Created: 12/1/1987

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A Comparison of Warsaw Pact and NATO Defense


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A Comparison of Warsaw Pact and NATO DefenseQ

A Research Paper

This paper was prepared

Office of SovietHuropcar. Analysis, with contributions


Scoperesearch paper is our first published comparison of the overall defense

activities of NATO and the Warsaw Pact. It builds upon our previous published comparisons of US and Soviet defense activities1 and upon an assessment of the defense activities of the non-Soviet Warsaw Pact countries publishedike these earlier intelligence studies, in addition to using physical measures such as the numbers of weapons procured, this paperonetaryestimated dollaraggregate and compare diverse defense activities and programs. For the readers' convenience, dollar values of defense programs presented in this paper arc shown in graphics and tables as point estimates rather than as ranges. The reader should remember, however, that around each estimate is an implicit confidence band and that, in general, our certainty is greater for higher levels of aggregation. | |

1 For our most recent publication, sec DI Intelligence Assessment8 (Secretomparison of Soviet and US Defense.

Ketrrir fflank





lafo/maUo* mailable aiofH? was mid In this rrfort.

oth the Warsaw Pact and NATO improved their military forces considerably. Their force development programs, however, have involved different approaches reflecting fundamcnial differences in doctrine, strategy, and the nature of the two alliances. In comparing their numerous and diverse defense activities, we use in this paper both physical and value measures to provide aggregate indicators and to identify trends in force developments. Physical measures, such as manpower and the number of weapons procured, are used lo provide rough indicators of comparative force size and weapons acquisition trends. The valueUS dollarused to aggregate activiiies and programs such as military aircraft and infantry regiments that have no other common denominator and lo supplement rough quantitativeof defense procurement wilh an indicator that takes account of differences in weapons quality, (j^

The Pact's procurement policy has put more emphasis on quantity, and less on qualily. lhan NATO's. (

Thethe Soviet Union playing the dominantgreater quantities of weapons lhan NATO in almost every major category:crceni more tactical combat aircraft, almost twice as many helicopters.ercent more submarines. Iwice as many tanks, twice as many armored personnel carriers, and almost six limes as many artillery weapons. As the period progressed, the Soviets increased their emphasis on the production and deployment of more technologically advanced weapon systems in an effori to narrow NATO's technological lead. Still,dvanced systems representedmall share of Soviet inventories for most categories of weapons, with the notable exception of land arms, where modern systems accounted for large shares of weapons fielded.

NATO, while not seeking to match the Pact in ihe number of weaponsfocused on the acquisition of more advanced and individuallyweapons lo counlcr Ihe Pact's numerical superiority. Surfacea notable exception. Here NATOuantitative advantagePact, mainly because of US requirements to transportthe Atlantic and lolobal force

two alliances have also followed different approaches to operating and maintaining (heir military forces.

Pad opcraiing procedures arc designed lo preserve cquipmcnl andigh level of equipment readiness. Pact countries do not use their equipment as much as the NATO countries do. NATO uses its equipment more for training, in keeping with its emphasis on personnel and unit readiness, with consequent heavier demand on its peacetime logistics and

Pactntories arc more standardized than those of

vast majority of Pact weapons arc Soviet designed and Soviet produced, whereas, in NATO, several countries design and produce weapons for the same combat role. NATO, therefore, mustore complex network of operations and maintenance infrastructures requiring more intensive training and more spare parts. I I

On the whole, the dollar .aloe of NATO defense activities was greater than that of comparable Warsaw Pact activities.

The dollar value of NATO's defense activities exceeded those of the Pactercent6 and by more thanercentith the change resulting primarily from sharply increasing US defense outlays

Although tbe Pact acquired greater quantities of weapons, tbe cumalali'c dollarof mililao procurement la (be two alliances was roughly the


The value of Pact procurement was much higher than NATO's al the start of ihc period, but6 the dollar value of NATO procurement exceeded the Pact's by almostercent. US procurement outlays- the key driver of this growth almost tripleds the United States embarkedajor military modernization effort.

In general, NATO's weapons were more cosilyer unit basis. Moreover. NATO, especially Ihe United Stales, invested more heavily than the Pact in procurement categories other than weapons, including slocks of munitions, spare parts, and sophisticated training equipment,


Soviet, andesult Pact, military procurement was atigh level that ihe Soviets were able to procure large quantities of weapons even though the annual dollar value of procurement remained roughly constant.

The dollar value of Pact military procurement, which had grown on averageercent per year from theo the, experienced no growthn the non-Soviet Warsaw Pact (NSWP) countries, procurement growth was slow, and.esult. Ihe NSWP armed forces stayed well below the quantitative and qualitative standards of frontline Soviet units. |

The dollar value of NATO's operations andM)those of tbe Pact byercent.

This isesult of NATO's higher operating rates, its need to maintain technologically more advanced weapons, and its less standardized equipment holdings. I

Although the requirements of Gorbachev's civilian industrialprogram arc tightening the competition for resources, we believe that defense procurement in the USSRs likely to be slightly higher than in the past five years. If General Secretary Gorbachev's campaign to modernize the economy should falter, the Soviets might slow or cancel military programs in favor of nonmilitary production. Even at slightly lower levels of procurement, however, improvements in both Sovietand conventional forces would be substantial. | |

The Soviets have been exerting increasing pressure on the NSWP countries to expand and improve their forces. Because of the current adverse economic situation in Eastern Europe and the resulting unwillingness of the NSWP countries to allocate more resources to the military, the development of the NSWP forces is likely to fall well short of Soviet wishes. The East European countries will have to replace older systemslower pace lhan in the past, cut oiher defense activities in favor of procurement, or buy older systems, f 1

WilhU NATO, the prospects are mixed. <Q

Although the non-US NATO countrieshole carriedignificant modernization of iheir armed forces, reductions in defense procuremeni programs due io budgetary constraints have forced most of them to continue using older equipment. Delays and cuts by some allies-Belgium, Denmark, Norway, andmake it increasingly difficult to meet all of their NATO commitments. These shorlfalls, especially on the Alliance's northern and southern flanks, could force other allies lo compensate by increasing defense activities or toeakening in NATO's military posture. Current US plans call for modernization of weapons and equipment to continue in all three services.



Force Trends and

Acquisition .1

in Weapons Acquisition Policies

in National Acquisition Programs



of Defense Activities

in the Dollar Value of Total Defense Programs

of Investment Trends

of Operating Activities

and Maintenance

Development, Testing, and Evaluation




Dollar-Costing Methodology for Warsaw Pact Defense Programs

for Estimating tbe Dollar Value of Non-US NATO Defense Programs

of the Characteristics and Cosls of Selected US and Soviet Weapon Systems




Pad Acquisition of Major Equipment Relative to NATO

Acquiredercentagenvent nr ics

Pact and NATO Acquisition of Selected Major Weapon6 86 "

Pact and NATO Manpower6

Pact and NATO Defense

of Cumulative Costs by Resource

Pact and NATO Miliur>

Pact and NATO

Pact and NATO

Pad and NATO Operating

Pad and NATO Operaiions and

Pact and NATO Personnel

Pad and NATO Inventories of Selected6

Pact and NATO Acquisition of Scledcd Major Weapon

Pact and NATO Military Manpower by6

Procurement in Dollars, by Couniry

A Comparison of Warsaw Pact and NATO Defense Activities,

This assessment compares Warsaw Pact and NATO defense activities over the. using both physical and value measures. The physical measures used include daU or the number* of weaponsand delivered lo military units, inventoriesajor weapon systems, and levels of militarySuch measures arc useful in portraying the weapon mixes and the relative sizes of the two alliances. They cannot, however, be used to produce summary measures of diverse kinds of defenseand military units such as tanks, tactical aircraft, and infantry regiments.

To aggregate such diverse programs and activities, some value must be assigned that captures the relative worth ofterms of physical and operational characteristics, resource costs, or some other quality. Because prices area useful way to combinequantities and because trends in defense activities are often related to overall developments in an economy, it has become common practice to develop aggregate measures based on the costs of the resources devoted to various defense activities These costs can be calculated in any currency, but dollars arc the frame of reference of US policymakers and force planners who are familiar withdefense dollar" can buy.

