ROWEN PROPOSAL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90T00435R000100120013-5
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 9
• Document Creation Date: December 27, 2016
• Document Release Date: March 15, 2013
• Sequence Number: 13
• Publication Date: December 22, 1988
• Content Type: MEMO

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CONF TIAL
The Director of Central Intelligence
Washintord/C2005
National Intelligence Council
MEMORANDUM FOR: D/SOVA
FROM: Fritz W. Ermarth
Chairman
SUBJECT: Rowen Proposal
22 December 1988
Here is the proposal from Harry Rowen that we have been talking about
and which the DWI wants us to review for an early response back to Harry.
FYI: The "proposed level of effort of about three man-years" amounts as I
understand it Harry wants to have a phone confab about this
very soon; he conveys a sense of urgency. So we need to reach a judgment
quickly.
Attachment:
Letter from H. Rowen dtd 16 Dec 88
CONFI NTIAL
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CONFIDENTIAL
SUBJECT: Rowen Proposal
Distribution:
Orig - D/SOVA
1 - NIO/USSR
1 - NIO/SP
1 - NIO/GPF
1 - NIO/ECON
CONFIDENTIAL
22 December 1988
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STANFORD UNIVERSITY, STANFORD, CALIFORNIA 94305
HENRY S. ROWEN
EDWARD B. RUST PROFESSOR
OF PUBLIC POLICY AND MANAGEMENT
1005 HOOVER TOWER
Dec. 16, 1988
Dr. Fritz Ermarth
CIA Headquarters
Roan 7E62
Washington, D.C. 20505
Dear Fritz:
Here is a description of the project I have in mind.
Sincerely,
t a-7-7
Henry S. Rawen
Enclosure
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H. Bowen
12/16/88
DRAFT
Possible Future Soviet Military Spending, Strategies aixl Forces
There has been a growing incongruence between the performance of the
Soviet economy and its growing military spending. Poor Soviet economic
performance is mostly attributable to its Stalinist economic system but heavy
spending on defense and the overriding priority accorded military programs
contribute to its malaise.
Faced with a similar situation a decade ago, the Chinese leadership cut
military spending by about 20 percent and reduced its military manpower by
about 1 million men. Then, as econanic reforms took hold and the economy
forged ahead it held military spending down. The econony greatly benefitted
as the share of output going to defense fell from around 12 percent of GNP in
1978 to around 5 percent now.
The Soviet leadership now, like the Chinese then, has strong reasons for
cutting back. Perestroika progresses slowly and it may have caused a fall in
output. Worries about the reaction of the masses to higher prices is causing
second thoughts about an early freeing of rigid and distorting prices. Joint
ventures with the West can help in a few sectors tut cannot lift the whole
economy. Borrowing from the West is increasing but there are limits to this
process; Poland and Hungary are vivid examples of the dangers of getting too
much in debt.
This leaves, as one of few options, trimming military spending. The more
or less public line of the Soviet military has been that only mutual
reductions with the West are admissible. But mutual reductions, as Khrushchev
once said, can take years to negotiate. Gorbachev has cut through this
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internal controversy by announcing a set of unilateral measures. On the face
of it, they won't yield significant savings but with parallel reductions in
procurement, they could. In any case, these are unlikely to be the last such
reductions whether future ones are unilateral or negotiated mutual reductions.
Nonetheless, there is no assurance of future cuts. But even if one
regards the most probable future trajectory as one very much like the past,
i.e. with further slow increases, there still is a significant chance of
lower--perhaps much lower--military spending over the next decade. There is
little attempt here to justify the likelihood of spending cuts. (Even
substantial ones would give only a modest boost to such an inefficient
economic system. But in the context of increased borrowing from the West and
progress in perestroika, they could be significant.) Rather, the principal
purpose of the proposed project is to stretch our imaginations about Soviet
military futures, to provoke discussion about them, to elicit other
possibilities than those enumerated below, and to put dawn same markers for
analysts who will be evaluating incoming data.
These alternatives can be characterized in terms of 1) levels of military
spending over time; 2) several alternative force structures, procurement
rates, manning levels, etc. and associated strategic rationales will be
formated for each level of spending.
