USSR MONTHLY REVIEW

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83T00853R000300020002-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 54
• Document Creation Date: December 21, 2016
• Document Release Date: October 15, 2008
• Sequence Number: 2
• Publication Date: September 1, 1982
• Content Type: REPORT

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Directorate of Secret
Intelligence
USSR Monthly Review
September 1982
ON FILE USDA RELEASE INSTRUCTIONS APPLY
State Dept. review completed
Secret
SOV UR 82-008X
September 1982
Copy 4 5 9
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Directorate of
Intelligence
USSR Monthly Review
Secret
SOV UR 82-008X
September 1982
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Secret
Contents
Soviet Concern
for Security on the
Southern Frontier
Neighbors
Iran
Despite vigorous diplomatic and economic initiatives backed by a
substantial military commitment, the Soviet Union's relations with
countries on its southern border are beset by many problems.
Increased contacts with China probably will fall short of genuine
reconciliation, Vietnamese interests do not always parallel Soviet
wishes, the present situation in Afghanistan appears likely to
continue with no easy solution in sight, and the Soviets can expect
only marginal success in their pursuit of improved relations with
USSR-Iran: Prospects for a Troubled Relationship 3
little promise of compensating gain
Moscow's emphasis on improving bilateral relations with Iran
almost certainly will continue as long as Tehran remains anti-US;
the USSR's alternative policy options-an intensified covert desta-
bilization program or military intervention-carry serious risks and
large-scale military operations in the region
The ground forces opposite Southwest Asia have been steadily
modernized over the past 15 years, and recently the air forces there
were increased, after years of neglect. Nevertheless, both still have
serious weaknesses. Most of the ground units are seriously under
strength and ill trained, most of the aircraft have limited range, and
ground transport is inadequate. The Soviets probably would take
several months to correct these deficiencies before they undertook
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Moscow and Beijing reportedly will begin "exploratory talks" on
border issues and other state-to-state matters next month. No
sudden breakthrough on the issues that have deadlocked the two
sides for almost two decades is likely. Nevertheless, Moscow will
take considerable comfort from the resumption of the dialogue and
consider it a significant diplomatic victory over the United States at
a time when the Sino-US relationship is widely considered to be
deteriorating
13 25X1
Richard Topping
281-8477 or secure 36725
Soviet Military Developments on the China Border I 17
The Soviet Union has substantially increased its ground and air
forces opposite China since the mid-1960s while simultaneously
modernizing these forces and improving their logistic infrastructure.
Over the next decade, the augmentation and modernization of these
forces probably will continue as the Soviets attempt to redress
perceived vulnerabilities in their force structure along the Sino-
Soviet border)
25X1
In 1981 expenditures in direct support of Soviet forces in Afghani-
stan plus the value of equipment lost there amounted to about 800
million rubles (3.1 billion dollars), or the equivalent of about
1 percent of total Soviet military expenditures for the year. Unless
the Soviets decide to increase substantially their commitment to
Afghanistan in the future--and at present this seems unlikely-the
economic costs of maintaining the existing situation probably will
not be a primary determinant of Soviet policy.
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The Soviet Union and Vietnam: A Close but Uneasy Alliance
long-term durability of the relationship.
The Soviet Union and Vietnam share an alliance based on the needs
of the two sides and their hostility toward China. While these
factors help to stabilize the relationship, strains and contradictions
continue to accumulate and almost certainly pose problems for the
Analysis, on 11 August 1982.
Other Topics USSR: The Economy in the 1980s, Dependence on the West, and 31
Military-Economic Trade-offs
This briefing was presented to the Senate Foreign Relations Com-
mittee by Deputy Director of Soviet
27 25X1
Implications of the USSR's Hard Currency Problem for Aid to Allies 45
and Clients 25X1
important to US interests.
Moscow is trying to conserve foreign exchange, in part by reducing
economic support to dependent allies and clients. This policy almost
certainly will increase problems in bilateral relations with East
European and Third World countries. On the other hand, the
Soviets will continue military assistance in Third World regions
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New Soviet Helicopter
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Soviet Concern for
Security on the
Southern Frontier
Perspective: The Soviet Union's Policy
Toward Its Southern Neighbors
The Soviet Union's foreign policy goals in the countries on its southern
border are to negate possible threats to Soviet security interests, expand
Soviet influence, and develop access to economic resources in those
countries. Countering these aims are a hostile China armed with nuclear
weapons, diplomatic and economic opposition from the West, a small but
increasing US military capability in the Indian Ocean littoral, and growing
nationalistic and religious forces in the countries along the border. The
articles in this issue examine the policies employed by the Soviet Union in
pursuing its goals, the problems it faces, and likely future directions in
LJ/\ I
The Soviet Union has committed substantial military resources along its
southern frontier and has exercised the gamut of military options-short of
war with a major power-to support its interests in Asia. In Afghanistan,
the Soviets have committed forces to combat in supporting a client regime
engaged in civil war; opposite China the Soviet Union has used the threat
of military action with deployment of over one-fourth of its ground forces
along the border; it has maintained influence in Vietnam, in part, through
the use of substantial military aid; and military sales to Iraq, Iran, and In-
dia have been directed at both foreign policy and economic objectives. To
date, the least attention has been devoted to Southwest Asia, where Soviet
military forces are somewhat under strength, probably because of the lack
of an immediate military threat to the Soviet Union, the requirements of
other areas, and the remoteness of the region. Even there, however, Soviet
forces have been steadily modernized and could form the basis for a future
LJA I
In addition to their substantial military activity, the Soviets have vigorous-
ly employed diplomatic and economic approaches in their relations with
Asian countries. The largest recipients of Soviet economic aid-Turkey,
India, Afghanistan, and Vietnam-all lie in the crescent along the Soviet
1 Secret
SOV UR 82-008X
September 1982
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southern frontier. Soviet diplomatic overtures to countries in the area have
been strenuous and frequent, even to countries such as China and Pakistan
The Soviet Union's relations with countries on its southern border are beset
by many problems. The war continues in Afghanistan, relations with China
remain strained, Vietnamese interests do not always parallel Soviet wishes,
the Soviets have a troubled relationship with Iran, and Turkey is a member
of an adversarial alliance. Moreover, the Soviet actions in Afghanistan
have aroused suspicions throughout the region, and the Soviets appear to
be doing no better than the West in understanding and dealing with the
rise in Islamic fundamentalism or with the Iran-Iraq war
In particular, the Iran-Iraq war presents the Soviets with a no-win 25X1
situation. An Iranian defeat of Iraq, with whom the Soviets have a
Friendship Treaty and an extensive arms supply relationship, would
undermine the USSR's credibility as a security partner and raise new
doubts about the quality of its weapons. Moreover, a successor regime,
especially a radical Islamic regime, might be more anti-Soviet. Any
support of Iraq, however, risks further antagonizing Tehran and wrecking
prospects of improved relations with Iran in the future
For the foreseeable future, Soviet foreign policy on the southern frontier
most likely will continue to be a mix of diplomatic and economic initiatives
backed by military commitments. The Soviet Union and China both seem
willing to undertake a gradual resumption of cultural and economic
contacts and reportedly will hold "exploratory talks" on the border issue
and other state-to-state matters in October. While the two sides may agree
on limited measures to reduce tension, any action almost certainly will fall
short of a genuine reconciliation. Vietnam's political isolation and Chinese
hostility continue to foster the Soviet and Vietnamese alliance. In the
longer term, Vietnam's increasing demand for and dependence upon Soviet
aid could deepen resentment of Soviet restrictions on the aid program and
could increase the existing friction in the relationship. The present
situation in Afghanistan appears likely to continue with no easy solution in
sight. Finally, Moscow's emphasis on improved relations with Iran almost
certainly will continue as long as Tehran remains anti-US, but the Soviet
efforts are likely to have only marginal success
25X1
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USSR-Iran: Prospects for a
Troubled Relationship
The Soviets have reason to be pleased with Iran's
continued anti-US orientation and their own slightly
improved economic relationship with Tehran. Al-
though bilateral political relations remain strained,
Moscow's emphasis on improving relations almost
certainly will continue as long as Iran remains anti-
US, the USSR has a chance of making further gains,
25X1 and pro-Soviet elements are not sufficiently strong to
mount a successful challenge.
Current Status of Soviet-Iranian Relations
The Soviets undoubtedly view many facets of the
Iranian situation positively:
? Iran remains stridently anti-US, a major Soviet
objective since the 1979 revolution.
? The most publicly anti-Soviet Iranian leaders
(Bani-Sadr and Ghotbzadeh) have been defeated.
? Bilateral trade increased to a record $1.1 billion in
1981, more than double the abnormally low 1980
volume and slightly above the prerevolution
average.
In spite of these favorable trends, the Soviet media
have been critical of Iranian policies. A Pravda article
on 9 March 1982 provided the most authoritative and
wide-ranging list of Soviet complaints against Iran
since the revolution, citing numerous slights as evi-
dence of Iran's hostility. In the article, commentator
Pavel Demchenko expressed concern that conservative
clerical elements were gaining influence in Tehran,
charging that rightwing elements around Khomeini
were seeking to block good relations with the USSR.
it calls "puppets" of the United States.
25X1
Subsequent Soviet commentary, particularly in
Persian-language broadcasts from Baku-on the so-
called National Voice of Iran (NVOI)-has repeated-
ly condemned Iran's support for the Afghan insur-
gents, the repression of "genuine revolutionary
forces" (the Soviet-backed Tudeh Party), and Iran's
developing relations with Turkey and Pakistan,--which
These criticisms probably reflect serious Soviet doubts
about the direction of Iran's revolution and the impli-
cations for Soviet interests: 25X1
? Some 2,500 to 3,000 Soviet economic advisers are
working in Iran-fewer than under the Shah but a
substantial increase since the early days of the
revolution. There may also be some 100 to 200
military personnel in Iran, about the same number
as under the Shah.
? Soviet arms deliveries, contracted for under the
Shah but halted when the Iran-Iraq war began in
September 1980, resumed in mid-1981.
? Iran's contacts with Cuba and the radical Arab
states have expanded, and Syria and Libya have
funneled Soviet-made equipment into Iran.
These developments suggest that the USSR's pros-
pects for further gain are promising.
? Having supported the radical clerics now in posi-
tions of power, the Soviets must be disappointed
that Iran's anti-Soviet orientation has not
diminished.
? Longstanding Soviet-Iranian differences on natural
gas shipments and construction of a new gas pipe-
line have not been resolved. Moscow is probably
suspicious of Iran's proposal to cooperate with
Turkey in building a pipeline to Western Europe.
? The USSR's main internal asset in Iran, the Tudeh
Party, has gained little numerical strength. Its
potential leftist allies have been decimated by re-
pression and alienated by Tudeh's treachery.' The
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party has faced continuing repression-occupation
of its offices, the banning of its newspapers, the
arrest and execution of its members.
