PRIVATIZATION IN NACC COUNTRIES Defence Industry Experiences and Policies and Related Experiences in Other Fields COLLOQUIUM 1994 ********* COLLOQUE 1994 PRIVATISATION DANS LES PAYS DU CCNA Experiences et politiques des industries de defense et experiences comparables dans d'autres secteurs Colloquium 29-30 June, 1 July 1994 Brussels --------------------------------------------------------- THE IMPACT OF DEFENCE INDUSTRY PRIVATIZATION ON THE LABOUR MARKET: A WESTERN VIEW Franz-Lothar Altmann While it is virtually impossible to compare the defence infrastructures of each of the former East Bloc and Soviet economies on common ground, there are some similarities which help us understand the defence privatization challenge more clearly. Franz-Lothar Altmann says that the regional and "monocultural" implantation of defence industries in these regions, and the potential negative political/security impact of rapid defence privatization if it is done too hastily today, are the reality which the East and West must face. Dr. Franz-Lothar Altmann is the Deputy Director of the SŸdost-Institut in Munich. Privatization and Employment ---------------------------- Does there necessarily exist a close correlation between privatization of state owned enterprises (SOEs) and the increase of unemployment? In theory this question will be answered "yes": It is common knowledge that in socialist state enterprises excess employment is normal, and every private owner will first try to diminish those costs which can be reduced without any capital infusion. However, the term "privatization" is often used just for the formal change of the legal framework of the enterprises, i.e. the transformation of a state enterprise directly administered by a ministry into a joint stock company where at least for some time the state still holds the majority - if not all - of the shares. In such a (pre-)privatization case, which e.g. in Poland is called "commercialization" - the management will think about reduced employment only if from the state, the capital owner, distinct pressure is exerted. This, however, cannot really be expected since the politicians want to be reelected, and therefore they will not be very eager to announce unpopular decisions like workers' layoffs. But the situation becomes different if private capital takes over, as the interest of the investor will be oriented towards profit-making, and any reduction of costs - here labour costs - will and must be examined. A different situation also occurs if the shares of the company - after commercialization - are distributed among the employees. In this case, of course, even so-called privatization should not lead to large layoffs. Who will act against his/her own employment interest? Unemployment in Eastern Europe ------------------------------ In fact, overall employment decreased already before privatization of the large SOEs became a serious issue. It started in most of the former socialist countries due to the drastic decline in output which followed the collapse of the Eastern trade cooperation system, CMEA. Massive unemployment is primarily linked with economic decline, a conclusion which we can derive also from developments in Western market economies where private ownership of production predominates. If we look at the following table, it seems that the highest increases in unemployment in the former socialist countries appear where the loss of markets and lack of competitiveness were/are greatest (Albania, Bulgaria, Croatia, Slovenia, the Slovak Republic, Romania), or where restructuring had really started earlier but only half-heartedly (Poland, Hungary?), or where no specific protective accompanying measures had been applied, like the introduction of a very favorite rate of exchange in the then Czech and Slovak Federal Republic. --------------------------------------------------------- | Country |Change of Emp.|Rate of Unemp.|Number(1000)s| | | 1990-92 | end 1993 |of Unemploed | | | | |end 1993 | |-----------|--------------|--------------|-------------| |Albania | -21,7 | 25(?) | 301,3 | |-------------------------------------------------------| |Bulgaria | -28,7 | 16,4 | 626,1 | |-------------------------------------------------------| |Croatia | -22,1 | 16,9 | 243,1 | |-------------------------------------------------------| |Czech Rep. | - 8,8 | 3,5 | 185,2 | |-------------------------------------------------------| |Slovak Rep.| -13,5 | 14,4 | 368,1 | |-------------------------------------------------------| |Hungary | -12,1 | 12,1 | 632,1 | |-------------------------------------------------------| |Poland | -12,6 | 15,7 | 2889,6 | |-------------------------------------------------------| |Romania | - 4,5 | 10,1 | 1170,0 | |-------------------------------------------------------| |Slovenia | -13,5 | 14,9 | 137,1 | |-------------------------------------------------------| |Russia | - 4,2** | 1,1** | 835,5** | |-------------------------------------------------------| |Ukraine | - 5,6* | 0,4* | 83,9* | |-------------------------------------------------------| |Belarus | - 6,0* | 1,3* | 66,2* | |-------------------------------------------------------| |Baltic Sta.