TYUMEN, U.S.S.R. -- Sergei Pomogaibin gazed out across the flooded marshes of western Siberia -- a stark and desolate landscape that produces more oil than Kuwait and Saudi Arabia combined -- and shrugged his shoulders in a gesture of despair.

"Oil has been our blessing, but it is also our curse," the master driller shouted as he supervised the sinking of a new well 8,000 feet deep in the sandy soil. "We wasted the money we earned from oil on the Third World, on military projects, on importing food from the West. If it hadn't been for oil, we would have been forced to introduce our perestroika reforms much earlier."

The West's fascination with the personality of Mikhail Gorbachev has tended to obscure the fact that many of his bold new policies are a response to economic setbacks. The Soviet leader has been hailed abroad as the man whose "new thinking" in foreign policy liberated Eastern Europe from Communist domination, wound down the Cold War and launched the world's second superpower on the path to economic reform. But how much choice did he have?

A trip to the oil-rich Tyumen region of western Siberia suggests that the answer may be very little. The era of cheap oil that could be resold on the international market for high prices -- subsidizing an inefficient domestic economy and Soviet adventures in the Third World -- seems to have vanished for good. Its disappearance has been accompanied by an agonizing reappraisal of the strength of the nation's economy and of the Soviet Union's ability to bear its imperial burden.

As Gorbachev prepares for his Washington summit with President Bush, some of his advisers are spreading the word that the Soviet economy was only saved from collapse during the mid-1970s by a massive infusion of petrodollars. World oil prices multiplied 15-fold during the '70s, just when the huge new oil fields of western Siberia were coming on stream.

"Our command-and-administer system had stopped working effectively by the early '70s, but the failure was masked for an entire decade by huge incomes from oil," said Otto Latsis, editor of the Communist Party's theoretical journal, Kommunist.

The oil riches of western Siberia allowed the Kremlin to project Soviet power into Asia, Africa and Latin America. Soviet petrodollars helped pay for the 10-year war in Afghanistan, the stationing of Cuban troops in Angola and Ethiopia, and Vietnam's invasion of Cambodia. Plentiful supplies of cheap energy gave an extra lease on life to corrupt and inefficient Communist regimes in Eastern Europe.

According to Latsis, the Kremlin earned more than $200 billion by exporting oil and gas to Western countries over the past 15 years. Huge as this figure may seem, it represents only a small proportion of the total volume of Siberian oil. Roughly 75 percent of Soviet oil production is reserved for domestic consumption; A further 10 to 15 percent has been earmarked for the Soviet Union's Communist allies.

World oil prices fell sharply soon after Gorbachev came to power in March 1985. At the same time, extraction costs began to spiral. Drillers like Pomogaibin were no longer hitting huge gushers every time they sank a well. Kremlin policy-makers were suddenly faced with a much more hostile economic environment. They discovered that the energy crisis -- dismissed by Soviet ideologists in the '70s as a uniquely capitalist phenomenon -- could also affect socialist countries.

"The oil money was a kind of drug," said Stanislav Shatalin, a prominent economist and a member of Gorbachev's Presidential Council. "Like any drug, it created the illusion of strength while destroying the body even more and making the disease even more fatal."

The Fall of a Party Boss

For many residents of western Siberia, the headlong dash to exploit the region's huge natural resources was symbolized by the career and personality of Gennadi Pavlovich Bogomyakov. As Tyumen's longtime Communist Party boss, Bogomyakov wielded immense power over a region three times the size of France. Then, in a sensational political upset last December, he was forced to resign along with his entire party committee.

Fellow apparatchiks still speak about Bogomyakov with awe as a "real leader" devoted to his job. Publishing what amounted to his political obituary last year, the Communist Party newspaper Pravda described Bogomyakov as both "a child and bulwark" of the Stalinist system of central planning.

It was because of men like Bogomyakov that the Soviet Union overtook Saudi Arabia and the United States as the world's largest producer of oil in 1973. During his 20-year career in Tyumen, Bogomyakov devoted himself body and soul to fulfilling and over-fulfilling the "plan." As long as he met the oil production targets laid down by central planners in Moscow, nothing else seemed to matter.

The results are clearly visible as you fly over the western Siberian oil fields today. Huge stretches of taiga have been cleared to make way for an ever-expanding network of oil rigs, pipelines and shantytowns for oil workers. Seen from above, the region looks like a vast industrial wasteland, gradually spreading out into the untamed forest from the banks of the Ob River.

