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Military Spending in Eastern Europe

Document Type: 
CREST [1]
Collection: 
General CIA Records [2]
Document Number (FOIA) /ESDN (CREST): 
CIA-RDP79B00972A000100600006-9
Release Decision: 
RIPPUB
Original Classification: 
K
Document Page Count: 
16
Document Creation Date: 
November 9, 2016
Document Release Date: 
July 22, 1998
Sequence Number: 
6
Case Number: 
Publication Date: 
July 15, 1969
Content Type: 
STUDY
File: 
AttachmentSize
PDF icon CIA-RDP79B00972A000100600006-9.pdf [3]569.17 KB
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Approved For Release 1999109108: CIA-RDP79B00972A000100600006-9 Military Spending in Eastern Europe Approved For Release 1999109108: CIA-RDP79B00972A000100600006-9 Introduction* This study presents a general view of the size, structure, and funding of the defense establishments of the six presently active members of the Warsaw Pact other than the Soviet Union: Bulgaria, Czecho- slovakia, East Germany, Hungary, Poland, and Romania. It attempts to give some appreciation of the size and trends of military programs of Eastern Europe. Because of the different currencies in use and the arbitrarily fixed official exchange rates, no at- tempt is made to aggregate defense spending by the East European Warsaw Pact countries as a whole. The official budget data provide only an approximate idea of the size and impact of defense activities, but are probably more reliable as indicators of trends over time in defense spending and the relative priority af- forded to national security programs in each of the countries. * The authors acknowledge important contributory re- ApprbvetlForReleq~YB19W 8.: CffQXf,98H197r8p10~G 10y-9 paper by LL JJ//~~II //11 Cdl 25X1A9a Approved For Release 1999109108: CIA-RDP79B00972A0001 00600006-9 National Budgets The budgetary system used by each of the six East European Warsaw Pact nations is similar to that of the USSR. Total budgetary expenditures are divided among four categories: Financing the National Economy; Soc- ial-Cultural Measures; National Defense; and Adminis- tration. Funds in the defense category are believed to include only those direct outlays required to pay mili- tary personnel, procure military equipment and supplies, and to maintain equipment and buildings. Other military- related activities, such as border guards and militia, are believed to be financed by budgetary sources other than the defense category. Similarly, the funding of military research and development is believed to be in- cluded in the social-cultural account. Investment in military production facilities is believed to be finan- ced outside the defense budget, as in Western nations, and probably is included along with other investment funds, in the national economy account. A major difficulty, therefore, in assessing the exact magnitude and impact of defense spending in the Warsaw Pact countries is to identify and quantify the defense- related expenditure items that appear in budget categories other than defense. Unfortunately, precise delineation is not possible, because the breakdown of the budgets is not detailed enough to allow the separation of all military spending from civilian outlays. A rough indication of the impact of defense expendi- tures in the East European Warsaw Pact countries may be obtained by examining the percentages of the total bud- gets allocated to the overt defense category. The results obtained are not really comparable to the same figures for the Western nations because of the differences in in- clusiveness of the total budgets. In the Communist nations a much broader scope of economic activity is financed through the budget--e.g., most investment in plant, equip- ment, and inventories. General Trends in Military Spending Since 1960 the defense budgets of the East European Warsaw Pact countries have been characterized by a gen- eral upward trend with an average yearly increase of around 10 percent. A similar increase is seen in the total state v Approved For Release 1999109108: CIA-RDP79B00972A000100600006-9 budgets and, as a result, with the exception of East Germany, military spending has accounted for a rela- tively constant share of the total budget of each country. East Germany's announced defense budget has been increasing. as a percentage of its state budget, mainly because it is believed currently to include ex- penditures not previously part of the defense category of the budget. Several factors have contributed to the general. in- crease in military spending. First, procurement