Dollar valuations, moreover, reflect differences in the technical and performance characteristics of military hardware as well as in the numbers of weapons procured. They can. therefore, be useful not only in portraying the relative magnitudes of similarand general trends in defense activities, but also in doing so in terra that take account ofdifference*,

Dollar valuations, however, have the following limitations;

do not measure actual Warsaw Pact and non-US NATO defense spending, the impact of defense on the respective economies, cv the variousperceptions of defense activities The Soviets. East Europeans, and non-US NATO nations do not spend dollars. Issues of defense burden arc properly analyzed with estimates of defense expenditures in domestic currencies. Dollar valuationsoreign country's defense activities measure the cost at prevailing US prices, wages, and efficiencies to develop, deploy, andilitary force of Ihe same size and with the same weapons as the foreign country and lo operate those forces as that country does (secnd Bl We do not address the question of whether the Warsaw Pact and non-US NATO nations would choose to have the same military establishments if they had lo pay dollar prices instead of paying for their weapons and manpower in their own currencies. Presumably, if these nations had to make their decisions facedollar price list. Ihcy wouldifferent mixture of weapons and manpower

values areeasure of the overall military capabilities of NATO and Warsaw Pact faeces Assessments of capability must lake into account tbe accumulated stocks of militaryand supplies; military doctrine and battle scenarios; the tactical proficiency, readiness, and morale of forces, the effectiveness of weapons;factors;ost of other convide rut ions


In the past we were able to compare Ihe dollar value or Warsaw Pact and NATO defense activities only for ihe largest members of the two alliances: the Soviet Union and the United States. Recently, however, we


completed an estimate of the dollar value of non-Soviet Warsaw Pact (NSWP) and non-US NATO defense activiiiesethodology consistent with thai used for the US-Soviet comparison. This allows us, for the first lime, toomparison of the entire Warsaw Pact and NATO alliances. ^ '

The estimates of Warsaw Pact costs presented in this paper were deriveduilding-block(seche dollar values of all Soviel and NSWP defense activities were developed by identifying all the Soviet and NSWP forces to be compared wilh NATO's, including Iheir supporting elements, and then estimating order of battle,Inventories, and new equipment purchases. To these detailed quantities, we applied5 dollar prices. Because the building-block approach is based on the individual components of the Warsaw Pact defense effort, we can estimate defense program values by resource categories investment; operating; and research, development, testing, and evaluation |

US data in Ibis paper are expressed in terms of calendar-year outlays derived from the Five-Year Defense Plan (FYDP) issued by ihe Department of Defense in6 and from the Budget of ihe United Slates Government, Fiscalactiviiies of the Department of Energy, the Coast Guard, and the Selective Service have also been included to improve ihe comparison wilhPact programs. The outlays are expressed in conslanl dollars so that trends reflect only real changes in military forces and activities and not the effects of inflation. US order-of-battle data were also derived from the FYDP; US produclion data were provided by Ihe Department of Defense.

The dollar value of defense programs for Ihe non-US NATOerived by adopting aihe use of purchasing-power parities in common use for international comparisons of civilian economic activities. Previously, NATO reported spending was converted io dollars using official exchange rates. Exchange rales, however, reflect one country'sfor another country's currency, not ihe amounts of each country's currency required to purchasegoods and services. Purchasing-power parities.

in contrast, which are constructed to representprices for the same good or service expressed incurrencies, are better conversion factorsPact-NATO sizing comparisons lhanrates because ihcy arc more representativevalue of the goods and services beingapproach was also chosen because it ismost consistent with the approach wc usedefense costs of the Warsaw Pact (secB).

Force Trends and Comparisons Weapons Acquisition

Duringeriod, tbe Warsaw Pactgreater quantities of weapons than NATOcategory except ships. Compared wilhSoviets and their allies acquiredercentaircraft, almost twice as many helicopters,more submarines, twice as many tanks,many armored personnel carriers, and almostas many artillery weapons, but only aboulmany major naval surface combaianis (seeOn the olher hand, the comparisons in appendixthat NATO systems are generally moremore capable, and therefore more costlysystems.esult, the dollar value ofprocurementas only Jthan the dollar value of NATOvalue comparisons are discussed in theValue of Defense

Differences in Weapon Acquisition Policies. The large acquisition of weapons by the Warsaw Pacteflects its strong commitment io modernizing Us armed forces and maintaining the quantiiative advantage it historically has enjoyed over NATO in ihe area of convenlional weaponry. Indeed,6 the Pact had substantially more arms than

'The NATO data include Frame, whichember nfdoc* nol ixiriictnaic ie NATO! inicsiaicd miliiarjdam eichidt SJuin.did nni decide on atto Ihe Allianwrwe nolmember durir-t

NATO in most major Categories, particularly in land arms. In general. Pact strategy focuses on preparing for conflict in continental Europe. Although the USSR, the dominant member of the Warsaw Pact,arge bluc-waler navy and some forces outside Europe, the Soviets do notlobal posture in the same sense as Ihe United Slates.esult, while the Pactarge inventory of land arms and aircraft, its naval forces, while grow-ing, are smaller than NATO's (See|

Althoughhence Warsawdevelopment traditionally has featured the acquisition of large quantities of less advanced weapon systems, the Soviets have been concerned for years with Ihe threat NATO's more advanced weapons would pose lo Iheir forcesar in Europe.esult, they have begun introducing more advanced sysicms such as0 lank andndactical combai aircraft. These new systems, however, still representmall share of the weapons fielded by Sovid forces.or example, new systems represented onlyercent of the Soviel inventory of tactical combat aircraft. Land arms are an exception;0 percent of the Soviet inventory of tanks and armored personnel carriers were modern, f

The East Europeans, whom the Soviets have asked lo lake an increasing role in Pad strategy, have made notable progress in modernizing some parts of their forces. They have introducedloggeras replacements for agingishbeds, deployedissiles, acquired large numbers of BMP armored personnel carriers, and introduced relalivcly modern self-propelled artillery such as tbem howitzer and the Soviet-producedm andmNevertheless, much of ihe NSWP inventory still consists of weapon sysicms introducedhe EasI European countries still lag behind Ihe USSR in fielding self-propelled artillery, modern armor, mobile SAMs. attack helicopters, and modern aircraft, lo thehe ground forces in the norlhcrn-tierGermany. Poland, andSoviel forces stationed in Eastern Europe by live ioears or more in many weapons categories. The soulhern-lierRomania, andeven fewerweapons. Since thehe gap in quality between Soviet and NSWP forces has widened.most disturbing io the Soviets is ihe fact lhat Ihe NSWP forces ate falling behind in precisely ihose categories of equipment most critical to the Soviet conventional slraicgy. which is based on integrated firepower and the combined-arms maneuver. I 'I



Table 1

Warsaw Pact and NATO Inventories of Selected6

i jtcjoty

Tactical aircraft

MtfCd unlace cornbaianu1












on Ihc other hand, has emphasized nuclear weapons for deterrence rather than building large conventional war-fighting capabilities. In large partesult of this emphasis, NATO has smallerforces lhan the Pact and has focused on the acquisition of smaller numbers of more advanced weapons to counter the Pact's numerical superiority.

In general, the Warsaw Pad has placed less emphasis than NATO on pushing the stale of the an in designing ils weapons. Many Warsaw Pact weapon systems were developed through an evolutionaryprocess, drawing on older Soviet weapon designs. These include0 tank, thelackjack bomber, and tbeondor transport aircraft. NATO weapons, in contrast, are generally designed from scratch, and.esult, arc moreadvanced and more cosily.]

It is not, however, invariably Ihe case that Warsaw Pact weaponsower dollar cost and higher production runs than NATO's. As shown in appendix C, some Soviet weapon systems arc more costly than comparable NATO weapons NATO, whichforces needed to transport and protecttransiting the Atlantic, also acquiied more of the weapons associated with this mission than did the Warsaw Pactf- I

Because Ihc Warsaw Pact acquired more weapons lhan NATO in almost every category, newly acquired weapons accountarger share of current inventories in the fact lhan in NATO (seeany ol tlie systems acquired were older designs.arger share of newly acquiredin its inventory is an advantage that the Pad enjoys over NATO. On Ihe other hand, while NATO has carried out an es tensive modernization of older weapons through retrofitting, the Warsaw Pad has only recently begun *ide scale retrofitting of its existing systems except land arms: retrofitting of land

arms has been going on for several years in tbe


DitJcTtneet in Nmiional Acmmiiitio* Programs.the Warsaw Pad. Soviet acquisitions accounted for the vast majority of weapons procured during the

eriod. In NATO, on the other hand, Ihe non-US countries, which collectively account for a

-We nan (niuflicleni dsialerne ihe nambei ufsyMtnis thaieen reiiofillcd in both alllarwu Wc ire condoning icicarrti In this areaook at the broadand the impact of tuch aciidtieion Ihe aimed tortet ol NATO and thePna


aircraft, missiles, submarines, and surfacefrom the USSR. Their imports enable the Soviets to lengthen produclion runs and thereby reduce unit produclion costs through economies of scale.l Europeans are more self-reliant in the produclion of land arms, although they depend on Soviel designs and production processes. During, in an effort to give impetus lo NSWP modernizationand lo reduce the growing disparity between Soviel and NSWP force capabilities, the Soviets pushed for greater integration of Easl European defense industries in producing general purposeThis effort had ihe following consequences:

NSWP defense industries, while continuing tothe Soviets with armored personnel carriers, infantry fighting vehicles, and artillery, increased their concentration on simpler air and naval support systems such as transport aircraft aod amphibious warfare ships as well as small arms, munitions, and weapon components. This cased the design and produclion demands on NSWP industry andthe opportunity for leakage of sensitive Soviet technology. NSWP concentration on supportalso reduced Soviel dependence on militarily vulnerable NSWP plants for critical weapons and enabled Pact rear services to draw on local sources for parts.