? Continuing Soviet and Tudeh efforts to penetrate
key Iranian institutions probably have achieved only
limited success. Soviet contacts with nationality
groups have been minimized to avoid antagonizing
the regime. The USSR apparently does not have
sufficient leverage over the Iranian power structure
to constitute a near-term threat to the regime
Soviet View of Iran-Iraq War
Soviet disapproval of Iran's invasion of Iraq in July
1982 has added another irritant to Soviet-Iranian
relations. Since Iraq's initial move into Iran in Sep-
tember 1980, the Soviets have tried to maintain good
relations with both combatants and have urged an
early end to the war. Iran's continuation of the
conflict complicates these policies.
While the fall of Iraqi President Saddam Husayn and
the spread of instability in the Gulf as a consequence
of Iran's militant activity eventually might work to
Moscow's benefit, either could prove detrimental.
Saddam's successor, particularly an Islamic funda-
mentalist regime, might be more anti-Soviet than
Saddam, and some conservative Gulf states might
seek closer security ties to the United States. In
addition, the USSR's reputation as a reliable ally
would be harmed by the decisive defeat of Iraq, with
which it has a Friendship Treaty and an extensive
arms supply relationship, especially in the wake of the
defeat in Lebanon of Moscow's Syrian and Palestin-
ian clients.
The USSR's ability to affect the situation is marginal,
however. Its low political standing in both Tehran and
Baghdad undermines a possible role as mediator, and
it has few attractive options for preventing further
Iranian military attacks. Exerting its limited political
and economic influence almost certainly would not
restrain the Iranian rulers but would antagonize
them; its support for a mid-July UN resolution calling
for a cease-fire and Iranian withdrawal drew an
immediate rebuke from Iranian Prime Minister
Mu.savi. Direct military intervention on behalf of Iraq
is highly unlikely. It would all but destroy Moscow's
prospects for future gains in Iran. Moreover, in the
event of a rapid Iranian breakthrough, the Soviets
would be put in the unwelcome position of either
employing the forces they had sent-which they
would hope to avoid-or suffering the embarrassment
of withdrawal.
In an effort to protect their current equities in both
Iran and Iraq, the Soviets probably will continue to
remain aloof and maintain a generally balanced pos-
ture. They will continue to ship large quantities of
sophisticated arms to Iraq and to fulfill their much
smaller arms commitments to Iran
Soviet Options and Prospects
The Soviets almost certainly will maintain their cur-
rent emphasis on courting Tehran, while building
internal assets for the long term. This option is
desirable so long as Iran maintains its anti-US orien-
tation, Moscow has a chance of making further gains,
and pro-Soviet elements are not sufficiently strong to
mount a successful challenge.
Within the framework of their current policy, the
Soviets have limited flexibility. In an effort to force a
more responsive Iranian policy, they might intensify
criticism of Iranian policies, encourage preparations
for antiregime activities by the Tudeh and other
leftists, and increase military preparations on their
own or the Iranian-Afghan borders.' Such a policy
would be constrained, however, by Moscow's contin-
ued desire to establish closer bilateral relations.
The Soviets are eager to establish a broader military
supply relationship with Iran-even though this might
create strains in relations with Iraq. As in much of the
Third World, arms sales and attendant training and
advisory programs provide the most promising avenue
for Moscow's establishment of close bilateral relations
and a permanent presence.
2 The Soviet decision to operate close to the Iranian-Afghan border
last April, which led to an inadvertent incursion by Soviet troops
into Iran and an Iranian protest, suggested a certain lack of concern
about its impact on bilateral relations. Future operations of this
25X1
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Given Iran's current leadership, Soviet efforts are
likely to have only marginal success. Tehran has not
proved vulnerable to pressure tactics thus far and is
:25X1 unlikely to become so. Iran's leaders have made clear
The incapacitation or death of Khomeini, however,
might remove a major obstacle to gradually improved
relations, and clerics less suspicious of Soviet inten-
tions might emerge dominant. Such a development
could produce some warming in relations, involving
25X1 increased economic and military cooperation. So long
as Islamic fundamentalists remain dominant, howev-
er, anti-Communism, suspicion of Soviet intentions,
and opposition to the Soviet presence in Afghanistan
The Soviets are unlikely to offer economic conces-
sions, as demonstrated by their stand on natural gas
pricing, but they will be forthcoming in providing
transshipment services, participating in development
projects, and selling technology and equipment.
their distaste for cooperating with the Tudeh internal-
ly or the USSR externally and have dealt with each
only to the extent considered useful. They have
preferred to purchase civilian and military equipment
from the Third World and Europe
instability within Iran, it might increase instability on
the USSR's own borders. These factors militate
against its adoption unless the Soviets believe that
virtually all these negative developments are already
in train. 25X1
Soviet consideration of military intervention in Iran
could be prompted by several developments-a US
military move into Iran or the threat of such a move;
the collapse of the Tehran government, threatening
prolonged chaos or civil war and disruption in border
areas; or seizure of power by a leftist Iranian faction
seeking Soviet assistance. Articles 5 and 6 of the
Soviet-Iranian treaty of 1921 would provide a legal
pretext for intervention.'
Although such developments could prompt Soviet
military action, the relatively low level of Soviet
preparedness on the Iranian border suggests that the
Soviets are not planning to intervene in the near term.
There are major disincentives to military intervention:
? It would constitute a direct challenge to vital West-
ern interests, possibly leading to a major confronta-
tion with the United States.
probably will limit relations.
A change in Iran's leadership could produce a govern-
ment that is even more actively anti-Communist and
anti-Soviet than the current regime. Should Moscow
believe its interests were threatened significantly, it
might intensify its program of covert action designed
to destabilize the government and, ultimately, subvert
and overthrow it.
? Intervention in another Third World country would
seriously damage the USSR's image in many coun-
tries where it is seeking closer relations. 25X1
? The Soviets would have severe problems maintain-
ing occupation forces in fiercely xenophobic Iran.
Iran's successful response to Iraq's attack has prob-
ably strengthened Soviet perceptions on this score as
25X1
Moscow could instruct the Tudeh Party to go under-
ground and oppose the regime. A Soviet program of
large-scale military and logistic assistance, facilitated
by porous borders, would improve the capabilities of
Tudeh and other leftist groups and increase their
ability to threaten the government. While the pros-
pects for success would be slim under a strong regime,
they would increase should Iran begin to disintegrate
politically.
Significant support for subversive activity would carry
severe risks for the USSR. It would further damage
Soviet-Iranian relations and might result in the effec-
tive destruction of Tudeh within Iran. By promoting
have the USSR's own problems in Afghanistan.
More likely than the actual resort to military force is
Moscow's use of the threat of intervention to intimi-
date Tehran or deter US intervention. If they believed
that political developments in Iran were leading to the
possible emergence of a pro-US regime, the Soviets
' These articles give the USSR the right to intervene in Iran under
certain circumstances. Iran unilaterally abrogated them in Novem-
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probably would warn, as they did in November 1978,
that foreign interference in Iran would affect Soviet
security interests. They might complement this warn-
ing with a show of military force near their borders
with Iran or an increase in cross-border activities on
the Iran-Afghan border.
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Soviet Military Posture
Opposite Southwest Asia
Background
Until the late 1970s the Soviets regarded Southwest
Asia as secondary to their major security concerns-
NATO and China. Indeed, Soviet forces in the mili-
tary districts (MDs) nearest the area (the North
Caucasus, Transcaucasus and Turkestan) were largely
intended for operations in theaters outside Southwest
Asia. The units in the Transcaucasus and North
Caucasus were oriented against eastern Turkey, and
those in Turkestan against western China. Moreover,
Soviet exercises postulated that these forces would
fight on the peripheries of the main theaters rather
than conduct major independent operations.
Local conditions contributed to the neglect of this
area by the Soviet military planners. The mountain-
ous terrain and the poor transportation networks in
the three MDs imposed major obstacles on even the
limited operations which were envisioned in exercises.
As a result, the area was treated largely as a back-
water by the Soviet military
Ground Forces
Soviet military capabilities opposite Southwest Asia
were reduced significantly as a result of the buildup
along the Sino-Soviet border in the late 1960s and
early 1970s. The principal impact of the Sino-Soviet
border buildup was felt in the late 1960s, when the
larger part of the Turkestan MD was split off to form
the Central Asian MD, positioned opposite China.
The reductions in capabilities were not universal:
several new divisions were formed in the region during
these years, and the Transcaucasus MD (which bor-
dered NATO forces in eastern Turkey and CENTO
forces in Iran) did not lose any units to the buildup.
On balance, however, the emphasis on the Sino-Soviet
border caused a net loss to Soviet forces opposite
Southwest Asia.
The invasion of Afghanistan prompted the first major
change in Soviet forces in the region since the border
buildup. Two motorized rifle divisions and one air-
borne division were introduced into the region and a
Turkestan MD in 1979-80.
Organization. The composition of the ground forces in
these three MDs differs considerably from that of
Soviet ground forces elsewhere. The Soviets have
apparently organized their ground forces in this re-
gion to accommodate the forbidding problems of
movement across mountainous terrain. In contrast to
the large numbers of tank divisions opposite NATO
and China, there is only one tank division in the entire
region. The other divisions, including those in 25X1
Afghanistan, consist of 28 motorized rifle divisions
(MRDs) and two airborne divisions
Divisional armor, artillery, and support units in this
area are smaller than comparable units elsewhere. For
example, motorized rifle regiments in these divisions
generally have only a tank company (10 tanks) instead
of the usual tank battalion (40 tanks). Smaller sub-
units reduce the need for manpower, and the wartime
strength of these divisions after mobilization would
probably average only 10,000 to 11,000. (For compar-
ison, the divisions opposite NATO and China would
average more than 12,000.)
Readiness. In peacetime, most of the divisions oppo-
site Southwest Asia are manned at very low levels, as
shown in the table. Excluding the Soviet forces in
Afghanistan, only five of the Soviet divisions in the
region are considered "ready." ' All of these "ready"
divisions are in the Transcaucasus.
The low level of peacetime manning in the region
restricts the levels of training that can be conducted.
' The Soviets describe their units as "ready" or "not ready" on the
basis of manning and include several less formal gradations in each
category. In general, "ready" divisions can begin military opera-
tions shortly after mobilization and "not ready" divisions require
extensive additional preparations and training.
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Figure 1
Military Districts Opposite Southwest Asia
C r Rostov
North Caucasus
Military District
Soviet Union
Aral
Sea{
Tbilisi Caspian
BAGHDAD
~ Sea
Transcaucasus
Boundary representation is
not necessarily authoritative.
MANAMA
Banratn~t
~ -Qatar
l * DOHA
~`--yCl nif"e'
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K& ait
vWAIT
Tashkent
Turkestan
Military District
25X1
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"Ready" divisions
Full strength a
a Full-strength divisions are fully equipped and are manned at 95 to
100 percent.
b All airborne divisions are full strength.
One airborne division was disbanded in Afghanistan in 1980, and
its subunits were attached to other units. These subunits, which are
equivalent to a second division, are not shown as a division in this
table.
d These divisions are fully equipped and are manned at 70 to 85
percent.
e These divisions are fully equipped and are manned at 55 to 70
percent.
r These divisions are manned at 25 to 40 percent and would require
additional vehicles.
g These divisions are manned at 5 to 25 percent and would require a
large number of additional vehicles.
h A mobilization base is a depot that contains the major combat
equipment for a division but is not manned in peacetime.
