Not long ago, some American businessmen stationed here met with the U.S. ambassador to discuss to troublesome topic: Whether it makes sense for them to stay.
According to one well-informed source. Ambassador Malcolm Toon told the businessmen he thought it did - "but mostly from a political point of view." It helps the American image to have razzle-dazzle firms like IBM and Bank of America here, this sources asserted. But, he went on, "From a business point of view, about dollars and cents, then you really have to question it."
No one here expects a mass exodus of the companies that opened their representation offices so hopefully in the early 1970s when the Nixon-Brezhnev detente seemed like it would last at least through the mid-decade. But Soviet foreign trade with America has not developed as many had hoped, in part because of the slightly-slower-than-expected growth of the Soviet economy, in part because of unanticipated Western inflation that pushed prices up, and in part because of the continuing clash of wills and goals between the U.S. Congress and the Kremlin over trade and individual rights.
More than 20 U.S. companies doing business here on a permanent basis are listed in the recent directory of the embassy's commercial office, and many others send in trade representatives regularly. In addition, the large Soviet trading organizations are making deals in Europe and the United States for American goods. But it has not matched anyone's expectations.
Indeed, according to figures just released by the commercial office, overall Soviet-American trade for the first nine months of the year has declined from just over $2 billion in 1976 to $1.4 billion. (This difference undoubtedly will narrow for the entire year when massive Soviet grain purchases are included in later data."
Many observers say that the Soviets have trimmed their purchase orders because of a pinch on hard currency caused by the 17-million-ton shortfall in the grain harvest last year. But overall statistics complied in the West from Soviet figures indicate a deeper pattern: The yearly average rate of growth of this vast and complex economy is diminishing this decade. From an average yearly growth of about 8.4 per cent during the second half of the 1960s, the growth rate has fallen to about 6 per cent and is expected to continue at that level through 1980.
At the same time, this trend is offset somewhat by the continued sale of Soviet oil in the West, where it earns hard currency at rates comparable to the ones charged by members of the Organization of Petroluem Exportinmg Countries. Thus, according to figures complied by Economist magazine last year. Soviet earnings from oil exports have shot up from $1.3 billion in 1973 to $4 billion in 1976 from about half again as much oil.
But these hard-currency increases are offset by the worldwide inflation that has pushed up dramatically prices for Western goods the Soviets want in order to modernize and improve their economy.
Thus, for example, one American company that has done hundreds of millions of dollars of business with the Soviets during the decade, presently has a number of spare parts and maintenance contracts in force and expects to renew them when they expire. But the firm has not expanded its markets with any contracts for new machinery or equipment, despite the assertion by several sources that the Soviets "clearly want what the company makes,"
The Soviets fully recognize their deep-rooted economic problems. Among these are chronic inefficiency on the assembly line and in factories, a national agriculture that soaks up about a quarter of the adult work force (compared with about 6 per cent in the United States), and a labor pool that is not adequate to the needs of a rapidly expanding economy.
At the same time, the nation has immense resources, the full value and extent of which in some cases only now are becoming known. Recent studies suggest that the Soviet Union and its Warsaw Pact allies have among them about 60 per cent of proven world coal reserves, more than 10 per of oil, perhaps 30 per cent of natural gas, 20 per cent of uranium oxide and enormous untapped hydroelectric potential.
Working against those potentials are the huge costs of exploiting the resources. The distances between the oil-producing areas of Siberia and the industries that use them to the west in European Russia are enormous, pushing up the cost of production, for example.
Under the 1978 general economica plan unveiled in mid-December by the Kremlin, heavy-industry production will grow by just 4.5 per cent in 1978, one of the smallest proposed increases since World War II. Consumer goods, always second fiddle in postwar Soviet economic planning, will increase by 3.7 per cent. Whether these reduced rates of growth will mean that the American businessmen here can expect to do more business this year with the Soviets seems problematical. But chances are that few will leave.
As one businessman said recently. "Why should I pull out? I've got my foot in the door now. Maybe it will open . . . oh . .. say, day after tomorrow . . ."