SOVIET DEFENSE EXPENDITURES, 1963-1972

Created: 3/1/1972

OCR scan of the original document, errors are possible

DIRECTORATE OF INTELLIGENCE

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Intelligence Memorandum

Soviet Defense

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CENTRAL INTELLIGENCE AGENCY Directorate of Intelligence2

INTELLIGENCE MEMORANDUM

Soviet Defense

Foreword

Onoviet Finance Minister Vasiliy F. Garbuzov,peech before the Supreme Soviet, announced that planned defense expenditures2 would again9 billion rubles. This marks the fourth consecutive year of an almostlevel of planned defense spending as announced by theexpenditures were planned7 billion rubles99 billion rubles0

The total amount to be spent for defense announced each year is the only official figure which publicly alludes to the overall Soviet defense effort. It is

unclear, however, what portion of militaryas defined in theincluded under the Soviet defense budget. Most military research andand military space programs are believed to be

financed by the science budget rather than the defense budget. Expenditures for military aid to other nations or for stockpiling of military commodities also may be covered in part or in total in other budgetary accounts.

For these reasons, the announced defense budget iseliable indicator of the total amount of Soviet spending for military-related activities or of overall changes in these activities from year to year.

Hote; This memorandum waa prepared by the Office of Strategic Research and coordinated within the Directorate of Intelligence.

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To estimate this total and Soviet spending forprograms, direct costing techniques have been developed.

This memorandum presents estimates of Sovietexpenditures for the32 developed by the Office of Strategic Research and based for the most partirect costing Soviet defense expenditures are reconstructed by costing in detail the observed Soviet forces, unit by unit, to provide an appreciation of the economic implications of Soviet military programs.

Ruble expenditures estimated by this method describe the defense effort as it would appear to the Soviet military and economic planners. The dollar valuations of the Soviet defense programs provide the US reader with an appreciation of the magnitude of Soviet defense activitiesasis for comparing the defense efforts of the US and the USSR.

This memorandum is the fourth annual publication

occasion for reporting on intelligence estimates of Soviet defense spending. This year methodological refinements have made it possible to excludefor civil space programs from the

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A summary begins on page 5.

Summary

Page

5

The Soviet

Expenditure Trends

General Purpose Forces and Command

and General

Strategic

Military Research, Development, Testing,

and

Military Manpower

and USSR Comparisons

Strategic Attack

Strategic

General Purpose Forces .

Military Research, Development, Testing,

and Evaluation .

The Economic Setting

The Burden of Defense ProgramsCompetition for

The Five-Year

General Purpose-

Military Research, Development, Testing,

and

Total Defense Spending

Annex

Page

Comparison of US Expenditures Withof USSR Expenditures for 0

Estimated Soviet Expenditures for. . .

Estimated Soviet Expenditures forMajor Mission and Resource

Estimated Soviet Expenditures forand Strategic Defense, by 16

Estimated Soviet Military Manpower, by Major 18

Comparison of US Expenditures With Dollar Valuations of USSR Expenditures for Strategic Attack and Strategic 22

Comparison of US Expenditures Withof USSR ExpendituresPurpose 24

Comparison of US Expenditures Withof USSR Expenditures

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strategic attack, strategic defense, and military RDT&E. ecline in strategiceveling off of ICBMprimarily responsible for the low growth rate

Soviet defense expenditures2 areat5 billionillionn increase ofercent over those Continued increases in militarynd strategic defense spendingrojectedin strategic attack expenditures. Outlays for the other missions are expected to remain near1 levels.

A comparison can be made between Soviet and US defense efforts by estimating the approximate dollar value of Soviet defenseis, bywhat it would cost to reproduce the Soviet military forces and activities in the US. omparison shows that cumulative US expenditures

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Comparison of US Expenditures Wilh Dollar Valuations ol USSR Expenditures for

3 have amounted toillion dollars, compared with the equivalent ofillion dollars for the Soviets. US defense spending has displayed more fluctuation than has Soviet spending (see facingnd with the exceptionhe US expenditures for each year exceeded the Soviet effort valued in dollars.

