FACTORS INFLUENCING SOVIET FORCE DEVELOPMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92B00181R000400320003-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 12
• Document Creation Date: December 23, 2016
• Document Release Date: January 11, 2013
• Sequence Number: 3
• Content Type: MISC

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Factors Influencing Soviet Force Development
1. Introduction
a. who I am, what we do
b. want to discuss 3 issues:
i. what is Gorbachev`s industrial modernization program and
how does it affect the economy
ii. what does the modernization program mean for defense--trade/offs
iii. what are some of the decision paints on the horizon 25X1
2. Gorbaehev`s Inheritance
a. GNP growth--2% per year 1976-85--lowest in decades ~**GRAPH 1*~c*
i. of all the ma,~or industrialized nations,
b. low growth compounded by the fact that it occured in economy
only 1/2 the size of US. *~KK~GRAPH Z~~-*~not only were Sovs not
catching up, they were starting to fall behind. even smaller on a
per capita basis f*~k__ ~GR~PH~3~*~-----~
c. Gorbachev was well aware of thesetrends: member of Politburo since
198Q
3. Modernization Program
a. two-step approach:
i. "human factor"--strengthen Party control, improve worker
discipline, and weed out incompetents. Anti-alcohol campaign
most visible part.
ii. in the long run, productivity gains--organizational changes,
reform initiatives, and modernizing country`s capital stock. The
latter involves retooling Soviet industries with new, more
capable machinery.
b. the capital stack program may require temp sacrifices on part of def
sector--the equipment for renovating industry comes from the
machine-building sector, which is also the primary source of military
hardware.
i, investment in 11 civ MBMW ministries to increase 8Q% 86-90.
ii. new quality control system introduced to improve product quality
iii. "science" expenditures--rough indicator of R&D resources--to
increase 35%
'v. new interbranch scientific and technical complexes to expedite
devel & assimilation of new tech into MBMW production base
c. foreign spt to fill in gaps that can`t be met at home.
i, probably increase imports from E Eur and West.
ii. cooperative R&D progs w/ EEur in key manufacturing techs
d. crucially important to defense, Gorbie has singled out advanced techs-
miero-electronics, advanced machine tools & robots, CAD/CAM, tele-
communications--as having a "revolutionary" role in transforming
civilian economy.
i. computer equip production to grow 18% annually thru 1990.
sposed to have 1.1 million PCs then, compared with almost none
thru mid-198Qs.
ii. production of robots 86-9Q sposed to increase 12Q%, NC machine
tools 90% and machining centers 33Q% compared to $1-85.
e. these same techs are crucial for new, more advanced weapon systems
i. Sovs lag badly~0-!Mast Sov mil officials have
acknowledged that successful~orig-term competition w/ West
demands the development of these.."civilian" sectors.
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4. How has Gorbie done so far?
a. performance over past year and a half highlights both strengths and
weaknesses in his program
b. in 1986--1st full yr of Gorbie's rule--was a good yr for Sov economy.
GNP grew at fastest rate in a decade (4%). Industrial growth also
highest in nearly a decade (3.5%). Ag harvest 4th largest on record.
Supplies of many quality foods increased and additions to housing
stock largest in 2 decades.
c. on the down side, 87 performance not living up to Gorbie`s hopes.
.Industrial production in 1st half 87 about 1% less than in 1st half
86. Machinery production--of crucial importance to mod program--
actually fell slightly compared to a year ago. New system of quality
control causing confusion and even chaos as inspectors reject output.
d. continue to receive indications Gorbie's policies running into
resistance. But nothing to suggest that Gorbie intends to back down.
June 87 CC plenum suggests just the opposite. But problems indicate
how difficult it will be to overcome inertia in Sov system.
e. PROSPECTS TO 1990--In short, based on what we've seen of Gorbie`s
program and problems encountered so far; we project GNP growth of
2% per year during remainder of this decade. Growth could be higher
if Sovs get good weather and hence goad ag harvests. But odds are
that if anything, actual performance will be even lower than predicted
5. Accomodatin~ Military Demands
a. Gorbie will be facing several military demands during the next few
years--a period that will probably be one of slow economic growth.
