FX
Directorate of Intelligence
Moscow's Defense Spending Cuts Accelerate
CIA HISTORICAL REVIEW PROGRAM RELEASE IN9
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MOSCOW'S DEFENSE SPENDING CUTS ACCELERATE
Key Judgments
New policy directions, disarray in the military, and disruptions in industry all combine to impart great uncertainty in our estimates of Soviet defense spendingaking all of the uncertainties into account, our estimate is tfwt1 decline in overall defense spending was betweenndercent,est estimate ofercent. Tliis brings total cuts8 to more thanercent and leaves spending at levels last seen in the.esult, the legacy of military-economic capacity left by the USSR for the successor states-primarilymuch smaller than several years ago, and eroding rapidly.
Estimated procurement outlays-accounting for aboulercent of total defense-dropped aboutercentnd were one-third lower than ai iheir high point8 (see8 there hasharp rise in the annual number of weapon production programs terminated or cut substantially
Ciround procurement was downercent and theater air procurement was down almost halfrocurement for general purpose naval forces dropped roughlyerceni in the same period. Procurement spending for the slralegic offensive mission fell by one-third over the past three years. Estimated procurement spending for space programs declined by one-halftrategic defensive forces continue to be the least affected mission area. We estimate spending for these forces declined less thanercent
Our estimates for military research, development, testing and evaluation (RDTdcE) are much less precise, but funding forrobably fell aboutercent last year and was roughly one-third below peak levels. The number of men in uniform has declined by about 1
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millionulling personnel expenditures by aboutomewhat smaller decline in spending for operalions and maintenance was partially offset by the costs of relocatingl eliminating weapons.
Ihe decline in defense spending acceleratedarticularly in the latter part of dieis even more dramaticigh inflation and deficit-induced cuts are plaguing the defense budgets of all the new stales as they attempt to reshape former Soviet forces into their own national armies and guard units. Russia and Ukraine are contending for control of the preponderance of former Soviet forces, but Ihe expenses thai accompany lhe assets ihey acquire willormidable financial challenge.
A draft defense budget for the Commonwealth of Independent Slates was submitted to the Russian cabinet in early March. Wilh acknowledged inflation in weapons running atpercent,illion-ruble total appears to representpercent cm in real terms from1 Soviet defense budget. TASS claims that the budget callspercent cut in procurement in real terms, compared with1 Soviet budget. Most major weapons programs would have lo be canceled to achieveuige cut in procurementingle year.
Even this budget is probably overoptimittic, however, because it calls for substantial financing from non-Russian CIS members. For example, Byelarus's contribution was set atillion rubles, but First Deputy Prime Minister Myasnikovkh subsequently stated that his country planned to spendillion rubles on defensen fact, we expect thai Ukraine and most other CIS members will join Byelanis in allocating much less for defense lhan envisioned in Ihe draft budget Most of what they do allocate probably will be spent directly on iheir own mililary personnel. This means that the CIS will probably receive only token contributions for RAsD and procurement, leaving Russia lo pick up the billesult, spending on arms2 could be cut by more thanerceni.
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Defense Spending Cuts Accelerate
Fven before the failed coup last August, economic disruptions, republic assertiveness, and turmoil in the military had fundamentally undercut implementation of the USSR's1 defense program. In the aftermath of the coup, power shifted decisively to the republics, destroying the former union.
This paper documents our estimate of defense spending during this turbulent time. The disintegration of the USSR, together with worsening economic disruptions, makes the uncertainty surrounding our estimates unusually large this year (secur estimates indicate that, after sizable cuts in9uts in real defense spending in the former Soviet Union acceleratede estimate that, during this period, total spending declined by more thanercent after reaching its peaknd fell aboutercent1 alone. Reduciions occurred in all major resource categories and mission areas and caused spending to fall to levels last seen in thesee
Increased Uncertainty in Estimating Defense Spending
New policy directions, disarray in the military, and disruptions in industry all combine to impart greater uncertainty in estimates1 defense spending. We continue to rely on our direct-costing building-block methodology supplemented by analysis of announced cuts in the official defense budget. As in past years, we have the most confidence in our estimate of the procurement of major systems such as surface combatants and aircraft. We continue to have the least confidence in our estimates of spending on RDT&E. Taking all of the uncertainties into account, our estimate is lhat1 decline in overall defense spending was fromoercent,est estimate ofercent.
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0 These estimates ore designed to capture recti resource flows to defense programs. They do not measure military, defense industrial,apabilities. See DI Reference Aiduide to Monetary Measures of Soviet Defense Activities.
Figure 2
Estimated Soviet Spending for Defense
Total Defense
Billions of2 rubles
Procurement
1 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91
Procurement Spirals Downward
1 procurement outlays-accounting for aboutercent of the total-are approximately one-third lower than at their high point8 (secutlays dropped sharplyby aboutercent, more than double the decline in each of the two previous years.