A mission-by-mission comparison between Soviet and US effortsixed pattern. The dollar valuation of the Soviet effort for strategic attack is about one-third more than US spending. ubstantial part of Soviet outlays, however, was for peripheral attackwhich the US has no exact counterpart. The cumulative Soviet and US spending levels for intercontinental attack forces are about equal. This comparison, however, understates the long-term US effort. US expenditures on forces for intercontinental attack peaked3 and the sizable outlays of the earlier years are thereby excluded. The dollar value of Soviet spending did not reach its peak

The Soviet effort for strategic defense has consistently exceeded that of the US. oviet outlays valued in dollars were about three times as great as those of the us, and the gap increased steadily over time. 3 the Soviets spent the equivalent ofillion dollars more than the US for strategic defense and1 the difference wasillion dollars.

, US spending for general purpose forces exceeded the dollar valuation of Soviet expenditures for such forces. Even before large-scale commitments of US forces in Vietnam, the US spending effort was aboutercent higher than that of the USSR. At the height of the Vietnam conflict, US general purpose spending averagedercent above the Soviet level. Since the start of US disengagement in Vietnam, US general purpose force expenditures have been falling andhe Soviet spending level measured in dollars by less thanercent. imilar pattern exists for command and general support expenditures.

Total US spending for militaryas aboutercent greater than the Soviet effort for the same period. Recentin the US spending for military RDT&Ewith continued growth in the Soviet effort have resultedollar valuation of Sovietfor militaryhich has exceeded that of the US for the last two years.

Analysis of the Soviets' ninthndicates that the resource situation in the USSR will remain tight over the next four years, thus providing incentive for holding military spending down. The Soviet economy, however, is capable ofevenpresent pace of military expenditures if the leaders are willing to pay the price in terms of other Moreover, institutional forces inherent within the Soviet military and defense industries would argue against any sharp reductions in defense outlays over the next few years.

Soviet military programs for even the near future cannot be confidently predicted with the precision necessary for constructing detailed cost estimates. This is particularly true at the present timeof the uncertain impact of the strategic arms limitation talks on Soviet plans. The following general observations can be made, however.

Overall spending for Soviet strategic forces for the next five years could be stabilized at about1 level and still make available sufficient funds toontinued upgrading of the forces.

Spending for general purpose forces will probablylow but steady growth if present trends in weapon modernization continue and if there is no substantial expansion of manpower levels.

Although the rapid growth of the last five years is expected to taper off, militaryrobably will continue as the most dynamic element of soviet military spending unless thereadical shift in emphasis from military to civilian.

The cumulative effect of the abovetrends would cause total spending to increaseate of aboutear ineriod.

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Methodology

The estimates of Soviet defense spendingin this memorandum are developed for the most part on the basisetailed listing of Soviet forces. The force components so listed are multiplied by estimates of their unit costs both in rubles and in dollars.* The results are then summed into totals and subtotals, using expenditure categories similar to those used by the US Department of Defense (DoD).

The validity of the estimates of Soviet military spending based on direct costing depends on theof the underlying physical data base and the accuracy of the cost factors applied to that base. The physical data base on forces and weapons reflects the combined collection and analytical efforts of the intelligence community. Available intelligence information has made it possible toomprehensive and highly detailed inventory of the numbers and kinds of weapons and units that make up the Soviet armed forces. This extensive physical data base includes information on such items as deployment levels of Soviet strategic attack, strategic defense, and general purpose forces,of major weapons and items of equipment, and manning requirements of the forces.

Cost factors are known with less certainty. on Soviet costs is good for Borne types of

* Detailed estimates in rubles and inre contained in the The annex also presents key elements offorces which were estimated for The ruble figures are estimates ofUSSR pays for its military forces anddollar figures are estimates of what theand programs would cost if purchasedin the US. The dollar figures arevaluing individual Soviet forces and programsUS prices. They are not obtained byestimates of total spending to dollars withruble-to-dollar ratio. As the mix ofby the Soviets changes, the ratio of overallin rubles to that expressed in dollarschange. As a result,uble ertain dollar expenditure in one year

will not necessarily equate to the same dollarin another year.

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spending--notably personnel costs, which accountubstantial share of total spending. Many other cost factors, however, must necessarily be derived from analogous US data and experience. On balance, considering the good evidence and degree of detail available on force levels and weapon programs, and the carefully constructed cost factors, the expenditure levels and trends are believed to be reasonably accurate reflections of the costs of the Sovietestablishment.

