The Soviet Union's economy was overindustrialized and highly militarized, with a disproportionate share of the military industry located in the Russian Republic. It is therefore not surprising that industrial production, including military production, has dropped sharply in the economic environment of the last few years. Many enterprises are shrinking, but few are failing completely or going into bankruptcy, and there is little disaggregation of large enterprises into smaller legal entities. Thus, with the exception of privatization, the general profile of Russian industry has not changed greatly.

The creation of new entrants (new business entities), to the extent that it is occurring, is one of the more promising aspects of the economic transition. However, the managers of many of the large enterprises resist divesting themselves of segments of their business. They fear that subsequent capitalization will result in a major reduction of value of the parent because the parent's contribution to the capitalized spin-off will not command much equity. Directors recognize the need for decentralization of management and financial responsibility, but many of them prefer to create divisions rather than subsidiaries. They also try to bring outside investment into the entire large enterprise rather than into a subsidiary. It is difficult for small groups of employees to simply leave and form a new (start-up) corporation because of the lack of commercial and social services infrastructure, especially capital markets, and the lack of rights to use state facilities.

With the significant changes in the Asian-Pacific security environment in the post-Cold War era, cooperation in the region becomes both attainable and necessary. Because the ocean plays such a significant role in the Asian-Pacific region, maritime security is becoming a vital element in regional cooperative security.

This paper argues that maritime security-including transparency measures, confidence building measures (CBMs), and naval arms control-is critical for cooperative securityin the region. Maritime security measures should be undertaken in both. undisputed and disputed
sea areas. When adopted in disputed sea areas, these measures help guarantee regional peace.

China would support these measures. Preoccupied with reform and economic buildup, China seeks to maintain peace and stability in the region, and would participate in AsianPacific security arrangements. China does not intend to become a blue-water power. Rather it plans to enter and support a maritime security process in cooperation with other countries in the region.

The world is facing truly breathtaking changes, in particular from the socialist countries. The traditional rigidity of communist regimes and the preeminence of the communist parties in these countries are breaking down. Strong voices of nationalism within the Soviet Union are challenging the very integrity of the union itself. Thus, a bipolar world--where the North Atlantic Treaty Organization (NATO), led by the United States, and the Warsaw Treaty Organization (WTO), led by the Soviet Union, represent both .an ideological schism and a superpower confrontation--is no longer the basis or even a dominant force for threatened conflict.

The recognition is growing that such factors as economic strength, abundance of basic resources, productivity, and the health and morale of the population are in many respects stronger bases of national security than are military forces. This recognition conflicts sharply with the concept of national security as defined in the Dictionary of Military Terms (issued by the U.S. Joint Chiefs of Staff) as "a military or defense advantage over any foreign nation or group of nations."

In view of all these developments, the realization that military power and national security are not synonymous is becoming more prevalent in the United States.  More attention is focusing on internal threats from deficiencies such as those in education, from erosion of the country's infrastructure, drugs, and problems of the environment. This attention, in turn, has deflected public concern and attention from military issues. The decreased concern not only has diminished the priority given to military preparedness but also, unfortunately, has lessened the concern with arms control.

The Korean Peninsula is one of the areas of acute political instability and conflict in the Asian-Pacific region. This is partly but not exclusively because of the unsettled problems between the two parts of Korea. The international environment could be more conducive to an inter-Korean dialogue, to national reconciliation, and to reunification. Without interfering in the internal affairs of the Korean nation, the United States and the Soviet Union, and other major powers of the region, could create more-favorable conditions settling the Korean problem, understanding always that the principal aspects of the problem are internal and must be solved by the two Korean states themselves.