Reductions occurred in procurement for all types of general purpose weapons-land, naval, and air-and for strategic offensive weapons, and were both broader and deeper thanrocurement for strategic defensive forces, however, slowed only slightly (secc believe that,, cuts in procurement were largely planncd-primarity the result of unilateral cuts announced in9 by then President Gorbachev.owever, scheduled declines were compounded, particularly in the latter half of the year, by falling weapons orders, supply disruptions, and resubordination of defense industry facilities-from all-union Soviet defense-industrial ministries to individual Commonwealth stales-in the wake of the failed coup.
Our spending estimates are built on detailed analyses of Soviet weapons production, and the spending irends mirror trends in the Soviet weapons production base. On average over the past two decades, the USSR maintained anilitary systems in production. We estimate that8 there hasharp increase in the number of programs terminated or cut substantially (secn the other hand, some high-priority weapons production programs continued1 at close0 rates.
(Hound forces Ground forces procurement continued to take heavy cuts, with estimated outlays down by aboulercent8 levels. Aflcr absorbing large cuts-
about, procurement expenditures for ground forces were cut againby aboutercent in real terms. The number of tanks procured dropped byhe number of light armored vehicles procured fell by aboutercentnd the number of artillery pieces by more thanercent.
Theater Air Forces. Estimated outlays for theater air procurement have fallen by about one-halfecline of aroundercent last year.
Naval Forces. The general purpose Navy also took heavy cuts. Fstimnled procurement for general purpose naval forces has dropped roughlyercentecline of aboutercent last year. Delivery of major combatants and submarines fell sharply.
Strategic Olfcnsrve Forces. We estimate that procurement spending for the strategic offensive mission fell by approximately one-third over the past three years,ecline of aboutercent
Strategic Defensive Forces. Strategic defense force modernization continuedelatively steady pace last year-estimated spending for procurement has declined less thanercent
ScaSfi. Estimated procurement spending for space programs has dectined by about one-halfrop of aroundercenthe number of space launches-and space launch vehicles procured-has declined by more than one-third8 and is now the lowest inears.
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Figure 3
Estimated Soviet Spending for Military Procurementhare8 Procurement Spending
Theoter oir General Strategic Strategic Space
Forces forces purpose offensive forces
1
Figure 4
Estimated Soviet Weapon Production Program Activity,
Number of programs
i
72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91
a The greon areas show the years for which the number of weapon program starts ond substantialphysical production Increases of morexceeded the number of program cessations and substantial declines. The red areas show the years for which the reverse relationship prevails. Because of the difficulties of pinpointing the precise year some programs begin or end, we have more confidence in the general trends depicted than in the data for any given year.
Other Spending Categories
Personnel.ersonnel expenditures have dropped aboutercent, and the number of military personnel has declined byillion. Accelerating draft shortfalls throughout the former Soviet Union, reduced callup goals, tighter medical standards, and the early release of conscripts are rapidly reducing overall military strength.
Operations and Maintenanceecline in spending for operations and maintenance-aboulercenteduction in the number of exercises and in overall operating tempos, which has been partially offset by the costs of relocating units and eliminatingontinuing downturn in space activity, as wellmaller force operating with lower equipment levels, also contributed to the reduction.
Research, Development. Testing, and Bvilluaijon, We arc least certain of our estimates ofecause most of these activities are not directly observable. Although the mostctivities generally continued last year, anecdotal evidence indicated that financial support was withdrawn by varying degreesacilities. The preponderance of anecdotal evidence showed that some workarge number of individual programs continued last year. Official Soviet statements, assessmentsroad samplerograms, and reporting from many sources suggest, however, thatxpenditures, after falling by aboulercentere cut far morc-by approximately.
Outlook
The downward spiral in defense spending is accelerating dramatically this year. Before the announcement of the Commonwealth's formation, the contradictory pressures of
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inflation and the budget deficit, complicated by the republics' demands for cuts, resultedlanned defense budget2 that was up in nominal terms but down in real terms. Inhe Russian legislatureirst-quarter defense budget that cut overall procurement spending on the order ofercentpending aboutercent.
A2 CIS defense budget was submitted to the Russian cabinet in early March. With acknowledged inflation in weapons running atercent,illion-ruble total appears to representpercent cut in real terms from1 Soviet defense budget TASS claims that the budget callspcrccnt cut in procurement in real terms, compared with1 Soviet budget. Most major weapons programs would have to be canceled to achieveuge cut in procurementingle year.
Even this budget is probably overoptimistic, however, because it calls for substantial financing from non-Russian CIS members. For example, Byelarus's contribution was set atillion rubles, but First Deputy Prime Minister Myasnikovich subsequently stated this his country planned to spendillion rubles on defensen fact, we expect that Ukraine and most other CIS members will join Byelarus in allocaling much less for defense than envisioned in the draft budget. Most of what they do allocate probably will be spent directly on their own military personnel. This means lhat the CIS will probably receive only token contributionsnd procurement, leaving Russia to pick up the bill.esult, spending on arms2 could be cut by more lhanercent.
Original document.
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