costs of the newer equipment--more sophisticated missile sys- tems, supersonic aircraft, electronic equipment, and ar- mored vehicles--has added considerably to defense costs. Secondly, as weapon systems become more complex the at- tendant operation and maintenance costs tend to increase. This involves not only the cost of spare parts and the frequency of repairs, but also the pay and allowances for the more highly trained military personnel. required to maintain modern weapon systems. In addition to more costly weapon systems, the Soviet Union has also increased pressure on other Warsaw Pact members to contribute more heavily to the Warsaw Pact's operations, both physically and economically. Despite the rising defense budgets, the overall mili- tary manpower strength of the East European countries has remained relatively constant during the 1960s. In most of the countries, army ground strength has declined slightly and in several countries the term of conscription has been reduced. The total number of combat aircraft has also been reduced, but in most cases more effective modern aircraft have replaced older obsolete airplanes. Naval strength, has increased with a relatively large number of missile-carrying patrol boats currently being added to the fleets. The present strength of the armed forces is shown in Table 1. Bulgaria The defense budget of Bulgaria has fluctuated in ab- solute terms over the past ten years, but has remained a relatively constant percent of the total budget of the country. The increases in absolute terms during the past two years can be partially attributed to pressures being u Approved For Release 1999109108: CIA-RDP79B00972A000100600006-9 CD co to CT C) O 0) '-i 6)N rn O CO C) ri In r-I 100 00 r-I W N U'j O W ri N N >~ 0 Cl CS 0 co N O VJ Lo O H 0 to I I I I to O mot' Ir ri ri N CO O i r 1 00 It LO M 0 LO co N Cl O O (3) N 00 H N Nil H to H Cl r-I N N C) Cd r-I N LO I N to O d) I Cn H ri O to O to O N cO r?I N cM ri C7 W 0 Cd i ?rl ,C; Cd to in 1 O 0 u > N O N ri U m Cl Cl c N I to H to ON 0 LO ri 'rte N N r-I N ri I .rq r-4 Cad d 5 Q N ?N Cd N -H U) Ij 4-1 'rl O Cd ?tl Cd Cam,' F N Cd m Cd ) ?r>I rri O O O rl 4j a) U) ri Rll Cd Cd a) dz~ a0 Cd t ?r1 ?N ri E~ iP z r i +> > 0 0 ?ri F W A m I I O ?H I I 1 0 Cn U .ri bA N N N I to Cd N i-t I q +t rl 0 FA ?ri 4.1 z Q tCC +mt N Cd m ?r1 Cd 4-) mW Cl) 0 w -P ;-C S?a N m ?ri n-HCmdO U m N-I OP CCdd U r-I 4- ?r $ F-I-t +3 +J Q I Cd m a a) 4-t I n CnO Cd FN H R Approved For Release 1999109108 CIA-RDP79B00972A000100600006-9 Approved For Release 1999109108: CIA-RDP79B00972A000100600006-9 exerted by the Soviet Union on the member nations of the Warsaw Pact for more assistance in maintaining the forces under the central control of the Pact. Bulgarian State Budget Defense Expenditures 1960-69 Expenditures 1/ Share in Total Bud eft Million Leval Percent 1960 179 6.0 1961 206 6.2 1962 225 6.0 1963 297 8.2 1964 260 8.9 1965 230 7.2 1966 252 6.8 1967 247 6.1 1968 264 6.0 1969 Plan 302.5 6.0 It cannot be ascertained whether or not the announ- ced defense expenditures truly encompass all the expendi- tures allocated to this sector of the economy, e.g., total spending for defense-related activities might include some of the budget assigned to science. Also, Bulgaria may re- ceive assistance from the Soviet Union in the form of cre- dit for military equipment. Despite the fluctuations in the defense budget, Bul- garian armed forces have remained reasonably stable during the past five years, ranging from a low of 150,000 men in 1969 to a high of 156,000 men in 1967. The forces are pre- sently estimated to have about 153,000 men: 125,000 in the Army; 6,000 in the Navy, and 22,000 in the Air Force. These troops are supplemented by a 20,000-man paramilitary force (including some border troops) and a People's Mili- tia of 150,000. 2/ The Bulgarian Army is composed of eight motorized rifle divisions and four tank divisions, supported by SA-2 Guideline surface-to-air missiles (SAMs). The Navy is equipped with two submarines, two destroyer escorts, about 1.Official }}budget and plan data Approved For Release 1999109108: CI RbP79X692A0001006000U6-~te for Strategic Studies, op. cit., p. 2. v v Approved For Release 1999109108 CIA-RDP79B00972A000100600006-9 50 other vessels, and a small Danube flotilla. The Air Force has twelve interceptor squadrons with 250 combat aircraft plus assorted reconnaissance aircraft, trans- ports, and ground support squadrons. 