Specialization in components probably resulted in greater economics of scale but may have done so ai the expense of rendering programs more vulnerable lo disruption because production problems in any one country can slow or hall production in oihcrs.

share of deployed forces, alsoarge share of the weapons procured in ihe period (secndhe larger coniribution io weapons acquisition by the non-US NATO countries relative to Ihe NSWP partly reflects Ihe non-US NATO countries' more active role in the alliance and their larger and more technologically advanced production base.(Q

The NSWP countries, with the exception of Romania, impoil almost all of their major weapon systems-

Militarily, standardization in Soviel armamentshas increased NSWP capabilities; economically. Pact countries have benefited from the experiences associated with specialization.esult, both the Soviets and ihe NSWP countries probably have been generally pleased by ihe standardizationSWP specialization in less

m Roeirch PaperI7CX (Top Scott

IMG. Ma*aSrmtnt at Wo'w Pathfraffmi

Wiiiutoii: Sawi Onah und Pari


Table 2

Warsaw Paci and NATO Acquisition of Selected Major Weapon


nucleit folia

ndoJiih-generation ICBMs andCBM launcher. Foar Typhoon and ihrec Delta-IV SSBNs.SLBMs. mosilySs.adrryiitE MIRVs. ^traduction of thend Blackjack sirateiic bombersruise' miss.lc capabilityRBMs andackfire bombers for peripheral suae*

US: About IM) ICBMs includlncicciernaa III ICBMs.LBMt, incladin,nissik. Ugh! Obio-eUss SSBNs.BRBMs

NATO France acquired aboulRBMs.0 SLBMi. and ihree

combat aircraft

actkal aircraft,ndilters, as-ellodern aircraft such as ihclanker.the MIGcohound. and theulcrum.

US:actical combat aircraftits,or the Air Force,.s to. the Nary.

ishbeds.loaters, only fivewbata. andotfoot aircraft.

Non-US NATOactical combat alicraft includings.lpha Jetawl combat-capable trainers.

(Or surface combatant*'

urface combaunis meludm* three Kiev-class carriers. I] cruisers.estroyers,quipped -lib guided mimics.

US:ajor surface combaunis Including four Nimita-elass aircraft carriers, eight (uided-rolssik cruiwfs,estroyers, anduided-missile frigates.


a>sr surface eombmnfsfour light alicratt carriers,estrnyers, and overiliates and corvettes.

purpose submarines

Al nackar-powered submarines (elgbi with cruise missiles) aadiesel-powered submarines armed wilh torpedo*.

US:as Angeles-class nuclear-powered attack submarine*.


NATO:uclear-powered attackand someicscl-powered submarines.


anksbrams models;of Miscingodels.

ooks, aboul two-third,of -hlchhe rest were.

Non-USanks includinghe new Wen German leopard II as well asf ibe modernised Leopard IV

elicopters, mostly MIS Hips.onliies, andindt;m helicopters introducedhe

US:lack.IM attackuack helicopter*

ostlyiss.ounds, andopUies.

Non-USelicopters, mainly BriiUh Lyna, Franco-British Gaielle. and WenBO-IDS models.



0 nrmored vehicles, o! which aboul half werenfanUy vchlctei anil0 were modern models such as ibeodernmoe BMP-ls with new aniiiank Guided missiles.

rmored vehicles including

infancy *od uivulry version* of Hie Bindlej- infamry

fighting vehicles.



PCt ineludincMP-li more modern moldsTR-JOi.

Non-USuicliew Wen German Fuclu wheeled APCs, almostFrench VAB -heeled APCi andritish Scorpion-family APCs.

O0 artillery pieces,ropclled guns.

US.rtillery pieces, over half of whichat If propelled

Mainly old artillery weapon sweptewm wif propelled howitftrt,m telf-prcoellrd, andmni teed Muilnrt

Non-USrtillery weapons,taliin-German Britishowed bowitrtia and several hundredclf-propelled

Major surface ccenfcoiacts includeons ditplacentcfli comapable ihijH over

weapons, subsystem and componentand reliance on Soviet designs will probably intensify in |

Although Ihe United Stales is the Untie largest producer of weapons in the Alliance, total non-US NATO production levels are roughly comparable to those of the Unilcd States for most major categories of weapon systems. The non-US NATO countries arc capable of developing andide spectrum of modern weapons. Tbe major non-US NATOnow produce their own ships, submarines, and combat aircraft. Most land arms procured by the noo-US NATO countries are also produced in Western Europe. (] )

Readinei* Strategy. In addition to following different approaches to military modernization, the twohave different policies for preparing their forces for war. The Warsaw Pact believes that the better ils equipment is preserved the more ready tt is for war.esult. Pact forces have lower operating levels than NATO forces; they do not liy or drive as much or conduct nearly as many live fire exercises as do their NATO counterparts | |

NATO, on the other hand,eavy emphasis on personnel and unit readiness and, hence,igh level of training, for example. NATO's

standard for minimum flight hours for Inctkalaircraftours per year, while in the Warsaw Pact the average is lessours per year. In comparison with Pact practice. NATOalso tends to be more sophisticated, involving more realistic and complex combai scenario* and greater ue of advanced umolatroo equipment In addition, NATO training activity levels arc higher because some of the NATO countries have higher turnover in military personnel resulting from conscription cycles that are aboutercent shorter than (hose In the


6 Warsaw Pact and NATO military manpower levels were roughly equal atillionillionsee figurehe Soviel Union

' We Mssh mty mm Sanam mmbe ulon: mantfkn. fai Ike

Wanm Pan, we donclude miliiar) ntmannei aiMcnedbe nnlilifircd trcurny lata ot Ike MMhlry en* Inie-rulmiliiar) ouniiiwdkm and railroad IroojK. o' civil detente inups

provided almostercent of total Warsaw Pact manpower illion men. Poland was the next largest contributor with moreen, followed by Easi Germany with. Within NATO, by contrast. non-US NATO forces made up aboulercent of ihc Allianceillion men. The United States had (heillionTurkey was the next largest contributoren (see table

Dollar Value of Defense Activities

The major differences ia ihe weapons acquisition and readiness strategies of the two alliances are reflected in the differing dollar values of their respectiveactivities. This section compares the dollar value of Warsaw Pact and NATO defense activities in the aggregate and by resource category -investment;and research, development, testing,

Trends in tat Dollar Value of Total Defense Programs

Throughouteriod, the dollar value of NATO's defense activities and programs exceeded the estimated dollar value of comparable Warsaw Pact activities and programs. The difference between the totals for the two alliances increased fromercent6 to more thanercent6 as the NATO totalercent per year while the Pad iota! grewairly steady annual rateercent. Wc estimate that the total dollar value of NATO defense activities68 billion in5 prices, compared7 billion for the Warsaw Pact (see| |

Within (he Warsaw Pact, the non-Sovietof the dollar value of defense programsrelatively level overeriodperceni. Among NSWPcountries. Poland wasand East Germany and Czechoslovakiawith almost equal totals. Together, thesecountries accounted for two-thirds oflutal (see inset,.