"Not ready" divisions are rarely able to conduct
training above the battalion level. In the past, the
Soviets have required such units to conduct training
from the individual refresher level through divisional
exercises before reclassifying them as ready for offen-
sive operations. We judge that even after mobilization
brought them up to strength, the "not ready" units in
this area would need at least a month of training
before they could undertake offensive operations in
Southwest Asia
The low level of manning in the "not ready" units in
peacetime also emphasizes the importance of reserv-
ists to Soviet military capabilities in the area. Al-
though Soviet units in every theater require the
mobilization of reservists, the degree of dependence
on reservists varies widely among the theaters. For
example, most of the Soviet military capabilities
opposite NATO's Central Region are concentrated in
"ready" divisions in Eastern Europe and the western
USSR, and therefore a significant percentage of
Soviet military power in that region would be avail-
able shortly after mobilization. In contrast, the five
"ready" divisions in the Transcaucasus represent only
half of the Soviet ground forces combat potential in
the area upon mobilization. To realize the rest of that
potential, the "not ready" units must integrate and
train large numbers of reservists.
The Soviets have undertaken only minor changes in
the manning of divisions in these MDs since the
invasion of Afghanistan. One unit near the Iranian
border in the Transcaucasus was raised from a low-
strength to a high-strength cadre division in mid-
1979. This minor increase in manpower, however,
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Figure 2
Weighted Equipment Value of Soviet Forces
Opposite Southwest Asia
a The weighted equipment value (WEV) of a weapon is a numerical estimate
of its effectiveness based on engineering studies of its firepower, mobility,
and armor. The scores in this graph were derived by applying the WEV
methodology to US estimates of the inventories of Soviet forces opposite
Southwest Asia contained in the Land Armaments and Manpower Model
(LAMM).
permits only slight improvements in the level of
training within the unit. More recently, one mobiliza-
tion base division in the North Caucasus MD appar-
ently was moved from the interior of the district to its
border with the Transcaucasus MD. The unit may
have been activated as a low-strength cadre division in
the past year.
Equipment. While the number of divisions in the
three MDs has remained stable between 1974 and
1979, their equipment has improved steadily, as
shown in figure 2. The introduction of modern infan-
try fighting vehicles (IFVs) and additional artillery
has increased their mobility and firepower. Even so,
the divisions in this area have been among the last to
receive new equipment, and their weapons are gener-
ally older and less effective than those of comparable
units in other theaters. Shortages of equipment, par-
ticularly IFVs, continue, and some of these units still
use trucks to transport infantry.
Logistics. The difficulty of providing logistic support
for the units opposite Southwest Asia remains a
serious limitation on Soviet military operations in the
area. Supplies sufficient to support a major campaign
probably are available in the three MDs. However,
maintaining an adequate flow of supplies over extend-
ed distances and through difficult terrain would pre-
sent formidable problems to the Soviet logistic system.
Soviet divisions typically carry sufficient supplies for
several days of combat; beyond that, they depend on
higher commands to provide further supplies. In this
region, however, the divisions have fewer transport
vehicles to carry supplies than the typical Soviet
division, and the higher commands at army and corps
level there are not currently equipped to take up the 25X1
slack. The large numbers of vehicles required to
correct these shortcomings would have to be requisi-
tioned from civilian motor pools upon mobilization.F
Effectiveness. The improvements noted in equipment
effectiveness in these three MDs have been part of the
general modernization of the Soviet ground forces
rather than a specific buildup in the region. On the 25X1
basis of US calculations of the weighted equipment
values (WEV) of the weapons there, Soviet weapon
effectiveness in this region has more than doubled
since 1966 (see figure 2). Moscow is not giving greater
emphasis to these forces, however; over the entire
period they have improved at about the same rate as
the Soviet ground forces as a whole.
Air Forces
There are nearly 800 fixed-wing combat aircraft in
the three MDs oposite Southwest Asia. They include
about 200 fighter-bombers, some 525 fighters and
interceptors, and nearly 70 reconnaissance aircraft. In
recent years the air units in the region have received
new aircraft at a slightly faster rate than those in
other areas, and modernization standards achieved
elsewhere are being met after some years of neglect.
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The Soviets are replacing some 70 older interceptor
aircraft assigned to two former National Air Defense
regiments with 90 fighter-bombers. They apparently
feel the need to increase their ground attack capabili-
ties in the region. Nevertheless, they have not chosen
to establish a national-level air army there equipped
with longer range ground attack aircraft, as they have
done opposite NATO and China.
have a limited range.
Implications
The Soviet military forces opposite Southwest Asia
could not undertake a major military offensive in the
area, such as a campaign to occupy the Persian Gulf
region, without extensive preparations and postmobili-
zation training. The five "ready" divisions in the
Transcaucasus could cross the Soviet border into
Turkey or Iran shortly after mobilization, but the
Soviet ability to sustain them during a protracted
campaign is problematic. The low levels of manning
and training in the "not ready" divisions-the major-
ity of the force in this area-and the inadequacy of
the regional transportation network would place ma-
jor constraints on Soviet offensive military operations.
In addition, the Soviets would have to shift some
medium or light bombers into the area because the
tactical fighter-bombers currently deployed there
Before the Soviets could undertake a large-scale
campaign in Southwest Asia, they would have to
increase the peacetime manning levels of combat units
and improve the logistic transport capabilities in the
region-activities that would be highly visible and
take several months. Long-term preparations for a
campaign in Southwest Asia probably would also
include improvements to the region's road and rail
system.
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Sino-Soviet Relations:
The View From Moscow
Soviet concern over the prospect of becoming "odd
man out" in the US-USSR-China triangular relation-
ship dates back to the mid-1960s and increased
sharply after the Sino-Soviet border clashes in March
1969. Moscow responded during the 1970s by making
strenuous and frequent attempts to secure a diplomat-
ic breakthrough with China. It also sought to prevent
the drawing together of the United States and China,
while promoting its own detente with Washington.
These efforts produced mixed results at best while
Mao was still alive, and Moscow has lost ground since
his death in September 1976. The Soviets have not
written off China, however. Instead, they have
launched a new campaign to persuade the Chinese to
resume their political dialogue, and the two countries
reportedly will hold "exploratory talks" on border
issues and other state-to-state matters in Beijing next
month.
Soviet Initiatives
Over the past year and a half, the Soviets have made
several overtures to the Chinese. They have stressed
the possibility of easing tensions along the Sino-Soviet
border but have indicated a willingness to take small
concrete steps in almost any area of the bilateral
relationship:
? President Brezhnev, at the 26th CPSU Congress in
February 1981, raised the possibility of confidence-
building measures (CBMs) for the Far East, a
concept that has particular relevance for the border
issue. The Soviets proposed private bilateral talks on
the subject in August of last year and hinted that,
Mongolia could be a party to such an agreement, a
point on which the Chinese would insist.
? Moscow tried another tack in September 1981 by
proposing a new round of border talks. (The last
round was held in Beijing in June 1978.) The
Chinese reply in December agreed in principle but
stressed the need for "serious preparations." The
Soviets-frustrated by the lack of progress on this
matter-responded with a second note in early
February, calling on the Chinese to set a date for
the next round of talks.
? Premier Tikhonov stated, during an interview in the
Japanese newspaper Asahi later in February, that
Moscow was prepared to take "concrete steps" to
improve relations.
? Brezhnev, in his speech at Tashkent in March,
reaffirmed Moscow's interest in easing tensions
along the frontier and expressed a willingness to
improve relations in any nonpolitical area. He insist-
ed, however, that such improvements could not be at
the expense of the USSR's friends or allies. 25X1
? Moscow has followed up by floating several ideas on
expanding economic, scientific, or cultural relations.
We believe they may be willing to dispatch
advisers to China as well as relax export curbs on
high-technology items
"People-to-People " Contacts 25X1
These overtures have been made against a back-
ground of increased low-level nonpolitical contacts.
Chinese sports teams have competed in three or four
events in the USSR this year, and the Soviet athletes
who participated in a track meet at Beijing in June
were the first to visit China since 1965. Academic and
cultural exchanges also seem to be on the upswing
The two sides have also expanded economic coopera-
tion. Bilateral trade will increase about 20 percent in
1982 but will still be well below the level achieved in
1980 and earlier. Trade reportedly would have dou-
bled this year if Moscow had been willing or able to
fill Beijing's orders for raw materials. Cross-border
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trade will be resumed at the local level, and the two
sides reportedly will exchange technical delegations in
the silk and fisheries industries in the near future, the
first such exchanges since the 1960s. In addition, an
agreement reached in February permits China to ship
containerized goods to Eastern Europe and Iran via
the Trans-Siberian Railroad and gives the USSR
transit rights through northeast China to the Far
East.
Beijing's Political Response
Despite increased contacts, the Chinese public re-
sponse to the political overtures has been cool. Beijing
has, for example, publicly responded to Brezhnev's
Tashkent speech by calling for deeds not words. It is
still demanding a sharp reduction in Soviet forces
along China's border, the withdrawal of Soviet troops
from Mongolia and Afghanistan, and an end to Soviet
support for Vietnamese activities in Laos and
Kampuchea. Beijing has ruled out any warming in
relations until its preconditions are met and-to em-
phasize this-has stated that
changes in Sino-US ties will not alter China's hostility
toward the USSR.
The Soviets are, nonetheless, relieved that the Chinese
have not closed the door entirely to improved rela-
tions. Beijing has not, for example, formally rejected
Brezhnev's CBM proposal,
Instead, the Chinese
have held discussions with several Soviet officials who
have visited Beijing during the past year or so. A
Chinese Foreign Ministry official also recently visited
Moscow to meet with Soviet officials-the first
middle-level Chinese official to visit Moscow since
normalization talks were held there in late 1979.
the border in certain areas and replace the old
markers where necessary. They have hinted at possi-
ble troop cuts along the Sino-Soviet frontier but insist
that a military disengagement-almost certainly
China's leading concern-must be a two-way process.
Moscow is, in the meantime, continuing its military
buildup-in both qualitative and quantitative terms-
and now has 52 divisions deployed opposite China.
That fact almost certainly looms largest in any calcu-
lation by the Chinese of Soviet intentions to seek
changes in the bilateral relationship.
Moscow also has been unyielding with regard to the
Soviet presence in Mongolia, Afghanistan, and Viet-
nam. Furthermore, the Chinese suspect Moscow is at
least partly responsible for the unrest in Tibet and
Xinjiang in recent years, and they resent Soviet
efforts to thwart the Sino-Indian border talks.
Moscow is mistrustful of Chinese attempts to improve
relations with the East European countries and has
been critical of Beijing's efforts to stiffen West Euro-
pean resistance to the Soviet threat. Both sides contin-
ue to compete elsewhere in Asia, and neither seems 25X1
ready to curb competition in other parts of the world.
Soviet Motives
Moscow's positive gestures suggest a desire to probe
for attitudinal changes in a period of Chinese leader-
ship flux. The Soviets also seem determined to prevent
further erosion of their position in the US-USSR-
China triangular relationship and to win back at least
some of the ground they have lost in that relationship
over the past decade. The Soviets, who have long been
apprehensive about becoming the "odd man out,"
apparently see both new threats and opportunities in
developing Sino-US relations.