1/ Most of the equipment for these forces probably comes from the Soviet Union and some small arms may be supplied by the other Warsaw Pact nations which are known producers of military equipment, e.g. Czechoslovakia. Other than possibly some small arms, Bulgaria is not known to produce any armaments. Czechoslovakia Since 1960 the category for defense and internal se- curity in the announced Czech state budget has been on a general increase with the 1969 planned defense expenditure being almost 70 percent higher than the 1960 figure. Announced expenditures for the social-cultural cate- gory, like defense expenditures, are also at their highest level ever. The 1968 announced figure for this account-- 64.6 billion crowns--is 60 percent higher than the 1960 allocation. 2/ Just how much military funding is included in the social-cultural portion of the budget cannot be de- termined with any real certainty. It is known that these funds support the Czechoslovakia Academy of Sciences and certain ministerial research organizations. Some military research might well be financed through these agencies. Table 3 Czechoslovakian State Bud et Defense Expenditures 3 1. The Institute for Strategic Studies, op. cit., p. 2. 2. Statisticka rocenka CSSR, for appropriate years. Approved For Release 1999109108: CIq'jRDP79Bp"712e[000100600006-9 1960-69 Expenditures Share in Total Budget (Billion Crowns) Percent) 1960 8.8 8.5 1961 9.5 8.5 1962 10.9 8.8 1963 11.3 9.0 1964 10.9 8.4 1965 10,3 8.9 1966 10.8 7.1 1967 12.4 8.7 1968 12.9 8.9 1969 Plan 14.9 9.5 V Approved For Release 1999109108: CIA-RDP79B00972A000100600006-9 It should also be noted that there are, in addi- tion to government research bureaus, several design and development organizations in Czechoslovakia which are considered to be "commercial" or nongovernmental in nature. Some military research might be conducted by these organi- zations as well, but, the funding would not appear in the defense budget. Until August 1968 Czechoslovakia maintained one of the most effective military establishments of all the Warsaw Pact nations, ranking with Poland and East Germany in terms of equipment quality and organization. The Czech Army is estimated to have about 175,000 men in five tank divisions, nine motorized rifle divisions and one airborne brigade. The Soviet SA-2 SAM system has also been supplied to the Czech Army by the Soviet Union. A 40,000-man inter- nal security and border guard force complements the Army. The Czech Air Force is estimated to consist of 50,000 men and 600 combat aircraft of both early and late model design. About 350 transport, training, and general support aircraft, many of Czech design, and 100 helicopters are also in the Czech Air Force inventory. 1/ The figures cited are for pre-invasion military man- power and equipment. They may have changed since August 1968, but at present, no further information is available on current manpower strength or status of troops. In terms of capabilities, Czechoslovakia reportedly was one of the first Warsaw Pact countries to incorporate in its military establishment some of the latest Soviet changes in tactical organization which increase mobility and firepower and enhance capabilities for conducting tac- tical nuclear warfare. Unlike other more Soviet-dependent Pact countries such as Hungary or Bulgaria, Czechoslovakia has equipped and supported much of its military establishment through domes- tic production. Of all the Pact countries; Czechoslovakia's armaments industry is perhaps the most developed. The Czechs have been mass producing their own small arms, artillery, and copies of Soviet tanks for some time. Even in the area of sophisticated military aircraft they have initiated native design and production of jet fighters trainers and utility-type aircraft. The Czechs have also Approved For Release 1999109108: CIA-RDP79B00972A000100600006-9 -7- received many of the latest model Soviet produced weapons. The present status of indigenous armaments research and production in the wake of the 1968 invasion is un- certain. East Germany The only direct source of financial information on East Germany's military activities is the budget category labeled "defense" which is part of the state budget announced every year. All other indicators of military activity are kept separate from data on other sectors of the economy, and information on military acti- vities is restricted to the highest levels of government. The extent of East Germany's military dependence on the USSR is a politically sensitive issue and one which both the Soviet authorities and the East Germans prefer not to illuminate. East German propaganda during the 1960s