STRATEGIC RESEARCH MONTHLY REVIEW APRIL 1977

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79B00457A001200010001-9
• Release Decision: RIPPUB
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• Document Page Count: 25
• Document Creation Date: December 15, 2016
• Document Release Date: February 26, 2004
• Sequence Number: 1
• Publication Date: April 1, 1977
• Content Type: REPORT

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Strategic Research
Monthly Review
Top Secret
April 1977
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CD Strategic Research
Monthly Review
April 1977
This publication of the Office of Strategic Research contains
substantive findings and analytical judgments that are preliminary in
nature and have not been formally coordinated with other CIA, and
intelligence community components.
Comments and queries regarding the articles are welcomed. They
may be directed to the person named following each item.
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Soviet Military Command Changes:
A Possible Arms Control Connection 6
Two oblique references in the recent Soviet
press suggest that the transfer of Marshal V. G.
Kulikov from the General Staff to command of
Warsaw Pact forces may have resulted primarily
from differences between him and political leaders
on arms control policy.
Soviet Civil Defense and the
ABM Treaty
Some US observers have asserted that the
Soviets sought the 1972 ABM Treaty because they
believed their civil defense program would
compensate for the lack of a nationwide ABM
system and give them a strategic advantage over the
US. This hypothesis does not stand up to historical
evidence.
Despite political instability in Peking, the re-
source commitment to defense appears to have
been relatively stable for the last several years.
Although national priorities apparently are now
under review, the combination of military and eco-
nomic considerations probably will lead decision-
makers to hold current defense spending near its
present level.
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Significance of the Official
Soviet Defense Budget 10
Recently reviewed Soviet open source materials
imply that the single-line item for defense in the
USSR State Budget covers all operating costs-and
only those costs-for the Soviet military forces.
This is an interesting hypothesis, but evidence
available to us through observation of Soviet forces
does not confirm it, Neither the figures nor the
trends seen in the Soviet data agree with our best
estimates of Soviet defense costs.
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Their dispute with Morocco over the former
Spanish Sahara has prompted the Algerians to im-
prove their air force by obtaining new combat
aircraft from the USSR and upgrading military air-
fields.
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Soviet Military Command Changes: A Possible
Arms Control Connection
Two recent signals in the Soviet press suggest a possible explanation for the
transfer of Marshal V. G. Kulikov from chief of the General Staff to commander of
Warsaw Pact forces in January 1977. (Kulikov replaced Marshal I. I. Yakubovskiy,
who died in early December 1976.) The first signal took the form of a historical
analogy, a common Soviet device for conveying politically sensitive messages to
domestic elites. On the same day Kulikov's transfer was announced, Pravda printed
an article by a Brezhnev protege which pointedly referred to a reshuffle of the
Soviet high command in 1919. The transfers that year resulted from a policy dispute
in which the military commander unsuccessfully opposed the top political leader.
The article thus appears to imply that similar circumstances occasioned Kulikov's
move.
The other signal was an article in the January Military Historical Journal by
Colonel Ye. I. Rybkin, an officer of the Main Political Directorate. Rybkin is a
long-time exponent of the doctrine of "victory" in nuclear war and critic of those
Soviets who assert the futility of adding to existing nuclear stocks. In the January
article, Rybkin acknowledged for the first time that quantitative increases in
strategic weapons "change nothing in practice" and avowed that, at SALT during
1972-1974, the Soviet Union committed itself to strategic parity. Marshal Kulikov's
past identification with the opposite view contrasts with Brezhnev's public and
private disparagement of quantitative superiority and suggests that differences on
arms control may have contributed to Kulikov's transfer to a post with less direct
influence on SALT and strategic planning.
Effect on Arms Spending. Kulikov's transfer lends credibility to Soviet declara-
tions in favor of concluding a SALT I I agreement, but there is less reason to credit
speculation* that his transfer and Rybkin's renunciation of quantitative superiority
signal a downturn in Soviet arms production and spending. Although the SALT I
agreements impose quantitative limits on Soviet strategic missile forces, the heavy
Soviet commitment to qualitative improvement of those forces continues to demand
large expenditures.
To date there are no indications of a slowdown in the growth of Soviet
allocations to military production and deployment. If the events cited above do
indicate a change in defense policy, its effects would not be detectable for a year or
more because of the long lead times required to transfer resources.
If Brezhnev favors a resource transfer to the consumer sector, he does not
appear to have overcome opponents of such a move. A Central Committee decree of
31 January concerning the sixtieth anniversary of the October Revolution reiterates
that "The pivot of the party's economic strategy... is the assurance of stable,
* For example, see Henry Bradsher in the Washington Star, 10 February 1977.