In contrast, the non-US NATO countriesuch more prominent role in NATO. Over ihc period, the dollar value of their activities accounted for abouterceni of the NATO total. This share declined, however, from aboulercent6 loercent6 because of the rapid increase in US programsithin non-US NATO, the defense totals

NATO investment Over time, however, tbebetween Warsaw Pact and NATO investment levels changed dramatically.6 Pact investment was more thanercent higher lhan that or NATO, but2 NATO had caught up. and6 NATO investment in dollars exceeded thai of the Warsaw Pact byercent (see| |

Underlying these changes in the comparative levels of investment in the two alliances were differences in investment's growth as well as in the growth of procurement, its major component. The estimated dollar value of Warsaw Pact military investment experienced almost no growth6hile that of NATO increased at an average raleercent per year. Procurement grewercent per year in NATO but remained stable in ihe Warsaw Pact. Tbe dollar cosis of NATO


much lower lhan those of the Warsaw Pact inIhe Pact's by almostercent |

The Soviet Union accountsuch largerbe cstimaied dollar value of military investment in the Warsaw Pact lhan the United Slates docsercent. While the NSWP share of Pact investment in dollars has been constant during the decade, the non-US NATO share has been decliningspecially0 as US outlays accelerated, ij

Procurement. Soviet military procurement, when measured in dollars, grew about one-halfercent per year. This growth was markedly slower than in the previous decade when procurement increasedercent per year (seerowth6 has been so slow that the dollar value of Soviet procurement has consistentlyroughly within the range5 billion perhen measured in cnnslant ruble prices.

For furiscussion of ihc procurement tki"xlu"n. sec DI

Ineilige-vv Aswwuenlon Secrci

J. Soviettirndiirt RetenTTrnSt

moreover, Soviet procurement displayed the same trend toward near-zero growth during the period.


While the dollar value of Soviet procurement was remaining roughly flat, East European defensedeclined slightly. As was true for the USSR, the NSWP procurement trendreak with earlier patterns except inwhere procurement growth measured in dollars remained the same (see| |

Dollar valuations also provide some general sense of the different mixes of weapons and equipmentby Ihc NSWP countries on the one hand and the Soviet Union on the oiher.missiles, ships and submarines, and landaccount for almostercent of total NSWPvalued in dollars; the remainder is account ed for byupport vehicles, andequipment. Abouterceni of the total goes

' Includes electronic equipmentdirectly awociitcdeapon system, such at air defease and other ground radars, lactxilcslintmeasuring cuuipmcnt. and nirlicld clccticaic' j

'fuim Off National Resources inO anJ the Warsaw Pact

addition to comparing the sixes of the defenie programs of the member countries of the Warsaw Pact and NATO, it is often useful to compare the shares of gross national product that each country allocates to defense. To calculate such sharesIt is necessary to use estimates of defensein domestic currencies rather than thedollarof defense activities.

Although we have the data required to estimate the shares of GNP allocated lo defense in the NA TO countries and the Soviet Union, our ability lodefense spending by NSWP countries incurrtnein is limited by data shortages We have sufficieni data to make such estimates for Poland. Romania, and Hungary, but only for selected years. We have insufficientstimate total defense spending in indigenous currencies in East Germany. Bulgaria, and Crechoslovakia. We are working on improving these estimates and hope to make in theore detailed comparison of the defense burdens of the Iwo alliances.

Our analysis indicates thai the share of GNPto defense in the USSR is about twice as large as the US share, and that in the NSWP countries the

defense share of GNP is generally larger than in most non-US NATO countries:

aircraft, tbe largest single componenl of NSWP weapons procurement costs. Land arms andate Ihe next largest withcrceni of the total. For (he USSR, in contrast, weapons account for aboutercent of ihe estimated dollar value of1 he share of procurement accounted for by weapons as opposed to electronics and supportis greater in the USSR than in the NSWP countries because: (I) in addition to procuring land arms und aircraft, the Soviets also produce and procure large numbers of missiles and ships. Iwo weapons categories thaiower priority in thehe Soviets acquire more modern and more costly weapons than do ihe NSWP allies, and

more generally, the Sovietstrongerlo force moderniration duringeriod lhan Ihe other members of the Pact.1

In NATO. US procurement outlays were the key driver in the growth of the dollar value of overall procurcmcni. US procurement almosi tripled Ineriod, increasing on the average bycrceni per year. This rapid growth rcflecicd an acroM-ihe-board modernization of military force* lhal emphasized the procurement of technologicallyweapons. It also reflected decisions in the

Figure 9

Warsaw Pact and


*3- .

_ Warsaw; fact




t *

When measured in US dollars,is ihe smallest ol the major military resource categories in both the Warsaw Pad and NATO. The dollar value of military construction makesercent of the total dollar value of Pact defense activiiiesercent of ihe NATO total. Overeriod, Warsaw Pad military conslruelion totaled0 billion, while NATO's totaledillion. The dollar value of Pact military construdion experienced no growlh over ihe decade; NATO's, in contrast, increased on averageercent jjer year (see figure '|

In both the Warsaw Pact and NATO, growth in the dollar value of military construction displayeddifferent trends before andhe dollar value of construdion adrvitics in the Warsaw Pact grew on averageercent per yearm declined slightly1oviet construction, which grewercent per year60 and declined1 when measured in dollar terms, was ihe major determinant of ihe Warsaw Pad conslruelion trend. The rise in Soviel military construdion duringeriod resulted from the modernization of missile sites, construction of command and control facilities, and the expansion of support infrastructures for Ihe ground and naval forces. The decline inas caused by ihe stabilization in ihe size of Sovid military forces, requiring smaller scaleof support, housing, and weapon facilities. In NATO, the value of construction declined on average byercent per year60 andercent per year. The accelerated growthesult of both US and non-US NATO construction growth1 as the Allies increased investment in NATO infrastructure programs such as the hardening of aircraft shelters and command and control facilities. (

Comparison of Operating Aeiiiilies

Operating adivilics comprise two- the operation and maintenance of military equipment and facilities and ihe scivices provided by dvilian personnel.pay and allowances, food, andprovided to iiciive and reserve miliiary personnel, f-


The estimated cumulative dollar value of NATOe activities was aboutercent han comparable Warsaw Pact costs duringeriod (secATO operating activities valued in dollars were higher than the Pact's throughout the decade, wilh the margin of difference growing from Just overercent6 to aboulercent

Operations and Maintenance Although NATOmaller inventory of weapon systems,are substantially greater than the Pact's.cumulative NATO operations and maintenance activities valued in dollars wereercent higher than comparable activities for the Warsaweriod (sec. They were higher for two main reasons NATO's operating philosophy calls for higher operating rates and more intensive personnel training than docs tbe philosophy of ihe Warsaw Pact, and NATO maintains more advanced weapons, which require more costly spare Parts. | I

Much of the growth inas due to increasing US outlays, which accounted for almostercent of total. US expendituresrew at an average rateercent per year. US OAM growth accelerated0 and climbedercent per year as ihe United Statesetermined effort to upgrade the combat readiness and susuiiiabiliiy of its fortes by undertaking more extensive maintenance of ilsequipment, particularly tactical combat aircraft. Ihc dollar value of non-USctivities experienced almost no growth on average during the period and actually declined3 This was due in parteneral rise in procurement costsime of limited budget growth la addition, most non-US NATO countries curtailed their operating activities in response to the steady rise in energy costs.alued in dollars continued to rise, however, as the Allies were faced with the maintenance ofsophisticated weapon |

A major reason the Pact's OAM cost* arc lower than NATO's is that the Pad weapons inventory is made up of generally less complex systems thai arc less costly lo operate and maintain than NATO's and


require fewer costly spore parts. Pact inventory,is highly standardized among ihc membercliminaiing the need forogistic structures. The NATO countries, in contrast, arc forced to developnfrastructures because Ihe Allianceuch wider variety of systems designed for similar roles than the Pact, thus increasing its requirements for spare parts and training,

The two alliances, as noted above, also differ in their approaches to training. The Pact armed forcespreserving equipment al high levels ofand therefore operate their weapons much less than NATO. The NATO countries rely more on personnel and unit readiness and therefore train and exercise more than the Pact despite recent cutbacks in (raining. For example, NATO pilots generally fly two to three times as many hours as their PactQ^]

Some NATO countries, faced with light budgets, have curtailed training in the active forces, strictly limited the use of fuel, and phased out older weapon systems without replacing them in order to reduce maintenance. The Belgians, Danes. Dutch, andlimited pilot flying hours to levels below the NATO minimumnd far below the standardours. Every country has canceled some ground forces field training exercises, and thosethat do take place are often subject to strict limits on fuel usage. | "j