| - 4,3 | 3,2 | 123,4 | --------------------------------------------------------- * These are official data. Estimates on real unemployment are of course much higher due to hidden unemployment. ** These figures cannot be taken seriously. They were reported officially to the ECE-secretariat. However, the Ministry of Labour released information in mid-July 1994 that the total number of unemployed was approaching the 10 million level, which equals an unemployment rate of 13 percent! Russian TV, 20 July 1994. Source: ECE, Economic Survey of Europe in 1993-1994 and national statistics. So far no direct correlation between progress in large scale privatization and the increase in unemployment can be definitely assessed. In particular, if we compare the Czech Republic and Bulgaria we can see that privatization of state-owned enterprises in the former has been pushed ahead in an amazing way, whereas too many political and other barriers have blocked progress in privatization in the latter so far. However, the unemployment figures present the Czech Republic as the transformation society with by the far lowest percentage (if we do not take the unemployment percentages of the CIS-countries as real), and Bulgaria is ranking among the three top countries with regard to unemployment! But this observation does not mean that there is no correlation between privatization and increase in unemployment. In general, of course, the unquestioned excess employment in former big socialist industry will have to be reduced to improve productivity and competitiveness, but the core question seems to be how well prepared the respective countries are to face mass privatization, and what kind of structural deficiencies have to be overcome. Of course, there are substantial differences, as the relative weight of problematic heavy industry enterprises varies from country to country. It is obvious that privatization of these companies threatens employment much more than does privatization of industries that are closer to consumers' needs. Consumer industries have a better chance of restructuring their production patterns according to international competition and acquiring foreign capital than heavy industries, as the latter has overproduction in all these countries. This means that in countries with already high (open or hidden) unemployment the threat of a possible increase of unemployment as a result of further privatization is a highly sensitive political issue. This is in particularly true if we see that these are the countries where privatization is limping forward. Defence Industry in the Former CMEA - a Special Case? ----------------------------------------------------- In all countries, both West and East, the defence industry has been and still is a special case - with regard to the relationship between producer and buyer, the employment situation, and the share of private entrepreneurship in decision-making. However, where the West has competition, this was not the case in the East. Here, a distinct division of labour was established, apart from the all-dominating hegemonical Soviet military production complex which had to secure the absolute independence and self-sufficiency of the procurement of the Soviet army. On the other hand it was obvious that self-sufficiency was not possible for any of the socialist satellite countries. What emerged was that very different patterns of weapons industries developed according to traditional experiences (e.g. Czechoslovakia) and to the specific requirements derived from the socialist division of labour. The Employment Dimension ------------------------ First of all it is striking how much the employment dimensions in the respective former Warsaw Pact countries vary. Although a general caveat must be placed, because statistical data on weapons industry employment were and to some extent still are subject to political motives and intentions, most of the countries concerned now tend to give rather correct figures. Variations, however, must occur when general figures are quoted representing the employment which either directly or indirectly is related to the military industries. The following figures should be taken as direct employment in weapons industries. Thus, in 1990 in the then CSFR, 250,000 persons were said to be employed in the defence industry representing approximately 3.5 percent of overall employment. There was a clear concentration on the Slovak Republic where about 150,000 people worked in these industries making up 6.2 percent of overall employment and about 20 percent of the output of the machinery industry of that part of the Czechoslovak Federation!(1) This regional concentration had several reasons. One was that Slovakia was more distant from the Western enemy border and closer to the neighbouring Warsaw Pact countries Poland Soviet Union and Hungary. But it was also a means of developmental strategy to build up new industries - and new factories were erected for the construction of T-Tanks and other heavy Warsaw Pact arms - in the underdeveloped regions of Slovakia to improve the employment situation there. In good old socialist years the Slovaks did not at all complain about these industries, in particular because they provided also excellent export opportunities. But already in the late 1980s scepticism came up when some of the foreign buyers had problems with payment (Libya, Syria, Iraq), and prospects for further export development became rather doubtful. Due to the political decision in Prague to stop exports of weapons and because of these payment difficulties, arms production in Slovakia was severely hit and employment decreased considerably. This was mainly because conversion to civilian production turned out to be much more complicated in Slovakia than in the Czech lands, and also the Slovak product-mix is much worse suited for general export than that of the Czech Republic. The latter even seems to have good chances to sell its L-139 airplane to the US Forces(2), whereas, for example, work