Eastern Europe and oil: the Soviet dilemma
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Eastern Europe depends on Soviet oil because it is less expensive, it can be obtained without draining hard-currency reserves, and it is reliably supplied. Since 1970, however, the Soviet Union has urged its CMEA/Warsaw Pact allies to seek additional suppliers. The Central Intelligence Agency predicts that Soviet oil production will level off in the near future and then decline. The CIA suggests that this will cause the Soviets to cut oil exports to the West and hold constant their oil exports to Eastern Europe. This paper postulates that as long as industrial growth in Eastern Europe continues, demand for oil will increase. The non-Soviet CMEA nations cannot now afford to buy large amounts of oil from OPEC. For this reason, the Soviet Union will probably continue to increase oil sales to CMEA nations, rather than risk their economic deterioration, which might lead to political unrest and instability.
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