$24 BILLION SOVIET MILITARY BUDGET REVEALS TIP OF ICEBERG

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000100610002-5
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: December 20, 2011
• Sequence Number: 2
• Publication Date: December 12, 1985
• Content Type: OPEN SOURCE

RTAT
Declassified in Part - Sanitized Copy Approved for Release 2011/12/20: CIA-RDP90-00965R000100610002-5
ARTICLE APPEARED
ON PAGE . -
WASHINGTON TIMES
12 December 1985
$24 billion Soviet milit~Wb~thj~t
reveals tip of iceberg
By Michael J. Bonafield
THE WASHINGTON TIMES FOREIGN SERVICE
GENEVA - When the Soviet
Union recently unveiled its $530 bil-
lion budget for fiscal year 1986,
Deputy Finance Minister Viktor
Dementsev told members of the Su-
preme Soviet, the nation's rubber-
stamp Parliament, that $24.4 billion
had been earmarked for defense.
The real figure, according to the
most cautious Western estimates, is
almost 10 times that amount, or $210
billion.
Mr. Dementsev said that Soviet
defense spending would remain at
4.6 percent of the budget, the same
as in 1985.
This was promptly hailed by some
in the West as a "political signal"
designed to reflect an improved U.S-
Soviet atmosphere in the afterglow
of the summit here Nov 19-20 be-
tween President Reagan and Soviet
leader Mikhail Gorbachev.
However, a look at Soviet military
budgets as far back as the early
1970s, and the rule of Leonid
Brezhnev, shows that Moscow has
consistently pegged its arms expen-
ditures between 4 percent and 6
percent.
Those figures, Western analysts
concur, represent only the tip of the
iceberg.
A closely guarded Kremlin se-
cret, one kept from the outside world
and the Soviet people, is the true cost
of the nation's huge military estab-
lishment.
"The funds allocated by [the Sovi-
ets] for military purposes have long
been the subject of controversy
among specialists;' said Richard
Pipes, a Harvard professor and spe-
cial adviser to Mr. Reagan on Soviet
issues.
"There is general agreement that
the figures shown in the official So-
viet budget are meaningless, and
that the bulk of military expendi-
tures is concealed under various
non-military rubrics."
Using elaborate calculations and
accounting techniques, the Central
Intelligence Agency estimates that
the U.S.S.R. spends between 12
percent and 14 percent of its gross
national product on defense.
Some independent analysts calcu-
late the share of Soviet military ap-
propriations is as high as 18 percent
and even 20 percent of the gross na-
tional product.
Additionally, a number of Soviet
dissidents, in particular Dr. Andrei
Sakharov, argue that more than 40
percent of the Soviet GNP goes for
military purposes.
The reason for the wide diver-
gence of opinion is the unique prob-
lem of assessing the Soviet Union's
economy, not to mention the military
budget.
For one thing, there is no Soviet
equivalent of the Western concept of
gross national product. The value of
the ruble has been arbitrarily set by
Soviet officials since 1977 as
equaling $1.40 U.S.
A more accurate valuation of the
ruble is the thriving Soviet black
market, where speculators give
three rubles for every dollar.
The Soviet gross national product
has been put at $1.5 trillion by the
A and other U.S. government
agencies. Using that figure as a
base, Kremlin military outlays of 14
percent would roughly equal $210
billion.
Since the Soviet military-
industrial complex operates in the
greatest secrecy, it is a matter of
conjecture where that money goes.
It is known that the party controls
defense industries through the De-
fense Ministry Department of the
Central Committee. The military in-
dustrial committee, in turn, super-
vises the production of all military
equipment.
Within this complex of interact-
ing agencies only one of the commit-
tees is called defense industry, al-
though at least eight other
ministries are engaged in defense
production, according to Harriet
and William Scott, analysts of the
Soviet military who have spent 15
years piecing together disparate ele-
ments of Kremlin defense produc-
tion.