fre- quently highlighted, however, the sharp contrast between the large West German defense budget and the small overt East German budget for defense. East German Defense Budget Expenditures 1960-69 Expenditures 1/ Share in Total Budget (Billion DME) (Percent) 1960 1.0 5 1961 1.0 5 1962 2.7 5 1963 2.8 5 1964 2.9 5 1965 3.1 5 1966 3,2 5 1967 3.6 5 1968 5.8 8.7 1969. Plan 6.3 8.5 1. Official budget data. -8- Approved For Release 1999109108: CIA-RDP79B00972A000100600006-9 Approved For Release 1999109108: CIA-RDP79B00972A000100600006-9 It appears that, before 1962, the announced budget figure was used solely for political purposes and was a completely unreliable indicator of East German military spending. Announced defense spending amounted to just under 1 billion DME every year from 1956 to 1961. In 1962, the announced defense budget almost tripled, reach- ing a level of 2.7 billion DME. It is believedthat at this point the defense category became a more meaningful in- dicator of defense activity and probably covered actual expenditures for personnel, imports of military equipment, construction, and conducting exercises and maneuvers. From 1962 to 1967, East Germany's defense budget grew at an average annual rate of six percent. In 1968, the announced defense budget again rose very sharply to 5.8 billion DME, an increase of 61 percent over the 1967 de- fense budget and an increase from 5 percent to almost 9 percent of the total state budget. East German Finance Minister Boehm stated that the large increase was necessary because of the "increased tension in the international sit- uation" which he claimed was caused by the continued "ex- pansionist policy" of West Germany. He also accused Bonn of enlarging its army and making domestic preparations for war. While the large increase fitted East Germany's pro- paganda line, it is doubtful that all of the announced in- crease reflected real increases in military programs. At least some of the large 1968 increase in the announced de- fense budget probably resulted from efforts to implement economic reforms designed to increase industrial output by improving accounting procedures and the price structure. The announced 1969 defense budget of 6.3 billion DME-- an increase of about nine percent over 1968--accounted for 8.5 percent of the total state budget. This increase was in line with defense budget increases in the rest of the Warsaw Pact countries. Present East German forces total some 126,000 men. The army has some 85,000 men with six combat divisions and some air defense missile systems. The Navy has 16,000 men with numerous surface craft including four destroyer escorts, 12 Osa-class missile patrol boats, Hound helicop- ters, and other small coastal craft. The Air Force has a total strength of 25,000 men with 270 combat aircraft with 18 fighter-interceptor squadrons and some 60 light transports and Hare and Hound helicopters. There are about 20,000 security troops and 70,000 border guards separate from the regular Army. 1/ The East German armed forces are almost completely dependent on arms shipments from the USSR and there has been very little indigenous weapons production. The Sov- iets have provided East Germany with many new items of equipment sooner than any other Bloc country and the structure of the Army is patterned after that of the Soviets with high mobility, firepower and flexibility for tactical nuclear warfare. Army ground strength remains low, primarily because of a severe shortage of manpower available for military service. East Germany is the only European Communist country without universal conscription. Accordingly, the Army's small size has been made the sub- ject of propaganda pronouncements intended to reflect un- favorably on the West German armed forces. Of all the non-Soviet Pact members, East Germany has the largest number of Soviet troops permanently stationed in the country, and probably contributes to the support of these troops. East Germany exports some military-re- lated items such as optics and other precision engineering equipment to the USSR. It is not known to what extent these sales offset East German purchases of military hard- ware from the USSR, or if purchases are included with the defense budget. Hungary Although Hungary.'s announced defense budget has been growing at a faster rate than most of the East European Communist countries, its share of the total budget has also been declining. It has absorbed about 5 percent of the state budget since 1967, a decline from almost 6 percent in 1965 and 1966, and about 7 percent in 1963 and 1964. During the period 1967-69, Hungary's defense budget has been growing at an average annual rate of almost 15 per- cent per year. 2/ 1. The Institute for Strategic Studies, op. cit., p. 3. 