Pertoanel. Trends and levels In the dollar value of personnel-associated activities in the Warsaw Pact and NATO followed very similar patterns duringeriod. This is not unexpected, given that the number of men on each side was almost the same and wc assign the same pay rates lo NATO and Pact personnel performing the same functionsf we count only those personnel who occupy positions that the United States classifies as fulfilling national security roles,6 the Pad and NATO had roughly the same number of men in their militarymillionillion, respectively {see


he cumulalivc total dollar value ofihese cslablbhments for ihe Iwo alliances wasrillion. Militaryaccounted for similar shares of the total dollar value of defense costs in the Pad and inandercent, respectively. The growth of pcrsonnel-rclated activities in both alliances was alsolessercent per year on average (see,

It should, however, be borne in mind that, unlike estimates of Ihe dollar cost of weapons and military equipment, which take account of differences inand performance characteristics, the estimated dollar costs of military personnel assume lhat all personnel performing (he same functions arc of equal quality. Eveningle country's military force this assumption is unlikely to be true, but in the absence of generally agreed-upon "qualityfactors there is no alternative lo making this simplifying assumption .| |

Research, Development, Testing, and Evaluation

Duringeriod, the estimatedvalue of Warsaw PactxceededNATOy almosiercent.costs exceeded ihose of NATOperiod. Theyercent per year overspan, while NATO'sercent peraverage as rapid growth in US RDT&Egrowth in non-US NATO

Duringeriod, ihe dollar value of Sovietercent of ihe total dollar value of ihe Soviel defenseon averagecrceni per year as the USSRits longstanding commitmentarge and growingstablishment.oviet resources committed io ihe development andof key advancedand advanced manufacturing systems-appear lo have grown even faster than the resources committed lo the development of individual weapons. Floorspace devoted to Soviet military6 Increased at an average rate of


erceni per year. Tolal manpowerin militaryncreased over the period al an average rate oferceni per year, somewhat faster than daringeriod. In

he Soviets employedillion people to support their militaryctivities.| |

Although we do not have Ihe necessary data to calculate the dollar value of militaryf each NSWP country, we made an estimate of ihc dollar value of militaryctivities for the NSWPhole (sece estimate that the cumulative value of NSWPuring Ihcwasercent of total NSWP defense activities.arge extent Ihe NSWP countries rely on Soviet weapons technology, either through purchases of Soviet weapons oragreements under which they produce Soviel-designed weaponry. Although the East Europeans, especially the Romanians, design some weaponthese are generally less sophisticated land arms, support equipment, engineering cquipmcnl, andpurpose vehicles. The contribution of the NSWP military RDT&F. effort to Ihe Warsaw Pact,is smaller than that of non-US NATO to the overall NATOffort. Ihe inset shows the area of militaryn which each NSWP country specializes. | |

In NATO, resources committed by the United States toalmostercent of the total dollar value of NATOon avcraee byercent per year, Growthfromercent per year in theercent per year in ihe. This growth was attributable primarilyajor effort tostrategic forces and to the application ofto the enhancement of conventionalNon-US NATO RDT&F, valued in dollars, increased on averageercent per year duringeriod. Unlike US RDT&F, non-US NATOrew faster in thehan in. Itercent per years the Allies tried to increase their technologicaland placed additional emphasis on theirindependence from the United States In, however, RDT&F. costs experienced almost no growth as West European governments limited


Electronics, optics. Helicopters. land arms.

NSWP Focus in Militaryy Country


East Germany Poland

Czechoslovakia Land arms, trainerarms.

tanks, APCs. ships.


esources allotted to the defense ministries because of economic difficulties, i

Many ofctivities were redundant as NATO developed four different main battle tanks, four different fighter aircraft, and numerous armored vehicles. Research activities vary greatly among the Allies. France, West Germany, and Ihe Uniteddevelop systems in most major categoriesfighter aircraft, missiles, land arms, and ships. The smaller countries have capabilities in specific areas such as small arms (Bclgiuml and electronics (thereece, Turkey, Denmark, and Portugal have very limitedapabilities.p


In the absence of major changes in Fast-Westand domestic economic and political conditions, recent trends in Soviet and NSWP defensereflected in our estimates of their dollarlikely lo continue through atf, however, the international environment oreconomic conditions should change, the Soviets might well alter their present plans. For example, if General Secretary Gorbachev's campaign loihc economy falters, the Soviet leadership will face tough decisions regarding priorities, and someprograms may well be slowed or canceled to

divert resources to nonmiliiary production. But even reduced levels of procurement would permitcontinuing military modernization.|'

Soviet Union

The Soviet leadership's continuing efforts toobsolescent industrial plant and equipment will require the allocation of scarce, high-quality once the near-exclusive preserve of thecivilian economic uses. Nonetheless, because Soviet defense industries have alreadysubstantial modernization in thend, they are well positioned to meet the Soviel armed forces* weapons needs duringive-year plan. On the basis of available evidence on the pace of major weapons development and production programs, we believe that deliveries of arms and military equipment to Soviet forces will continue at the high levels maintaineduch levels of procurement are likely to translate into substantial across-the-board modernization of Soviet

A comprehensive modernization of the USSR'soffensive forces should be completed by theStrategic defense force improvements,less substantial, also will permitin capabilities. The Soviets willtheir ability to defend against cruiselow-altitude bombers with such systems asmissile and lookdown/shootdown aircraftthend

Soviet conventional forces will also be upgraded. The Air Forces are receiving thend thend the Navy will get new submarines and warships-including the USSR's first full-size aircraft carrier.arieiy of improved land arms, most notably0 tank and new artillery weapons, many of which are superior to Western systems, arc being deployed with the Ground


The Soviets have been exerting increasing pressure on the NSWP countries to improve and expand their weapons inventories. Since ihe, however, the gap beiween Soviet and NSWP forces hasespecially in terms of quality. Most disturbing

to the Soviets is the fact that NSWP forces are falling behind in categories of equipment most critical io the Soviets' conventional strategy. The NSWP countriesilemma in modernizing their inventoriesof adverse economic conditions and thecosts of modern weapon systems. Up to now, ihe East Europeans relied on the acquisition of models of equipment that were old by Soviet standards in expanding their forces. In the future, they will be expected to purchase moremorearms. Because additional resources for defense will be bard to come by, the NSWP countries will haveeplace most older systemslower rate than in the past, cut other defense activities in favor of procurement, or buy older systems, all despite Soviet concerns over lagging NSWP military capabilities.


Although the Allies have made substantialin their armed forces, including theof ships, aircraft, and armored vehicles, cuts and delays in defense procurement programs have forced most of them to continue using older equipment. The countries of NATO's Central Region have been the mosl successful in modernizing their forces, while those on the northern and southern flanks have lagged well behindC=]

Economic problems and political pressure against defense budget growth have eroded the willingness of non-US NATO governments to make majorin their defense programs. Most Allies will continue to try to counteract substantial budgetby curtailing government expenditures, andefforts will take their share of the cuts. With high unemployment expected to persist into, we believe it unlikely that the non-UShole will make any major increases in their defense programs. Inumber of countries have announced plans for little or no growth in programs through the end of the decade. The Allies are likely to cancel major acquisition programs, curtail other(particularlyr slow deliveries lo

the increased costs of new weapon systems. Delays and cuts by some allies, particularly Belgium, Denmark. Norway, and Canada, will make itdifficult for them to fulfill their NATOThis could force other Allies lo compensate by increasing defense activities oreneral decline in NATO defense capabilities.


Tbe United Slates Is currently involvedajor program lo modernize and expand its forces.outlined in the Secretary of Defense's Annual Report lo Congress. Fiscal8 call for further improvements of the three military services. The Army will continue lorims tanks, which are being upgradedm gun. as well as additional Bradley armored fightingubstantial number ofpache attackalso will be iniroduced into the force. In ihe next

several years ihe Navy will be acquiring iwoNimilz-class aircraft carriers and will complete the reactivation of four Iowa-class battleships. The resi of US oaval forces will be modernized as well with the introduction of new cruisers, destroyers, and attack submarines. Navy air assets will be expanded wilh substantial numbers. AV-SBs.s. and ihe Navy's strategic capabilities will be improved wilh the deployment of ihe Tridentissile. The Air Force will continue to receive. US strategic nuclear forces'-will be improved with the introduction of Ihe Peacekeeper missile and theB bomber. | |

of Warsaw Pact defense activitiesin dollars measure the cost, usingprices and wages.roduce and man aof the same size, armed with the sameoperated in the same manner as that of


In this paper, defense activities are defined to include ibe following US activities and their counterparts in Warsaw Pact and non-US NATO countries:

National security activities funded by ihcof Defense.

Defense-related nuclear programs funded by the Department of Energy

Selective Service activities

defense-related activities of the Coast Guard.


