CiA HiSTGHSCAL,
RELEASE AS
MEMORANDUM FOR: Deputy Director of Central Intelligence
of Soviet
ueienso Expenditures:
1. This memorandum is to inform you of the results of an estimate of Soviet defense expenditures wh*ch was completed recently byC
^Jwho stated that he had viewed aat tne central Statistical Administration whichwo-page table showing an accounting of Soviet defense expenditures9 and
JaXso
^:hat he could make estimates offor earlier and subsequentupon his knowledge of
soviet statistics and accounting practices and his understanding of domestic and foreign
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?Ato impossible to. determine
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Secret
r
3. 2nthat Soviet de-
fense expenditures, in current prices, grew from nboutillion rubles0 to aboutillionhe time series shows sharp increases5, with only modest growth in theyears. For the yearshe estimate stabilizesillion rubles. The estimates of total expenditures for each year are shown in the following table:
Estimated Soviet Defense Expenditures (Billions of Current-Year Rubles)
7
0
4. We have not yet had time to
estimates and methodologies in detail. At first glance, however, they do not fit well with our knowledge of the pace of Soviet defense activities. Foi example, thereack of growth in his estimates afterperiod characterizedapid expansion of Soviet strategic and othera slight decline4 * hirty percent increase in Soviet
p?ndin2ch is not reflected in our perception of Soviet forces at that time. The oSJ SriXrowth89 also seems forco^ertWlthf the buildup in strategic alSSLh il occurred,in the second half of,
in the USSR which began
_3
EDWARD W. PROCTOR
Deputy Director for Intelligence
Attachment:
Description of USSR Military Expenditures.
Description of USSR Military Expenditures
SSR military expenditures rose moreimes and amount at present to aboutillion rubles.
According to officially published data defense expenditures areercent of thosehe military expenditures of tho USSR have increased for all items [articles] of expenditure,ignificant growth in the personnel of tho Soviet armed forces. The growth of armed forces personnel has been due both to the natural increase in the number of those conscripted for active duty in the Soviet army and to8 reform of tho law on universal military service which resulted in the draftingyear olds. Onhe Soviet armed forcesillion men (censushereillion0 thereroop reductionillion men ort present the personnel of the armod forces is estimatedillion men. The Soviet army was restored to its former manpower strength in It should be noted that the growth of armod forces personnel was marked by somewhat higner rates than the number of those studying in the Soviet army. This occurred because several educational institutions of the USSR Ministry of Defense were transferred0 to otherho Odessa Medical Tekhnikum, the Moscow Aviation Tekhnikum, etc. The increase in the size of the armed forces resulted in an increase in expenditures for maintaining them.
2 the Sovifit government raised purchase prices (zakupochnyye tseny) for farm produce by aboutercent, particularly for livestock products. Thisise in wholesale and rotaii prices which, in turn,rowth of military expenditures. arge sum of money was spent2 for support
of the Cuban adventure. 2or USSR defense rose more slowly than in the preceding years. harp growth in defense expenditures was connected withcale support by thet government of the Viet Nam Communists An tho war which started in Vietnam
7 tho growth of defense expenditures was oausod by Soviet support of tho Arab countries in tho Israeli-Arab conflict. In these years, on the other hand, thereizeable reequipping of the Soviet army with modern military hardware. hereignificant technical rearming of tho Soviet army. 8 the Sovietadopted the new law concerning the military service of citizens of the USSR, calledyear olds for active military service, planned and carried out the occupation of Czechoslovakia, increased the draft quota of reservists for retraining on the basis of modern weapons. Thisignificant increase in expenditures for defense. 9 the number of Soviet troops in Czechoslovakia was increased and the USSR carried out in this country (sic) large capital construction of military units and increased expenditures for tho procurement of armaments. for the technical equipping of the armed forces of the USSR grew at high rates. These years were also marked by increasing tension between China and the USSR. The Soviet Union greatly strengthened its eastern borders, created new military units, increased their military hardware, andarge relocation of tho armod forces in an easterly direction. rogram was undertaken in these years to build an anti-aircraft defense belt around Moscow and to create an anti-missile screen (zaslon). he policy of technical reequipping of the Soviet Army was continued. Many types of tanks, aircraft, missilas and other armaments were replaced. 3 the Soviet government supported Arab aggression against Israel. This year was markedignificant increase in the call-up of reservists for retraining. Thooe measuresurther increase in military expenditures.
Wo estimate USSR military expenditures05 billion rubles1 prices). Thisis based on fairly precise data concerning; the size of the Soviet armed forces. Articles,, andf the Otsenka were calculated on the basis of precise data. Articles,ere estimated taking account of trends in the growth of military expenditures and on the basis of other factors that influence the growth of expenditures for these articles. In addition account was taken of the growth of national income, the increase in the income side of tho state budget, and trends in the develop-msnt of the Soviot economy. Tho reduction of Soviet troopsillion men was taken into consideration in the calculations. Also considered was some rise in wages in thelight reduction in the taxes of workers and employees, as wollignificant increase of investments in support of the Cuban crisis and other factors.
, investment
in the development of subsidiary enterprises of thi USSR Ministry of Defense increased and capital invtot-monts in tne development of rocket technology Increased substantially.
According to our calculations2 roseercent, but according to officially published data the increaseercont Tho increase of expenditures for defenso occurred mainly as the result ofi
1. Rises in tho prices of livestock Increases in investment for armaments. 3. Expenditures in support of the Cuban crisin.
According to officially published170 n with the troopgrowth was due to an increase of personnel inarmyjw call-up. [Also],the dovp 1of the
capital invest-
A revision upward of wholesale prices for hrtavy industry output, coal, metals, and other articles caused some increase in military expenditures.