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A. Difficulty of Maintaining Their Current Status - Under any
circumstances, the Soviets face formidable costs in e-aint~ining the
world's largest military establishment.
1. the Soviets maintain very large stocks of
mi 1 itary equipment i n their staridi ny forces.
a. These weapons and equipment wear out and must be replaced--
from every several years for trucks to every 30 years or so
for major naval combatants.
b. Thus, simply to keep their forces at the current level
requires the Soviets to procure thousands of~major weapons
every year.
B. Modernizing the Forces - The Soviets, moreover, have worked hard to
improve the quality of their weapons by initiating a great many new
development programs.
1. During both the 196Us and 197Us the Soviets fielded about i40
major new systems and 2UU to 4UU major upgraded systems, and this
total may be slightly higher in the 19t~Os.
-- - __. - -
2. the Soviets have supported this effort
with steadily growing mi 1 i tary ROT&E expenditures that have
exceeded comparable US outlays since the early 197Us.
3. Through these efforts the USSK has raised the average level of
its military technologies considerably in some areas, narrowing
the gap between them and the technologies found in deployed US
systems. However this success has
come at a price--markedly higher costs to procure these weapons..
C. Defense Industrial Challenges - The military production base can
manufacture large quantities of weapons Sut
Soviet defense industry has been- challenged over the last decade to
assimilate production of increasingly complex modern weapons.
1. Over the last 12 years, .the USSR has turned out many more weapons
than has the United States.
o For the most part these weapons are less capable and
easier t o manufacture than their US counterparts.
o Since the early 197Us, however, the Soviets have modified
their weapon acquisition strategy, introducing a number
of systems that required advanced production technology.
2. The manufacture of these advanced systems was f requent]y
constrained by an obsolescent industrial base. It often relied
on labor-intensive production processes using simple machinery.
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3. In the early 197Us, therefore, the USSk began a comprehensive
modernization of its defense industries, retooling major plants
with advanced machine tools and other automated equipment.
Military electronics production was also upgraded substantially.
0. Emerging Weapons and Production Technologies -This defense-
industrial modernization helped the Soviets to master the production of
some very complex systems, like the MIG-29 fighter and T-8U tank.
But it also set the stage for intensified competition with civilian
interests in Gorbachev's industrial modernization program.
next decade will require further-improvement in design and
manufacturing technologies.
2. In sum, Gorbachev is under pressure to continue the accelerated
modernization of Soviet defense industry.
o As in the West, the Soviets will be forced to recycle
industrial capital every 9 to 12 years.
o Thus, defense industry will demand substantial quantities
of some of the best machinery and equipment.
3. In fact, the civil-military competition is already severe for a
whole range of materials, products, and manpower.
c~~~~ .~~
IY. keconciiing Competing Uemanos
This brings me to the last part of rtD' remarks and the really
critical question as far as US interests are concerned. Faced with the
heavy milit_ar_y_=dema__n_d~_I've just_des_cribed,_
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1. Nonetheless, competition for basic materials, intermediate goods, C;,~sE,~~`'~,~
and skilled labor will probably cause the pace of production of
some of these new systems to be somewhat slower and the date of
du,,r l
7f~~~-~;4W-s:~.;.
Soviet weapons entering production over the
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A. Meetin Near-Term Milita Needs--At least through 1990, we see no
et-up in the very high eve s of weapons procurement that have been
the hallmark of the Soviet defense effort over the last two
decades. The overhaul of the defense industries carried out during
the late 197Us and early 19tSUs should allow the Soviets to
manufacture most of the weapons we expect to be delivered to the
Sovi et forces through 1990.
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introduction somewhat later than Lhe Soviet military would
prefer.
2. But, on balance, we expect that Soviet defense spending wi 11 _ _~___ ~
we think total procurement spending during 1986-9U will
be approximately lU percent higher than in the preceding five
years and slightly above the record level of 1916-80.