2. United States Arms Control and Disarmament Agency, "Financial and Fiscal Systems of Hungary", Washington, 1968, p. 285. Approved For Release 1999109108: CIA-RDP79B00972A000100600006-9 Hungarian State Budget Defense Expenditures 1/ 1960-69 Expenditures Share in Total Budget (Million Forints) (Percent) 1960 3,100 n.a. 1961 3,376 4.4 1962 4,913 5.9 1963 6,500 7.3 1964 6,163 6.6 1965 5,757 5.9 1966 5,219 5.5 - 1967 5,444 5.2 1968 6,439 5,0 1969 Plan 7,956 5.1 During the early 1960s, Hungary's defense budget more than doubled. After 1963, when the defense budget re- ceived its largest share of the state budget, some 7 per- cent, Hungary's defense spending generally declined until the recent increase in spending beginning in 1967. The defense budget for 1969, almost 8 billion forints, is the highest level of defense spending thus far for Hungary. This is an increase of 24 percent over the 1968 budget. Hungarian press statements indicate that part of the large increase will be used to increase the pay of conscripts two and one-half times. New equipment will also be pur- chased for the army and regular army pay will be increased. 2/ The Hungarian armed forces have not fluctuated greatly over the decade of the 1960s, Total regular forces pre- sently have about 100,000 men with 95,000 in the Army and the remainder in the Navy and Air force. Hungary also maintains about 35,000 border and security troops and has an organized workers militia of 100,000 men. 3/ United States Arms Control and Disarmament Agency, "Financial and Fiscal Systems of Hungary", Washington, 1968, p. 285. 2. "Nepszabadag", December 11, 1968. 3. The Institute for Strategic Studies, op. cit., p. 3. -11- Approved For Release 1999109108: CIA-RDP79B00972A000100600006-9 Approved For Release 1999109108: CIA-RDP79B00972A000100600006-9 Hungary's Army is composed of six divisions and has some SA-2 missiles deployed for air defense. The Air Force has 140 combat aircraft and 20 small trans- ports and helicopters. There is a Danube flotilla with some 15 patrol craft. 1/ Hungary's indigenous production of military material is limited to small arms; the hulk of the Hungarian mili- tary equipment comes from the Soviet Union. It is not known whether the Soviet equipment is purchased or granted on a military aid basis, but it is likely that some portion of the equipment is paid for by the Hungarians. If it is purchased, payment is probably financed by the overt defense budget. The Hungarian state budget probably includes expen- ditures for the support of Soviet troops stationed in Hun- gary. The last definitive information on this point was in 1949 regarding the 1946-47 state budget. At that time the outlays for support of Soviet troops was reported to be about 10 percent of the total budget. 2/ The size of Hungary's overt defense budget suggests that it is adequate to provide substantial support of Soviet troops in addition to the direct expenditures for Hungary's own armed forces. Poland The Polish defense budget has increased steadily since 1961. The planned defense expenditures for 1969 exceeds that of the previous year by 14 percent, with pay- ments for imported military equipment believed to be chiefly responsible for the increase. Changes in wages and internal prices may have also had an effect. The Institute for Strategic Studies, op. Cit., p. 3. 2. "Gazdasagstatisztikai Tajekoztato", October 1947, p. 594 and January 1948, p. 56. Approved For Release 1999109108 : CIA-RDP79B00972A000100600006-9 Polish State Budget Defense Expenditures 1961-69 Expenditures Share in Total Budget (Billion Zlotys) (Percent 1961 17.0 7.3 1962 18.4 7.4 1963 20.7 8.2 1964 21.9 8.0 1965 23.2 8.0 1966 25.2 7.9 1967 26.1 8.1 1968 29.1 9.5 1969 plan 33.3 9.7 Military related spending not included in the announ- ced defense budget may be sizable since the internal se- curity forces are not included in the official figure, and Poland is the only East European country other than Czech- oslovakia with a sizable defense indutry. Investment expen- ditures for expanding the defense industry are probably in- cluded in the national economy budget. The Polish armed forces are reportedly the largest and best organized, trained, and equipped of all the non- Soviet Warsaw Pact forces. Their organization has been patterned closely after the Soviet military and has fol.