CIA AND DIA ESTIMATES OF THE DOLLAR COST OF SOVIET MILITARY EXPENDITURES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T00759R000100200052-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: May 6, 2010
• Sequence Number: 52
• Publication Date: July 25, 1984
• Content Type: MEMO

Sanitized Copy Approved for Release 2010/05/06: CIA-RDP87T00759R000100200052-8
The Director of Central Intelligence
Washington, D.C. 20505
NIC #04299-84
25 July 1984
National Intelligence Council
MEMORANDUM FOR: Chairman, National Intelligence Council
FROM: Maurice C. Ernst, NIO for Economics
SUBJECT: CIA and DIA Estimates of the Dollar Cost
of Soviet Military Expenditures
1. I am basing this memo on second- and third-hand information
about your intentions to down-play or eliminate altogether the release
of dollar cost estimates of Soviet military expenditures. I have no
problem whatsoever with deemphasizing the dollar comparisons. These
have been misused repeatedly, especially by DoD. I very much doubt,
however, that CIA, or DIA, can stop altogether producing and publishing
these estimates, at least on a classified basis, if only because
Congress will not let us do so.
2. I am well aware of the many ambiguities in the meaning of the
dollar cost estimates. We go to great lengths to deny that they have
any connection with relative military capabilities because they
represent flows rather than stocks and costs rather than military
utility--the latter being dependent not only on performance of a weapons
system, but also on the way it is used. Dollar costs do represent a
common denominator of sorts to aggregate various Soviet weapons systems
and their components. On a cumulative basis, they probably do have a
rough correspondence to military utility, despite the caveats, and
indeed are used for that purpose. In any event, they should be viewed
as only one among many indicators of relative military strength.
Obviously, dollar costs are not a measure of the burden of defense on
the Soviet economy, and unfortunately they are sometimes used for that
purpose.
3. For good or for ill, however, the US Executive Branch, Congress,
and the public have become accustomed over the past 20 years to using
dollar cost comparisons of military expenditures. I do not believe that
we can get away with suddenly ceasing to publish such estimates.
Congress in particular will insist that such estimates continue to be
prepared and made available.
All portions Secret
Sanitized Copy Approved for Release 2010/05/06: CIA-RDP87T00759R000100200052-8
 Sanitized Copy Approved for Release 2010/05/06: CIA-RDP87T00759R000100200052-8
4. As you will recall, the report of the Working Group on Soviet
Military Economic Analysis recognized that CIA dollar cost estimates
were often misused, but concluded that for CIA to "simply stop
publishing or even preparing estimates of Soviet military expenditures
. . . is both impractical and undesirable. We recommend . . . that the
CIA publish the estimates, that their meaning and limitations be
explained more fully, and that the CIA put restrictions on their use by
other Executive Branch agencies, requiring that they be quoted only with
appropriate qualifications." The report also concluded that "the users
were unanimous in their opinion that the various players in the defense
debate--the military services, the Secretary of Defense and his office,
the Congressional committees and their staffs, and the general
public--absolutely demanded a shorthand yardstick to compare US and
Soviet military spending, as a surrogate for overall spending
capabilities." Moreover, military expenditures are a component of GNP,
and Soviet-US comparisons of GNP and dollars have also been a CIA staple
product for over 20 years. There appears to be no good reason to
suddenly drop the GNP comparisons, which are used for a great many
legitimate purposes.
5. I am particularly concerned about withholding publication of
dollar cost estimates of defense expenditures at the very time when the
Soviet lead over the US appears to be disappearing. There are many in
Congress who will assume that the motive for withholding publication is
that the numbers no longer appear to support Administration policy.
Obviously even the faintest suggestion that this may have been a motive
will get you, the Director, and the Agency in trouble.
6. I strongly recommend that you and the Director discuss this
issue with a variety of people who are familiar with it, including some
NIOs and former NIOs like Hang Heymann, Ivan Selin, and some other
members of the MEAP. I believe we have two realistic options: (1) to
follow the recommendations of the Working Group on Soviet Military and
Economic Analysis--namely, to continue publication but insist on
applying qualifications and restrictions on the use of the numbers; or
(2) begin a p_roc~ess of deemphasizing the dollar numbers in our
publications by o using on the defense burden, and, where we provide
dollar costs, by emphasizing categories of weapons systems rather than
aggregates. In time, perhaps DoD and Congress can be weaned away from
misusing the dollar cost numbers, but we should not expect this to
happen all at once.
Maurice C. Ernst
cc:
VC/NIC
D/SOVA (( L bv' 7~w
Sanitized Copy Approved for Release 2010/05/06: CIA-RDP87T00759R000100200052-8