The direct costing approach cannot be used to estimate what the Soviets spend for military research, development, testing, and evaluation (RDT&E) because of the lackomprehensive data base. The Soviets, however, haveubstantial amount ofdata and other descriptive literature about their scientific activities, including information on manpower and facilities and some expenditure data. Although there are gaps in the data and theof the data is subject to uncertainty, the available information doesasis for RDT&E

cost estimates. These estimates correspond in

ceptual coverage to the categories of USctivity funded by the DoD and by the Atomic Energy Commission (AEC).

Estimates of soviet spending for militaryhould be viewed as much more approximate than the estimates of outlays for deployed forces. First, because the basic data come from soviet publications, the validity of the estimates depends upon the accuracy of Soviet financial accounting andorrect interpretation of the published information. Moreover, the allocationajor portion of Sovietxpenditures between military and civil applications is based largely on published Soviet data concerning developments in the Fifties. Finally, the transition from rubles to dollars and dollars to rublesumber of theoretical complexities as well as practical problems.

For the past few years, the USSR hasless detail than before on its spending for science so that the estimates of militaryxpenditures for the current period are particularly uncertain. 0 and subsequent years they should be regarded as preliminary and subject to change.

The Soviet View

Expenditure Trends

Soviet expenditures for military purposos grew from an estimatedillion rubles3 to aboutillion rublesn overall increase of aboutercent (see chart below). Excopt for the first two years, defense spending increased each year during the period, but at varying rates of growth. Spending was relatively constantndat an average annual rateercent, but the rate fell toercent

The magnitude of total Soviet defense expendi-.tures is determinedarge extent by expenditures for general purpose forces, and for command and general support elements that cannot be allocated to individual missions (mostly logistic, maintenance, communications, transportation, medical, and trainingogether these two major categories account for half of the total (sec facing chart). The pattern of total defense spending, however, has been shaped mainly by an increase in outlays for strategic attack forces6nd by moderate growth in spending for strategic defense, together with large annual increases in militarypending in the

Estimated Soviet Expenditures (or Defense,ol Growth

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Estimated Soviet Expenditures torMajor Mission and Resource Category.Category

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lato Sixties. Expenditures (for these elementstho Soviet drive since the mid-Sixties to catch up with the US in strategic arms. The Soviots devoted considerable resources in this period inorce to roughly match the US in numbers ofattack weapons. In the past few years the effort has been shifting to military RDT&E.

, theas the period of most rapid growth of total defense xpenditures increased only slightly as growth in spending for militarynd strategic defense was largely offset by ain outlays for strategic attack. Analysis of programs now under way indicates that total spending probably will grow only moderately

Moderate growth in Soviet defense expenditures estimated12 does nottatic defense establishment. On the contrary, the present level of Soviet military oxpenditures--the equivalent of more thanillion dollars perlarge enough to maintain existing force levels and provide

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teady flow of aboutillion dollars for new hardware for the weapons inventory.

Considering the relative shares of the resourceinvestment, andby the defense establishment, there hasignificant shift between investment andxpenditures (see chart on. perating costs accounted forercent of the total resources. Investment spendinglose second, consumingercent, andccounted forercent.

Operatingare composed of personnel costs and operation and maintenancegrown steadily throughout the period and now account for almostercent of total defense outlays. Thiseflection of the increase3 in both the total inventory of weapons and the total number of people in the military establishment. The only major class of weapons to haveignificant decline in numbers deployed3 has beenby someoats. The total military aircraft and the total number of minor navalin the Soviet forces remained at about the same level, but major naval combatants, strategic surface-to-surface missiles and surface-to-air missiles have gone up substantially. Total manpower3 byillion men.

Investmentinclude equipment procurement and construction of military facilities-have declined3 and1 accounted for onlyercent of the total. Also, unlike operatinq expenditures, investment outlays have fluctuated over the period. Generally as the procurement of oneends, procurement of another begins. For example,5 thereelatively low investment in strategic land-based missiles. Purchases of thead ended the year before and theas at the end of its production run. Procurement of thendas in progress, but thendere just entering the inventory. rocurement had not yet started. In all,issiles During the peak investment yearheas still being deployed, thendrograms were going strong, and preparations were under way to deploy the issiles

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were added to the inventory in that year. Investment in land-based strategic missiles has declined sharply8 as deployment has leveled off. Withndeployment nearing completion, onlyissiles were procured

Militarypending has risen rapidly, especiallyndith an estimatedercent of all Soviet resources devoted to defense, almost equaled the investment share. The shift toxpenditures apparentlyhange of emphasis from deployment of large numbers ofsimple weapons to development of moreweapons which are deployed in small numbers.

