THE Soviet Union is the second largest producer of fuels and energy in the world today (the largest is the United States) and the largest producer of oil. As a great industrial power it consumes most of the energy it produces.1 The surplus is exported, some for hard currency useful in purchasing food, capital goods, and intermediate products, and the remainder for much more complicated returns in exchanges with client states, notably Eastern Europe and Cuba.
Energy, along with other abundant natural resources, has historically been an important component of the material foundation of Soviet economic, political, and military power. The Soviet economic system, stripped of its baroque superstructure, is a growth machine designed to combine cheap natural resources with cheap labor to produce high national-income growth rates. Energy has been so abundant, even relative to abundant Soviet natural resource endowments, that Soviet planners have been able to meet rapidly expanding domestic needs and-- in recent years--generate considerable exports of oil and gas. The portion of these exports going to the developed West has provided useful hard currency; in recent years slightly over 70 percent of all Soviet hard- currency earnings from exports of nonmilitary goods to the developed West have come from energy exports.2 Exports to Eastern Europe and Cuba at low prices literally fueled the industrialization drives in those systems and left all the recipients dependent on the Soviet economy for relatively inexpensive fuels.____________________