- lowed all the current moves toward even more modern con- cepts. Continued imports of modern Soviet equipment along with weapons from local production has steadily improved firepower and mobility. The Polish ground forces, with 185,000 men divided into five tank and eight motorized rifle divisions, con- stitute the basic and by far the largest component of the armed forces. The Polish naval forces are the largest of the non-Soviet Warsaw Pact countries and include three destroyers, at least five submarines, and a small, well equipped naval air arm. The air defense command has 45 interceptor squadrons plus SA-2 SAMs. 2/ Sources of the data are as follows: 1961-67-"Concise Statistical Yearbook of Poland", Central Statistical Office, Warsaw, 11968J? 1968-69-Polish Government Budget. Approved For Release 1999109108: CI -RDP79B 0972 100640 06-9 It. The Institute for Strategic Studies, op. cit., p. 4. Approved For Release 1999109108: CIA-RDP79BOO972A000100600006-9 Although Polish forces make extensive use of weapons and vehicles of Soviet design, Poland's armaments industry is second only to that of Czechoslovakia among Warsaw Pact countries. Poland produces tanks, artillery, small arms, antitank weapons, ammunition and explosives, chemi- cal warfare equipment, aircraft, electronic and communica- tions equipment, and trucks of both Polish and Soviet de- signs. Romania Despite fluctuations in a total state budget that ranged from a 21 percent increase in 1962 to a 2 percent increase in 1965, Romania's announced defense budget grew, with the exception of 1964, constantly throughout the 1960s. It almost doubled in the ten year period. The defense budget, however, received a decreasing portion of the total budget during the period, falling from about 6 percent to about 4 percent, as the total state budget rose from 55.42 billion, to 152.62 billion lei, an increase of about 175 percent. 1/ Romanian State Budget Defense Expenditures 2/ 960-69 Expenditures Share in Total Budget Billion lei) (Percent) 1960 3.39 6.1 1961 3.50 5.4 1962 3.99 5.1 1963 4.12 5.1 1964 4.11 4.5 1965 4.54 4.9 1966 4.79 4.5 1967 4.96 4.0 1968 5.19 3.7 1969 Plan6.41 4.2 1. Central Statistical Yearbook, People's Republic of Romania, 1967. 2. Central Statistical Yearbook, People's Republic of Romania; and Report of speech to Central Committee Plenum and Grand National Assembly in connection with presentation of 1969 plan and budget in December, 1968, Approved For Release 1999109108: CIA-RDP79B00972A 00100600006-9 Approved For Release 1999109108: CIA-RDP79B80972A000100600006-9 In addition to the announced defense budget, some military spending may be financed from the unexplained residual of expenditures and from the budget for "Soc- ial-Cultural measures", which includes science. The addition of the proper proportion of these expenditures to the announced defense figure would give a more accur- ate indication of the absolute amount being spent yearly. by Romania to maintain and increase its military posture. Romania's military force of 173,000 men is the fourth largest of the Warsaw Pact countries, surpassed by the USSR, Czechoslovakia, and Poland. This represents a de- cline, almost entirely in the Army forces, from ancsti- mated 222,000 men in 1964. There has also been a reduc- tion from a two year. term of service in the Army to a one year term, although the two year term has been maintained for the Navy and the Air force. Total Army strength is approximately 150,000 with two tank and seven motorized rifle divisions supported by SA-2 missiles. Naval strength is about 8,000 with about 60 ships including five Osa-class missile patrol boats. Air Force strength is about 15,000 with 18 siuad- rons of fighters comprising 240 aircraft--the bulk of the combat aircraft. 1/ Romania is actively pursuing a policy of decreasing her dependence on the Soviet Union for military equipment. At present Romania only produces small arms but plans have been announced to produce a greater share of her own armament and. arms purchases are no longer to be limited to the Soviet Union and other Warsaw Pact countries. In a speech of July 1967, Minister of the Armed Forces Ion Ionita stated that, according to Party Directive, "Apart from the perfecting of armaments which Romania is now producing, the country should go over to the development of new types of military technology." Romania's objective appears to be to become as independent as she can without forcing the Soviet's hand and putting herself in the position of another Czechoslovakia.

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