force in ZTS Dubnica, one of the biggest arms factories, declined from 14,000 in 1988 to 7,000 in 19933. But this occurred - not after privatization - but just because of diminished demand. For Poland in 1990, employment in the weapons industry reached about 260,000 persons4 which corresponded to 1.6 percent of overall employment. As in Czechoslovakia enterprises producing military equipment were not supervised by the Ministry of Defence but by the Ministry of Trade and Industry which means that no real protection against reduction of production existed. The output of the Polish defence industry fell by 77 percent between 1988 and end of 19925 as a result of budgetary constraints, heavy cuts in military expenditures and an extreme slump in exports. But it must be stressed that most of these firms also produced civilian goods. Bulgaria had 110,000 people employed in its arms industry in 19896 which totalled about 2.5 percent of overall employment. As in Poland, the Bulgarian Ministry of Industry was responsible for the regular production of the military enterprises whereas the Ministry of Defence supervised only repair activities. The serious economic problems that struck the Bulgarian economy in the early 1990s included controversial discussions on increases or rather decreases of arms exports. This cost Ludzehev - the first civilian minister of defence, who defended the exports - his post. This situation also caused reductions in production and thus unemployment threats which led to several demonstrations of concerned workers as early as 1992. The Hungarian defence industry reached the peak of its development in the mid-1980s when it employed between 20,000 and 30,000 people7, representing about 0.6 percent of overall employment. The value of military production at that time (20 billion forint) corresponded to less than 2 percent of industrial output. Eighty percent of the output of HungaryÕs defence industry was exported, 12 percent of sales went to countries outside the Warsaw Pact contributing successfully to the country's hard currency incomes. This explains why the end of the CMEA and Warsaw Pact hit Hungary's defence industry more than those of the partner countries. However, it had the advantage that most of these enterprises had a product-mix where the greater part of the production was civilian oriented. This could be supportive for the necessary conversion attempts of today. Anyhow the value of defence production had decreased dramatically: in 1993 it was only 6 billion Ft of which 95 percent were exported8. At this NATO conference Daniel Daianu stated that approximately 100,000 people are employed in the defence-related factories in Romania. Considering that former president Ceausescu had declared, at the end of the 1970s, that the country had reached self-sufficiency in the production of military hardware9, and since then that military experts have argued that 75 percent of Romania's armament requirements for its 200,000 man army were achieved, by domestic production10, this figure seems relatively small. But observers also pointed out that the Romanian army was rather poorly equipped11. Of course, the economic downfall of Romania has already impacted its defence industry and thus defence employment. For example, it was reported that one of the three defence industry "regies autonomes" (state-owned concerns into which these factories had been organized, which are not foreseen for privatization. Law 15/1990), GIARA, reduced employment from 21,000 in 1991 to 18,000 at the end of 1993(12)! As Keith Bush has stated in an article published in spring 199413 figures on the size of the Soviet military-industrial complex were treated as state secrets, giving good reasons for extremely diverging estimates. Already the number of factories belonging to the military industry, which officials would like to see at around 1,500 (plus some 200 research institutions), sometimes even reaches 10,000. Even more diverse exist documenting the number of people employed in this sector. In his article Bush quotes some officials who spoke about only 4.5 million people, but he also mentioned ITAR-TASS which reported some 15-20 million14. Finally he quoted newspapers15 with "authoritative sources" who spoke of "some 40 million people currently employed in the overall sphere of ensuring the country's defence capability and security". Yuri Andreev is probably close to reality when he speaks in his conference paper of some seven million people directly employed (and 16 million indirectly) in the defence-oriented industry of Russia which itself inherited about 70 per cent of the capacities of the former Soviet Union. Half of all firms in Moscow and three-quarters of those in St. Petersburg belong to the military-industrial complex! The complicated financial situation already caused substantial reductions in the production volume of these enterprises. News reports from Chelyabinsk, where more than 30 defence-oriented enterprises are located, say that employment has already been reduced by 50 percent through unpaid holidays. The firms did not have the money to pay the wages because the government did not pay for the production ordered from Moscow(16). These rather cursory attempts to quantify the employment factor of the defence industries in some of the former socialist countries have disclosed two aspects. Firstly, all quantitative statements on employment in the defence industries must be handled with extreme caution. During the time of the Cold War confrontation this sector belonged to that part of the economy which was kept secret in