DOLLAR COST ANALYSIS OF SOVIET DEFENSE ACTIVITIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R001503790013-8
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 4
• Document Creation Date: December 19, 2016
• Sequence Number: 13
• Content Type: MEMORANDUM

approved For Release 2006/05/15 :,CIA-RDP84B00049R001503790013
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 Approved For Release 20~~1Lq5AER'LYB00049R001503790013-8
N FAC ~'/_Q (a =C1_
22 December 1981
MEMORANDUM FOR: Director of Central Intelligence
Deputy Director of Central Intelligence
THROUGH: Director, National Foreign Assessment Center
SUBJECT: Dollar Cost Analysis of Soviet Defense Activities
FROM: Director of Soviet Analysis
1. During our recent meeting, you indicated that you would like to
discuss the DoD's use of our dollar cost analysis of Soviet defense activities
at your weekly breakfast with Secretary Weinberger. This memorandum
summarizes the basis for our dollar estimates and provides some talking points
which we believe are appropriate.
Soviet and US defense activitie
2. The dollar cost method of estimating Soviet defense activities was
developed in response to DoD and Congressional
3. The resulting dollar estimates are the only means available to the
Intelligence Community to make the kinds of aggregate and sub-aggregate
military-economic comparisons of US and Soviet defense activities listed in
Figure 1. The dollar estimates are useful in portraying the magnitude and
trends in total Soviet defense activities and can do so over a forty year
period. Our building block approach also allows us to make US/USSR
comparisons at many levels of aggregation using DoD force and financial
accounting rules--by major mission, by resource category, and by US service
definitions. It is in fact detailed comparisons of this type that are of most
interest to DoD.
 Approved For Release 20Q p 1I 1t qkR j4B00049R001503790013-8
4. There are, however, issues that cannot be analyzed with dollar costs
alone. To measure the burden of defense on the Soviet economy, we must use
rubles--not dollars. Only rubles measure actual resource costs within the
Soviet Union. With our present dollar building block method, about half of
In the STAT
absence o reliable Soviet statistics, weapons procurement and many O&M costs
first must be estimated in dollars and then converted to rubles using a
complex series of ruble-dollar ratios. There is sufficient Soviet data
available to estimate the costs of personnel, construction, RDT&E, and part of
operations and maintenance directly in rubles.
6. The comparison between US and Soviet defense expenditures is one of
our most frequently requested products by DoD and the Congress. It is
controversial, the answers are occasionally misused, and it may inspire as
much public confusion as insight. But, the dollar cost estimates are still
the most commonly used way of aggregating the disparate parts of the Soviet
military in a manner that allows comparisons with the defense activities of
the US and other countries. They have proven consistent and useful as a
measure of the trends in Soviet defense activity over time. They are also the
only means available to assess Soviet military programs on a mission or
resource basis.
Director
Soviet Analysis
OFFICIAL USE ONLY
AP roved.For Release .2006/Q5/15: CIA-RDP84B00049ROO1503790013-8
 Approved For Release 201L qftR@PLVB00049R001503790013-8
Figure 1
Uses of Dollar and Ruble Estimates of Soviet Defense Activities
Type of Analysis
Total Defense Comparisons
Can be done using:
Present Dollar Building Alternate
Block Method Ruble Method
(Dollars & Rubles) (Rubles Only)
Mission Comparisons
(Strategic Forces, General
Purpose Forces, Support Forces) Yes No
Program Comparisons
(e.g., F-16 vs. Flogger) Yes No
Resource Comparisons
(RDT&E, Investment, Operating) Yes No
Service Comparisons
(USAF, Army, Navy, Defense Agencies) Yes
OFFICIAL USE ONLY
Approved EQr.Release 2006/05/15: CIA-RDP84B00049RO01503790013-8