IS THE SOVIET UNION LIKELY TO REDUCE MILITARY SPENDING TO PROVIDE ADDITIONAL AGRICULTURAL PRODUCTS AND CONSUMER GOODS?

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP67B00446R000100340014-9
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 3
• Document Creation Date: December 15, 2016
• Document Release Date: April 23, 2004
• Sequence Number: 14
• Publication Date: May 18, 1965
• Content Type: REPORT

Approved For Release 200 i5/,.~ C -
Is the Soviet Union Likely to Reduce Military Spending
to Provide Additional Agricultural Products and Consumer Goods?
The recent announcement by First Secretary Brezhnev that the
Soviet Union planned to embark on a massive program to boost agri-
cultural output during the next five year plan period (1966-70) has
properly raised the question of the impact of such a program on future
military expenditures. It is true that the new program, if imple-
mented, would represent a huge investment -- 71 billion rubles, or
about U.S. $79 billion at the official rate of exchange -- in the
awesomely inefficient Soviet farm system. In the minds of many
citizens of the Western democracies, there is an assumption that,
to implement the agricultural plan, defense outlays must be cut.
The Soviet leadership has not announced its intention to cut defense
spending in the years ahead; neither Brezhnev in his 24 March 1965
unveiling of the new agricultural program, nor Kosygin in his re-
marks about the. new five year plan, made public on 19 April 1965,
covered this point.
However, it would not be surprising if the Soviet budget for
1966, when announced, indicated an absolute reduction in the category
identified as "defense." Such a statement would have international
propaganda value as a means of claiming the peace-loving nature of
the post-Khrushchev government.
Budgetary statements of this type in the past have frequently
been misleading, designed to promote the image the.Soviets wish to
present to the world rather than to represent accurately programmed
military expenditures. First of all, what the Soviets define as
"defense" in their State Budget does not include all expenditures
on military and space activities. Secondly, the degree to which
the budgetary category, "defense," approximates the total of mili-
tary and space outlays almost certainly varies from year to year.
In mid-1961, for example, Khrushchev's reaction to increased emphasis
by the United States on advanced weapons systems was to restructure
Soviet budgetary accounts so that military spending would appear
to be impressively large -- 12.4 billion rubles for the year compared
with an announced plan of 9.3 billion rubles at the beginning of 1961.
An increase of 33 percent in the 1961 full year total could only have
been achieved in a six-months period by re-definition of what con-
stituted defense, not by a real increase in spending of the implied
proportion.
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A recent case of distortion in the opposite direction has been
noted. At the Supreme Soviet meeting in December 1964, it was announced
that defense spending would be cut by 500 million rubles in 1965, or
4 percent below the 1964 plan. However, research and development
for the military and space programs is not included under the Soviet
definition of defense, but in a sub-category showing allocations
for science. Since expenditures on science for 1965 were scheduled
to increase nearly 9 percent over 1964, and since the bulk of scienti-
fic outlays are for military and space research, most Western obser-
vers of Soviet affairs believe that the actual total of Soviet mili-
tary and space spending in 1965 will not decrease as officially
claimed. It is particularly important to recall that during the
period 1960-1964, when research and development expenditures for
military programs were rising very rapidly, outlays under the heading
of "Science" rose about 60 percent. Finally, Western students of
Soviet accounting practices point to the very large size of the
undefined residual categories, which in total almost equal in size
the published defense expenditures, providing ample room to conceal
military procurement and construction.
An analysis of Brezhnev's agricultural plan for 1966-70 which
takes account of its impact on scarce quality resources (manpower
and material) concludes that the USSR can continue its heavy emphasis
on military and space research and development and the planned ex-
pansion in the deployment of advanced weapons systems. The kinds
of resources needed to provide agriculture with the new inputs
Brezhnev specified, such as tractors, trucks, and agricultural and
construction machinery, impose an additional burden on the tradi-
tional branches of heavy industry which have long experience in the
assembly line production of standardized equipment. Although the
production of conventional weapons of the 1950's drew heavily on
these sectors of Soviet industry, modern weapon systems require
less from these sectors and depend more on the newer industries
producing electronics, missiles, precision mechanisms and the like.
Additional numbers of scarce scientists, design engineers and highly
trained technicians need not be diverted from military and space
installations to agricultural machinery plants. It is very unlikely,
however, that the Soviet regime would try to or could implement the
agricultural program as well as a substantial increase in defense
spending.
CONFIDENTI-AL
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TIAL
It is true that if agriculture is to receive the share of re-
sources during 1966-70 that Brezhnev proposed,, other claimants must
be squeezed. While general promises have been made of increased
supplies of consumer goods, no specific figures have been released
for 1966-70. The most likely place for the cut to be taken would
be in industrial investment, the consequence of which would be to
reduce further the growth of industrial output. Such a reallocation
could leave military and space expenditures unimpared -- indeed they
could grow modestly in the 1966-70 period thus keeping alive a
challenge to the West in the most important areas of national power.
ORR/ERA
18 May 1965
C Ff TI L
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