Sticking Points
Little if any progress has been made to date toward
settling the main points in contention-most notably,
the border dispute. The Soviets reject China's territo-
rial claims and insist they will only agree to resurvey
Secretary Haig's visit to Beijing in June 1981-
together with the announcement that Washington was
considering arms sales to China-probably appeared
particularly threatening. Moscow's desire to forestall
closer US-Chinese ties, as well as its perception that it
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faced renewed US competition in the defense field,
probably gave impetus to those who argued for new
initiatives toward China
In the months following the Haig visit, however, the
Soviets-judging from their public and private state-
ments-perceived a growing rift between Washington
and Beijing as well as a reluctance in China to
become too closely associated with the West. Al-
though they still appear to be debating the dimensions
of this rift, Brezhnev's statement at Tashkent regard-
ing Soviet support for Beijing's sovereignty over Tai-
wan was a clear attempt to capitalize on Sino-US
frictions over that particular issue
Moscow is probably not overly optimistic that this
friction can be immediately translated into improved
Sino-Soviet relations-especially in light of the US-
China communique on the Taiwan issue last month.
But it may think that an easing of pressure and
polemics-with its implication of an eventual rap-
prochement-could lead the United States and its
allies to question the wisdom of helping China to
modernize its economy and defenses. Moscow may
also think that, at a minimum, an absence of Soviet
pressure will create an environment in which Chinese
disillusionment with the United States could fester.
Furthermore, Moscow has long had an interest in
persuading Washington that Sino-Soviet ties are not
frozen-an effort to increase its leverage with
Washington and curb Beijing's ability to encourage
the United States to take strong anti-Soviet stands
elsewhere in the world
Moscow probably expects other, more immediate
benefits as well-for example, an easing of Chinese
hostility toward the USSR on a wide range of issues.
The Soviets want the Chinese to tone down their
opposition to the Soviet presence in Afghanistan and
Vietnam and to stop harping on the danger of Soviet
"hegemonism" in other parts of the world. Even a
partial "thaw" would ease the pressure on the USSR's
main allies in Asia and reduce the danger of a US-
China-Japan "alliance" against the USSR in the Far
East-a prospect that, however unrealistic, seems to
trouble the Soviets considerably. Moscow also would
expect other Asian states-for example, the ASEAN
countries-to become more susceptible to Soviet in-
fluence and/or suspicious of Chinese intentions.
Moscow's initiatives also may have been promoted by
Soviet domestic considerations. Brezhnev and his
colleagues are, for example, keenly aware of the cost
of the Soviet military buildup opposite China. We
estimate that spending for forces in that area ac-
counted for about 10 percent of Moscow's total
defense expenditures during the past decade. The
political leadership probably would like to stabilize or
even reduce expenditures for these forces, if only
because of the slowdown in Soviet economic growth
and the intensified military competition with the
United States. The Soviet leaders are, at the same
time, concerned about the vulnerability of Siberia and
the Soviet Far East, and thus want better relations
without giving Beijing any more than minimal conces-
sions in the military sphere.
Kremlin politics are also a factor in the Soviet
deliberations. The deaths of Premier Kosygin in late
1980 and Party Secretary Suslov early this year
removed two powerful Politburo members from the
scene and may have made it easier for Brezhnev and
the remaining members of the top leadership to adopt
a more flexible tone on Sino-Soviet issues. Mean-
while, time is running out for Brezhnev, who presum-
ably would like to achieve one more success as a world
statesman before departing the political stage.
25X1
Chinese Intentions
Beijing has a number of objectives in mind in expand-
ing low-level contacts with Moscow. It sees these steps
as a way of easing tensions and opening people-to-
people contacts without altering its fundamental dis-
agreement with the USSR on a broad range of
bilateral and international issues. At the same time,
the Chinese want to introduce a greater measure of
flexibility in their approach to Sino-Soviet relations
and no doubt hope to use the fledgling political
dialogue to acquire more leverage in dealing with the
United States. 25X1
There is no sign, however, that the Chinese believe the
USSR is preparing to make concessions over the main
contentious issues. In particular, we believe Beijing
will hold firm as long as Moscow refuses to make
substantial cuts in its military forces along the com-
mon border. In any event, Beijing can be expected to
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regard the USSR as its major adversary indefinitely,
and-while possibly expanding contacts-will almost
certainly continue to give top priority to opposing
Soviet "hegemonism."
Prospects
Neither the Soviet Union nor China appears ready to
make major concessions on the border dispute or other
contentious issues dividing them at present. The
USSR's attitude is colored by an ideological and
national animosity toward China which makes the
Soviets suspicious of Chinese motives and intentions.
Furthermore, Moscow is convinced that despite
China's economic and military weakness, Beijing can
best be dealt with by a continued strong military
presence on its border. This view is, at the same time,
accompanied by a genuine fear that China poses an
unpredictable threat to both the USSR and its inter-
ests abroad.
Another impediment to settling these issues is the
absence of a constituency in Moscow with a direct
stake in improved relations. The USSR's most power-
ful interest groups-the party bureaucracy, the mili-
tary establishment, and the security services-all
profit somewhat from the present situation. Moreover,
following Brezhnev's departure, his heirs will be jock-
eying for position, and none of them will want to risk
being called "soft" on China during a succession
struggle
Moscow is thus unlikely to make the major military or
political moves that Beijing appears to be demanding,
and any dramatic improvement in relations in the
near future is unlikely. The two sides will, at the same
time, continue to probe the possibilities for significant
movement in one area or another-if only to increase
their leverage vis-a-vis the United States, Japan, and
other third parties. The Soviets, moreover, could make
certain positive gestures in the next few weeks-for
example, tone down their radiobroadcasts to China,
especially those directed at the minorities along the
border. They also could hold out the prospect of
significant concessions at the talks in Beijing next
month, and might even yield some ground in ad-
vance-for instance, curb their military patrols into
contested areas along the border. The Soviets are not
likely to give away other bargaining chips, however,
The Soviets could make a more dramatic move at the
talks in Beijing next month, especially if they were
satisfied that the Chinese would not just up the ante.
Moscow could announce a limited troop withdrawal
from the border with China and/or a freeze on SS-20
deployments in the Far East. An alternative would be
to accept the main channel as the border on the
Ussuri and Amur Rivers without restating the
USSR's reservation that the Soviets must retain
possession of Heixiazi Island, opposite Khabarovsk.
Such moves would fall well short of China's stated
preconditions for improved relations but would point
to a Soviet willingness to discuss the border issue and
other matters seriously and could lead to a further
easing of tensions
In sum, we do not expect the talks next month to
produce a major breakthrough, but think both sides
will want to keep their budding dialogue going. The
Soviets realize that breaking their impasse with the
Chinese, provided it does not require a total capitula-
tion on Moscow's part, could offer great rewards.
Their success in the matter certainly would put them
in a better position to compete with the United States
throughout the world-for example, by allowing them
to cut Soviet defense spending (and thus free resources
for foreign aid projects, as well as civilian sectors of
the domestic economy) and/or reallocate portions of
the defense budget to programs directed primarily
against the West. It also would give the Soviets a freer
hand in the Third World, where they presumably
would face less opposition from China, while making
Europeans-East and West-more wary of Soviet
intentions and reluctant to get into a confrontation
lest this merely whet the Chinese appetite.
with the Kremlin.
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Soviet Military Developments
on the China Border
The Soviet Union has substantially increased its Figure 1
ground and air forces opposite China since the Soviet Active Divisions Opposite China
mid-1960s while simultaneously modernizing these
forces and improving their logistic infrastructure.
Over the next decade, the augmentation and modern- Number of Divisions
ization of these forces probably will continue as the 60 25X1
Soviets attempt to redress perceived vulnerabilities in
their force structure along the Sino-Soviet border.
Ground Forces
Since the middle 1960s the number of active Soviet
divisions along the Sino-Soviet border has tripled (see
figure 1). Soviet ground forces opposite China now
number approximately 435,000 men in 52 combat
divisions and higher echelon combat service support
units. These forces constitute over 25 percent of the
total manpower of the Soviet ground forces; in 1965
they were only 10 percent of that total.
The buildup of Soviet ground forces in the region
opposite China can be divided into two fairly distinct
periods. The first-from 1965 through the early 0 1966 68 70 72 74 76 78 80 82
1970s-was characterized by rapid growth in the
number of ground combat units in large part through
25X1 creation of new units
The period since the early 1970s has been
marked by slower growth in the number of combat
units but with emphasis on the introduction of new,
25X1 more capable weapon systems into existing units and
improvements in the combat support infrastructure 587648 9-82
(see figure 2).
25X1
Soviet ground forces along the Sino-Soviet border are
not as well equipped as those in Eastern Europe, but
their equipment inventories are continually being
ization in this region moves slowly, however, and
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Figure 2
Major Combat Equipment of
Soviet Ground Forces Opposite China
MIG-27 Flogger fighter-bomber and the SU-24 Fenc-
er light bomber. These aircraft have greater ranges
and can deliver guided munitions with greater accura-
cy than the older aircraft, which carry free-fall bombs
or unguided rockets. In tactical air defense forces, the
MIG-21 Fishbed is being replaced with the MIG-23
Flogger, which has greater range and an all-aspect
intercept capability including a limited ability to
detect, track, and destroy targets flying at a lower
altitude.
Foxbat, and SU-15 Flagon have been introduced and
The size of the Soviet territorial air defense intercep-
tor force (formerly PVO Strany) opposite China has
declined somewhat since the mid-1960s, but more
modern interceptors including the Flogger, MIG-25 25X1
0 1966 68 70 72 74 76 78 80 82
many major replacement items are not the newest
models, probably in part because of the low techno-
logical level of Chinese forces.
Air and Air Defense Forces
The number of tactical, fixed-wing combat aircraft
opposite China increased from about 220 in 1965 to a
current total of about 1,100. Over half of these
aircraft have a primary mission of ground attack; the
remainder perform air defense and reconnaissance
roles.
Since the mid-1970s, the rapid growth of these forces
has given way to the replacement of older aircraft
with newer, more capable models. Soviet ground
attack regiments, for example, are being equipped
with the latest models of the SU-17 Fitter and
The number of attack, transport, and general purpose
helicopters deployed along the border has also grown
significantly since the mid-1960s-from under 100 in
1965 to about 1,200 today. Helicopter units perform
direct air support, air assault, artillery spotting, elec-
tronic warfare, and a variety of other missions. Of the
750 attack and transport helicopters in the eastern
USSR, over 500 are MI-24 Hind or MI-8 Hip
versions configured for ground attack
As part of the force-wide Soviet Air Force reorganiza- 25X1
tion, a theater-level air army has been created in the
Soviet Far East. It is equipped with some 215 medium
and light bomber aircraft, including two regiments of
TU-22M Backfires, three regiments of TU-16 Bad-
gers, and three regiments of SU-24 Fencers, as well as 25X1
one regiment of fighters.