Military expenditures continued to increase We calculate thoir growthercent as comparedut according to officially published figures it3 percent.
3 thereignificant crop failure in the USSR. The Soviet government purchasedremendous quantity of grain at relatively higharge quantity of livestock products was also Purchases of food products from tho farm population were increased at prices formed in the local markets. These measuresharp increase in outlays for the food supply of the Soviet armed forces. Outlays forncreased somewhat. Because of tho serious economic and financial difficulties3 tho capital investment program was not fulfilled either for the economyhole or the defense system of the USSR.
USSR defense expenditures continued to grow We calculate that they grewc percent as compared The officially published figure indicates some reduction in military expenditures. This is explained by tho following reasons: receipt of food products from the subsidiary farms of the USSR defense system was increased becauseelatively good harvest, and thiseduction in expenditures for article 7 (of the Otsenka]. However procurements of weapons increased somewhat Also, investments in subsidiary agriculture were increased
4 the USSR launched an initiative to curtail the arms race and military budgets. This was the basis and main factor that prompted the Soviet government to publish reduced [understated] figures on defense expenditures45 whereas in fact they rose.
We did not make an allowance in the respective articles tor the arbitrary reduction of military expenditures, in the calculations of actual expenditures4
ere tied in [prlvedeny] e officially published figure in accordance with trends. It is not possible to calculate what was intentionally reduced. We have assigned all the decrease in militaryto articlehich is possible but we are not fully certain of it.
According to the officially published fiaure military expenditures continued to declinend amounted8 billionhey were at2 level. However, this does not correspond to the real state of things. Even assuming that the Soviet government did not increase purchases of armaments the size of the armed forces grew significantly25esult of the natural increase in persons of draft age. Furthermore the USSR greatly increased the production and procurements of armaments5 iii connection with the beginning of the Vietnam campaign. Expenditures for armaments also rose in conjunction with the strong support of India in the military conflict with Pakistan. We calculate that actual military expenditures of tho USSR56 billionincrease5 percent in comparison
Starting5 [and continuing] 6 the new economic reform began to bo widely introduced in the USSR. esult of the introduction of this reform the government of tho USSR freed sizeable budget funds for use in military purposes. Capital investments, which previously had been financed entirely from the state budget, were in large part replaced by long-term bank credits. The revenues of theidget were Increased, on the other hand, by establishing new forms of payments from profits by economic organizations.
Other measures wore also carried out and theysignificant growth of USSR state budgoc revenues and other funds used for military purposes. This made it possible for the Soviet government, beginningo increase tho production and procurement of armaments. Furthermore,6 and aubsequont years the Soviot govornmont redeployed the armed forcoa of tho USSR in an easterly direction. This required an increase in tho capital construction of buildings and structures as well as some increase in expenditures for tho money allowance (of servicemen].
A growth of military oxpendituros6 is observable not only in our calculations but also in the officially published figure. Consequently one con conclude that the Soviet government did noteal paring of the military budget eitherr in subsequent years. i
ere markudignificant increase in tension caused by the Israeli-Arab conflict and the incursion of Soviet troops into Czechoslovakia. These factorsew growth In USSR military Investments for the procurement of armaments wore greatly increased. In addition, the manpower of the USSR armod forces was significantly increased by tho call-upyear olds in accordance with tho new law on universal military service. During tho period of activity inignificant number of reservists was called up, primarily command personnel and personnel licensed to drive motor vehicles. Aboutercent of tho transport equipment of economic organizations and enterprises ir. the western oblasts of the USSR that wore suitable for transporting liquid fuol were also mobilitzed. These measures required an increase in military expenditures, particularly in tho articles relating to armaments and the construction of now facilities, communication nd military units on Czechoslovakiaa territory. Expenditures for food end nonfood material supplies for the Soviet army, expenditures for the money allowance, etc. also incruased Tho total increase of military expenditures inmounted toillion rubles (our calculation).
In thisignificant increase in military expenditures also occurred. Thereuildup of the military power of the USSR, especially of new equipment, planes, ships, and missiles of new types. The troops in the south and east of the USSR were strengthened. Creation of an antimissile defense belt around Moscow and several large industrialconstruction of which was begun inat full speed, nder these conditions outlays for the construction of new buildings and structures as well as for the purchase of new armaaents increased at high rates. he military expenditures of the USSRum in excess ofillion rubles, or amounted to about one-third of the entire USSR state budget. In the following years USSR militarywore stabilized at thede limits and grew much morb slowly. This is explained by the important economic difficulties which confronted the Soviet economy in these years. In practice the economy of the Soviet state did not endure the high military expenditures that the Soviet government imposed on it. osult the Ninth Five Ycnr Plan in its original design was not fulfilled and alreadyll of the plan assignments were scaled down except for military expenditures. USSR military expenditures increased somewhet3 in connection with the Arab aggression against Israel and significant military support to the Arab countries. In our opinion military expenditures4 had to be decreased somewhat since sizeable sums were required to fulfill the messed-up plans of the Ninth Five Year Program which was coming to an end. At present USSR military expenditures ore approximatelyillion rubles per year andup aboutorcont of the USSR state budget.
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Identical mpmontoi Director of Central Intelligence Deputy Director of Central Intelligence Deputy Director for Operations
Deputy to the DCI for National Intelligence Officers Director of Economic Research Director of Political Research Director of Strategic Research
The Acting Director, Defense Intelligence Agency The Director, National Security Agency
Assistant Chief of Staff for Intelligence, Department of the Army
Director of Naval Intelligence, Department of the Navy
Assistant Chief of Staff for Intelligence, Department of the Air Force
Director of Intelligence and Research, Department of State
Director of Net Assessment, Office of the Secretary of Defense
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