In addition, they include border security force* thatartime mission of border defense, prcmllitary training performed by civilian schools, and pay for reservists funded by civilian enterprises] |

They exclude:

space activities that in the United States would be performed by the National Acionaulics and Space Administration.

assistance to foreign nations (except for the costs of uniformed personnel! and military sales.

Cml defense programs

Internal security or uniformed labor troops who do not have wartime defense missions.

The cosi of increasing and maintaining stockpiles of reserves such as fuel, spare parts, and raw materials.

Industrial mobilization preparations.

Dual-use infrastructure such as communications lines, reinforcednd wider roads

The costs of staiioninc Sovicl troops in NSWParc considered part ol Soviet defense

although there is some evidence that host countries provide support in the form of infrastructure and subsidized prices on supplies sold to Sovicl contin-gen's-1 |

These definitions are similar to those NATO uses to monitor defense spending of its member countries. The definitions of resource categories also resemble NATO's, although NATOarrower definition of RDTcVli costs. I I


Wc develop the dollar values of all Warsawactivities by identifying and listingof the forces such as individual classesships, ground forces divisions (dividedon the basis of type and readinessair regiments (categorized by aircraftur listing also contains forour estimates of order of battle,equipment inventories, and newTo these detailed estimates of activities,appropriate US prices and wage

Pfocuremtia in dollars represents estimates ofto manufacture Warsaw Pact weapons andin the United States using prevailing pricesand labor (including overhead andUS manufacturing technology. We use theunit dollar cost derived for Sovietto estimate the dollar value of procurementsame item (or the NSWP inventory. Becauseequipment is one or more designSoviet cquipmcnl, we have had anthoroughly research these cost estimates andthem quite


estimate of procurement of supportaccounts for roughly one-half of total procurement in the Warsawmore uncertain than our estimate of procurement of major weapon systems because the support category is difficult to monitor on an item-specific basis as is done for procurement of weapon systems. *"

Operations and maintenance) cover the cost of labor, materials, spare parts, overhead, and utilities required to operate and maintain equipment the way the Pact docs. We calculateostsercent of the procurement costarticulartbe percent is based on operating rates and costs of spare parts. Except for land arms, for which operating rates are adjusted for known differences in levels of readiness, wc assume that NSWP andractices are the same. Thisood assumption for maintenance practices because NSWP equipment is Soviet designed or produced,eaker assumption for operating practices because NSWP training and exercise rates differ from those in the Soviet Union. Although we know that NSWP operating rates have declined since the, wc arc presently unable to estimate the extent of the decline.esult, the estimates assume NSWP operating rates at theoviet levels. Civilian pay is calculated by multiplying the number of civilian defense workers by Ihe average pay of their US counterparts. Q

The dollar values of pay for Soviet personnel arc based on the estimated rank of the person the United Stales would assign to carry out similar functions. The Soviet conscripts' rank, and thus dollar pay, is based on the rank of US personnel with the same average time in service. To account for the fact that the United Slates would use enlisted men for many positions in which the Soviets use officers, dollar pay for some Soviet officers is an average of USofficer and commissioned officer payestimates are made for food and travel costs.

Because wc do not have detailed data on NSWP rank structure, we were only able to apply US pay rates to categories of personnel rather lhan to each individual rank, as is done for the Soviet personnel csiimatcs. The categories in each branch of service are officers, warrant officers, career enlisted men, conscriptconscript privates, and cadets. q

Research, development, testing, and evaluation (RDT&E) cosis fot (he Soviet Union are derivedethodology lhat assigns ruble values to ihein Soviel militaryhese include wages, materials, equipment, capital repair, capital construction, travel, training, and other operating costs. The ruble values arc then converted lo dollars by using an average military procurement dollar-ruble ratio. The purpose of using adollar-ruble ratio is to reflect the differenl productivities of research and development resources in the Iwo countries. In effect, we are assuming that the ratio of the dollar value of the research and development work performed in the Soviet Union to the ruble cost of these resources equals (he ratio of the dollar value of military hardware produced in Soviet defense plantshe ruble cost of the resources employed in (hose plan's. This approach is analogous to the purchasing power parity methodology used lo convert non-US NATO defense expenditures to US dollars (seeonsists of all phases of programs and activities from research through full-scale testing and evaluation. [

To estimate the dollar value of NSWPctivities wc first estimated expenditures for military research and development in domestic currencies in the countries for which wc had sufficient data to do so. We then computed the ratio of these estimated East Europeanxpenditures to estimated military investment and operating expenditures in domestic currencies, and applied this raliour

"See DI Technical IntelligencecerelY'limifiOf luwrr

Include* dec ironies, vehicles, engineering equipment, natales and eguiwee.equipment, and aircraft ground suprort euuipmcnt

estimates of the dollar value of total NSWPand opcraiing activities toollarNSWPe then added thevalue of total NSWP militaryoof other NSWP defense activities.

n the Dollar Cost Estimates Estimate of Sovirt Programs

Every year we revue the estimate of the dollar value of Warsaw Pact defense activities using updated, data on costs, production quantities, operating, and order of battle Presumably, our estimates for any one year (forould improve as time passes because we should know more about the quantities and characteristics of the weapon systems andproduced in that year. (|

The annual revisions to incorporate new ir.foiii.anonethod of assessing how well we estimate the dollar cosls of major portions of Soviet defense activities. If estimatesiven year charged sharply with everythai different analysts, improved data, and new methodologiesvery differentwould have tittle confidence that wc have an accurate estimate of military activities in that year On the other hand, if the estimates fluctuated onlymall amount and no bias were detected, we could have greater(hat Ihe estimates were substantially correct.

Our experience in the past has been such as toreasonably confident of the accuracy of ourIndeed, monitoring our annual revisionsstatistical techniques leads us to believe thatcost estimate for total defense activitiesto be in error by more than plus or minuslor any year6heerror can be much wider for some individualcategories than for the total because ofof errors at lower levels of aggregation tooffsetting. Wc generally base morein data that represent trends than in datalevels, especially the levels for

NSWP Defense Cost Esllmaies In general, our confidence in the estimate of the total dollar value of NSWP defense activities it at least as high as our confidence in the estimate of Soviet defense costs. Among the NSWP countries, however, our confidence varies. It is highest for the northern-tier countries and Hungary, and lowest for Romania and Bulgaria Our lack of country-specificon operating rates and our lower confidence in manpower estimates for Romania and Bulgaria make our cost estimates for those two countries more uncertain]

"Jetitl Ettinomlc Camimurr. fast Ei/ropta* Economies Sto* C'owik In.

Methodology for Kstimaling thealue or Non-US NATO Defense Programs

It was noi possible, however, to use ihe direct costing methodology for non-US NATO. andiven the very large research effort that would have been required. This appendix describes the development and resultsethodonvert expenditures for these purposes fromS dollars. Our method has several steps

Obtain the Defense Program Questionnaire (DPQ) expenditure data for each NATO country incurrencies.

et of appropriate conversion factors, which arc applied lo expenditures in nationalat the Iowcm level of aggregation possible to produce estimates in dollars for the goods and wrvtccs being compared,

Apply disaggregaled US defense price indices to remove inflation from Ihe dollar estimate To ihciedollar estimates.addof pay and allowances derived b> applying OSrales to NATO personnel Q

The quality of any comparison of two or more nations' defense activities depends ia Urge part on thefactors used to record themommonunit. For this paper, the factors for non-OS NATO expenditure* had to be consistent wilh Ihe factors used to convert Warsaw Pact expenditures'omestic price baseollar price base. Otherwise, the resulting NATO Warsaw Pact dollar comparison would be misleading. The most desirable method of deriving the dollar value of non-US NATO defense activities would have been lo directly cost in dollars each piece of hardware, each man. and eachwas done for the Warsaw Pact forces. In fact, enough data were available to cost non-US NATO pay and allowances directly in dollars, andonsiderable degree of consistencyhese categories accounted for half of Ihe IQlal dollar value of non-US NATO activities.