According to the Scotts, whose
study, "The Armed Forces of the
U.S.S.R.," is regarded by most spe-
cialists as the premier source on the
subject, there are.nine defense pro-
duction ministries specifically en-
gaged in defense work. They are:
? Aviation industry - aircraft and
helicopters.
? Communications equipment in-
dustry - military application of
communications systems.
? Defense industry - conven-
tional weapons.
? Electronic industry - radars
and associated systems.
? General machine building -
rockets and space equipment.
? Machine building - munitions.
? Medium machine building -
military applications of nuclear en-
ergy.
Radio industry - radios.
? Shipbuilding industry - naval
stores and vessels.
Urn"imA
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These ministries, say Western ob-
servers, received the lion's share of
military appropriations. There are,
in addition, at least nine other min-
istries that are engaged in defense-
related industries. They are:
? Assembly and special con-
struction work - construction.
? Civil aviation - assists air
forces.
? Electrical equipment industry
- electrical products.
? Energetics machine building-
power.
? Machine-tool and instruments
building industry - missile and
space instrumentation.
? Maritime fleet - assists navy.
? Means of automation and con-
trol systems - guidance systems.
? Oil refining and petrochemical
industry - gas and oil products.
? Transport and heavy machine
building - prime movers, trucks,
etc.
In addition to these ministries,
there are close links between mili-
tary industries and the Government
Planning Committee (Gosplan), the
Government Building Committee
(Gosstroi), the State Committee on
Science and Technology and the So-
viet Academy of Sciences.
A major portion of military funds
flows through these committees,
and many observers believe that
Gosplan and Gosstroi parcel out ap-
propriations for defense con-
struction ranging from tanks to new
air bases.
The Academy of Sciences, on the
other hand, is involved in virtually
every aspect of defense. The acad-
emy's social-science research insti-
tutes are heavily engaged in military
strategy, with primary emphasis on
political-military-economic plan-
ning.
In trying to sort out Soviet defense
expenditures, many Western ana-
lysts have divided the economy into
two categories: "Sector A;' which
produces exclusively for military
purposes, and "Sector B," which sup-
ports the civilian economy.
The problem with this, say some
observers, is that significant por-
tions of "Sector B" are drawn upon
to supplement "Sector A"
"In all [Soviet] investment alloca-
tions to the consumer sector," said
Mr. Pipes," Soviet authorities always
bear in mind how adaptable a given
facility is for the purposes of war
mobilization."
One example of this
"adaptability" is Aeroflot, the state
airline, which Moscow takes consid-
erable pride in boasting as the
world's largest carrier.
Aeroflot, which is the largest air
fleet in the world, falls under the
ministry of aviation, whose director
is an active duty air force officer.
During the 1968 invasion of
Czechoslovakia, Aeroflot aircraft
and personnel delivered the initial
strike force to its landing at Prague
airport.
Huge numbers of Aeroflot air-
craft can be seen by foreign tourists
on the ground at major airfields in
the Soviet Union. Maintenance of
this unused fleet would, say military
observers, bankrupt any Western
commercial aviation company.
Yet Aeroflot's aircraft inventory
continues to swell, thanks in large
part to separate funds channeled to
the carrier from the Kremlin's hid-
den defense budget.
With an estimated 5.5 million men
and women in uniform, combined
with the procurement and mainten-
ance of the world's largest arsenal of
strategic missiles, bombers,
medium-range missiles, missile-
launching submarines, attack subs,
fighter aircraft, tanks, armored per-
sonnel carriers and other weapons
and weapons systems, the Soviet
Union could not possibly get by with
a military budget of $24.4 billion, say
analysts.
"In the past decade the Soviets
have been spending a minimum of
over $200 billion a year on the mili-
tary," said a specialist on Soviet af-
fairs in Munich, West Germany. ".And
I might add that is the most conser-
vative figure. Many others believe
the figure is half again as large"
"And besides," he said, "$24 billion
wouldn't even support the invasion
of Afghanistan for one year."
Declassified in Part - Sanitized Copy Approved for Release 2011/12/20: CIA-RDP90-00965R000100610002-5