Down below, you notice 200-yard-wide swaths of dead pine and birch trees on either side of the roads that crisscross the taiga. To raise the roads above the marshy flood lands, the oilmen took soil from the surrounding countryside, creating swamps and destroying the delicate ecological balance.

"Everything was done too fast. Of course, this was all very inefficient. We should have looked after our resources much more carefully," said Pomogaibin, driving out to the site of a new oil well south of the town of Nefteyugansk. "Everybody, from the minister to the driller, knew that something was wrong. But nobody dared complain."

Over the past 15 years, the production of Tyumen oil shot up eightfold to more than 8 million barrels a day. The Kremlin was delighted, awarding Bogomyakov the Lenin Prize for his services to the Soviet economy. But little was done to ensure adequate living and working conditions for the oilmen who flooded to western Siberia from the rest of the Soviet Union.

Environmentalists were the first to raise their voices against Bogomyakov and the economic system he represented. Encouraged by similar protests in the Soviet Baltic republics, they started picketing Communist Party offices in Tyumen in early 1989. The protests grew in size until eventually the local party committee bowed to the inevitable and resigned en masse.

"Compared to many local Communist Party bosses, Bogomyakov seemed an honest man. There is no evidence that he stole money or took bribes. But he was a symbol of the extensive approach to economic development, and we realized we couldn't go on living that way," said Viktor Yegorov, chairman of the Tyumen Popular Front, which campaigned for Bogomyakov's dismissal.

The Vanished Billions

As the head of a leading Soviet economics institute and an adviser to Gorbachev, Stanislav Shatalin has access to confidential government information. But even he acknowledges that it is practically impossible to account for the billions of petrodollars earned by the Soviet Union during the oil boom.

"We have built a madhouse in our economy, and we live by the laws of this madhouse," he told the progressive weekly magazine Ogonyok. "Not a single spy in the world -- from Scotland Yard, the CIA or our own most respected KGB -- could reveal what happened to all the hard currency we earned from west Siberian oil. We wasted these huge earnings irresponsibly. They have vanished into thin air."

Sales to the West of Siberian oil and natural gas accounted for roughly 60 percent of Soviet hard-currency earnings over the past 15 years. The Soviet oil boom, fueled by rapidly rising oil prices after the 1973 Arab-Israeli war, coincided with the start of a much more activist Soviet policy toward the Third World.

Recently released Soviet government statistics show that the Soviet Union is owed the ruble equivalent of $136 billion by its socialist allies and developing countries in the Third World. In an attempt to strengthen its positions around the globe, the Soviet Union sent giant steel mills to India, modern fighter planes to Syria, tanks and helicopters to Iraq, technicians to Ethiopia and Angola. Most of the aid will never be repaid.

The huge loans to the Third World were justified in the name of socialist internationalism, at a time when imperialism seemed to be in full retreat. In the 1970s, Soviet ideologists were convinced that the tide of history was moving in their direction. The United States was still suffering from the aftershocks of Vietnam. Western Europe was reeling from the impact of the energy crisis.

In fact, the triumphant tones struck by Kremlin propagandists concealed enormous failures. A sizable proportion of the Soviet Union's oil wealth was squandered on grain imports from the West, which quadrupled in volume between 1970 and 1983. The money earned from oil performed a function similar to that of the hard-currency debts amassed by East European countries in the 1970s. Instead of reforming their inefficient economies, the region's aging rulers relied on massive injections of outside funds.

It was not until 1985 -- the year that Gorbachev came to power -- that the impact of the oil crisis began to be felt within the Soviet Union. This was the year the world oil price collapsed from $30 to $15 a barrel. It also was the first year in more than two decades that the production of Siberian oil actually declined.

The new Soviet leader responded to the shortfall by flying to Tyumen and urging the oil workers to redouble their efforts. New wells were sunk, and production picked up. Over the past two years, however, it has fallen again -- and this time there seems little likelihood that the decline can be reversed in the near future.

"After the big oil fields that were opened in the '70s are exhausted, our energy situation will be very similar to America's," said Latsis, the economist. "We still have a lot of oil, but we need modern technology to extract it. Unless we dramatically increase investment in the oil industry over the next five years, production is bound to go down."

Until now, the Soviets have mainly relied on water-injection techniques, forcing the oil to the surface by building up underground pressure. This is an economical method of extracting light oil from huge fields, but it is not very effective for lifting heavy oil out of new deposits. It also tends to leave oil fields waterlogged, shortening their natural life spans.