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balanced growth in heavy industry-the fundament of the economy." As Military
Thought for September 1976 noted, "This encompassing formula especially empha-
sizes the significance of heavy industry for the further development of the whole
national economy and the strengthening of the country's defense capability." If
there had been a change in Soviet policy, this formula probably would have been
deleted or modified.
Brez.hnev's Political Influence. The duration of increased Soviet interest in arms
control, signaled by Kulikov's transfer and the Rybkin article, depends largely on
the political strength of its most influential proponent-Brezhnev. His influence
could be cut short by illness or by a diminution of his political support.* In the
defense field, Brezhnev appears to rely heavily on Defense Minister Ustinov and on
Party Secretary Kirilenko, but neither man has a public record of support for arms
control. For example, an article by Ustinov in the February 1977 issue of Kom-
munist, the party's theoretical journal, accuses the United States of not having
abandoned the quest for strategic superiority. Other Soviet leaders, particularly
Council of Ministers Chairman Kosygin and KGB chief Andropov, are probably
more receptive to arms control, but the transfer of Kulikov probably involved the
aid or at least acquiescence of men who do not appear to be reliable supporters of
arms limitation.
Even Kulikov's replacement as chief of the General Staff, Marshal N. V.
Ogarkov, was more intransigent than other Soviet delegates when he was at SALT in
1969-1971. Furthermore, officers appointed to the General Staff during Kulikov's
tenure have not yet been transferred to other posts and could provide Kulikov with
a channel for continuing influence.
Other Motives for Kulikov's Transfer. Those who supported Kulikov's transfer
may have had diverse motives. Probably inspired by a speech which Ustinov gave last
July, they Soviet military press has been campaigning against officers who condone
disciplinary violations. Of late, this campaign seems to have diminished. The coin-
cidence of Kulikov's transfer with the waning of the press campaign could indicate
that he was blamed for mismanagement of the disciplinary system. We do know that
the General Staff is responsible for keeping track of disciplinary violations and that
the failure to keep proper records was one criticism made in the press. Other
possible motives include impatience with Kulikov's self-assertive personality and the
rivalry between Kulikov and Ustinov that may have resulted from their probable
Lion for the appointment as minister of defense. Others may have felt that
competi16
Kulikov was better suited for the Warsaw Pact job than for the General Staff
position.. In sum, Kulikov's transfer may have been motivated by a combination of
* Brezhnc!v's sickness in 1975 may have accounted for the vigor with which apparent opponents
of arms control asserted their views in the summer and fall of that year.
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Soviet Civil Defense and the ABM Treaty
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The transfer of responsibility for Soviet civil defense to the Ministry of Defense
preceded the signing of the ABM Treaty by some eight months. This sequence has
led some American observers to infer a causal link between the two events. They
assert that the Soviets sought the treaty in the expectation that their civil defense
program would compensate for the lack of a nationwide ABM system and give them
a strategic advantage over the US. This hypothesis logically depends on two prop-
ositions: that the Soviets had determined the course of their civil defense program
before they agreed to limit ABMs, and that they believed civil defense was an
effective substitute for an ABM system.
Apparent Sequence. The evolution of Soviet views on ABM limitations and on
civil defense organization suggests that the Soviets decided to accept an ABM treaty
like the one eventually signed in May 1972 before they knew what would happen in
civil defense. This decision probably occurred sometime between 1968 and early
1970. Before 1968 the Soviet view of the ABM issue, as Chairman Kosygin
explained in February 1967, was that a defensive system would not fuel the arms
race and that consequently there was no reason to include ABMs in arms control
negotiations. By July 1968 the Soviets had changed their minds and had accepted
the inclusion of ABMs as a topic in SALT. When the United States proposed
optional versions of an ABM accord in March .1970, the Soviets took only one week
to select the so-called National Command Authorities variant. The speed with which
they accepted this variant and the fact that they had begun deploying a system
corresponding to the NCA option around Moscow suggest that the Soviets had
already decided in favor of a treaty of this type. US concerns about the asymmetries
of the US and Soviet ABM deployments, however, delayed the signing until 1972.
The final agreement permitted protection of one ICBM complex in addition to the
national capital.
