
\smallskip\noindent{This draft of SOVIET[F88,JMC] TEXed on \jmcdate\ at \theTime}
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