General Purpose Forces and Command and General Support

About half of total Soviet defense spending goes for general purpose forces and for command and general support. With only minor exceptions, expenditures for both of these missions grewelativelyrate throughouteriodjudging from ongoing developments in theexpected to continue this trend Spending for the general purpose forces is the larger of the two, and is the largest single expense item of Soviet defense spending (see chart on. 4ommand and general support was the second largest defense expense, although it has been surpassed since then by militaryutlays.

Tablesndn the Statistical Annex present data on the deployment of Soviet forces and weapon systems since

Within the general purpose forces, ground forces generally account for aboutercent of total spending for the mission, naval forcesnd tactical aviation and military transport aviation for aboutercent each. The Soviets have addedivisions to their ground forces* There have been substantial increases in the number of aircraft and major surface combatants in the navy, and smaller percentage increases in the number of tactical aircraft and transport and auxiliary aircraft. The number of minor surface combatants has remained at about the same levelnd the fleet of general purpose submarines has gone down aboutercent.

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Strategic Forces

Expenditures for strategicand defensefor almostercent of total defense spendingut declined toercentand are expected to continue to fall Spending for strategic forces also haslight absolute decline, falling from anillion rubles3 to anillion rubles

Expenditures for intercontinental attack forces increased rapidly in the middle Sixties as the Soviets expanded their ICBM force, and remained high in the late Sixties with deployment oflass submarine fleet. Expenditures for the ICBM force, however, have declined sharply8 as deployment has

Estimated Soviet Expenditures tor Strategic Attack and Strategic Defense, by

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off (see facing chart). Annual outlays for peripheral attack systems were reduced by more than one-half37 and have remained relatively stable since.

The Soviet ICBM force increased fromaunchers3 to anaunchers The peak growth yearhen the deployed force more than doubled that of the preceding year. Growth of the operational force has tapered off since then.lass submarine fleet will have expandedoat8 to an estimatedoats by the end In contrast, the Soviet heavy bomber force has declinedeak4urrent level of. In the peripheral force, total launchers at peripheral missile complexes have increased slightlyut the medium bomber force has been reduced by almostercent and the ballistic missile submarine fleet has been cut in half.

Estimated expenditures.for strategic defense forces were relatively stableut rose thereafter when the Soviets deployed new surface-to-air missile systems and interceptor aircraft. 2 expenditures are expected to stay at about1 level. Spending for ABM deployment as well as for control and warning systems remained relativelythroughout the period. (See facing chart.)

The number of interceptors in the Soviet air defense system has declined by aboutercenthile related expenditures increased by almostercent, reflecting the increasing complexity and cost of modern aircraft. imilar cost growth is evident fornumber of launchers has increased3 by slightly less thanercent, but associated expenditures have increased by overercent, again reflecting the increased sophistication and expense of modern weapons. Deployment of the Soviet ABM system has* been limited to theaunchers located around Moscow.

Military Research, Development, Testing, and Evaluation

most dynamic element in Soviet defensein recent years has been RDT&E. Although aitempending was more or less

constant. Since then, expenditures for military RDT&E

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have increased rapidly, rising fromillion rubles7 to an expected level ofillion Spending for militaryission surpassed the amount spent for command and general supportevel second only to that of the general purpose forces. It is expected to retain this position

Military Manpower

Total Soviet military manpower increased fromillion men3 toillion1 (see chart below). More than half of this growth was in the general purposethe ground troops element, which increased byen primarilyesult of the Sino-Soviet buildup.

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Strategic attack forces increaseden mainly because of thondrograms. Strategic defense manpower increased0 men as SAM forces were increased and modernized. Command and general support manpower roseen during the,equirement for greater numbers of support personnel forof more sophisticated weaponry.

US and USSR Comparisons

- The purpose of costing observed and estimated Soviet defense programs in dollar terms is toan appreciation of the physical size of the program by showing the level ofinwould be required to reproduce tho Soviet programs in the US. In general, the dollar values show what it would cost in the US to purchase and operate the Soviet forces. Dollar valuesin this wayasis for comparing US and Soviet programs.