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25X1
Tactical Considerations
The vastness of the Sino-Soviet border region and the
limitations and vulnerabilities of its transportation
network would pose major problems for the Soviets in
a large-scale war with China. The Trans-Siberian
Railroad-the only complete rail link between the
European and Asian portions of the USSR-is vul-
nerable to interdiction by regular or paramilitary
Chinese forces. The remoteness of the region and the
long supply lines from the western USSR make the
25X1 Soviet Union highly dependent on standing forces and
pre-positioned stocks along the China border.
resupply capabilities of Soviet forces.
Chinese forces are not capable of conducting large-
scale offensive operations inside the USSR. But
Siberia's main lines of communication and major
population and industrial centers are near the Chinese
border. This means that defense-in-depth is not an
option for the Soviets. A Chinese breakthrough would
immediately threaten strategic objectives in the Soviet
rear and jeopardize the fragile reinforcement and
The length of the border, moreover, also makes a
complete linear defense impractical. The Soviets have
25X1 therefore adopted as their preferred posture a forward
defense with forces positioned for major offensive
operations. The basic Soviet strategy apparently is to
be in position to meet any Chinese attack with a
25X1 strong rebuff and counterattack using the existing
forces in the border area.
Soviet planning for war against China is based on the
establishment of air superiority early in the conflict.
In the event of hostilities with China, the Soviets
apparently expect to achieve air superiority within the
25X1 first few days, wherein air assets would be used to
blunt any Chinese thrusts into the USSR and to
support offensive operations into China.
Future Soviet Ground and Air Forces
on the Chinese Border
power and equipment there to increase slightly. Bar-
ring such dramatic political developments as those
described in the preceding article, the number of
Soviet divisions along the border probably will in-
crease through at least 1990-perhaps by as much as
one low-strength division per year.' This is part of a
Soviet Ground Forces program projected to create
additional low-strength divisions in several areas with-
in the USSR. Nondivisional assets in the Far East are
In our projection, the new divisions to be created by
1990 will be spread along the border in all four MDs
All newly created divisions are expected to be motor-
ized rifle divisions. 25X1
One likely objective of further ground force develop-
ments along the border will be to redress the Soviet
weakness in the central sector where Mongolia now
serves as a buffer and where Soviet troops would
oppose the many Chinese ground force units protect-
ing Beijing. Over half of the Soviet divisions we 25X1
project would be positioned for deployment into
Mongolia.
'These estimates are based on an interagency projection of future
trends in Soviet ground force organization and equipment using the
CIA's Land Armaments and Manpower Model (LAMM) data
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operations against Chinese forces. The more pessimis-
tic assessments of a war with NATO may have
reduced Soviet expectations regarding the availability 25X1
of reinforcements from the western USSR.
A serious constraint on Soviet reinforcement efforts
along the China border is the increased concern over
simultaneous military attacks by NATO and China
against the USSR. The competition for reinforce-
ments and resupply, and the large frontages that
could be involved in a campaign against China, would
severely strain Soviet capabilities to support major
offensive operations in Asia if a war in both theaters
should be prolonged. The Soviets would almost cer- 25X1
tainly not make a large-scale commitment of man-
With the exception of helicopter units, the growth of
Soviet tactical air forces opposite China has leveled
off in recent years. We believe that the Soviets will
place less emphasis on creation of new air regiments
in the next few years and will concentrate on replac-
ing older systems with newer, more capable aircraft.
power and material that could compete with, and
ultimately degrade, their European war effort.
The augmentation and modernization of Soviet
ground and air forces will be aimed at redressing
perceived vulnerabilities opposite China to further
protect Soviet lines of communication and population
The expansion of Soviet helicopter forces in the Far
East probably will continue. We believe that by the
mid-1980s most Soviet armies in the region will have
an attack helicopter regiment. Furthermore, we esti-
mate that approximately half of the Soviet divisions
along the border will have a squadron of helicopters,
including a dozen Hips and Hinds to provide the
division commander with fire support and a limited
air assault capability.
Implications
The stationing of large numbers of ground and air
units along the border and their continual augmenta-
tion and modernization may reflect an increased
Soviet assessment of forces required to defend Soviet
territory and engage in offensive operations into
China. We believe that since the early 1970s the
Soviets have increased their estimates of potential
Warsaw Pact losses in a war against NATO.' The
Soviets may have similarly revised calculations for
We believe the force balance along the Sino-Soviet
border increasingly favors the USSR. Although the
Chinese have considerably larger forces along the
border, the Soviet forces are superior in weaponry,
mobility, and command, control, and communica-
tions. Soviet ground and air force equipment is being
modernized more quickly than similar equipment in
China, and trends in force upgrading and equipment
holdings indicate that the Soviets will increase their
substantial advantage over China in ground and air
forces. Continuing improvements to the combat sup-
port infrastructure-including logistics, transporta-
tion, and supplies-will serve to reduce Soviet vulner-
ability to Chinese interdiction and increase the
sustainability of forces in the area.
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Secret
Involvement in Afghanistan
The economic costs of the Soviet involvement in
Afghanistan have been a small part of total Soviet
military expenditures. We estimate that during 1981
the Soviets spent less than 500 million rubles (2.5
billion in dollar cost terms) in direct support of their
forces in Afghanistan.' In addition, the value of the
equipment lost in 1981 was about 300 million rubles
($0.5 billion). Together these two sums are equivalent
to about 1 percent of estimated total military spend-
ing in rubles for that year.
Furthermore, there is no evidence that dislocations
resulting from the involvement have had a significant
negative impact on civilian sectors of the economy.
Unless the Soviets decide to increase substantially
their commitment to Afghanistan in the future-and
at present this seems unlikely-the economic costs of
maintaining the existing situation probably will not be
a primary determinant of Soviet policy.
The Extent of Soviet Involvement
The Soviets are halfway through their third year of
trying to crush an insurgency in a Muslim country.
Their initial expectation was that this could be accom-
plished in a matter of months. The level of opposition
is greater than they expected, however, and their
efforts are being thwarted by the Afghan
Mujahedin-a collection of small, fiercely independ-
ent groups who form temporary bands for the purpose
of engaging Soviet and Afghan Government forces in
unconventional warfare.
Soviet and Afghan troops are able to conduct opera-
tions throughout the countryside at will, but the
Afghan Army and the Soviet contingent are too small
to occupy permanently more than the major urban
areas of the country. They are not able to exercise
more than temporary control over any rural territory.
' All ruble estimates are expressed in 1970 prices. Unless otherwise
stated, dollar cost equivalents are expressed in 1980 prices and
represent an estimate of what it would cost to procure, operate, and
maintain an equivalent force of men and equipment in the United
The Mujahedin typically withdraw in the face of
superior forces, then return after Soviet forces with-
draw at the close of an operation.
The number of Soviet military personnel currently
estimated to be in Afghanistan is 100,000. This
amounts to slightly less than 2 percent of total Soviet
armed forces and about 4 percent of all ground and
air forces-the main suppliers of Soviet manpower in
Afghanistan. The contingent has grown by only about
15,000 men since mid-1980.
Direct Military Costs of the War
We estimate that in 1981 the Soviet military in
Afghanistan spent 480 million rubles ($2.5 billion) for
operations and maintenance, personnel, medical treat-
ment, construction, ammunition, and equipment re-
pairs. Some 325 million rubles ($1.3 billion), or two-
thirds of this amount, is estimated to be
incremental-costs that would not have been incurred
had the Soviets not invaded Afghanistan. The amount
spent in 1981 is only slightly higher than the estimat-
ed 450 million rubles spent in 1980. Although we have
not assessed Soviet outlays for 1982, it appears that
Soviet military activity through August has been
higher than that for the same time frame for 1980 and
1981, and we would expect, therefore, that costs will
be somewhat higher also
If the Soviets continue to conduct the war as they
have in the last two years, we can expect the fighting
in Afghanistan to continue for a long time: the
Mujahedin show no signs of weakness in their resolve
and neither do the Soviets. It appears that the direct
military cost to the Soviets of maintaining their
position is at an acceptable level, at least for the
present.
Indirect Military Costs
We estimate the replacement value of Soviet equip-
ment destroyed during 1981 at 320 million rubles
($550 million). Nearly 95 percent of this amount
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represents Air Force equipment, particularly helicop-
ters. The cost of replacing all Soviet helicopters
destroyed in Afghanistan in 1981 would amount to 25
percent of the value of helicopters produced for the
tactical air forces that year. By comparison, the cost
of replacing Soviet Ground Forces equipment de-
stroyed in 1981 amounts to 1 percent of the value of
1981 land armaments production.
We do not have evidence that the Soviets have
increased armaments production to replace equipment
losses in Afghanistan. Current levels of production
and inventories of all equipment of the types used in
Afghanistan are more than adequate to cover these
losses.
We are unable to estimate with much confidence
either the total value of Soviet-supplied equipment in
the hands of Afghan troops or the value of destroyed
and damaged Afghan equipment that may have been
replaced by the Soviets. We do know that the Afghan
Government is paying for past Soviet aid with earn-
ings from the sale of natural gas. Military goods
shipped since December 1979, however, are thought
to be in the form of grants and, in current prices, are
estimated to have been nearly $400 million in 1980
and over $200 million in 1981.
Nonmilitary Costs
Overall, intervention in Afghanistan has been more of
an annoyance to the Soviets than a drain on the
economy. Military priorities have caused internal
disruptions in such areas as transportation and con-
struction. In the republics just north of Afghanistan,
these disruptions may have been quite severe at the
beginning of the intervention. Over time, however, the
Soviets have been able to moderate some of these
adverse effects.
The Soviets have attempted to relieve supply bottle-
necks by building new and improving old transporta-
tion routes into Afghanistan. They have laid POL
pipelines and completed construction of a bridge for
railroad and vehicular traffic across the Amu Darya
at the USSR-Afghan border. The road from the
bridge to Kabul has been improved, and eventually a
railroad may be completed either to Kabul or to a
logistics base. Because of the frequent attacks against
the POL pipelines and the mining of the roads by the
insurgents, the Soviets have not been able to eliminate
the logistic bottlenecks.
The Soviets have been plagued for years by a shortage
of railroad cars. Their involvement in Afghanistan
and its requirement for rolling stock has only aggra-
vated an already overtaxed system and has put the
squeeze on some local economies: shipments of cotton
b '1'
k
k
h
25X1
seat to mi Lary
ave ta
en a ac
from Tadzhikistan
goods, and alternative transport has not been able to 25X1
take up all the slack.
Construction workers-always in short supply-have
been diverted to projects in Afghanistan. While the
number involved is thought to be small, this diversion
puts lower priority projects in the USSR further
behind schedule.
These disruptions, while annoying, are somewhat
localized. They generate indirect costs that are impos-
sible to calculate but not severe enough to have an
observable effect on the Soviet conduct of the war
ordinary Soviets." There have been complaints direct-
ed at the government about the lack of news concern-
ing the welfare of military personnel in Afghanistan.
The Soviets have responded to at least one of these
criticisms in the press (Pravda), indicating some offi-
cial concern about popular reaction to the war
This reaction generally takes the form of griping
about shortages of consumer goods (which are often
25X1
25X1
25X1
blamed on foreign ventures) and rumors and ex- 25X1
changes of information about the war, particularly
among families with draft-age sons.
there is a "sense of panic" in the Moscow region,
where the perception is that Soviet military deaths in
Afghanistan number 30,000. This figure is at least six
times higher than Western estimates.