In contrast to the apparently settled Soviet position on ABMs by 1970, the
subordination of the civil defense program remained controversial from its acquisi-
tion of autonomy in the mid-1960s to November 1971. During this period the civil
defense staff under Marshal Chuykov engaged in disputes with the Ministry of
Defense about control over certain resources and about the doctrinal importance of
surprise. At the root of these disagreements was Chuykov's decision favoring
evacuation over shelters as the tactic of civil defense. Because of the time needed for
evacuation, Ministry of Defense planners who expected nuclear war to begin by
surprise-either a surprise US attack or a sudden Soviet preemptive strike-preferred
readily accessible shelters that would not tip the Soviet hand. Evacuation demanded
that transport ana manpower be made available to civil defense from resources
designated in existing plans for military mobilization and use. Although a costly
investment, shelter construction would relieve demand for these resources in the
event of war because fewer people would need to be evacuated. In 1968, either
because of MOD pressure or for other reasons, the civil defense leadership modified
its previous objections to accept some shelter construction as an alternative to
evacuation.
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Nevertheless, continuing disagreements with the civil defense staff probably
were the reason for a proposal to integrate civil defense into the MOD. The proposal
was made by military officers as early as 1969 and justified on administrative
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In 1968 Chuykov published a pamphlet in which he stated:
The role of civil defense would be artificially exaggerated if one considered it
capable by itself of independently assuring the defense of the population and
material resources from weapons of mass destruction.
grounds.
controversial until decision. Tier the appointment in October 1972 of a
new chief of civil defense, General A. T. Altunin, the priority of the shelter program
increased, even though Altunin recognized that construction of shelters for the whole
population would be an expensive, long-term project.
Chuykov regarded a combined effort by civil defense and the armed forces as
essential for successful defense.
A civil defense textbook published in 1970 (and therefore written while the
fate of ABM may still have been uncertain) asserted the effectiveness of ballistic
missile defense but also noted:
However, no one can guarantee that a portion of the enemy missiles will not
penetrate through our air defense. In this case significant reduction of popula-
tion casualties can be achieved only by carrying out a whole complex of civil
defense measures.
The third edition of the textbook, published in 1977, repeats this statement.
These pronouncements suggest that the Soviets do not regard civil defense as a
substitute for an ABM system and did not at the time they were deliberating a
treaty. Instead, civil defense is consistently presented in Soviet sources as a comple-
ment to an ABM system.
Conclusion. The evidence, therefore, does not support the hypothesis that
reliance on civil defense made the Soviets expect an advantage from the ABM
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Treaty. It is entirely possible that the prohibition against deploying ABMs con-
tributed to increased Soviet interest in passive defense. But the roots of the current
civil defense program are visible in the disputes of the 1960s, when the viability of
an extensive shelter program was debated with only passing reference to ABMs.I
Significance of the Official Soviet Defense Budget
Recently examined Soviet open source materials imply that the single-line item
for defense in the USSR State Budget covers all operating costs for the Soviet
military forces and only those costs. By implication, costs of military construction,
procurement of arms and other equipment, and military research, development, test,
and evaluation (RDT&E) are located elsewhere in the budget or financed from
nonbudgetary sources.
This is a tempting hypothesis; if it were true and we could isolate the element
of inflation, the announced defense budget would provide an indicator of both the
magnitude and the pace of the overall Soviet defense effort. On a number of counts,
however, the hypothesis does not stand the test of examination against known and
observed trends in the activities of the Soviet forces which generate operating costs.
For example, although both the announced budget and CIA's estimate of operating
costs show an overall rise since 1960, the announced budget shows large surges and
dips which are inconsistent with the more regular and steady annual buildup in the
Soviet forces. More important, the announced budget shows no growth since 1970,
and even declines from 1973 through 1976, a period when we know the Soviets
were continuing to add to their forces in ways that certainly would increase
operating costs.
Background. The Soviet Government closely protects information on spending
for defense. Only one official figure on defense expenditures is released annu-
ally-the single-line item labeled "defense" in the Soviet State Budget. The USSR
has never clearly defined what activities are included in this statistic, but the
published figure is clearly too low to cover the full range of Soviet military activities.
In fact, actual defense outlays are estimated to be about three times the level the
Soviets publicly admit.*
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The New Information. A recently found analysis of Soviet state expenditures
by V.P. D'yachenko* suggests that in the early years following World War II, the
announced defense budget was limited to operating and maintenance costs. In
discussing state expenditures from 1946 through 1951, the article contrasts military
maintenance costs with other outlays, such as for construction of facilities and
supply of materiel. It also provides a table on the 1949 State Budget where
soderzhaniye vooruzhenikh sil, maintenance or upkeep of the armed forces, is
substituted for the standard budget term for defense, oborona. The figure given for
"maintenance" of the armed forces is identical to the announced defense budget for
that year.
