LETTER TO WILLIAM CASEY(SANITIZED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85M00364R000300350036-5
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: January 4, 2017
• Document Release Date: April 23, 2008
• Sequence Number: 36
• Publication Date: July 21, 1982
• Content Type: LETTER

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July 21, 1982
Mr. William Casey
Director
Central Intelligence Agency
Wachi ngton, DC 20505
Dear Mr. Casey:
The Military Economic Advisory Panel held its spring meeting on May 21
and 22. We had several productive sessions with the Soviet Analysis group,
and also held initial meetings with the European Analysis staff that will,
I am sure, lead to fruitful cooperation in the future. As you are well
aware, much of the value that the Agency receives from MEAP arises from the
give and take that occurs at the sessions themselves, which therefore does
not need to be noted in our correspondence; several of our discussions in
the areas of the state of the Soviet economy and the Bloc's critical hard
currency crunch fall into this category.
There are four topics which I would like to take up with you, however.
Three of these are familiar from past correspondence. I am happy to report
good progress on the first of these, the development of an Indicators
strategy. In my lost letter, I described this as, "an explicit attempt to
define and develop the factors we should look for, to indicate how the
Soviets will eventually resolve their 'guns versus butter dilemma'." Agency
analysts have undertaken a major, well-conceived research effort entitled,
"Military and Foreign Policy Consequences of Deteriorating Soviet Economic
Performance," an effort which will encompass and, in fact, go well beyond
the indicators strategy. We are pleased to see this effort and are working
directly with the study group to provide contributions to this serious
enterprise. (I'll return to this subject later.)
Second is the continued need for a thorough but comprehensible paper
discussing the uses, types and limitations of US-Soviet comparisons of
military expenditure in dollars and rubles. Outside interest in such
comparisons has flagged a little, and perhaps this is to the good,
considering the frequency of distortions in non-Agency uses of the numbers.
Nevertheless, the comparisons are important in their own right and may
become again a focus of public interest under conceivable conditions.
Therefore, it remains important to explain the calculations in ways that
deal with the major technical issues and are also accessible to the various
interested audiences. We are pleased that SOVA has now agreed to try to
prepare such a paper after discussion of its coverage and general outline
.with a member of the Panel.
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Mr. William Casey
July 21, 1982
Page Two
The third topic, worth repeating even though there is little new to
add, is the desirability of using other than career analysts to supplement
or replace Agency intramural efforts in a number of areas. There seems to
have been some real improvement in attitude toward, and appreciation of,
the potential benefits of such a policy, but there is as yet no program to
implement this idea. Outsiders would be particularly useful in areas where
much of the material comes from unclassified sources, as in Eastern
European economic analysis.
A fourth point is to encourage the Agency to continue its difficult
studies in the general area of population analysis and quality of life.
Regional variations are becoming very important, as shown by the observa-
tion that more people are emigrating from Siberia than immigrating to it,
in spite of the S.U.'s industrial requirements.
Finally, I come to the most important topic of this letter. This is
a topic of some delicacy, because it goes beyond the question of intelli-
gence to skirt the area of policy advice. The topic is the implications of
deteriorating Soviet economic performance (as opposed to the research issue
discussed earlier). The research work is underway and there is the great
risk of trying to anticipate the results, but nevertheless the picture that
is starting to emerge of Soviet economic and military prosgcts is so pro-
found that it is worthwhile to start to sketch it now.
But first, some disclaimers. The Soviet system operates as a crisis
system--economic incentives are so weak, and the role of the party leader-
ship in mobilizing and motivating shock troop attacks on specific problems
is so deeply ingrained, that one could easily mistake the "normal" function-
ing of the Soviet economy as that of a failing system moved to desperate
measures. The military economy continues to perform strongly, turning out
.large numbers of high-performance weapon systems that have succeeded in
reducing our technological leads in several areas, while maintaining Soviet
advantages in numbers or other quantitative measures (e.g., ICBM payload).
And finally we see in the USSR no echo of the worker dissidence, nor of the
channels for making this dissidence felt, that is such an important factor
in Eastern Europe.
'Cevertheless, Soviet leaders appear to be facing a combined and
prolonged ecornomic, political, security and leadership crisis such as they
have not seen since at feast 1957, and it is not easy to see how they will
work their way out of it. Soviet economic prospects--poor agricultural
performance, declining population increments, flat energy production,
growing costs of subsidizing the COMECON countries--seem bleak for the rest
of this decade and will probably grow worse rather than better in the
decade of the 90's. The lack of prospects, degree of corruption, and
?general decline in consumer standard of living facing Soviet citizens is
unprecedented in recent years. The continued political and economic threats
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Mr. William Casey
duly 21, 1982
Page Three
to the Eastern European system appear particularly grave, in that almost
all of these countries have serious economic and external debt problems
.requiring financial aid that the Soviets cannot afford, and appear to
require drastic belt-tightening that few of the regimes are in position to
impose. The Soviets see the instability in Eastern Europe as a fundamental
threat to their own security. At a time when reforms are long overdue in
their internal economic and Eastern European relations, they have no
successor to Bre2hnev in view who has the youth or vitality to carry out
the needed reforms. Fven looking past the current generation of potential
successors, one sees the likelihood of a transitional group followed by a
generational gap, leading to no obviously qualified candidates to replace
the successor some five to ten years hence.
Having assessed the depth of the Soviets' crisis, I believe that the
intelligence community must put this crisis in perspective. The Soviet
Union's acute problems are not likely to be made more serious by short-term
actions that the U.S. or our allies could take. The Soviets are here to
stay, and are not that vulnerable to sanctions or other steps. My personal
belief is that the Government's focus on short-term economic sanctions and
threatened military actions, whatever their potential benefits, is obscuring
a once-in-a-generation chance to affect Soviet behavior over the next decade
or longer. I do not profess to know what is the proper course of U.S. policy
toward the Soviet Union for the next six to ten years, nor would I ask that
such a recorrrrrendation come from intelligence advisors. However, l do believe
that it is proper for the community to call attention to the long-term
nature of the crisis f acing the Soviets, and. to the need for the U.S. to
develop a long-term policy toward the Soviets, taking the depth and duration
of the Soviets' plight into account. I hesitate to recommend the vehicle
by which a small number of longer-term policy alterr;acives can be developed,
analyzed and compared, although an NSC study with high level inter-agency
participation, for about half a year, suggests itself. What is most impor-
tant, however, is to recognize the Soviets' situation, not to overestimate
their near-term vulnerabilities, and to take seriously the value of a
thorough, longer-term policy study to seize this opportunity.
As usual, the Panel and I am available at your convenience for any
follow-on discussion or study that you might find useful.
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