CIA'S DOLLAR COST WORK: WHERE DO WE GO FROM HERE?

Created: 8/3/1990

OCR scan of the original document, errors are possible

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MEMORANDUM FOR: Director of Soviet

Dollar Cost Work: Where Do Wo Go

From Here?

1. Since the, CIA has, presented its estimates of tho cost of Soviet defense activities in dollars. Although such estimates in no way measure the resource drain onong history of misuse byhave done thia work because both DoD and Congress have domandad it. With the exception of last year when such information was not requested,as used dollar cost comparisons in tho Secretary of Defense's posture statement to Congress. Similarly, sinco the, we have routinely provided this information to the Joint Economic Committee as part of the annual hearings. Estimates also are routinely passed to ACDA for use in thoir annual publication on world-wide defense expenditures andariety of military commands. At present, we have requests pending from the JEC, ACDA, andlatter requestorecision today on the availability of dollar cost comparison estimates for inclusion in this year's soviet Military Power.

2. Wg havo long recognized tho political pitfalls in publishing dollar cost estimates. Probably more than any other estimate in the DI, these are subject to misuse and misinterpretation. Despito our best efforts to explain to our customers what "dollars" should and should not bo used for, they havo often been used incorrectlyurrogate to measure tho USSR's military capabilities and the burden of defense, as well as an indicator of political/military intentions. They havo alsoremendous amount of ammunition for our critics who have frequently attacked parts of thisas the cost of an individualtried to use it to discredit our entire defense economic effort. While we have generally weathered such criticism well, the issue arises whether we should not stop

publicising given that the Secretary ot Dofs

posture statement did not include thea last year and the near certainty that the data will again be misused.

Pluses and.Kinur.ffs of Not Publishing

3. On tho plus side, it again seems unlikely that DoD will request this data for the posture statement. With the dollar cost of Soviet defense activities falling below the United States', DoD will probably shy away from this type of comparison. At the same time, publishing our comparisons is sure to generate another broadside from our critics. While we feel we have generallyood job of pricing Soviet equipment in dollarsurea on which most critics have focused their

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of our estimate are weak. This is particularly true of our dollar cost work on. Although we have always acknowledged our weakness in thisthe current round of attacks on our economic worktend to gloss over this fact. perhaps mostwe moveipolar to multipolar world, presenting US-Soviet dollar cost comparisons will be less useful. If current geo-political trends in Europe continue, the US and Soviet defense establishments will be structured lens and less for head-on confrontations, and direct comparisons yill be less meaningful

4. That said, there are still reasons why wo may want to continue publishingcaled-back manner and forew more years. First, no matter how we couch it, we will be roundly criticized for politicization if we decido not to publish thesedoing so for moreirst time that the cost of Soviet defense activities falls below the level of US spending. Second, we already agreed this year, at least orally, to provide this information to the JEC. It has been over four months since this request was first madeetter to the Directorecond request was received last month). While we can say that we have decided not to provide thisprovide it onlylassifiedof these actions is sure toegative reaction from Sonator Binganan, committee Chairman. Finally, dollar comparison data undoubtedly will bo provided to

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Congress and the Executiveby us orlong as there is high-level interest in this topic. If we let others take tho lead, however, we will inevitably be asked to comment on thoir submissions and bo placedeactive modo.

How Should He Proceed

5. Although there is no idealecommend we continue to make our dollar comparisons available, but put our

consumers on notice that we intend to discontinue such estimates within the next one or two years as the relevancy of dollar cost comparisons declines. He could begin now to minimize their use in formal presentations. Wo would probably still have to publish agreatly revised and shorter than the earlier draft youonly our estimates for total defense activities. Having gone forward with tho NJD, we would then bo able to

service part of the JEC request. Unlike last year, however, we would provide only graphs (no tables) and restrict our submission to the dollar costs of total US and Soviet defense activity. We would not provide estimates broken out by force, mission, or resource category. Of course, we also would noteparate US-Soviet comparisons paper.

Original document.

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