Defense Expenditures in National Currencies

NATO's DPQ is the basic source of information on each country's defense expenditures expressed incurrencies. Its standardized format provides ihe best available assurance of consistent reporting. Every non-US NATO country except France uses the DPQ format, allowing us lo convert to dollarsow level of aggregation. For France, we used budget data broken down by major resource categories andaggregate subtotals for procurement (capitaI'. operating costs, and research and development.j-

Developlnit Appropriate Conversion Factors

Problem* Wilh Using Exchange Rates as Converters

We did not use exchange ralesasis forfor Iwo main reasons:

rales reflect one country's demand for another's currency, not ihe amounts ol each coun-trys currency required to ensure equivalent domes-lie purchasing power One unitiven country's currency may be exchangeable for one unit of another's, bul ihe prices of equivalent goods and services in ihe two countries may still differ greatly.

of exchange rates is especially inappropriate because of the misleading distortions caused by fluctuations lhai have occurred since thender floating exchange rales. | |

Problems wilh tbe exchange rate method hsvc led two primary users of non-US NATO dollar defense esiiand the US Department ofto express dissatisfaction with it. Although NATO


it to develop expenditure totalsommon currency (USt warns;

Conversions of national dataommon monetary unit for purposes of comparison are not accurate to the extent that market exchange rates do not perfectly reflect the relativepotter of national currencies. In aof monetary stability the effect of such anomalies is limited, but "hen there are marked fluctuations in exchange rates, as at present, the resulting distortions can seriously affect the relationship between countries."

The Department of Defense uses exchange rates to convert non-US NATO defense spending to dollars for its annual "burden-sharing" report to Congressay of measuring members*he report states that another method would be more desirable but NATO has not yet developed one:

It is necessary toethod lo equalize exchange rate fluctuations The most precise method devised to date is the Purchasing Power Parity (PPP,he NATO interna' lional staff is constantly working on theofetter methodology to improve its price deflators. This will leadto the development <if an agreed PPP system for defense companions."

Tbe PPP Cows-pi

Tbe best way toepresentative conversion of ihe value of goods and services from one currency to another is loethod that captures the relative prices of (he same good or service inethod involves using the relative purchasing power of national currencies as measured by price ratios called purchasing-powerPP is an inlernatiooal price index indicating the number of unitsoreign currency required to purchase the same quantityood or service in that country as one US dollar will buy in the United

" NATO. ImermnionMStagJHemmatdw. ISMHMF.luly tVSi. p

" Detail mem ofvLaa. Allied Can/rltuiiotu toomlnou Defemr. March

pp may be cxpicsscd as the rutio of any two currencies. Most ppp studies, including work done in NATO, use dollarsase currency; any other unit or money could be used but dollars are familiarider audience.

The PPPs in This Study

We used ppps from the general economies of the non-US NATO countries as proxies for military ppps because of the lack of unique military ppps. In thehe United Nationsroup of Experts to study the feasibility of developing militarye Group concluded that toseful sel, countries would have to divulge extensive defease data To date, not enough NATO countries have provided such data. I

Our study is based on PPPs calculated for three benchmarkhc source is the International Comparison Project (ICP) of ihc Unitede interpolated bclweenyears according to (he relative rales of inflation in each country using disaggregated GDP deflator indices from an OfcCD study"! |

We tried to work at the lowest possible level of aggregation so thai the matchivilian PPP categoryPQ category would be as close as possible (see thePQ categorydiverse activities and had no exact civilian PPP counterpart, wePPigher level of aggregation. This procedure ensures that, al aall ihe DPQ activities are covered,

onstant Dollar Scries

Because each benchmark PPP represents prices and quanliticsarticular point in time, they reflect currentollar estimate in current prices was

Kravis. Irvine, ft al.nd Income.nhia Hopkini University Prtu. Baltimore.nd United Nations. World Cantparisotis of Pu'tha^lnt Paper and StealIVp. UN. New York.tlCD, NoMOttalndP.CD. Paris.


Analog Purchasing-Power Parities (PPPj) From ihe UN International Comparisons Projeel (ICPf


DPQ Category

Ships and boatt Trucks, butes. trailers


Nonelectrical machinery

Construction, mining, and metallurgy equipmeni

Clothing and footwear Food,nd tobacco Purchased transport Other conn ruction Construction Producer durables

Fuel and power Gross fixed rapttaI formation Gross domestic product

A weighted mix of civilianercent) and gross fixed capitalercent)

Dqwiwa of orfrmu Drfcnc Pbeaiag Qfi

mtittilt auframti amdnarmnamnio* u,


camuu ai aumili lo

To . kratihnr drruf ami MMM, -r

mmrd thi mmmtpnmHretrknt mmmmrp" W

of (ombai whutn is similarhr foduilum id

-tdand laatuutlk* <rhictfi unj ir, eMIuM infamy

Aircraft,hips and harbor craft Transport vehicles

Missile support systems, electrical and communiat lions equipmeni

Artillery, weapons and small arms ammunition and explosives

Engineering and military road equipment, combat vehicles <



Other personnel'

NA TO common infrastructure'

Military construction

Soneoneurrent spare parts, other equipment and supplies i

Petroleum product i

Other operations and maintenance t

Other defense t

Research, development, testing, and evaluation "The urn/i*

Iammmcuaaa, nwrntus. roads, ami

btrntr rrti-

i formr dpqkal air biaad riwafk to tow as mwh nf ikr ood) at mt mm mmt

On overwomol pt'iowxllr umalmlri tomtw ol mater'ali


by dividing each NATO country'sfor. andn current domestic prices by these PPPs. These figures were then convened to5 dollars usingUS dollar price indices for military goods and services. | |

Assessment of theP Method

PPPs are better conversion factors for Warsaw Pact-NATO sizing comparisons than exchange ratesthey are more representative of the goods and services being compared und do not fluctuate with changes in the currency markets. Figurehows how much exchange rates and analog PPPs fluctuated in the period under study. The line showing the weighted average change in our defense PPPs it relatively Ail and shows lhat the PPPs have increased fairly smoothly over tbe period, reflecting rates of inflation that are higher in the non-US NATOthan in the United Slates The fluctuations in tbe exchange rate line, on the other hand, portray changes in the relative sizes of countries' contributions to the common defense in ways unrelated to underlying trends in real growth in defense expenditures. For example,9 the United Kingdom had the fourth-largest defense expenditures In NATO whenin exchange rale converted dollars.owever, Ihe value of British defense expenditures increased in terms of the dollar, reflecting Iheof the pound relative lo (he dollar. Thus, British defense expenditures valued in dollars rose to second place wilhin NATO with no appreciablein sterling defense outlays Whereas iheof ihe German mark and the French frank relative lo ihe dollar was considerably less-tbe variation in exchange rates offset increases in German and French defense expenditures incurrencies thai were larger than Britishincreases expressed in sterling.^

Methods for Estimating NATO Military and Civilian Pay

Pay andarge portion of NATO defense expenditures, were priced ilireeily in dollar* without using PPPs. Military pay and allowances in dollars

were based on the pay of personnel Ihe United Stales would assign lo carry out functions similar lo those in non-US NATO military forces The concept is lo match pay to positions or jobs, not ranks. For each country, wc estimated dollar pay rates for ihrce categories of personnel: officers, career enlisted men. and conscripts For civilian pay and allowances, wc multiplied the annual number of civilians reported io the DPQ for cnh country by the average cosi of pay and benefits fordirect and indirect hires working for the US Department of Defense.


Pay Rate*

The dollar pay rale* for NATO officers are based on ihe actual average pay and allowances received by US officers in fiscal year IMS. We obtained these data from Ihe Appendix lo ihe US Budgethich reports personnel cosis separately for officers and enlisted men, and subtracted subsistence cosis.these by the number of US officers given in the Budget appendix and subtracting food, we calculated average pay and allowances per officerer year

Career Enlisted Pay Kales

Two career enlisted pay rates were developed. The first was for countries that, like the United States,olunteer military: the United Kingdom and Canada. This pay rate is the average actual pay and allowances for US enlisted men iner man The second pay rate is for countries with conscription Pay to career enlisted personnel in these countries was calculated as (he average pay to all US enlisted personnelnd halfii ec career enlisted pay was

. r

Derivation of Dollar Pay Rales for NATO Conscripts

Average Length or Service

ITo One Equal Tunc

" Service







Ufliicd Kingdom, Canada, and Luxembourg liavo volantecr

sen ice.