terms of production as well as of employment. Furthermore, many of the respective factories performed dual production (civilian and military). But when the agenda turns to defence industry employment, it is never clearly explained whether the respective employment figures relate to each enterprise, or only to its defence-related part. Substantial understating is therefore very easy, depending on the purpose and target of the statement. The second finding is that - regardless of the above-mentioned uncertainties concerning the data - the quantitative dimension of defence-related employment in industry varies significantly from country to country. This means that the importance for overall employment differs dramatically, as does the political dimension - i.e. the possible barrier to further restructuring or even privatization of these industries. Privatization versus National Sovereignty/Security -------------------------------------------------- The end of the Cold War confrontation and the dissolution of the Warsaw Pact did not do away with all security fears and considerations concerning possible conflict situations. This is obvious and understandable for the NIS as well as for the former satellite countries in Eastern Europe. In the future, Russia wants to remain a military superpower, which of course requires a strong domestic defence industry. On the other hand this distinct attitude must put the smaller East-central and South-East European countries, and naturally also the non-Russian NIS into great insecurity, particularly as Russian nationalistic overtones become more pronounced. There is no hard currency to purchase the necessary equipment in the West now. Therefore existing capacities must be used for maintaining at least some defence strength. Abrupt privatization can only endanger the preservation of these capacities. Thus the question arises what and how much of the existing defence industries must remain national (state) property in order to secure national sovereignty and security? It is not at all surprising that the defence industry was at first kept off the lists of enterprises to be privatized in most of the countries. In Bulgaria, for example, a three-year moratorium on privatization of enterprises producing or selling military equipment was imposed by the Parliament(17). The Warsaw Pact Division of Labour in Arms Production ----------------------------------------------------- In the Eastern Bloc the defence industries were organized according to the intra-bloc division of labour. In no other sector was product specialization and cooperation as developed as in the arms industries. However, this specialization entailed first of all an extreme orientation on the needs of the USSR and secondly on intensive intra-CMEA trade. The result was that production for all these countries exceeded their domestic needs by far, causing enormous marketing problems today, after the end of CMEA and Warsaw Pact. A country like Ukraine, which has a heavy local concentration of the former-Soviet military production, is now almost completely dependent on sales to its larger Russian neighbor in substantial portions of its industrial sector. This is also somewhat dangerous to Ukranian sovereignty. On the other hand Ukraine's military industry is also dependent on deliveries from Russia, which makes it difficult to quickly build up an independent domestic defence industry. For some of the Eastern countries (Czechoslovakia, Bulgaria and Poland) weapons also were a very profitable export item not only in intra-CMEA trade but also for hard currency trade - in particular in trade with Third World countries (Libya, Iran, Iraq, Syria, etc.). After the end of the Cold War, the subsequent dissolution of the Warsaw Pact, and the disintegration of the CMEA, the profitability of arms production had disappeared almost completely because all of a sudden intra-CMEA was converted into hard currency trade, and the first area to be to cut was arms purchases from the former allies. But also exports to the Third World became difficult due to international embargoes and payment problems of the customers. The West disapproved arms exports to some former good customer countries because of the ultimate destination (security, terrorism): Iraq, Syria, Libya. For example, in 1987 the USSR exported armament worth US-$ 23 billion, but in 1993 Russia could sell only arms for US-$ 2 billion, whereas capacities would allow an annual export volume of US-$ 30 billion 18! So, why should foreign or domestic private investors be interested in these industries where almost no market - at least in the immediate and medium-term future - exists? But even worse, the new competition for arms exports among the former allies began after the break-up of Warsaw Pact and CMEA, affecting prices very negatively. The Czech Republic and Poland competed for deliveries of T-72 tanks to Pakistan, and the Slovak Republic and Poland tried to sell armored vehicles there. Pakistan succeeded in reducing the purchase prices, finally buying only in the Slovak Republic. Peculiarities of the Eastern Defence Industries Concerning Privatization ----------------------------------------------- As I explained, the defence industry in the former socialist countries is a special case, and cannot be compared with other industries where privatization is already more or less underway. In particular with regard to privatization there are additional features which might create more question marks when speaking about its impact on the labour markets. First of all it must be considered that the