60 THE END OF THE COLD WAR
The USSR’s usual way of easing its difficulties was to sell more oil
and gas abroad. The growing problem was that the Soviet petroleum
industry had outdated technology and was failing to achieve its targets.
Although the State Planning Commission had a project to increase
production to 650 million tons by 1984, the oil ministers reported that
only a target of 625 million tons was realistic – and this would mean
that hard-currency profits would almost disappear.^32
The USSR would obviously have to rely on selling precious metals
abroad; but it was no longer easy to find sufficient sources. The Ameri-
can trade embargo introduced by President Carter after the invasion
of Afghanistan caused additional damage in 1980. Vodka distilleries
were ordered to cut output in order to save cereal stocks for other pur-
poses. Chemical industries also suffered from the cutting of US–Soviet
commerce.^33 The Party Secretariat received further information of an
unfavourable nature. None was more depressing than the fact that
over two-thirds of collective farms were running at a loss. The State
Planning Commission no longer had the funds to increase the subsidy
to them. Even so, the farms themselves knew that the banks would
never call in their loans. There was economic deadlock.^34 Things were
made worse by the fall in the world prices for gold and diamonds.
Reagan’s squeeze on Western financial credits began to have an impact
and the Politburo kept an eye on a situation that grew steadily less
promising. The USSR was in a deteriorating condition that had dire
implications for its capacity as a superpower as well as its ability to
stave off popular discontent.^35
Gorbachëv urged radical reform on Andropov. Each was aware
that the annual budget disguised reality on a systematic basis. Retail
prices were held fairly steady only by regular secret transfers from the
state savings bank, where Soviet citizens kept vast sums of money
mainly because there was a deficit of consumer goods to buy. Though
Andropov withheld permission for Gorbachëv and Ryzhkov to gain
unrestricted access to the budget, they could anyway see that the situ-
ation called out for fresh measures. They also recognized that it would
never be enough to raise prices on food and clothing. The Politburo
discussed the matter on a number of occasions and its members, being
aware of the grumbles in society, were anxious about the predictable
unpopularity of retail price reform. At the same time they wanted
to accumulate the resources for industrial modernization. Andropov
rejected Gorbachëv’s advice. Instead he opted for ‘a struggle for dis-
cipline’ under the supervision of the party and the KGB.^36 Workers