Pay Rales

The dollar pay rates for conscripis were chosen lohe different terms of conscripted serviceATO countries. For countries tn which the average time in service is live to seven months, the USate was used. Conscripts with seven toonths' average experienceeighted average ofay with the weights chosen so lhat the resulting implied average experience equals that of the NATO country's conscripis, using an average of six monthss andonths for(seep

Adjustment for Personnel Practices

The US proportion of2than in most other Western countries. All NATO countries except Denmark use enlisted men io do some jobs thai in the United States are done by officers, and thus wc assign the payirstto some of the enlisted men inoaniriee In West Germany, for example, where officers makeercent of military manpower, wcercent

uy rale it auuoiod Tor conicrtpu in counirlei -nth average cwssuij* iline in service ol five to seven months.

of toulcrcenithe career enlisted ranks and give it USpay. There are two exceptions toCanada has virtually the sameofficers as the Untied Slates; therefore, nofor different personnel practices is maders the only NATO country wilh aof officers lhan ihe Unilcd States. As.is for ihe Warsaw Pact countries, we giveofficers ihe pay of US enlisted men.arc assumed toid level NCO gradeabout



Figure IS

Comparison of Direct-Cost

PPPs With Analogs und Exchange Kales


We multiplied the annual number of civiliansin the DPQ for each country by tbe average per man cost of pay and benefits for civilians, both direct and indirect hires, working for the US Department of Defense.1 I

ol Results

Wc believe that our overall results are reasonable because they stood up well under two tests that we performed First, we compared our work with that of the UN Group of Experts, which developed military PPPs for the Uaited Sutes and three other NATO countriesigurehows the relationship between our analog PPPs and the Group's Althoughpproached the problem differently, sve ended up

"UN (IrnfrilReduction olMilitaryCon* itiycitaa it Miliary Price Index" and Purehaunt Pe*er Paniiet foe)S. Q

wilh similar findings for the totals. Where tbe Group believed ils data to beand RDTaUresults matched ours fairlyhe UN's persistently low Italian PPP for these categories was triced to differences in the treatment ofThis discrepancy is not troubling because we

'thr UN PPP for Uilun eceraiiiics is kwvet lhan uun tlWH (titira pay tun.

dtcccilynon-US NATO personnel can In fact, when (be UN personnel parities are substituted for our directly coiled personnel estimates, our overall Italian PPP matches that of the UN almost exactly.

The UN's PPPs for investment were uniformly higher than our own. Wc decided to carryecond test to assess the quality of our analog conversion factors because the UN admitted lhat its dala were weak and uneven. For this purpose, we costed in dollars (using the same dollar-oosling method used for the Warsaw Pact) six non-US NATO systems: Iwo tanks (Ihe British Challenger and the German Leopard Ilk two frigates (tbe British Broadsword and the Dutchnd two aircraft (the French0 and

the) An implicit dollar cost PPP was derived by dividing (he national currency price of these items by then dollar cost. Wc found that our analogs were reasonably dosehese "actual cost" PPPs; live average difference wascrceni,with an average error ofcrceni forra(es (see. Wc concluded, therefore, (hat the analog methodology yields more reasonable results (nan conversions using exchange rates.|


Comparisons of Ihe Characteristics aad Costs of Selected US and Soviet Weapon Systems

This appendix presents comparisons of Iheand dollar costs of selected US and Soviet weapon systems, identifying the key featuresto the differences or similarities between the estimated dollar costs of the Sovicl systems and US weapons costs Tbe estimated dollar cost of the Soviet weapons discussed arc derived by the building-block methods discussed in appendix A. The costs of US weapons were obtained from US Department ofSelected Acquisition Reportsethe SAR data to make them comparable in coverage to our estimates of the dollar value of tbe Soviet weapons. Ia the case of aircraft, for example, wc adjusted the SAR cost to reflect only the fly-away cost plus initial spare parts and excluding any support

should be aware thai our confidenceof the costs of on individual Sovietii lower than our confidence in costa higher level of aggregation Tbe margin ofbe wider for some individual items than forbecauseendency of errors at low levelsto be partially offsetting.

Readers should also note that these comparisons do not by themselves indicate which weapon systembelteror do theyomplete measure of weapon system capabilities. Suchwouldet technical assessmenttbe scope of this paper. We invite comments from our readership on how to improve theseand how to make them more useful.


Mayjnihk he igfcrvbatty Lu vjruMe hng&t

rvaKiaal awTuraen: In addition so bang heavier tftiatanks and Lrnngmarngia* am) aa automatic rubermilnml* uhumb* Ibt us Mlqn-ppc4cevdynksnuM (aa siaMuaiaaa

ijv.ee with an ad> saccd dfe-on-ipe-nvm eajibiliu (hat ihc Soviet iaatsoonoi hate Incnrnnaiitanwiihike0 AI uaa. on iheeaka hand, (he Sonrlmen advanced triquetral synems. eleeire-oplrcs. gan-misuk tyilemi. and laminated

Tank Comparisons

A beams




2 for-


2 re-

1 reverie









7 for-














solo lion












(owvdfr um coil al





i.ooo tmi'M. cr mi


Infantry Fighting Vehicle Comparisons

Self-Propelled Artillery Comparison





1 i


Weight jioni) _

Speed Ikilomtlc-t

Sovicln SP Gun

Weight (fo*^





Speed (hilomeiersange (lilomrterst

Capacity {troopt)

Range (kilometers)


of tun (mim)

t (1


urbo dicstl


Rale of Are (rounds



Area men!

V^dieiel dicsel ejiesel Cre*

'3-inm smooth ioie gun. 'M-mm

M-nun mm gun,

cannon. TOW,

Spandrel macmnegun

and Spigot


eady. J




iDion 6 million

Conml tost


Prmripal siniUrklrs: Thend ihe Soviet 2S3 ai similar in ifcost character iitics thai drive their respoctne coats, namely ihc hull, suspension, and tuner Tney are also simitar in -eight and in ibe range of their gun).

production 0

(dtTragr ualiinlrs.i do/Ian)



diffmnccs: Tberadley is heavier lhan compa-rabfc Soviet infanlry fighting vehkses.ore powerful engine, and ii oQuippedhcnnat imaging sight and the TOWTGM



Bomber Comparison


Transport Aircraft Comparison

differewceK TheBore advanced and redundant avionics suhe than the Blackjack,i(hcraod more fuel-elfieiem engine.lso embod.e. advanced lecanotcsy design for drag redcciion. reduced radar cross section, and forward canard control surfaces that enableflight operation in turbulent air.


he8 cabin it pretsurired. nhereai theressurired only in the upper cabin,fl's landing gear has somewhat belter Rotation lhan Ihe CondorV.B alloai quicker loading and unloading cperatioct; and it has greater redundancy in iti electronic control system*.

Air Superiority tighter Comparison

Counterair Fii>htcr Comparison

differences:nlike thes designed lor siicrafl earner operations. Thii requires special fcaiircs foe eaupnlt-aisuted takeoff, for landing with use of arresiirij devices, and for maintenance onboard ship;ngs for spaceand corrosion resistance for operation! at sea. In addition,8 was designed to have capabilities In ihe ground attack and air superiority roles.(heas designed primarily for the counters" minion, with ground ailackiry role.

Ailack Helicopier Comparison


Nuclear-Powered Attack Submarine Comparison


Cobra AH-IS


empty (ktlosrami)





ma meal


gun. rockets


(arerate unit toil of first ISO until. CY mi


he Sovielind helicopter it larger, heavier, and fatter lhan ibe US Cobra. The Hind ii larger because ii wat originally designed lo feny iroOpa into combai: il ii fatter than Ibe Cobra because it hai No engines compared to one on the Cobra. Tbe Cobra, on the other hand, has relatively advanced avionics.

ll SSN it thorier and lighter lhan ihe Lot Angeles, has double-hull conslruelion. and two nuclear reactors.




Nuclear-Powered Aircraft Carrier Comparisons

Table C- II

(iuioW Missile Cruiser Comparison


Beamength {mtittn


Leonid BrerJinev Nimiu







Flight deck width (meitn) 73




short lake-Oil and landing aircrafi. probable defemire mmiks (SAMtl, eon-enonal lakculT and landing aircrafiski jump alifts


estimated production

Ceoi (owner unit toillMts. CYI9BS



disphcemeni <roas]



'- in.li runi

m Galling guns

m Phalans de-

v.it> launches. Mi missilei

Harpoon Quad

ock-ei-propclkd depth charges

Standard /ASu-in launchers



in hull

riple launchers


(average unti toil a/ firstmm. CYinSdol-ton,



Burnt Blank

aroei she AbUincontrol system, has numcrnus redundantsystems, and incorporates features designed lu provide belter Imng condiiioni tor ihe


lalMical Tables


Dollar Vahj* of VVarsai Pact and NATO Defenseby Rnourer*




Dollar Value or Soviel and OS Defence Activities by ResourceWfl













Dollar Value of Non-So.ict Warsaw Pad IK'ferBc Aclirilies by Resource*


im OSS


ttf.it (ii

C omi ruction
















Cuimila iii*_


























NATO lain!




























Because of roondina. data may not add io toiali inrmn.






5 2









Original document.

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