An indication that the announced Soviet defense budgets in recent years
encompass only operating and maintenance costs is also found in a 1973 treatise on
economic/financial planning by Soviet input-output specialist L. Ya. Berri.** He
presents a concept of state expenditures in which the defense category explicitly
excluded all capital investment and capital repair. Other defense-related activities
not included in this definition of defense were increases in state material reserves
and social-cultural measures, such as science. While he does not define "expenditures
on defense" (raskhodi na oboronu), the clear inference is that they are limited to
operational-type outlays.
Although Berri's analysis includes nonbudget expenditures, he has demon-
strated that Soviet planners employ a concept of defense which excludes many of
the costly investment-type activities associated with the total defense program.
Moreover, this concept has the same title as that used in the State Budget.
Comparisons With CIA Estimates. The published Soviet defense figures are not
directly comparable with CIA estimates of Soviet military operating costs, because
the former are in current rubles (which include the effects of inflation) and the
latter are in constant 1970 rubles (which do not). Most Western analysts agree that
there has been inflation in the Soviet Union, although its pace is difficult to measure
because of the controlled nature of the economy and the paucity of Soviet price
data. With a rough adjustment for inflation of 2 percent annually-calculated on a
1970 constant ruble base-the Soviet published budget is somewhat higher than the
CIA estimate for military operating and maintenance costs through 1972 and lower
in subsequent years. Also, the CIA data indicate that Soviet military operating costs
have been increasing annually since 1960. The Soviet figures, on the other hand,
generally show such costs rising prior to 1970 but falling slowly thereafter. (See
chart, next page.)
CIA estimates of the costs of Soviet defense programs are based on a direct
costing approach, which ties cost estimates directly to Soviet military programs
V.P. D'yachenko, Tovarno-denezhniye otnosheniya i finansy pri sotsialisma, Moscow, 1974, pp.
322-323. D'yachenko was a corresponding member of the Soviet Academy of Sciences and headed
the Department of Pricing at the Academy's Institute of Economics from 1953 until his death in
1971.
* L. Ya. Berri, ed., Planirovaniye narodnogo khozyaistvo SSSR, Moscow, 1973, pp. 451.453.
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Estimated Soviet Military Operating Expenditures versus
Announced Soviet Defense Budget
Billion Rubles
Published Soviet Defense Budget
(Adjusted to 1970 Rubles**)
* Includes pay, food, clothing, and personal equipment
expenditures for military- personnel, MOD civilian wages,
facility and equipment maintenance costs, POL, utility
and transportation costs, and miscellaneous other main-
tenance costs.
** The published defense budget in current rubles was
adjusted to 1970 rubles by assuming an average annual
rate of inflation of '2 percent. This assumption is based
on an analysis of official Soviet wholesale price indexes
and wage data together with Western data on Soviet
Prices.
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The CIA estimates should be regarded as general orders
of magnitude rather than precise figures. Nonetheless, the long-term upward growth
trend reflects reliable information on Soviet forces and weapons programs.
That operating costs could be falling in the seventies, as suggested in the Soviet
data, directly contradicts our evidence. Soviet military manpower levels are esti-
mated to have increased over the 1970-76 period by about 370,000 men, there have
been several military pay raises, the inventory of weapons has increased, and there
has been greater technological sophistication of new Soviet weapon systems which
have undoubtedly raised maintenance and operating costs.
Conclusions. On balance, with the information currently available, the hypoth-
esis that the USSR's announced defense budget covers all operating costs-and only
operating costs-since World War II cannot be confirmed. Neither the magnitudes
nor the trends in the Soviet data agree with our calculations of Soviet operating
costs based on the physical activities observed.
We cannot, however, rule out a real basis for the Soviet data. For example, the
defense budget may consist solely of operating expenditures, but it may not include
all such expenditures because of Soviet accounting practices. Also, it is possible that
the Soviet definition of operating expenditures may change over time.
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It is also possible that the budget is manipulated for political purposes. For
example, in the middle of 1961 Khrushchev announced a 25-percent increase in the
defense budget, presumably in response to escalating tensions over Berlin and to an
increase in the US defense budget. Similarly, some operating expenditures may have
been added to the defense budget in the second half of the 1960s as a response to a
concurrent rapid expansion in US defense budgets, while operating expenditures
may have been shifted from the defense budget to other budget lines in the 1970s to
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siunal Soviet attitudes about detente.