The monetary values developed for theexpressed in0 dollar terms. price base is used so that all changesfrom year to year reflect changes inand programs themselves rather than changes

Further, the DoD data used for the US in thehave been adjusted to include AEC spending, to exclude civil defense and military assistance, and to aggregate allpending into one account. These adjustments have been made to obtain as much conceptual comparability as possible with the dollar values of Soviet programs.

In reviewing US and Soviet comparisons, it is important to bear in mind that dollar valuations of Soviet programs should be viewed as approximations rather than as precise measures. It is important to note also that the relative levels of effort of the two countries measured in money terms are only rough guides to relative levels of military capabilities. Equal levels of effort for comparable programs do not necessarily result in equal force effectiveness.

Total Spending

Spending for defense by the US was consistently higher in the Sixties than the dollar valuations of Soviet spending, but the trends in the total defense effort for the two countries have differed The chart on page hows the trends The yearsre included toackground for the period discussed in this.

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US expenditures declined slightly4ncreased sharply67 during the Vietnam buildup, and remained near7 level 9 they have tapered off, and US outlays1 fell below the estimate of the dollar value of the Soviet effort. In contrast, Soviet expenditures haveteadytrend for most of the period the USillion dollars on dofonse during the, while the Soviots spont the equivalent ofillion dollars, or aroundercent of US spending.

Strategic Attack

The USSR spent approximately one-third more in dollar terms for strategic attackhan the USUS expenditures in the five years preceding this period greatly exceeded those of the Soviets. The Soviets spent only about two-thirds of their strategic attack expenditures on intercontinental attack systems. The remaining

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one-third was spent on peripheral attackMRBMs, IRIJMs, medium bombers- and ballistic missilemission is largely confined to targets along the periphery of the USSR. The US has no exact counterpart of those peripheral attack weapon systems, so all of its strategic attackwent to intercontinental attack forces (see chart on.

Of their expenditures for intercontinental attack, the Soviets spent aboutercent on ICBMs. More thanercent went for ballistic missile submarines and less thanercent for heavy bombers. During this period the USercent of its intercontinental attack budget for ICBMs,ercent for submarines, andercent for heavy bombers.

In dollar terms, Soviet expenditures for ICBMsere about twoalf times those of the US. At the beginning of this period the US had already deployed all of the large, liquid-fueled Atlas and Titan missiles. Thus, US expenditures largely reflect the deployment of the smaller solid-fueled Minuteman. In contrast, the Soviet expenditures reflect the deploymentizable number of large liquid-fueleds well as the entireorce.

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The US was the heavier investor in ballisticsubmarines, spending about one-third more than tho dollar cost of Soviet programs. Soviet expenditures on submarine ballistic missile

however, increased rapidly in the late

Sixties with the deployment oflass submarine.

Soviet effort measured in dollars exceeded that

of tho US by aboutercent for the9

The US has maintained andargebomber force throughout the period. In

contrast, the Soviet bomber forco has remained small, and little qualitative improvement has been made in it over the years. esult, the US spent almost five tjr.ps as much for intercontinental bombers as did the USSR.

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attack expenditures surpassed those of the US. The dollar valuation of Soviet spending forattack surpassed US spending6 and has exceeded the US level every year since. -

Strategic Defense

Soviet expenditures for strategic defense valued in dollars were nearly three tiroes those of the US for thesee facing chart). The difference was even greater for air defenseSAMs andthe dollarof Soviet spending were over eight times US expenditures. The greater emphasis on air defense by the USSR reflocts, among other things, the greater bomber .threat to Soviet territory than to that of the US.

Equivalent dollar costs of Soviet expenditures for both ABMs and control and warning were slightly less than those of the US for thehole. The Soviet effort on ABM systemsrelatively duringercent of total strategic defense spending3 toorcent In contrast, US spending for ABMs started8 and1 had grown to almost half of the us strategic defense budget.

General Purpose Forces

, the US spent more on gen-oral purpose forces than did the Soviets (see upper charts on page. Before its large-scalein Vietnam, expenditures by tho us on general purpose forces averaged aboutercent above the dollar valuation of counterpart Soviet spending.

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uring the height of the VietnamS spending exceeded that of the USSR by about 65 The percentage difference was even greater in terms of investment (that is, procurement andoutlays.

01 US expenditures for generalforces declined appreciably with the reduction in the Vietnam effort, and1 us spending for

general purpose forces exceeded the dollar valuation of Soviet expenditures by less thanercent. imilar comparison pattern exists for command and general support.