25X1
25X1
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Although we believe Soviet combat casualties are low,
the return of wounded and mutilated veterans of the
Afghan fighting contributes to a sense of public
frustration and is in stark contrast to the govern-
ment's reporting of the war. Press coverage has been
limited. Articles generally are restricted to praise for
the performance of individuals and units in noncom-
bat situations
Despite the casualties, there is a benefit to the Soviet
military in Afghanistan: operations there provide an
opportunity to test men, equipment, and tactics under
There is little likelihood that the Afghan military will
be in a position to assume a leading role in the
fighting in the near future. Therefore, the Soviets
probably will not be able to withdraw their forces any
time soon. To do so would invite early collapse of the
Kabul government. By maintaining the status quo, the
Soviets are able to support the Babrak government at
what probably is an acceptable economic cost. If the
insurgent forces became stronger and inflicted in-
creasingly costly damage on them, the Soviets proba-
bly would consider increasing their military commit-
ment.
combat conditions.
Outlook
The Soviets have few options regarding their involve-
ment in Afghanistan. They can:
? Launch an all-out effort to seal the borders and
defeat the Mujahedin.
? Withdraw and risk collapse of the Afghan Commu-
nist Government.
? Continue on their present course.
According to one estimate, the first option would
require more than a half million men, with no guaran-
tee of ultimate success. The long-term economic costs
of this option are probably more than the Soviets are
willing to bear at present given the uncertain situation
in Poland and the continuing rift with China. This is
especially true if the Soviets do not see a quick end to
the war even with a massive infusion of men and
equipment. The low level of growth in manpower and
expenditures devoted to Afghanistan makes it appear
unlikely that they will choose to increase radically
their level of effort in the near future.
Unless military, diplomatic, and internal political
factors change greatly, Moscow is unlikely to with-
draw from Afghanistan. We believe they will continue
the limited support to the Afghan Communist Gov-
ernment we have witnessed so far. The present situa-
tion could continue until the Mujahedin grow weary
of the war or the Soviets are able to strengthen the
Afghan military to the point where it can not only
begin to hold its own, but also show some progress in
subduing the insurgents
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A Close but Uneasy Alliance
In return, the Soviet Union receives access to military
facilities in Vietnam. Soviet surface ships and subma-
rines make regular visits at Cam Ranh Bay, and this
access allows an improved, if still limited, naval
The Soviet Union and Vietnam share a close but
uneasy alliance based on the needs of the two sides
and their hostility toward China. The Soviet Union
sees Vietnam as a barrier to the spread of Chinese
influence in Southeast Asia. In addition, Soviet access
to Vietnamese base facilities supports the Soviet
presence and military activities in the region. The
Vietnamese need Soviet military assistance to defend
25X1 themselves against China and to maintain their con-
trol of Indochina, and economic aid to keep their
economy afloat
toward China.
While these factors help to stabilize the relationship,
strains continue to accumulate and almost certainly
pose problems for the long-term durability of the
relationship. The alliance is experiencing the most
severe strains in three areas: economic relations, the
Soviet role in Laos and Kampuchea, and Soviet policy
project construction
Soviet Military and Economic Aid
The Soviet Union reportedly supplies 90 percent of
Vietnam's petroleum, iron and steel, fertilizer, and
cotton imports and 70 percent of its grain imports. In
addition to commodity and industrial aid for some
200 developmental projects, Vietnam also benefits
from the expertise of some 4,000 to 5,000 Soviet
economic and technical advisers who help with plan-
ning, policy formulation, mineral exploration, and
Soviet military aid increased to more than $1 billion
in 1979, after the Vietnamese invasion of Kampuchea
and the Chinese attack on Vietnam. Although this aid
was reduced to an estimated $700 million in 1980 and
$280 million in 1981, it probably is still sufficient to
25X1 meet Vietnamese needs. Soviet aid has helped Viet-
nam upgrade and modernize its Air Force, improved
the effectiveness of its ground forces with new and
more sophisticated weapon systems, and increased the
capabilities of its Navy with the addition of 41 new
units since 1979. Some 2,000 Soviet military advisers
are in Vietnam.
capability in the South China Sea.
improving port facilities there and have conducted
some naval air operations out of Cam Ranh Bay. In
late July, Vietnamese Foreign Minister Nguyen Co
Thach publicly announced in Bangkok that Hanoi was was leaving its options open on the question of
offering base rights to the Soviet Union if Chinese
military pressure threatens Vietnam's security.
Notwithstanding the factors that drive Moscow and
Hanoi together, there are deep-seated-if not yet
critical-tensions between the Soviets and Vietnam-
ese.
Economic Issues
Economic relations are probably the most serious
source of friction. The Soviets have indicated publicly
and privately that Moscow is unhappy with its large
economic aid burden in Vietnam (an estimated $2-3
million a day in 1981), believes that much of its aid is
wasted, and is increasingly constrained by the prob-
lems of its own economy. Finally, other Soviet involve-
ments around the globe have presented Moscow with
increasingly tough choices regarding resource alloca-
tion.
In the past three years Moscow has responded to these
economic concerns with cutbacks in aid programs of
great importance to the Vietnamese: 25X1
? Soviet food exports to Vietnam were cut by 30
percent in 1980 despite serious food shortages;
food ship-
ments were halted altogether in August of 1981.
Moscow in
early 1982 diverted shipments of wheat flour origi-
nally destined for Vietnam to the USSR.
25X1
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in 1981 the
USSR sharply increased the price of oil supplied to
Vietnam.
? The Soviets apparently have refused to start any
new developmental projects and have slowed their
work on old ones)
Resulting Political Friction
Soviet inability or unwillingness to meet Vietnamese
economic needs was clearly demonstrated at the July
1980 summit between Brezhnev and Vietnam's Le
Duan. Hanoi publicly complained that Le Duan's
request for more help with the Vietnamese third five-
year plan was rebuffed by Brezhnev.
Hanoi's increasing frustration with Soviet tight-
fistedness led to a harsh public rebuke of Moscow in
the winter of 1980-8 1. In an interview with the Far
Eastern Economic Review, Nguyen Lam, Vietnam's
chief economic planner, complained that the Soviet
Union still had not made any firm commitment to
Vietnam's current five-year plan (1981-85). According
to Lam, the Soviets told Hanoi that they would
provide 40 percent less aid during the third five-year
plan than they gave during the previous one. In
addition, Lam complained that Soviet shipments,
coupled with purchases of Middle Eastern oil at full
world price, met only two-thirds of Vietnam's oil
Economic relations with the Soviet Union evidently
became a top political issue in Hanoi in late 1981 as
Vietnamese financial difficulties worsened. Anti-
Soviet sentiment was reportedly voiced during a heat-
ed debate at the 11th plenum of the Vietnamese
Communist Party in October and again at the
December 1981 plenary session in Hanoi.
Hanoi, on the
other hand, wants to be an exclusive conduit for this 25X1
aid and is suspicious about Moscow's efforts to im-
prove bilateral political links to Phnom Penh and
The Soviets blame some of Vietnam's economic prob-
lems on poor planning. The Soviet Vice Minister of
Transportation and Soviet port officials have privately
cited instances where costly Soviet equipment,
machinery, and heavy construction vehicles have been
misused by the Vietnamese.
Soviet efforts to deal with the problems by tightening
up the administration of aid have created resentment 25X1
in Hanoi. The Soviets have been pressing Vietnam to
accept large numbers of Soviet economic advisers and
administrators at all ministerial levels and to replace 25X1
Apparently in response to Soviet pressure, the Viet-
namese begrudgingly made some changes in Decem-
ber of 1980. They replaced about half of the senior
officials involved in projects sponsored by the USSR
The Soviet Role in Laos and Kampuchea
In addition to efforts to tighten up the administration
of the aid it sends Vietnam, Moscow is trying to make
sure that the aid it sends Laos and Kampuchea is
properly handled. We believe Moscow feels that it
must cultivate direct political links to Laos and
Kampuchea to facilitate the aid shipments and pre- 25X1
vent them from being diverted by the Vietnamese.
Vientiane.
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namese competition for influence in Indochina.
Pen Sovan and Pen Sovan's subsequent ouster (pre-
sumably orchestrated by Hanoi) suggest Soviet-Viet-
The Soviets have ignored Vietnam's demands to go
through Vietnamese channels and have stepped up
their direct ties with party, army, and governmental
officials in Laos and Kampuchea. The Soviet attempt
to cultivate ties with former Kampuchean Party Chief
China Policy
Differences over policy toward China also are begin-
ning to develop and are a potential threat over the
long term to the alliance. Unlike Hanoi, Moscow has
softened its hardline anti-Chinese posture. In fact, the
Soviets are seeking to improve relations with China,
although they have not yet made any concrete conces-
Outlook
Despite growing friction, we see no sign that the
Soviets or the Vietnamese intend to loosen their ties in
the near future. Hanoi will probably continue to
believe that the alliance will provide necessary support
25X1 for its military campaign in Indochina, as well as
assistance in dealing with persistent economic prob-
lems and Chinese hostility. For their part, the Soviets
presumably reap too many strategic advantages from
25X1 the alliance to unilaterally withdraw from their com-
mitment, despite the economic burden it creates. F_
Nevertheless, the economic and geopolitical circum-
stances which prompted Vietnam to ally with the
Soviet Union will probably not continue indefinitely.
We believe Vietnam is keeping its options open for a
political solution in Kampuchea that will satisfy
ASEAN and encourage China to follow ASEAN's
lead, if only to maintain Beijing's carefully cultivated
ties to that organization. A lessening of Sino-Viet-
namese tensions could result, along with an increase
in Hanoi's list of economic patrons and a reduction in
its economic and military dependence on the Soviet
Union 25X1
Such a scenario could affect the Soviet-Vietnamese
alliance in two ways: 25X1
? The alliance could be strengthened if Hanoi is only
interested in making up for the Soviet shortfall in
aid. Moscow would probably encourage Vietnam's
ongoing efforts to attract West European economic
donors to ease some of its aid burden. Thus a modest
infusion of outside aid to Vietnam would probably
reduce Soviet-Vietnamese friction over economic
aid. 25X1
? On the other hand, the alliance could be weakened
if Vietnam's resentment of Moscow becomes so
strong that Hanoi decides to replace large amounts
of Soviet economic aid with assistance from alterna-
tive sources. Such a diversification of aid would
strengthen Vietnam's ability to pursue a more inde-
pendent foreign policy.
Paradoxically, a weaker alliance may also result from
Vietnam's political isolation and Chinese hostility,
which in the short term bring Moscow and Hanoi
closer together. Over the longer term, this increasing
dependence could deepen Vietnamese resentment of
the Soviet embrace and could increase the existing
friction in the relationship. History offers a precedent:
similar factors contributed to the split between China
and the Soviet Union two decades ago
Ultimately, the direction that the alliance takes will
depend on the degree of Vietnamese dissatisfaction
with its Soviet patron. As long as Vietnam continues
to be reasonably satisfied with the practical benefits
from the alliance, it will probably choose to remain
close to Moscow. But if the strains described above
become more acute, Hanoi may find support from the
outside useful in backing away from what it is
apparently already coming to see as an intrusive and
overbearing Soviet patron obstructing its ultimate
goal of an independent foreign policy.