main customers of these factories are the governments which all (except the Czech Republic) are suffering from large deficits in their budgets. Over-capacities have already been, and will be further, on reduced regardless of possible privatization. In Russia it is said that a reduction of more than 50 percent has been achieved, and similar reductions have taken place in the other former Warsaw Pact countries. But it is not clear to what extent these reductions in production have led also to lay-offs in the work force. National security considerations as well as political pressure on the governments have blocked such attempts. This means, however, that these defence enterprises are probably in a worse economic situation (uncertain, hazy future prospects, huge over-employment, enormous debts) than "normal" industrial enterprises, which makes it more difficult to think about privatization. Another important point is that practically all the smaller former Warsaw Pact countries proclaim the general aim to become incorporated into NATO structures which forces the weapons industries in these countries to restructure their technical equipment according to NATO requirements. However, for this purpose, investment must meet financial means. Normal (domestic) privatization certainly cannot provide this, and foreign investors will be very cautious and selective: So far only engagements in the Czech Republic and in Poland are known (SOFMA, Thompson). On the other hand it is particularly important that the arms industries have the best qualified workforce available. Layoffs in the course of reducing over-capacities (restructuring) and/or privatization trigger large "brain drains" which already can be observed in some countries today. This is happening in Russia, where an estimated 1.5 to 1.8 million highly skilled scholars and specialists will be lost by the end of the 1990s. Today's main motives for emigration are ethnic (minority) problems and poor financial and material conditions at work and at home19. If larger layoffs occur in the defence industries, the brain drain -particularly from the NIS - will accelerate, as these industries employ most of the highly-qualified researchers. Yuri Andreev quoted in his presentation at the Colloquium, that in the fundamental sciences half of all expenditures were connected with the military, and up to 70 percent in space research! Where will these specialists find new jobs, if not abroad in countries trying to develop their own defence capacities, like Pakistan, India, Iran, or Iraq? Already, in South Korea there are 155 Russian scientists employed including special designers for fighter airplanes(20). Given the fact that the best-qualified and skilled workers are in the arms industries, it should be easier, to draft a retraining and reallocating program for these people than for others. These enterprises could be more attractive to foreign investors because of the better trained labour force, but also for other kinds of non-defence production activities. It is, however, not certain whether this scenario fits the national security considerations of the respective governments described above. Two additional important points should not be forgotten. Firstly, workers/employees in the military sector have a rather strong lobby: the military. This group will certainly play the national security card in their own vested interest (Russia). Since a rather high number of deputies in these countries' parliaments are either officers or are related to the military-industrial complex, decisions on reductions of the defence industry have difficulty finding the necessary majorities. Secondly, we must consider the fact that production was very often concentrated in specific regions. Layoffs there can have over-proportional unemployment impacts on entire regions. Andreev told us that in Russia, for example, half of all firms in Moscow and some three quarters in St. Petersburg belong to the military-industrial complex. Russia has ten so-called "secret" towns totally devoted to nuclear defence production, and dozens of other smaller secret towns producing other types of armaments. Names like Chelyabinsk, Sverdlovsk, Krasnoyarsk or Tomsk are well known even in the West in this respect. But also such concentrated regions can be found in other countries, such as Middle Slovakia. These two special characteristics can become great political barriers against too rapid privatization or restructuring which allegedly will be connected with large-scale layoffs. In 37 regions of the Russian Federation more than 400,000 workers already demonstrated for "constructive measures" of the government in the beginning of June 1994! It is only normal that nationalist and/or conservative politicians and political parties must be extremely interested in supporting such actions, and in wielding the fear of unemployment for counteracting the realization of privatization and restructuring. Defence privatization may reach even more into basic political issues. In 1990, when Vaclav Havel took the quick decision that the then Czech and Slovak Federative Republic should immediately stop the production of armaments, this became one of the strong arguments for the separation of the Slovaks. They claimed that the negative employment effects hit mainly Slovakia whereas the Czechs harvest the international positive reputation related to the announced closure of the defence industry! Finally, privatized defence industry will need much more capital for modernization than other industries. Normal domestic voucher privatization, however, cannot