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Analyzing Soviet Defense Programs, 1951 1990.PDF

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Mcoa•Y"'"'I6 .:>uV!et Defense Programs, 1951 1990

http://www .csi. cia/stud ies/vol4 2no3/art 7 .h tm l

economy. The effort to cost Soviet defense programs, on the other hand, had to start essentially from
scratch by assembling information on all the physical measures of defense activity and multiplying them
by the estimated costs of these activities.
These costs were then aggregated by military service; resource category (procurement, construction,
personnel, operations and maintenance, and R&D); and military mission (strategic offense and defense,
general purpose forces, and command and general support). Thus, the Agency came to grips with
Millikan's second objective for foreign economic intelligence--information on how a potential enemy
was allocating its resources. Soviet GNP and defense programs were valued in rubles to assess Soviet
decisions on the allocation of resources and to measure real growth in defense and in dollars to permit
comparisons with the GNP and defense programs of the United States and other countries.

Building an Evidentiary Base
The evidentiary base for the defense and GNP estimates at first varied greatly but improved considerably
over time. After the mid-1950s, a great deal of information relevant to the GNP calculations became
available. By the mid-1960s, the methodology and the data were available to estimate GNP by sector of
origin and end use in 1955 ruble prices and in current prices and to compare US and Soviet GNP in both
ruble and dollar prices. From then until the breakup of the Soviet Union, the estimates were almost
continuously reviewed and improved, but these were variations on a theme and not radical new
departures. Throughout their history, the estimates of real growth in GNP rested on the premise that
while Soviet value statistics--that is, the ruble value of industrial output were badly flawed, statistics on
physical output--tons of steel, square meters of cotton fabric--were sufficiently reliable to support the
building-block approach.
The evidence for the defense estimates was quite different. National intelligence collection provided the
information on Soviet defense production and procurement and order of battle, and this information
became increasingly accurate after the early 1960s with each enhancement in US overhead
reconnaissance capabilities. But operating rates, maintenance practices, and the like had to be estimated
by a variety of methods, and the acquisition of several Soviet maintenance manuals helped. Identifying
the resources committed to military R&D, however, was a problem until almost the end of CIA's costing
effort. For most of the period, military R&D had to be inferred from a small sample of Soviet statistics
on the financing of science. In the 1980s, an effort to build an R&D estimate from the bottom up by
collecting intelligence on more than a thousand Soviet R&D establishments finally succeeded--and
reduced the previous estimate of its growth of military R&D markedly.
Finding prices to attach to the estimates of military activity was another problem. Prices were generally
available for military pay and allowances and other personnel costs. Defector reports supplied the
information on military pay in rubles, and US dollar pay rates for equivalent ranks or occupational
specialties were obtained from the Pentagon. Ruble and dollar prices for much of operations and
maintenance (O&M) and construction could be found in Soviet publications and in CIA research on the
relative ruble and dollar costs of the different kinds of construction work and some of O&M. During the
1970s and early 1980s, a large number of contracts with US defense firms provided estimates of the
dollar cost of manufacturing most of the more expensive items in the Soviet procurement and spare parts
accounts. Intelligence on ruble prices was scarce, however. Not until the 1980s had enough ruble prices
been collected to firm up the ruble estimates of Soviet military procurement and the maintenance part of
The question of what to include in the definition of defense outlays was an issue from the beginning. For
comparisons with US programs, the Soviet activities were selected to match as well as possible US
spending on Department of Defense (DoD) national security programs, defense-related nuclear activities
of the Coast Guard, and the present value costs of retirement, disability, and survivors' benefits for
active-duty military personnel. When estimating the cost of Soviet military programs, a broader
definition was used, one that included civil defense troops, railroad troops, construction troops, MVD
troops, and civilian space outlays.

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