Secret 25X1
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Other Topics
Dependence on the West,
and Military-Economic Trade-offs
USSR: The Economy in the 1980s,
The following briefing was presented to the Senate Foreign Relations Committee
by Deputy Director of Soviet Analysis, on 11 August
1982.
1. Mr. Chairman, you have asked for a briefing on three topics-prospects
for Soviet economic growth in the 1980s, the degree of Soviet economic
dependence-on the West in general and on the United States in
particular-and the vulnerability of Soviet military programs to Western
use of economic measures.
A. I propose to discuss each of these questions in fairly summary fashion.
B. My colleagues and I, however, would be happy to try to answer
questions you may have at any stage of my presentation.
II. Let me turn first to the general economic prospects for the USSR, a
subject that has attracted a great deal of attention both within the
government and in the Western academic community and indeed in
Soviet publications over the past several years.
A. There is general agreement on the Western side at least that Soviet
economic growth will be markedly slower in the 1980s.
B. We believe that GNP growth is unlikely to average more than 2
percent per year in the 1980s, compared with 3 percent per year in the
1970s, and 5 percent per year in the 1960s.
C. In fact, the slowdown is already under way. Growth in Soviet GNP
ranged from 1 to 2 percent in 1979, 1980, and 1981, and on the basis
of first-half 1982 results, we expect another year of growth below 2
percent.
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D. To repeat, then, we are projecting a period of very sluggish economic
growth compared with what the USSR has experienced in the past. I
want to emphasize, however, that it is not a prediction of economic
collapse. Rather, it will be a period during which a new leadership will
have to make increasingly tough choices among various programs-a
subject I will return to later.
III. A prolonged slowdown in GNP growth starting in the late 1970s had long
been anticipated for a variety of reasons. Some the Soviets can do little
about-notably the need to rely on costlier and more remote sources of
energy and other raw materials and the declining increments to the labor
force. Other factors tending to dampen the rate of economic growth in the
1980s reflect policy choices, especially the decision to restrain the increase
in new fixed investment because of the continuing priority for defense.
A. Turning to these sources of slower economic growth, I will begin with
the energy situation.
1. With oil production sharply declining in the European USSR and
having peaked at the giant Samotlor field in West Siberia,
maintaining oil output has become increasingly costly and difficult.
Oil is still the USSR's major source of energy, accounting for over
40 percent of production.
2. The coal industry is also in trouble. Reflecting inadequate past
investment, production of coal-which accounts for about a quarter
of energy output-declined for three straight years. Also coal
quality, particularly its energy content, continues to deteriorate.
3. Construction of nuclear power facilities is lagging behind schedule.
Nuclear power now accounts for only 6 percent of electricity
output.
4. Natural gas, currently providing a little more than a quarter of
energy output, is a bright spot in the energy picture. Production has
been increasing rapidly, at about 7 percent a year. On the basis of
huge reserves in West. Siberia, the USSR should be able to sustain
that rate of advance, at least as long as plans for gas pipeline
construction do not hit serious snags.
5. Because of the promising outlook for gas, the Soviet energy position
is far from desperate. Nonetheless, growth in energy production in
the 1980s is likely to average only slightly more than 1 percent a
year.
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B. Labor shortages are becoming more and more of a brake on the
economy. The labor force, which grew by about 20 million persons in
the 1970s, will increase by less than 10 million persons in the 1980s.
As a result, the average annual increase in the labor force will decline
to one-half percent per year in the 1980s compared with one and one-
half percent per year in the 1970s.
1. Moreover, the increment in the labor force will be very unevenly
distributed geographically. The Russian Republic, for example,
will show no net growth in the labor force while Central Asia will
account for 90 percent of the total national increment.
2. The effect of the employment slowdown on the economy's perfor-
mance could be substantial. More than any other industrial power,
the USSR has relied on increases in the size of the labor force to
spur development.
C. Meanwhile, slowing growth in investment will mean that the stock of
plant and equipment will not rise as rapidly in the 1980s as in the past.
1. Investment in the first half of the 1980s is slated to rise by only
about 10 percent over 1976-80-by far the lowest increase in the
post-World War II period.
2. The slowdown is attributable in part to bottlenecks in sectors such
as steel and construction materials that provide key investment
inputs.
3. It also can be explained by a leadership decision to maintain the
primacy of defense spending-which continues to rise at about 4
percent a year-and to some increased attention to consumption.
4. The slowing of investment growth comes at a particularly inauspi-
cious time because the amount of capital needed to produce a unit
of output-especially in energy and raw materials-is sharply
rising.
D. I will turn now to Soviet economic ties with the West. The USSR was
helped considerably in the 1970s by a rapid rise in the price of its prin-
cipal exports-oil, gas, and gold-and a willingness of Western
lenders to support a large increase in the Soviet hard currency debt.
The outlook for the 1980s is not nearly so favorable.
1. Exports of oil, which now account for over half of hard currency
earnings from merchandise exports, are likely to be greatly reduced
by the leveling off of oil production and by increasing consumption
at home. The loss of earnings from oil that we expect will be only
partially offset by increased sales of natural gas under the new
contracts with Western Europe.
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2. We also think that because of production difficulties, unfriendly
markets in the West, and rising domestic consumption, the USSR
will do well to maintain the volume of its nonenergy exports at the
1980 level. While military sales are likely to increase, Soviet
customers will have a harder time paying for them. We think a
larger share will carry long repayments or barter terms.
3. Furthermore, Soviet terms of trade vis-a-vis the West probably will
be far less favorable in the 1980s than they were during much of
the 1970s. The steep rises in oil prices-and in other raw materials
sold by the USSR-that occurred during the 1970s seem unlikely
to be repeated in the 1980s.
4. As for Soviet imports, persistent weaknesses in the agricultural
sector coupled with the leadership's commitment to improving the
people's diet make it likely that the USSR will continue to spend
heavily on grain and other farm products. These agricultural
imports would have to come at the expense of nonagricultural
imports.
E. The USSR's external economic situation promises to be strained also
by the need to give aid to its client states. East European countries, in
particular, face serious economic problems of their own and will
presumably pressure the USSR to continue trading with them on more
favorable terms than Moscow does with the West.
1. Poland especially will probably continue to receive large infusions
of aid.
2. The resource drain on the USSR from such subsidies and aid could
thus remain heavy.
IV. Soviet leaders are well aware of their economic problems. Nevertheless,
they express confidence-at least publicly-that all obstacles can be
overcome by boosting productivity.
A. In fact, however, labor productivity has been rising more and more
slowly and capital productivity has been declining for several years.
1. Some of the poor performance on the productivity front can be
attributed to rising costs of extracting resources, whether in Siberia
or more than 3,000 feet down in a.Ukrainian coal mine.
2. We also see abundant evidence of bottlenecks in industry and
transportation that, together with shortfalls in agriculture, have
kept industry working at less than capacity.
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3. Part of the blame for production failures undoubtedly belongs to
Soviet planners, who have made the wrong investment decisions in
the steel, coal, construction materials, and machinery industries.
4. But much of the productivity slump remains a mystery to us and to
the Soviet authorities themselves.
a. Soviet officials often cite the lack of labor discipline in the
factory and on the farm.
b. Certainly, the rate of growth of incentives has tapered off as the
rise in personal incomes has outstripped the availability of
consumer goods and services.
c. It is also true that factory managers are less strict with their
employees because of the increasing difficulty they are having in
finding new workers.
d. Finally, we may be seeing the expression at the workplace of a
general disenchantment within Soviet society, a subject that has
received a great deal of academic and popular attention in the
West in recent years.
B. In any event, we don't believe that the leadership can do anything in
the next few years to turn the economic situation around.
1. Economic reform is often suggested as a remedy, and the Soviets
themselves have devised numerous reforms in management and
planning in the last several years.
2. These measures do not seem to have had any impact on the
efficiency of the economy. Instead, they have tended if anything to
increase the degree of centralized control and intervention in
enterprise management.
3. The prospects for reforms that would truly loosen central control
and move the economy toward greater reliance on prices and
market forces are not bright at any time and seem especially dim
during a succession period.
4. We estimate-with no great confidence, however-that no serious
economic reform involving decentralized decisionmaking regarding
production and investment choices will be advanced until a new
leadership has managed to secure its position and the economic
situation is substantially worse than it is now.
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V. I would like now to address the second topic-Soviet dependence on the
West.' In a nutshell, we believe the Soviets could go it alone if denied all ac-
cess to Western goods and services, but only with sizable losses in consumer
well-being and in the productivity and quality of industrial output.
A. Imports paid for in hard currency are considerably more important to
the USSR than the raw trade numbers imply.
1. Hard currency imports-which account for about two-fifths of
total Soviet imports-are equal to as much as 5 percent of the ruble
value of GNP.
2. In addition, East-West economic ties have developed to the point
that if Western technology and goods were not available to the
USSR it could not adjust quickly or completely to their loss.
Valuable time would be lost in trying to adjust, adding substantial
strains to an already stretched economy. This year, for example,
with orders for Western machinery and equipment already sharply
curtailed, further reductions in imports would impinge on priority
programs in steel, transportation, agriculture, and heavy machine
building.
3. But dependence really cannot be found in ratios of imports to GNP
or other statistical measures. Dependence exists primarily in
particular sectors and programs.
VI. First I want to look at the connection between equipment imports and the
economy. Soviet leaders decided in the early and mid-1970s that access to
Western technology could boost economic growth by stimulating productiv-
ity and helping to break critical production and construction bottlenecks.
A. Although the USSR has had considerable difficulty in assimilating
the equipment and technology it bought from the West, these imports
have helped Moscow deal with some critical problems, particularly in
certain manufacturing sectors. And, as I mentioned a few minutes
ago, the Soviet. Union stands little chance of keeping its economic
growth up unless it can reverse the recent trends in labor productivity
in industry, agriculture, and the economy in general. I would,
therefore, like to point out a few of the areas in which Western
technology has played a key role.
1. In the 1970s, imported chemical equipment accounted for about
one-third of all Western machinery purchased by the Soviets.
' We use the term "West" to refer to the USSR's trade with all hard currency non-Communist
partners.
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a. This equipment was partially or largely responsible for doubling
the output of ammonia, nitrogen fertilizer, and plastics, and for
tripling synthetic fiber production.
b. Western chemical equipment and technology will continue to be
important for Soviet production of consumer goods and chemi-
cal-based industrial materials, for farm output, and for plans to
overhaul a chemical industry that is still antiquated in many
areas.
2. Right now, Soviet plans for a number of important programs have
been delayed because construction equipment has not been avail-
able in sufficient variety or quantity to build plants.
a. Plans to produce heavy industrial tractors and bulldozers have
been delayed by faulty tractor and engine designs.
b. The USSR also lacks the capacity for production of transmis-
sions, suspension systems, and heavy-duty axles (capable of
supporting weights of 50 tons or more).
c. The Soviets plan to produce their own equipment with imported
plant and technology. Under a contract with Fiat, for example,
Italians will supervise construction of a turnkey facility to
produce earthmoving equipment.
d. In the case of pipelaying equipment, pipelayers capable of
handling large-diameter pipe are produced only in the United
States and Japan, although Fiat-Allis intends to begin produc-
tion in Italy in a year or so.