Military Research, Development. Testing, and Evaluation

Total US spendingor militaryas aboutercent more than Soviet spending in dollar terms for the same period.* Recentin US spending on militaryogether with continued growth in the Soviet effort have resulted in dollar values of Soviet spending that have been higher than the US levels 9 (see facing chart).

5 As noted earlier, the Soviet outlays for militaryre estimated in the aggregate and conceptually include all outlays for nuclearrograms. To obtain comparability, US data include all DoDfor RDTSE and all ARC expenditures, See page iscussion of the validity ofOf Sovietxpenditures.

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The Economic Sotting

The USSR has the second largest economy in the world. Measured in terms of gross national product, the overall magnitude of the Soviet economy has grownoint where it is more than half that of the US.

The structure of production in the twohowever, is quite difforent. The USSR is unique among industrialized countries inighly developed industrial sector side by sideackward agricultural sector and aprimitive trade and service network. This imbalance stems from an overriding priority long given to rapid economic growth and defense, calling for the development of heavy industry, particularly producer and military goods, at the expense of agriculture and goods and services for the.

The Soviet economy also differs from that of the US in that all of the major resource allocation decisions are made at the center. Each year the Soviet leaders must make very specific decisions about how the available resources will be allotted to claimants for consumer satisfaction, for economic growth, and for defense and space programs. Two of the principal Sovietstrength and economicfor the same resources. The leadership must consider the fact that military strength is obtained in part at the expense of economic growth and, therefore, that large military programs today could reduce the amount of resources available in the future.

The Burden of Defense Programs

One common measure of the burden of defense spend ingational economy is the size of theserelative to GNP. When valued in ruble prices,1 defense share of GNP in the USSR isercent. This is slightly less than the share of GNP that the US devoted to comparable.

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The lopsided development of the USSR's economy has caused an apparent anomaly that arises when the economic burden of its military effort is viewed this way. Given that US GNP is about twice as large as Soviet GNP, it would appear logical to expect that Soviet defense programs must be about one-half the size of US programs. Actually, the USSR supports defense programs about as largo as those of the US. This does not mean that the USSR is more efficient than the US in the production of military goods and services. In fact, in most areas of militarythe USSR is less efficient.

The apparent paradox results rather fromin the price structures of the two economies. The Soviet economy isual economy, consistingodern and efficient industrial sector alongside backward agricultural andsectors. Because of these widein efficiency, the costs of military output are low relative to costs in the backward sectors.esult of the differences in costs between the military and other sectors of the Soviet economy, military expenditures tend to appearmaller portion of the Soviet GNP than they would be if the efficiencies in the various sectors of the economy were more alike.

MilitaryCompetition for Resources

A further appreciation of the burden of military spending can be gained by considering it in theof opportunityis, the alternative uses that the Soviet leaders might like to make of the capacity devoted to the defense effort. production and RDTsE are particularly competitive for the resources needed to foster and sustaingrowth,riority objective of the Soviet leadership. It is clear that the military competition with the West has impeded economic growth in the USSR. This theme has been repeated over and over again in the public statements of Soviet leaders.

Defense spending affects Soviet industry bya large share of the capacity for theof machinery and equipment from civilian to military programs. Over the past decade defense

needs siphoned off about one-third of all machinery and equipment produced in the USSR. For the most part the capacity devoted to the production ofequipment is among the most modern production capacity available in the Soviet economy.

Hore important from the standpoint of economic growth, however, is the fact that the defense effortarge share of the finest scientific,and managerial talents of theassets needed to bolster productivity in the civilian sector. For example, about half of tho totalffort is claimed by defense andifth by the spaco programime when the Soviotare trying desperately to speed up thoof new technology in the economy.

The Five-Year Plan

Analysis of the USSR's ninth five-year, ratified at the1 session of the Supreme Soviet, indicates that thobetween the military and civilian sectors for resources will remain sharp over the next four years. The plan calls for continued high rates of growth in capital investment, but additions to the labor force during this plan period are to be only three-fourths the number added in the previous one. This means that tho success of the plan will dependubstantial increase in labor productivity which, in turn, willtep-up in the rate ofinnovation in industry.

