COMMENTS ON RICHARD ARMSTRONG 'S ARTICLE , ' MILITARY - INDUSTRIAL COMPLEX- - - RUSSIAN STYLE ' , FORTUNE, 1 AUGUST 1969

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80B01439R000500160023-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 3
• Document Creation Date: December 12, 2016
• Document Release Date: October 25, 2000
• Sequence Number: 23
• Publication Date: August 7, 1969
• Content Type: MF

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7 August 1969
MEMORANDUM FOR: Deputy Director for Intelligence
SUBJECT Comments on Richard Armstrong's
Article, ,Military-Industrial Complex--
Russian Style", Fortune, 1 August 1969
1. The Fortune article is generally accurate.
There are a number of minor discrepancies, but the
quantitative data presented are in general agreement
with national intelligence judgments. Selected
examples are shown in the attachment.
2. The remarks under the subtitle "Two Kinds of
Costs" (pages 4 and 5 of the article) pertaining to
CIA's estimates of Soviet defense spending and GNP
are substantially correct, as is the example cited of
misuse of the estimates. Soviet defense expenditures
measured in dollar costs should not--the author cor-
rectly asserts--be compared with Soviet GNP as derived
by the CIA method. We hope this is read thoroughly in
the Pentagon and on Capitol Hill.
3. Our estimate of the share of Soviet defense
spending in GNP valued in dollars would be 11.5 per-
cent, if we were to measure it that way. This is
somewhat higher than the 10 percent figure arrived at
by the author. However, measuring the defense burden
of one country by revaluing into the prices of another
country is a hybrid approach that should be used with
great care, if at all. In rubles--the better measure--
the Soviet Union devotes roughly 8 percent of its GNP
to defense. Even so, this is such a generalized re-
lationship that it does not provide much of a measure
of the full burden of the defense effort on the Soviet
economy.
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4. The last paragraph of the article concerning
the "USIB Estimate" is misleading in that it implies
that the US Intelligence Community believes that the
Soviet Union is trying for strategic superiority or
a "first strike" capability. Whereas the NIPP does
project Soviet forces that may exceed the US in se-
lected weapons by the mid-Seventies, the Intelligence
Community has never estimated that the Soviet Union is
trying for overall strategic superiority. In NIE 11-
8-67, the judgment was made that "all things considered,
we continue to believe that the Soviet leaders will not
expect to acquire strategic capabilities which they
would deem sufficient to permit them to launch a first
strike against the US without receiving unacceptable
damage in return.." We judge rather that the Soviets
are concerned with preventing degradation of their
present capabilities by oncoming US strategic programs,
particularly by the great numerical increase in numbers
of individually targeted warheads now programmed for US
forces in the Seventies.
5. The author's qualitative judgments on Soviet
forces are somewhat overstated. For example, his
accolades on the smoothness of the Czechoslovakian
invasion is overly favorable to the Soviets, while
the inference that they were so poorly provisioned
that they "lived off the land" is probably too un-
favorable a view of the Soviet logistics system.
25X1A
BRUCE C. CLARKE, Jr.
Director
Strategic Research
Attachment:
Comparison Table
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7 August 1969
Comparison of CIA Estimates and
Selected Figures in Fortune Magazine's
"Military-Industrial Complex-Russian Style"
Fortune CIA
1,035
1,038 (mid-1969)
121 - 1968
202 - 1969
200 including 45
tankers
65 Category I
Divisions
About $60 Billion (1968
39% of US GNP (1967)
63% of US GNP (1967)
MR/IRBMs
Heavy Bombers
Combat Ready Divisions
129
Submarines 380
Total Soviet Defense
Expenditures $54-62 Billion
Soviet GNP (expressed in 33% of US GNP
Rubles)
Soviet GNP (expressed in 70% of US GNP
dollars)
Soviet Defense Expenditures
(% of Soviet GNP in
rubles)
Soviet Defense Expenditures 10%
(% of Soviet GNP in
dollars)
8% (1968)
11.5% (1967)
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