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Pricing Soviet Military Exports

military exports to developing countries,
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Soviet Arms Aid

Uses and Limitations
The dependence of intelligence analysts on Soviet list price data in deriving dollar values of Soviet military exports-prices which may be just Moscow's crude appraisals of the market values of the equipment and from which its negotiators readily grant substantial discounts--detracts from the reliability of such estimates as a meaningful index of the "real" value of Soviet arms shipments. Systematic efforts to calculate the cost of items of equipment in terms of what it would cost to produce them in the United States, although perhaps conceptually more meaningful, have been bedeviled by a host of data procurement and comparability problems. Such uncertainties notwithstanding, the intelligence estimates based on Soviet list prices (since these prices do not appear to differ markedly from year to year or among client countries) do provide a consistent standard against which to gauge the trend of Soviet military deliveries over time and as distributed among the underdeveloped countries.
The uses to which the intelligence community can put the arms aid data derived from trade residuals are somewhat more limited. They reveal only the amounts payable in cash or credit for the Soviet military equipment; they enable us to distribute the exports neither by country of destination nor by type of equipment; and the Soviet foreign trade statistics from which they are derived become available only six to nine months after the end of the calendar year. They nonetheless, in giving the value of military exports for which repayment is expected, provide useful insights into the balance-of-payments impact of Soviet military aid on both the USSR and its underdeveloped clients as a group. They also provide a check on the accuracy of the independent estimates of the dollar value of the exports.
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Posted: May 08, 2007 08:16 AM
Last Updated: Aug 05, 2011 01:10 PM