Whether such an increase in labor productivity can be realized is questionable. elaxation of the military burden could be of benefit, insofar as it frees high-quality physical and human resources for the modernization of the economy. Theproblem facing the Soviets, however, isof effective managerialplanning and betterfacilitate the adoption of improved technology in the civilian economy. Despite the efforts launched by Brezhnev and Kosyginrospects for fundamentalof the management of the economy remain dim.

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needs siphoned off about one-third of all machinery and equipment produced in the USSR. For the most part the capacity devoted to the production ofequipment is among the most modern production capacity available in the Soviet economy.

More important from the standpoint of economic growth, however, is the fact that the defense* effortarge share of the finest scientific,and managerial talents of theassets needed to bolster productivity in the civilian sector. For example, about half of the totalffort is claimed by defense andifth by the space programime when the Sovietare trying desperately to speed up theof now technology in the economy.

The Five-Year Plan

Analysis of tho USSR's ninth five-year, ratified at the1 sossion of the Supreme Soviet, indicates that thebetween the atilitary and civilian sectors for resources will remain sharp over the next four years. The plan calls for continued high rates of growth in capital investment, but additions to the labor force during this plan period are to be only three-fourths the number added in the previous. This means that the success of the plan will dependubstantial increase in labor productivity which, in turn, willtep-up in the rate ofinnovation in industry.

Whether such an increase in labor productivity can be realized is questionable. elaxation of the military burden could be of benefit, insofar as it frees high-quality physical and human resources for the modernization of the economy. Theproblem facing the Soviets, however, isof effective managerialplanning and betterfacilitate the adoption of improved technology in the civilian economy. Despite the efforts launched by Brezhnev and Kosyginrospects for fundamentalof tho management of the economy remain dim.

Outlook

The level of future Soviet defense spending will depend in part upon the results of the ongoingarms limitation talks (SALT). The tight resource situation in the Soviet economy will undoubtedlyincentives for holding spending down. On the other hand, institutional forces inherent within the Soviet military and defense industries probablyany sharp reductions in defense outlays over the next few years. Moreover, the Soviet economy is capable ofevenpresent pace of the military buildup if the leaders arc willing to pay the price in terms of other.

Strategic Forces

The decline in spending for strategic attack forces, reflecting the completion of the large ICBM deployment programs begun in the mid-Sixties, probably will be halted if the new ICBM and bomber systems currently under development are deployed in significant numbers. If thiscons*truc-tionlass ballistic missile submarinesattack expenditures could rise above the present level4

ALT agreement limiting the numbers of intercontinental delivery vehicles, the upgrading of existing systems would still probably prevent significant cuts in expenditures for strategic forces. The new programs would, however, probably be loss costly than the original ICBM buildup and the level of spending for strategic attack systems probably would remain well below the peak spending of the late Sixties.

Spending for strategic defense appears to have peaked1 and is expected to remain the same2 and taper off slightly3 even inALT agreement. The major ongoing air defense deploymentand interceptorbe near completion by then. If a

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SALT agreement is not reached, the beginning of an ABM deployment program45 could drivo spending above1 level.

In brief,ALT agreement overall spending for stratogic forces probably would be stabilized at about1 level. This level, however, is still sufficient toontinued qualitative upgrading of the forces. In the absenceALT agreement, strategic attack expenditures might rise again34 as new deployment programs get under way.

General Purpose Forces

Spending for general purpose forces is expected to increaseate ofercent per year over the next four years. This is somewhat higher than the average rate of the previous five years, reflecting the likelihoodtep-up in programs for the modernization of all elements of these forces, continued expansion of the ground forces deployed opposite China, and an increase in the deployment of naval aircraft.

Military Research, Development, Testing, and Evaluation

The fastest growing component of the Soviets' military spending is military RDT&E, which isto have increased at an average annual rate of aboutercent for the past five years. The figures announced for the new Soviet five-year plan imply that total scionce expenditures will continue to grow at or near the high rates of the Sixties. Mow these increases will be split between military and civilian purposes is difficult to determine. There is obvious concern within the Soviet Union for tho general state of industrial technology.

Priorities may be shifting, and development of industrial technology may get an increasing share at the expense of development of new weapons systems. Moreover, wage inflation in the science sector is expected to continue and,esult, real growth in scienco expenditures will probably be less than

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that implied by the Soviet five-year plan. These considerations notwithstanding, military RDTsE expenditures are expected to continue toover the next five years, although the rate of growth probably will taper off from the high levels of the last five years.