One Way Out

The Kremlin is in an economic bind. Declining oil revenues make it more difficult to purchase expensive equipment in the West. Without Western technology, however, oil production is likely to decline even further. Latsis predicted that production could fall as much as 10 percent by 1994, reducing Soviet oil exports to the West virtually to zero.

"We are discussing what to buy abroad: bread or equipment. In four or five years, we may not be able to buy anything at all," he warned in a recent article in the daily Rabochaya Tribuna.

In the short term, there is only one way out of the impasse. If the Soviet Union no longer produces enough oil to sell to the West, it must end the system of preferential trading with its former East European satellites. Countries such as Poland, Hungary and East Germany have been notified that they will be charged for Siberian oil in dollars at world prices starting in 1992 at the latest.

For decades, Moscow sold oil to its allies at subsidized prices through complicated barter arrangements designed to reward political loyalty. The Communist leaders of Eastern Europe knew that, if they angered the Kremlin, they risked losing their access to cheap energy. Even the veiled threat of cutting off supplies was usually enough to bring them back into line.

The size of Soviet trade subsidies to Eastern Europe was a taboo subject here until very recently, but the veil of secrecy is gradually being lifted. One leading Soviet researcher estimates that the Soviet Union lost $4 billion in 1988 alone through subsidized sales of oil to its East European trading partners. According to Vladimir Voloshin, a researcher with the Moscow-based Institute of World Socialist Economics, the Soviet Union was selling oil to Eastern Europe at 40 percent below world market prices.

"We wasted our energy resources so that the East Europeans could build a Stalinist version of socialism," Voloshin said. They developed a parasitical attitude toward the Soviet Union. Who needs that kind of socialism? It became simply impossible to maintain these huge subsidies."

How the Soviet system would have developed without Siberian oil is a subject of considerable controversy here. Many analysts, including some of Gorbachev's advisers, argue that perestroika would have been introduced much earlier, but others believe that the Soviet Union might have retreated further into xenophobia.

"You have to credit Gorbachev with some of the changes," said Vitaly Sevrin, the mayor of Nefteyugansk, in the heart of the west Siberian oil fields. "Back in the '70s, our leaders justified poor living conditions as the price we had to pay for a strong defense. Such explanations might have lasted for another 10 years. If another leader rather than Gorbachev had come to power in 1985, we might have gone back to barracks-like socialism."

A temporary return to totalitarian rule was theoretically possible in 1985 -- and still cannot be ruled out if Gorbachev's economic reforms fail to produce results. In the short term, dictatorship could sweep some of the Soviet Union's long-standing problems back under the carpet, but there is a wide consensus here that it would be catastrophic over the longer term.

"If someone like {former Soviet leader Leonid} Brezhnev had remained in power in this country, the result would have been disaster. We would have become a second Romania. Whoever tried to rule in this way would have ended up like {Nicolae} Ceausescu," said Latsis, referring to the summary execution of the former Romanian dictator after a popular uprising last December. NEXT: Laying down the burden

MOSCOW -- A 1986 Rand Corp. study suggested that the annual cost of maintaining the "Soviet empire" in Eastern Europe and the Third World rose steadily from $6.4 billion in 1971 to $43.2 billion in 1981. The cost then declined to $29 billion in 1983, according to Rand's calculations, as the Kremlin began charging its Communist trading partners more realistic prices for oil.

Vladimir Voloshin of the Moscow-based Institute of World Socialist Economics, who made a detailed study of Soviet trade with Hungary, estimated that the Soviet Union lost about $4 billion in 1988 alone through subsidized oil exports to its allies.

Other elements in the Kremlin's "imperial burden" during the 1970s and '80s included direct economic assistance to Third World countries, outstanding trading credits and military aid. Soviet Foreign Minister Eduard Shevardnadze recently revealed that the 10-year war in Afghanistan cost the Soviet Union a total of 60 billion rubles ($100 billion at the official rate of exchange).

The government newspaper Izvestia caused a sensation here in March when it published the first detailed breakdown of debts owed to the Soviet Union. Leading debtor nations included Cuba ($24.64 billion), Vietnam ($15.2 billion), Mongolia ($15.3 billion), India ($14.2 billion), Syria ($10.7 billion), Poland ($7.9 billion), Iraq ($5.92 billion), Afghanistan ($4.9 billion) and Algeria ($4 billion). -- Michael Dobbs