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 APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200110021-0

'''FIGURE 3. GNP, by sector of origin, 1971 (U/OU)''' (chart)

shipbuilding, and heavy engineering—provided the main sources of economic growth until the early 1960's. East Germany's traditional export industries, producing consumer goods and light machinery, lagged for lack of supplies, markets, and modernization.

The GDR economy has been undergoing partial modernization since the early 1960's, as a result of the availability of large amounts of Soviet crude oil, other changes in supply and demand in the Soviet-East European market, and increased purchases of Western machinery on credit. In the late 1960's, the Ulbricht regime tried to accelerate this transformation by pushing output and investment in industries producing goods and services to meed consumer demand, but this lopsided, overambitious program bogged down in 1970 in the wake of two hard winters and poor harvests. In the fall of 1970 the Politburo overruled Ulbricht and reversed priorities in order to case widespread shortages, especially of fuels, power, and machinery components, and to reduce mounting trade deficits. Investment growth was curtailed and investment expenditures were diverted to the coal and power industries. These decisions formed the basis of the Honecker regime's policies in 1971-72.

Indications of another policy shift appeared at the end of 1971 when the regime acknowledged the importance of increasing the domestic supply of industrial consumer goods. Implementation of the policy change began in 1972 and has been reflected in the economic plan for 1973. Attempts to appease the population with more goods has parallels elsewhere in Eastern Europe; everywhere expectations have risen faster than supply. The East Germans are also determined to offset the general disappointment of the populace over continued, reinforced isolation from West Germany. This emphasis on increasing consumption has its cost—a large foreign trade deficit with the West in 1972 and another large deficit expected in 1973.

B. Sectors of the economy

1. Agriculture, fisheries, and forestry (U/OU)

a. Climate and soils

The East German terrain is a nearly flat to rolling plain, bordered in the southwest and south by a narrow belt of hills. The plain is extensively cultivated (Figure 5), although the soils, except for one small area, are low in fertility, requiring large amounts of fertilizer and good management. Forests are scattered over most of the area, but timber production is concentrated in the southern highlands.

The climate is generally favorable for agricultural production. It is subject to both oceanic and continental influences, but the continental influences from the east usually predominate. Temperatures are less severe than those at comparable latitudes in North America. Summer temperatures generally rise to between 70° (F.) and 75° during the day, while minimum temperatures at night range between 50° and 55°. Greater temperature variations occur in the winter. Precipitation is not abundant, averaging between 20 and 30 inches annually (20 and 24 inches over most of the agricultural areas), but it is distributed fairly evenly throughout the year. The frequent precipitation and a low rate of evapotranspiration, resulting from the relatively cool temperatures and the small number of sunny days, insure sufficient moisture for the cultivation of most crops.

About 58% of the land in East Germany is suitable for agriculture (43% arable and 15% in meadows and pastures), 27% in forests, and 15% is agriculturally nonproductive (Figure 6). Grain is sown on 50.2% of the cropland, well below the prewar figure. Principal grain crops are rye and wheat, but barley and oats are also grown. Potatoes, also a major crop and used both as a staple for human consumption and as feed, are planted on 14.2% of the cropland. The use of land for

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200110021-0