THE SOVIET BUDGET FOR DEFENSE AND THE ANNOUNCED MANPOWER REDUCTION (CB 61-2)

Created: 1/19/1961

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CURRENT SUPPORT BRIEF

THE SOVIET BUDGET FOR DEFENSE AND THE ANNOUNCED MANPOWER REDUCTION

OFFICE OF RESEARCH AND REPORTS

CENTRAL INTELLIGENCE AGENCY

This report represents the immediate view] of the originating Intelligence component* of the Office of Research and Reports. Comments are solicited.

This document contains iriformatlon^flefting the national defense of the United States, within the rnearung of thelespionage laws, TitleSC,lhc transmission^ivrevelaUon of which In any manner to _air^unaulhorlzed person is prohibited by law.

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THE SOVIET BUDGET FOR DEFENSE AND THE ANNOUNCED MANPOWER REDUCTION

The recent Soviet announcement of its budgetary allocationlthough it reflectsodost reduction in planned expenditures, is compatible with the reduction in the armed forcesillion men announced by Khrushchev on This budeet-

illion now rubles) or some

than the planned expenditures1 billion rubles

Because its scope and composition are not fully known, the budgetary allocation for Defense does not permit, of itself, judgment as to whether or not the announced reduction in manpower ls being implemented. That the nodest change in the allocation is not incompatible with such anreduction in forces is attributable to several factors.

1. It was announced that the reduction in forco was to beby the endhat,is,eriod of two years. Thus, half the indicated time remains and it is to be expected thatart of the personnel have been released. Moreover, any im-nedlato change in the associated outlays is not likoly to be inproportion to tho personnel released. For example, the timing of the releasesear may be such that there would be little noticeable impact on expenditures In that year. Expenditures for personnel can even increase (seearticularly if release is late in the year.

The release of large numbers of career porsonnel requires considerable Immediate and non-recurring outlay for severance pay, relocation, and the like, as well as an increase in pension payments. Tho former keep the lovel of expenditures up for as much as one year aftor releaso; the latter are more permanent in their effect.

The extent of the savings that occur for any period of time isonsiderableunction of the rank or grade of those roloased. The officer corps representing someercent of total military manpower receivesercent of the pay and allowances. should proportionately fewer officers be released during

a period, tho decline in expenditures for the period would be relatively small.

budgetary decline ls necessarilyet basis. programs to maintain the military posture while releasingit is reasonable to expoct somo expenditures to increase.

elated interest ls that Khrushchev's announcement last Januaryillion rubles would be saved by the reduction in force ls thought to have reflected gross, not net, savings. The only argument againstonclusion is thatignificant reduction in thodoes not show up by noxt year he may have left himself at adisadvantage.

Finally, estimates of Soviet military programs and activitiesthat in spite of reductions in force of the approximate size announced by Khrushchev, growth in total military expenditures is to be expected during theears. Tho estimates exhibit some decline during the period oft-the reductions and thereafter increase.

Definitive comparison between estimated expenditures and the explicit budgetarybillion rubles innot possible because, as already noted, the scope of the allocation ls not fully known. Certain

to changes in

are,enance-

that such outlays will bei 1 I It is estimated

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