Total Defense Spending

The net effect of the above projections is that Soviet defense spending will probably continue to grow ineriod evenALT If anticipated trends are correct, outlays for the forces probably will grow an averageercent per year, or roughly the same average rate as during the previous five-year period. Counting the expected trends in spending for military RDT&E, total expenditures for defense probably will increase on the orderercent per year.

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Statistical Annex

The expenditure data in this annex are basedetailed single-valued statement of the Soviet forces which was specified solely for costing Key elements of the forces used for costing are shown in summary form in Tables The expenditure data in the tables are expressed in billions to two decimal places* This level ofis desirable in order to take account of small variations in the underlying physical data. The uncertainties are such, however, that no other significance should be attached to the second decimal place.

The expenditure estimates do not includeSoviet civil space programs as in pastreports. Available intelligencenow made it possible to differentiateand military space programs. In accordance

with US Department of Defense practice, estimated expenditures for Soviet military space programs are included under the category command and general support.

Dollar values for Soviet programs are expressed in0 dollars.

-

SEC^T

Tables

Page

Soviet Defense Expenditures,

by

Valuation of Estimated Soviet

Defense Expenditures, by Mission,

36

Soviet Defense Expenditures,

by Resource

Valuation of Estimated Soviet

Defense Expenditures, by Resource

Soviet Expenditures for Strategic

Attack Forces, by 9

Valuation of Estimated Soviet

Expenditures for strategic Attack Forces,

by

Soviet Expenditures for Stra-

tegic Defense Forces, by Element,

Valuation of Estimated Soviet

Expenditures for Strategic Defense

Forces, by

Soviet Expenditures for General

Purpose Forces, by3

Valuation of Estimated Soviet Ex-

penditures for General Purpose Forces,

by Element, 44

of Soviet Ground Force Units and

Selected Items of Equipment forForces,

of Major Soviet Strategic

Weapon Systems, 46

*

; Is illSS 1;

9

am jsi

1

ihi

Estimated Soviet Defense Expenditures, by Resource Category

8 Rubles

4 5 6 7 8 9 1

RDTiE"

expenditures

.nn

7

armaments

14

17

ships and boats

3

78

99

systems

equipment

.

34

43

weapons

58

26

expenditures

and

74

Beaaute of founding, oc*ccnentt way net add to the totals shout. 'Preliminary.

"txolndes expenditures relating to military personnel on aotiveengaged in

BDTst, uhicn are included under operating expenditures.

Es tinated Soviet:

5

Expenditures Cor

Attack Forces, by Element

6 Rubles

intercontinental attack

LRA heavy bombers Ballistic missile

CBMs

Peripheral attack

LRA medium bombers MRBKs and IRBMs Ballistic missile submarines**

Joint support

Total

60

8

2

81

81

. 44

OS

The expenditures for strategic attack 2nd other operating coats, procurement cf all and construction of facilities for long-range encompasses surface-to-surface missiles with ballistic missile submarine systems, and all assigned to Long Range Aviation* Ho sxpendit vf rounding, components may not add to the to

* Preliminary* ** Allocation of expenditures for ballistic and peripheral attack forces is in accordance intercontinental Attack.

forces include all outlays for personnel hardware (including nuclearttack weapon systems* Thisange of $Q0 nautical miles and more, heavy and medium bombers and tankers urea forre included. Because tals shown *

missile submarines between intercontinental Dith, Soviet Forces for

-f

ii IIl li'il iii: :i

3 iii

:

=

Table 7

Estimated Soviet Expenditures for Strategic Defense Forces, by Element

8 Rubles

4 5 6 7 8 9 0 1

Hotel The expenditures for strategic defence forces include all outlays forper-eonnel end other operating costs, procurement of all hardware (including nuclear warhead's: > and construction of facilities for aystems assigned to the defense of the USSR against air, missile, and space attack, except the antisubmarine warfare forces, which are included in naval expenditures. This mission encompasses the control and warning network and all SANs, ABMe, antisatellite systems, and aircraft assigned to PVO Strany (Air Defense of the Homeland). xpenditures forre included. Because of rounding, components may not add to the totals shown.

* Preliminary

Control and warning

systems

.

aircraft

systems

systems

Hill I! Pi

SE^tET

133

in Hi

i n

III!8

1!

Original document.

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