SOVIET DEFENSE SPENDING

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00806R000200710018-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: August 5, 2010
• Sequence Number: 18
• Publication Date: February 13, 1984
• Content Type: OPEN SOURCE

Sanitized Copy Approved for Release 2010/08/05: CIA-RDP90-00806R000200710018-2
ART I CGS, xr rrr&-r y AVIATION WEEK & SPACE TECHNOLOGY
ON PACE 13 February 1984
Soviet Defense Spending
Estimates of Soviet military budgets by the U. S. Cen-
tral Intelligence Agency and by others have been
used by both pro and anti defense advocates over the
years to support their own particular cases. When the
estimates of Soviet spending rose in the 1970s, the
backers of a bigger U. S. defense budget seized on
them. Then when the most recent CIA projection
showed a slowdown in the growth rate, and a similar
estimate from NATO followed, opponents to higher
defense spending reacted with relish.
The fact of the matter is that there is a lot -of
laughing gas clouding the core of reality in these
estimates. They are fine as far as they go, but they
are also a nebulous structure by themselves to build a
NATO's recent report contends that the growth .
rate for Soviet military spending has been cut in
half-to about 2-2.5% in the years since 1976 from a
4-5% rate between 1970 and 1976. The NATO re-
port said the estimates were derived from NATO
member nations. That translates into NATO getting
some or all of it from the CIA, and releasing the
same report all over again but leaving the public with
the impression that there was new documentation to
back the original CIA estimate.
No great mystery surrounds the technique for mak-
ing these estimates. Analysts take the Soviet physical
output of defense hardware and Soviet military force
levels and price them out in terms of what "it would
cost the U. S. to build or" field the equivalent. As. a
comparison of level of effort by the two countries, the
estimates are revealing but are only a proxy for what
the Soviets are spending in rubles.
A Different Yardstick
The problem with putting any Soviet product into
money terms is that money is not the same yardstick
there that it is in the West Prices are published for
goods and services in the Soviet Union but are estab-
lished or agreed to by the government. Unlike the
case of a market economy, official prices there do not
reflect scarcities and perceived value. They can reflect
whatever the state has on its mind at the moment
Data for prices in the Soviet Union are available in
the West, and at least one scholarly volume has been'
written on the subject. What is not clear is whether
the published prices mean very much, or, more perti-
nently, whether. they are consistently applied in high-
priority defense and technical programs. So the
intelligence estimates reflect Western theories of mon-
ey, not-Soviet
The Soviets have been aware of the failure of mon-
ey to measure efficiency in the Soviet economy. Some
years ago they began a search, for a substitute for
profits in the capitalistic system to develop what they
called indices for how well enterprises were being
run. Repeated Soviet exhortations for greater ef6cien-
WIFNT -7E
Iona
cy in industry are a sign that the search has not been
successful.
A more accurate gauge for the Soviet military ef-
fort is hardware, the physical size of forces and pro-
duction of the Soviet defense industry. As the NATO
report says, Soviet production of military hardware
continues at a high level. U. S. Defense Secretary
Caspar Weinberger made the same point in discuss-
ing the Fiscal 1985 defense budget at its unveiling,
that Soviet output is a better criterion than spending.
The Soviets are producing 840 fighters a year where
the U. S. is closer to 350. Quality 'tea fuzzy factor in
those numbers in making comparisons, and what qual-
ity costs the Soviets. is a tough question to answer.-.
Nebulous Measurement
Pricing out Soviet defense hardware in U. S. terms
gives some idea of how much in the way of resources
the Soviets have committed and how much a charge
they are on the Soviet economy. The measurement is
still highly nebulous. Soviet labor has a much differ-
ent value from labor in the West, especially for the
military forces where personnel are paid a fraction of.
those in.the U. S. Production rates are a better mea-
sure but not without shortcomings. In an economy
where results are measured by output of hardware
rather than profit and loss, the outcome is to produce
to meet or exceed quotas whether or not them is any
consumer demand for the goods.
Something of the same thing could be happening in
Soviet defense production: hardware produced to .
keep the factory working and the masses employed.
In the defense case, though, that production does
constitute forces in being and capability, and has to
be dealt with, irrespective of whether the capability
makes sense.
There is yet another hooker in looking at Soviet
defense spending growth, however estimated. It
would be startling-and ominous-if the Soviet per-
centage growth rates continued at the levels of 10
years ago. The on which the annual growth
percentage is commuted is rising every year. A con-
stant percentage growth on a steadily rising base
would mean a vast increase in whatever was being
calculated-rubles . for defense or hardware produc-
tion. The percentage growth rate should decline over
time as the base rises if hardware production is stay-
ing roughly constant That ? is. essentially what the
Soviet defense effort is doing, and the NATO report
says there is no sign of. any Soviet policy decision to
slow it down.
Misunderstanding and hot air have already fol-
lowed the issue of the new estimates. Estimates of
Soviet defense spending are one small piece of a com-
plex puzzle, and they have to be related to hardware,
force sizes and deeds as well as words to mean any-
thing. William H. Gregory
STAT
Sanitized Copy Approved for Release 2010/08/05: CIA-RDP90-00806R000200710018-2