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Military Spending in
Eastern Europe
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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-
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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
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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
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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
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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.
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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
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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
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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.
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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.
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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.
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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.
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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.
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It. The Institute for Strategic Studies, op. cit., p. 4.
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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,
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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.