226 



to international export marketplace. It is possible, of course, that 

 such developments may come to pass, but I think it's very unlikely 

 in the near future. 



In the short run, it is difficult to see how the current evolving 

 Russian system can effectively match needs in production. Too 

 many constraints currently disrupt production to do so, among 

 them the weather, input and transportation shortages, lack of for- 

 eign currency, limits on Government subsidies, the absence or near 

 absence of markets, barriers on inter-CIS cooperation, environ- 

 mental constraints, and on and on and on. 



I conclude that Russia will continue to rely on imports for a sig- 

 nificant portion of its total grain supply for the foreseeable future. 

 It will do so because of limits on its own production and supply, 

 but also because imports allow a means to manage food supplies 

 in the face of social discontent. These imports need not come at a 

 cost to Russian producers in the form of disincentives to produc- 

 tion, such as has been argued here today. There should be ample 

 domestic markets for their future production. On the other hand, 

 such imports, if reliable, can play a significant role in maintaining 

 basic social welfare at a time of tremendous economic, political tur- 

 moil, and change. 



Thank you very much. 



[The prepared statement of Mr. McCoy appears at the conclusion 

 of the hearing.] 



Mr. Penny. Thank you all for your testimony. 



Carol, in your written testimony you mentioned barter arrange- 

 ments. Other countries have begun the process of negotiating bar- 

 ter agreements with Russia and other Republics. What are the 

 prospects for the United States in that regard? 



Ms. Brookins. I think there already have been with U.S. export- 

 ers barter or countertrade opportunities. I think we do have poten- 

 tial in that area, Mr. Chairman, particularly for commodities that 

 are not generally tradable, like enriched uranium, and I think 

 there is an effort going on right now to study the possibility where 

 we were planning on purchasing a certain quantity of enriched ura- 

 nium. 



The problem, from what I can tell, lies within our own adminis- 

 trative procedures here in terms of where the money would move — 

 in other words, if we're going to buy enriched uranium from the 

 Russians rather than possibly transferring those dollars over there, 

 what it would have to probably be would be an inter-Treasury 

 transfer from one account, the account of Defense Department or 

 Energy Department or whoever it is, into the account of the Com- 

 modity Credit Corporation, I would assume, if the5^re actually com- 

 modities being sold to Russia. 



Barter has an advantage also because if we did barter trans- 

 actions, it would not require cargo preference, sir. 



Mr. Penny. How about GSM-103 for purchases of ag equipment 

 and processing equipment? 



Ms. Brookins. GSM-103 could be used in the original 1985 leg- 

 islation, which set forth the GSM-103 program. There were all 

 types of authorities for equipment and other types of farm products 

 or actually farm infi-astructure that could be permitted under the 

 program, but it would be basically done — or I think it was antici- 