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China's Defense Resource Allocation Policy
Despite political instability in Peking, the resource commitment to defense
appears to have been relatively stable for the last several years. This judgment is
based on estimates of Chinese military procurement as measured in constant 1972
yuan prices (see chart below). Although national priorities apparently are now under
review, the balanced needs for military strength and economic investment for
growth will make it difficult for the leadership to favor one strongly over the other.
Consequently, stability in defense spending probably will continue over the next few
years.
Expenditure Trend. The modest growth in military procurement since 1972
largely reflects a policy of selective updating of arms and equipment. In general,
Estimated Chinese Military Procurement
Billion 1972 Yuan
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when new models have been introduced, they have been accompanied by cutbacks
in older production programs resulting in a relatively small increase in spending for
procurement. In 1975, for example, when the Chinese increased procurement of the
TU-16 bomber and resumed production of the MIG-21 fighter, they produced about
50 fewer obsolescent MIG-19 fighters. There has been, however, a noticeable
increase in ground force procurement since 1975.
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Force Augmentation. Although well below the peak year of 1971, the esti-
mated procurement level today is about twice the average annual level of the sixties.
China is upgrading its forces both with increased numbers of weapons and with
technological improvements.
Priorities Under Review. Several recent events suggest that China's new leader-
ship is reviewing national development priorities, particularly the relationship be-
tween defense modernization and overall economic development. Last year's eco-
nomic performance was disappointing, and the promulgation of the Fifth Five-Year
Plan is a year overdue. The question of priorities was raised last December with the
publication of a 1956 speech by Mao which argued that to strengthen national
defense it is first necessary to strengthen the economic base. This notion has since
been the subject of several articles in the Chinese media.
The convocation of several national economic planning conferences-including
a publicized series of four on defense-related planning-also points to a possible
reevaluation of the defense budget
Outlook. A decision to increase the rate of military modernization would tend
to exacerbate China's economic development problems. Any significant step-up in
the production of modern aircraft, electronics, ships, armor, and missiles would
draw heavily on the same types of equipment and manpower resources required for
the continued development of the economy. Nevertheless, there is tenuous evidence
that some elements of the military establishment are pressing China's leadership for
increased allocations to defense programs.
China has insufficient resources at this time to finance more rapid military
modernization while simultaneously supporting advances in competing civil pro-
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grams. But the leadership would probably find it difficult to cut back on military
spending in the face of a continued Soviet threat. As a consequence, China probably
will continue the defense resource allocation policy it has followed since 1972,
holding growth of military spending in check while allowing for selective improve-
ments in military equipment.
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Algeria Improves Its Air Force
Spurred by its dispute with Morocco over the former Spanish Sahara, Algeria is
improving its air force by acquiring new combat aircraft from the Soviet Union and
upgrading military airfields.
Aircraft Deliveries. The USSR has delivered 71 MIG-21 fighters and 16 MI-8
transport helicopters to Algeria since early 1976, 25X1
These aircraft probably were supplied under a $500 million arms agreement w hic
Algiers sought in reaction to the takeover of the Spanish Sahara by Morocco and
Mauritania in 1975. F_ I
The acquisitions have enlarged Algeria's inventory of fighter aircraft by nearly
one-half and its helicopter force by approximately one-third.
Integration of New Aircraft. The Algerians may be planning to use the new
aircraft to expand the number of combat squadrons, although the availability of
pilots will limit any substantial increase in units in the near term. F_
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The Algerians also may use a portion of their recent arrivals to replace
obsolescent aircraft in operational squadrons. MIG-17 subsonic fighters, for ex-
ample, have been in service for well over a decade, and Algiers could have earmarked
some of the new MIG-21s as their successors in ground attack units. Although there
are riot yet enough MI-8s to replace the older MI-4s completely, the Algerians may
retire some of the MI-4s. The M1-8s have substantially greater cargo and troop
capacities and a higher cruise speed.
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Air Superiority. Algeria thus is increasing its already decisive advantage over
Morocco in air power, although a direct military confrontation between the two
over Sahara now appears unlikely. Despite some shortcomings in its air force training
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program, Algeria has the edge in terms of the capabilities of its air crews as well as its
substantially larger holdings of fighter aircraft. Morocco will receive the first of a
scheduled delivery of 25 Mirage F1 multirole fighters toward the end of the decade,
substantially improving the quality of its inventory of combat aircraft. Nonetheless,
will have too few aircraft to overcome Algeria's air dominanre_
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