B. Lon er-Term Re uirements--Although procurement will probably rise at
a relative y slow pace, this does not mean that we expect civil-military
competition to ease. On the contrary, if the economy's strong showing in
1986 proves to be transitory, as we bel i-eve 1 i kely, then extremely
difficult resource allocation decisions will have to be made between
competing civilian and defense interests, as well as among competing
interests within the civilian and defense sectors themselves. Over the
next few years, the toughest decisions are likely to be in the investment
arena.
1. Despite the high targets for investment in those branches of
industry key to the modernization ,program, we believe achieving
the production taryets in critical areas like the machine-
building and the energy sectors will require more investment than
is currently planned for 1987-9U. Investment is already being
given priority., however, and finding additional resources will
not be easy.
2. Moreover., a major part of Gorbachev's short-term economic
strategy depends on increasing workers' incentives. The
leadership has already deemed it necessary to boost investment in
consumer-related areas in 1987, and further growth will probably
be needed if momentum is to be maintained.
3. And, as I have already said, Soviet defense industries also will
require 1 arge investment over the next few years.
a. Our evidence shows that new programs are in progress to
update or replace older systems with imp roved models in every
mission area, with many likely to begin series production in
the mid-i99Us.
b. The Soviets begin t o prepare for weapons production during
the 10 years prior to initiation of series production. The
largest expenditures, includiny those to put in place most of
the machinery and equipment, occur in the last half of this
lU-year period.
This sugyests that they will be allocating considerable
investment in the late 1980s and early 1990s to prepare
for systems entering production during the last half of
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C. Arms Control Issues--We do not know how Gorbachev will respond to
these pressures. But in putting~to ether the 1991-95 Five-Yeas Plan
--which must begin in earnest a+w~e~t~~o--the state of
the econorr~?, Moscow's perceptions of the military threat, and
Gorbachev's domestic political standing would all come into play.
1. Gorbachev has based much of his political future and long range
plans for sustaining the USSR's superpower status on his economic
agenda, and we believe that, if at all possible, he intends to
give the civilian economy the investment resources it needs. To
do this, he will have to constrain the growth of military demands
for these same investment resources.
2. His preferred way of accomplishing this would be to reach an arms
control accord that would give him some confidence that the pace
of US weapons programs would also be constrained.
a. In effect, he must manage the US strategic competition or he
will have to deal with it in ways that could subvert his
agenda.
3. This is one of the main reasons we think he is so interested, for
example, in an INF agreement.
a. Although the resource implications of an INF agreement by
itself are at best marginal, the larger process of arms
control is seen by Gorbachev as his principal means of
dampening both external and internal pressures to spend more
on defenses -at least until he can reap the productivity gains
he hopes to obtain from his industrial modernization program.
b. And he probably believes that a successful conclusion of a
major agreement with the present US administration will
provide momentum to the process and create pressure for
subsequent movement toward agreements on strategic offensive
and defensive forces as the United States moves into an
election year.
he ~o rT e a
a 25X1
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6. Final Thoughts
a. In closing, even though I`ve been talking about what Gorbie could do
to ease the resource allocation pressures he's under, if he felt
he had to substantially increase the military budget, the USSR would
not be a basket case.
b. Spending mare on defense would undermine the mod program and possibly
forstall any gains in living standards, leaving the economy on a very
slow growth path through 1990s (possibly less than 2% per year).
c. This outcome would be unlikely to lead to economic collapse or
social upheaval, however. Worth remembering that Sov economy is now
so large that even at zero growth, more than 2 trillion dollars of
goods and services can be produced each year.
d. Technological gap would almost certainly widen, leaving USSR to
continue playing "catch up" not only in civilian technologies, but
also in some critical military teehnoiogies.
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(a'verdge annual percentage growth
GNp
1966- 71--
~6-
81~' 86
70 75 80 85
industr~dl Oufpul
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