Although the focus of this project is on a possible reduction in Soviet
military spending, it recognizes that this might not occur; or there might be
a brief period of cuts followed by increases (as under Khrushchev followed by
Brezhnev's increases); and that even if there are overall cuts some force
categories are likely to be expanded.
It also recognizes that there is ample scope for improvements in the
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efficiency of Soviet military spending and the elimination of low payoff
activities which, if exploited, could sustain or even increase its military
power while benefitting the economy. Such moves might include having a
smaller military establishment (especially ground force) which is better
eguipped and trained. (Such a shift is ncw being publicly advocated in the
Soviet Union by sane military analysts.) It might also include such measures
as cutting back on the deep underground program and reducing mobilization-base
expenditures. The savings might be partly, or even wholly, applied to more
advanced conventional weapons.
The final choice of cases to be examined will be based on discussion with
experts in the Agency. The following ones are tentatively suggested:
1. Spending Levels:
- A Base Case of a sustained 2 percent annual growth over the next
decade with no major changes in force structure or doctrine.
- lama Spending for several years followed by a Substantial nit
(10%) in the first half of the 1990s and beyond.
- A Ws& flit (Chinese type--20%) over the next several years
followed by a constant spending level.
- An Even Greater SIV
2. Major Allocational Shifts and Strategic Rationales
The main parameters include possible changes in inputs (manpower,
procurement, R&D, construction); fug& types (specialized nuclear,
ground, naval, tactical air, airlift, C31--including space) and
regional deployments (mpong me). Sane possibilities are these:
- De-emphasis of. Nuclear Forces. This would entail slowing the
modernization rate of ICBMs and SLBMs, holding down R&D for
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offense weapons and ABMs, perhaps slowing the modernization rate
of SMS and other air defenses. This shift would signal
acceptance of the view that the nuclear buildup had extracted
the principal gains to be gotten from the big nuclear buildup
and that improved conventional forces were now relatively more
important. This thrust might emerge in the context of a START
agreement. It would amount to a major shift in Soviet military
priorities.
- Trizuningof th lue-Water Navy. faits in the navy might be more
in modernization than in forces, although in the deeper
reduction cases both cuts would also occur. The rationale would
be that while such a navy is nice to have it is too costly and
less important than other branches.
Scale-Back of Ground Forces. In different sub-cases, this would
affect different combinations of modernization, readiness and
force structure and perhaps Associated Tactical /dr.
Gorbachev's announced cuts fall mainly in this category. The
rationale might be that the very large size of the ground force
structure assumes that a future war would be on the scale and
duration of the Great Patriotic War. Given advances in
conventional weaponry, the existence of nuclear weapons, and a
realistic geo-political assessment, such a war seems most
unlikely. Better to cut back and transfer some of the resources
to upgrading the quality of C3I, conventional munitions and
better training of a smaller force.
- Substantial Reductions alms the Chinese Border. (A subset of
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the ground force reduction option.) This move night be
associated with a Deng-Gorbachev meeting early in 1989. It
might entail moving some units to low readiness category while
eliminating others, mothballing some bases and cutting back
proportionately on weapons procurement. The rationale would be
that the danger of a war with China is low and the coercive
value of these forces against China is now small.
- Cuts beyond those recently announced in Eastern Europe. This
would have an even larger political effect in Western Europe.
- A oeneral (but not universal) cut in R&D and procurement, spread
widely across the services. The argument would be that these
are needed to improve the basic economy and for consumer goods.
- A further cut in Military Manpower beyond the 500,000 announced
by Gorbachev. Again, the motivation would be to boost non-
military output.
- Under the heading of sectors that might experience Increased
Spending are C3I (including space activities), modern
conventional munitions, and advanced tactical aircraft. The
rationale here is that the technical-military revolution in
warfare centers on these sectors.
Carrying out this project requires constructing a series of roughly equal
cost postures along several different spending profiles. This reguires having
available cost factors at the appropriate level of aggregation for each case.
Doing this adequately will depend on cooperation with cost experts in SCVA and
perhaps other parts of the Intelligence Community.
The products will consist of an interim report 4 months after funds are
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available and a final report at the end of 9 months.
The proposed participants in this project are Henry S. Bowen of Stanford
University (project head) and
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