SOVIET DEFENSE SPENDING: TRENDS IN RUBLE EXPENDITURES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T00608R000700080007-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 56
• Document Creation Date: December 9, 2016
• Document Release Date: March 17, 1999
• Sequence Number: 7
• Publication Date: March 1, 1975
• Content Type: IR

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Intelligence Report
Soviet I~efenre S~iending:
Trends in dZuble Ex~e~7diturer
S~~
SR IR 75.5
March 1975
~?py N ? 17 6
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NATIONAi. SECURITY INFORMATION
Unauthorized Disclosure Sub?~ect to Crimirc9 Sanctions
Clouifi?d by 014959
Ex,mpt from G?n?raI D?elaulfieatlon Schodulo
of E.O. I16S4SS ox?))mptlon(( cm?poryt
Autornal~icallyy(diclauif ~1d nm
daf? impowl6b fo d,l?rmin?
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Soviet Defense Spending:
Trends in Ruble Expenditures
Since 1960 the Soviets have added more than one million men to their armed forces, deployed
more than 2,000 intercontinental range missiles, constructed a massive nationwide air defense system,
and conducted an ambitious space program. These gains have been costly-in 1974 Soviet defense and
space programs would have required more than 100 billion dollars to reproduce in the US.
In ruble terms, Soviet expenditures for military and space purposes grew steadily over the period,
rising at an average annual rate of about 3 percent in constant prices to about 28 billion rubles in 1974.
The upward path of Soviet defense spending has been marked by three well-defined cycles. These result
from the large procurement costs incurred in the deployment phases of succeeding generations of
strategic systems. The cycles appear to have been independent of economic conditions or short-farm
political considerations.
The expansionary phase of the latest cycle began in 1973 as the USSr~ undertook a new round of
procurement of ICBMs. The rates of growth in military spending which have accompanied this cycle
are higher than for any comparable period in the past. Nevertheless, the general pattern during the
current phase is consistent with past cycles, and spending will probably level off at a new higher
plateau in 1976-1977 as the new wave of deployment of ICBMs approaches completion.
An examination of the trends in spending for some key components provides an indication of the
principal defense planning issues facing the USSR:
- Spending for the SS-11 Mod 3, the four new ICBMs being developed for the Strategic
Rocket Forces (SRF), and SSBN systems for the Navy is providing the main impetus to
the current upward surge in total defense outlays. If the Soviets develop a second
generation of MIRY systems for these new missiles, outlays for strategic systems will
remain high throughout the remainder of the seventies.
- The current overall procurement cycle is more broadly based than its predecessors of the
sixties. Spending for the Air Forces-especially Frontal Aviation-and for the Ground
Forces is growing as the USSR strives to upgrade its conventional forces. Though not
presently increasing, spending for general purpose nave! forces remains at a high level.
-- The Air Defense Forces (PVO Strang) are not sharing in the current growth of the Soviet
military. The large PVO deployment programs undertaken ~n the sixties, have been
completed and no new ones are under way.
- Spending for military RGT&E is taking a rising share of the total acquisition cost of
military systems-development costs plus procurement costs-reflecting the increased
complexity of Soviet weapons. Estimated RDT&E costs over the 1970.1974 period were
75 percent as large as investment in new systems as opposed to only about 40 percent as
large in 1960.1964. This trend suggests that military R&D costs will continue to rise.
The Soviet leaders, now more sensitive to consumer demands than in the past, have
acknowledged the high costs of their defense effort. They are aware of the heavy impact of military
requirements on the technological resources needed to modernize the Soviet economy. Nonetheless,
the leaders believe that the economy is generally healthy, and they appear confident that it can sustain
the present magnitude and pace of the defense effort.
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Mar 75
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
March 1975
INTELLIGENC^ REPORT
Soviet Defense S ending?
Trends in Ruble Ex enditures
Organization of the Stuay
This study analyses trends in Soviet defense spend-
ing as they might be seen by Soviet leaders. Fo1: this
reason all of the data are presented in rubles.* The
study is divided into fief: major sections:
-- The Framework for Analysis describes the sys-
tem of accounts that is employed in the USSR
to organize expenditures for defense programs
into categories.
-- Soviet Defense Outlays presents a discussion
of overall trends in Soviet defense spending
in terms of major categories of expenditures.
Included in the treatment of total So~~iet
defense spending are those elements of: space
expenditures that in the US would be :';unded
by the National Aeronautics and Space Admin-
istration.
View From the Ministry of Defense covers the
outlays by each of the branches of :.~ervicE,
facilitating an understanding of the institu-
tional aspects of Soviet defense spending.
Resource Implications of the Soy t Defense
Effort deals with the relationship between
* For a detailed treatment of the estimated dollar costs of
Soviet defense programs see Soviet Spending for Defense: A
Dollar Cost Comparison of Soviet and US Defense AetivitU,
SR IR 74-7, December 1974 (S).
Comments and queries regarding this publication are welcome.
They may be directed to of the
Programs Analysis Division, Office of Strategic research,
code 143, extension 5238.
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defense activity and the economy. This section
includes a discussion of the magnitude of the
overall defense effort and the criticality of
various resources required to achieve defense
goals. It also examines ways in which the
Soviet leaders might view the burden of defense
spending on the economy.
