A. The Kremlin wants to take a posture of high
 military readiness for the sake of its image
 in the Communist and non-aligned world, in
 the face of the Vietnam conflict, the Sino-Soviet
 dispute, Middle East tension, and
 continuing rivalry with the United States.
 1. The cautious collective leadership in the
 Politburo may also feel that it cannot
 turn down military requests as Khrushchev
 sometimes did.
 B. As for the economic climate, there have been
 two successive good-to-excellent harvests;
 industrial production has been growing at
 8 percent a year; and the consumer has been
 getting a significantly bigger piece of the
 pie for two years as a 50th anniversary present.
 C. For the moment, the Kremlin has decided it
 can provide both guns and butter.
 D. As we analyze the latest economic decisions,
 industry and particularly agriculture are
 going to have to pay for this.
 1. Planned investments and 1970 production
 goals have been cut back in major sectors
 of industry. Chemicals, for instance, are
 taking a 30 percent cut in planned investments
 through 1970, and as a result their output
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