provide the necessary fresh capital, whereas foreign investors could - if they are allowed, and are interested find appropriate conditions. But if this does not happen and only domestic attempts of privatization are applied, larger lay-offs will be unavoidable, because without the necessary capital most of the respective industries will certainly be unable to compete on the very demanding international markets. Of course, the lay-offs will differ in size due to the structure and the technological level of production, and will also have differing political impacts in the various countries. It will be certainly much more difficult for Russian factories than for Czech producers. There is an example of a small Czech producer (Ceska Zbrojovka, privatized in 1992) who managed to survive and even now to compete without the infusion of foreign capital! Conclusions ----------- In this short discussion paper I attempted to underline that the defence industry in the former socialist countries is a very special case indeed, regarding the question of changes on the labour market. Although the dimension of production and thus of employment in these industries varies significantly among the respective countries, some features seem to be common to all of them. This is certainly the regional concentration of the defence industries affecting whole regions in monocultural manners, but also the political dimension and the very probable impacts of closures of defence-related factories on the political environment. The general security uncertainty which all of the smaller former satellite countries feel - vis-ˆ-vis Russia and also vis-a-vis possible turmoils in some other NIS-states - does not leave room for much contemplation on further and larger reductions of national defence capacities. On the other hand, domestic politics in Russia (i.e. the unstable political situation) allow nationalistic and conservative pressure groups in the military and in politics to bloc any attempt to "weaken" the international military position of the country. Therefore, we should not expect privatization to progress too rapidly in the Eastern defence industries. But what in the meantime? Other solutions must be found, because restructuring and modernization of the defence industries is unavoidable. Countries, such as the Czech Republic, the Slovak Republic and Hungary, have found their intermediate solutions: state holdings or consortiums with strong state influence of those enterprises which could not be successfully privatized so far. Footnotes: ---------- 1. Douglas L. Clarke: Eastern Europe's Troubled Arms Industries: Part I. In: RFE/RL Research Report, Vol. 3, No. 14, 8 April 1994. 2. Aero chce dodavat L-139 ozbrojenym sil‡m USA. In: Mlada Fronta Dnes, 4 July 1994. 3. Defense News, 15-21 Nov. 1993, p. 25; quoted after D.L.Clarke, op.cit. 4. D.L.Clarke, op. cit. 5. Polska Zbrojna, 8 Dec. 1992; quoted after D.L.Clarke, op. cit. 6. Antoaneta Dimitrova: The Plight of the Bulgarian Arms Industry. In: RFE/RL Research Report, Vol.2, No. 7, 12 Febr. 1993. 7. The smaller figure was given by Mikl—s Kar‡csondi: The Defenceless Defence Industry. In: Hungarian Economic Review, No. 17, Dec. 1993. The higher figure is from Douglas L. Clarke: Eastern Europe's Troubled Arms Industries: Part II. In: REFE/RL Research Report, Vol.3, No. 21, 27 May 1994. 8. Magyar Hirlap, 5 Nov. 1993. 9. Ilie Ceausescu: Romania, Vol. 20, Bucharest 1981, p. 510. 10. Jonathan Eyal: Romania - Between Appearances and Realities. In: J. Eyal (Ed.): The Warsaw Pact and the Balkans, RUSI Defence Studies, Houdmills: Macmillan, 1981, p. 80. 11. J. Eyal, op. cit., p. 81, and D. L: Clarke, op. cit. (II), p. 36. 12. Fragmente dintr-un raport cutremurator. In: Romania Mare, No. 203, 27 May 1994. Conversia industriei de aparare. In: Express, No. 17, 3-9 May 1994. 13. Keith Bush: Aspects of Military Conversion in Russia. In: RFE/RL Research Report, Vol. 3, No. 14, 8 April 1994. 14. ITAR-TASS and Interfax, 11 and 12 March 1994. 15. Komsomolskaya prawda and Izvestiya, 16 Sept. 1993, and Krasnaya zvezda, 11 Sept. 1993. 16. Russian TV, 16 June 1994. 17. BTA (in English), 23 June 1993, published in FBIS-EEU-93-141, 16 June 1993, p.4. Quoted from D.L.Clarke, op. cit. (II), p. 31. 18. Vice Premier Oleg Soskovets in a government meeting. DDP/ADN, 12 June 1994. 19. Stanislav Simanovsky: Brain Drain from the Former Soviet Union and the Position of the International Community. In: Osteuropa-Wirtschaft, 1/1994, pp. 17 ff. 20. S. Simanovsky, op.cit., p. 18. --------------------------------------------------------- Copyright 1994 NATO All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means: electronic, electrostatic, magnetic tape, mechanical, photocopying, recording or otherwise, without permission in writing from the copyright holders. Authorization may be requested for redistribution of the text on a non commercial base by research and educational services. Requests should be addressed to the Economics Directorate, NATO, via e-mail 'scheurweghs@hq.nato.int'. First edition 1994 ISBN 92-845-0079-6 This is the latest in a series bringing together papers presented at the NATO colloquia organised by the NATO Economics Directorate and Office of Information and Press on economic issues in the former USSR and Central and East European countries. For further information please write to the Director, Office of Information and Press, 1110 Brussels, Belgium. The articles contained in this volume represent the views of the authors and do not necessarily reflect the official opinion or policy of member governments or NATO.