-- Outlook discusses factors which are likely to
influence the direction of total Soviet defense
spending over the next few years. Defense
spending by branch of service is also projected
several years into the future.
This study supersedes Soviet Spending for Defense:
An Annual Review, Volume 1. Trends irc Ruble Expendi-
tures, SR IR 73-11, August 1973.
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Contents
Page
25X1 B
Soviet Defense Outlays
10
Expenditure Trends
10
Resource Analysis
12
Operating Expenditures
12
Investment Expenditures
16
"Science" Expenditures
20
Space Expenditures
20
Military RDT&E Expenditures
20
Comparison of Military RLT&E
and Investment
22
Military R&D and Investment in
Strategic Systems
22
Va.ew From the Ministry cf Defense
23
Spending for Forces
24
Ground Forces
24
The Navy
26
Air Defen:.e Forces
29
Strategic Rocket Forces
31
Air Forces
33
Command and Support
35
Comparison of Service Budgets
35
Total Spending
35
Spending by Resource Category
37
Spending for Military RDT&E
39
Resource Implications of Soviet Defense
Spending
43
State of the Economy
43
Defense and Economic Aggregates .
44
Assessing Individual Programs
46
Framing the Arguments
46
Resolving LhA Conflicts
47
Outlook
49
Appendix: CIA Estimates of Defense
Spending
53
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Charts
Page
Estimated Soviet Expenditures for Defense
11
Estimated Soviet Defense Expenditures
b
R
y
esource Category .
13
Estimated Soviet Defense Operating
Expenditures
15
Estimated Soviet Defense Investment
Expenditures
17
Estimated Soviet Defense Procurement
Expenditures
19
Estimated Soviet Expenditures for Space and
Military RDT&E
21
Estimated Soviet Expenditures for the
Ground Forces
25
Estimated Soviet Expenditures for the Navy
27
Estimate Soviet Expenditures for the Air
Defense Forces
30
Estimated Soviet Expenditures for the
Strategic Rocket Forces
32
Estimated Soviet Expenditures for the Air
Forces
34
Distribution of Soviet Expenditures for
Military Forces by Branch
36
Resource Structure of Soviet Expenditures far
Each Branch of Service, 1960-1974
38
Estimated Soviet Investment and Procure-
meizt Expenditures by b:-anch of Service
40
Tables
Estimated Soviet Defense Expenditures by
Branch of Service, 1960-1975
60
Estimated Soviet Defense Expenditures by
Resource Category, 1960-1975
61
SECRE'~,
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Soviet Defense Outlays*
Expenditure Trends
Soviet expenditures for military and space purposes
have grown steadily but irregularly since ].960, regis-
tering an increase in every year except 1972. On an
average these expenditures hav-~ grown at about 3 per-
cent annually. .Spending during 1974 amounted to about
27.5 billion rubles--about 50 percent more than in
1960. Expenditures grew little between 1970 and 1e72,
but sizable increases took place :;_n 1973 and 1974, and
increases nearly as large are projected for the next
several years.
There have been three identifiable cycles in
Soviet defense spending since 1960: 1962 marked the
peak of the first c~~cle; the second cycle extended
from 1963 to 1972; and 1973-1974 witnessed the ex-
pansion phase of ,the third cycle. Spending for mili-
tary forces--total outlays less space and military
R&D--accounts for more than 70 percent of estimated
total defense spending and has largely determined the
growth pattern exhibited in total defense outlays.
Combined spending for civil space and military
RDT&E grew rapidly throughout most of the sixties as
the Soviets sought to de?ielop a wide rang~A of military
and space systems. Ann~.~al percentage growth rates
were extremely h~.gh in the early sixties because ab-
solute expenditures were suite small in those years.
Since 1970 growth has slowed as space RDT&E spending
has leveled off and as ICBM systems under development
have approached operational status. While combined
space and military RDT&E spending increased every
year between 1961 and 1973, annual growth rates varied
considerably, reflectii~y in some periods a roughly
inverse relationship to growth rates in forces
spending.
* Expenditures for civil space pro.~rams are included in all
calculations in this report unless specifically stated other-
wise.
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Estimated Soviet Expendlltures for Detenso
Dilllon 1970 Ru61ea
Space and Military RDT & E
e I I I
1980 1992 1964 1999 1#89 1870 1972 1974
Annual Rates of Growth
Percent
lOr Totel Defense
Space and Military RDT & E
-" X801 92181 93192 94189 85194 99185 97199 88197 99199 70198 71~J0 72171 7317'2 74n3
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Resource Analysis
As noted above, three resowrce categories of
defense expenditures can be identified and estimated:
operating, ~.nvestment and "science." (see chart at
right.l
Since 1960, operating expenditures have, with
little variation, claimed slightly less than one-
third of total defense outlays. Investment expendi-
tures have declined from about 50 percent of the total
in 1950 to slightly over 40 percent in 1974. The
effect of periodic dips in procurement of riew weapons
has tended to be offset in total investment expendi-
tures by steadily rising outlays for spare pmts
because of the increasing stock of Soviet weapons.
"Science" expenditures associated with the defense
effort rose from 15 percent to more than 30 percent
of the total between 19b0 and 1972. Since 1972,
however, the share of defense outlays spent on civil
space and r