3. Large computer systems and minicomputers of Western origin also
have been imported in large numbers (1,300 systems since 1972).
a. These have capabilities that the Soviets cannot match and use
complex software that they have not developed.
b. Moreover, they often are backed up by expert training and
support that the Soviets cannot duplicate elsewhere.
B. Meanwhile, imports of equipment from the West have played a vital
part in supporting the energy sector.
1. Because of deficiencies in drilling, pumping, and pipeline construc-
tion, the USSR bought about $5 billion worth of oil and gas
equipment in the 1970s.
2. These purchases, covering a wide range of equipment, have added
substantially to energy production.
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a. Submersible pumps purchased from the United States, for
example, are estimated to have added roughly 2 million barrels
per day to oil production alone in recent years.
b. Practically all large-diameter pipe laid in the USSR has been
obtained from Western Europe or Japan.
c. US production technology recently installed will allow the
USSR to produce drilling bits with a life expectancy five to 20
times greater than experienced with Soviet bits.
d. Similarly, the Soviet offshore exploration effort would not be
nearly as far along as it is without access to Western equipment
and know-how.
3. The USSR will continue to need imports of a broad range of
Western oil and gas equipment if it is to minimize the fall of
production in declining fields, increase output elsewhere, and help
locate and develop reserves.
C. Agricultural imports are the other major source of economic depen-
dence on the West. Soviet purchases of Western grain jumped from an
average of 17 million tons a year in 1976-78 to 27 million tons a year
in 1979-80, and to 39 million tons in 1981.
1. Without Western grain, Soviet consumers would not have had the
increase in meat consumption they have realized since the early
1970s, and there would have been a sharp drop in per capita
consumption of meat in the late 1970s instead of a leveling off.'
2. After three consecutive poor grain harvests-and with another
below-trend crop expected this year-imports of grain will continue
to be critical for the Soviet livestock sector and for consumption
goals.
a. We now estimate the 1982 grain crop at 165 million tons, or
more than 70 million tons below the Soviets' planned output.
b. We also believe that total grain imports will be close to the limit
set by port and rail capacity-roughly 50 million tons a year-
during the marketing year ending next June.
VII. Dependence on the West, however, does not translate into dependence
on the United States. If US-Soviet economic relations were shut down,
the Soviets could-with few exceptions-switch to other Western and
some East European suppliers for products and technology.
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A. The Soviets need US grain mainly in years when stocks are low
worldwide and grain crops in other major grain-exporting countries
are poor.
1. We believe, for example, that Moscow could buy most of the grain
it needs this year and next from other suppliers, although it
probably would have to pay premium prices for some of the
purchases.
2. The Soviet Union, however, probably could not find the mix of
grain it would like without coming to the United States. Most
observers agree that the USSR prefers to import wheat and corn in
roughly equal proportions, and the United States is the world's
major corn exporter.
B. A continuation of the US embargo on sales of energy equipment would
have a somewhat greater impact, especially in the short run.
1. The volume of water brought up with Soviet oil is getting larger,
and a program to produce a good high-capacity submersible pump
domestically has not yet been successful.
2. US manufacturers now have a monopoly on producing high-
quality, high-capacity pumps. If these remain embargoed, however,
other Western suppliers could enter the field within about two
years.
3. Although the United States is the world's leader in the manufac-
ture of drilling equipment, producers in Japan and Western Europe
could eventually gear up to supply the Soviet market with products
of comparable quality.
C. The US embargo on export of oil and gas goods and technology to the
Soviet Union is already affecting the timetable of the Siberia-to-
Western Europe gas export pipeline.
1. The USSR and its West European suppliers and customers are
trying to decide how to reformulate the project in light of US
sanctions.
2. Nevertheless, by using equipment available from Western Europe
or Soviet equipment (or a combination of both), the Soviets will be
able to commission the export pipeline and start pumping gas
through it by late 1984, although at a reduced flow. By using
excess capacity in existing pipelines, they should be able to meet
their gas delivery contracts until the export pipeline is completed.
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3. To the extent that Soviet-made turbines and compressors must be
diverted from domestic pipelines to the export pipeline, the domes-
tic economy will lose some gas-as much as 30 billion cubic meters
annually for a year or so in the mid-1980s.
VIII. Before I turn to the question of Western ability to influence Soviet defense
decisions through economic measures, let me briefly summarize our assess-
ment of overall Western leverage.
A. The impact of Western denial of goods and technology to the USSR
could range from minimal to substantial.
1. A unilateral US denial policy-whether focused on strategic
technology, machinery, or grain-would-as I said earlier-have
little impact. There are too many alternative sources of supply
available to the Soviets.
2. At the other extreme, the dislocations caused by a total Western
embargo on trade with the Soviet Union with minimal circumven-
tion probably would lead to a drop in Soviet GNP in the short term
and slower economic growth in the long term. It would force even
harder choices on the leadership with regard to domestic resource
allocation decisions.
3. I want to stress, however, that trade restrictions must be main-
tained for more than two or three years to be effective. It is the cu-
mulative effects of prolonged denial that are important.
B. Although the Western states, acting together, have the potential to
impose severe economic costs on the USSR through a cessation of
commercial and technical relations, their ability to gain political
leverage is circumscribed by three factors:
1. First, the Soviet economy is large and self-sufficient enough to
support the main thrust of its current military and foreign policies
in spite of any embargo the West might implement.
2. Second, Soviet leaders will be extremely reluctant to appear to be
giving in to Western pressure. This would be particularly true of
any new leader trying to establish his dominance.
3. Third, based on past experience, Soviet leaders probably do not
expect that sanctions or embargoes will be rigorously imposed
throughout the West or long lasting.
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IX. Mr. Chairman, my final topic today will be the trade-off between
economic growth and defense spending, with some discussion of Western
influence in this area.
A. First I'd like to address the general economic and political pressures
on defense spending.
1. Then I will offer a few comments on Western leverage on the
Soviet defense effort.
2. I wish to point out that I intend to discuss a wide range of Western
options without regard to the likelihood of their implementation.
B. Because of the economic prospects that I described earlier, the conflict
between the requirements of defense and the needs of the economy
poses an ever sharper dilemma for Soviet leaders.
1. On the one hand, they believe that they are facing a more hostile
international environment, which argues for a larger defense effort.
2. But the defense burden must seem harsher as growth in GNP
declines.
C. What will the USSR do? In the near term, we think it will maintain
the priority accorded to defense in spite of mounting economic
problems.
1. On the basis of observed military activity (that is, the number of
weapon systems in production, weapon development programs, and
trends in capital expansion in the defense industries) we expect that
Soviet defense spending will continue to grow at about its historical
rate of 4 percent a year through at least 1985.
2. In terms of specific changes in weapons programs in response to
any US buildup, however, the USSR will probably seek to avoid
making any hard choices until the shape of the US defense
program becomes clearer.
3. It is important to note in this connection that the Soviets recognize
that military power is their principal currency as an international
actor. Considerable pressure exists, therefore, to continue high
levels of defense investment to sustain Moscow's global role.
4. Further, given the current support within the Soviet elite for a
strong military position, advocacy of cuts in military spending
would involve formidable political risks within the Politburo. This
would be particularly true during a succession period.
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5. Finally, Moscow probably will continue to view arms control as an
instrument to limit deployment of new US weapon systems requir-
ing costly new programs to counter. While the Soviets may appear
to be more conciliatory, this does not imply a readiness to make
major concessions at the negotiating table.
D. Sustaining these policies over the long term, however, could ultimately
entail unacceptable political and economic costs-costs that will be
increasingly apparent to a post-Brezhnev leadership as it struggles to
prepare its next five-year plan for the last half of the 1980s.
1. By that time it may be evident that continued priority for defense
spending at the expense of civilian investment would weaken the
ability of the economy to sustain higher defense spending in the
next decade and would increase Soviet dependence on Western
technology and equipment for the most advanced industrial
processes.
2. Already, some Soviets are questioning the wisdom of the planned
slowdown in the growth of new fixed investment.
3. Moreover, if average annual growth in military outlays continues at
4 percent or higher, per capita consumption by mid-decade could
well decline.
E. Faced with these conditions, a new leadership will feel greater pressure
to reduce the growth in military spending in order to free up the labor
and capital resources urgently needed in key civilian sectors.
1. In this connection, the cost avoidance benefits of arms control
agreements could assume greater importance in Soviet policy.
F. Unfortunately, the choices that a new leadership will make cannot be
predicted with any degree of confidence. They depend on the balance
between Moscow's perception of the severity and duration of the
economic slowdown and its assessment of the cost and risk of selective
alterations in the military effort.
G. Nonetheless, under these leaner circumstances a Western trade
embargo would very likely force the Soviet leadership to reexamine
some of the trade-offs.
1. Soviet imports can be divided roughly among three categories:
a. Imports of raw materials and industrial products that are
needed by Soviet industry.
b. Purchases of machinery and technology that support Soviet
investment and modernization plans.
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c. Imports of grain and agricultural products that serve consumer
programs.
2. If the Soviets are forced to cut back on imports, we don't think they
have much room to reduce imports of raw materials and industrial
products.
3. Soviet leaders would then have to choose between agricultural and
machinery purchases.
a. If they decided to cut back on grain imports, for example, in
order to protect investment goals, increases in food consumption
would have to be scaled back.
b. As a result, living standards could begin to fall.
c. Lower consumption levels in turn would increase popular dissat-
isfaction and hinder the leadership's attempts to raise
productivity.
4. On the other hand, the investment crunch I mentioned will become
increasingly tight during this decade. Should the leadership decide
to maintain or even increase agricultural imports at the expense of
machinery imports, investment and modernization would suffer,
with long-term effects on both production and the level of Soviet
technology.
H. But to return to the basic question that you asked-there is little
chance that Western economic sanctions, even if comprehensive and
sustained, could markedly affect Soviet military power for the better
part of a decade. Most of the weapons and forces on which Soviet
power is based are already in the field or in production.
1. First of all, major changes in defense allocations take time, and we
expect current patterns to prevail for at least several more years.
2. The main impact of Western economic sanctions would be to slow
qualitative improvements in Soviet weapon systems.
3. And, given the time required to develop a new or modify an existing
weapon system substantially, a denial of Western technology would
not have a major impact until the later 1980s. The maximum
impact would be felt in the 1990s and beyond.
4. Should a weakening of the industrial base ultimately force some
cuts in military programs, this would not happen quickly, and the
effects on overall Soviet military capabilities would be very
gradual.
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Implications of the USSR's
Hard Currency Problem for Aid
to Allies and Clients
Faced with tighter hard currency supplies and poten-
tial Western credit restrictions, Moscow is trying to
conserve foreign exchange, in part by reducing sup-
port to dependent allies and clients. This policy almost
?25X1 certainly will increase problems in bilateral relations
with East European and Third World countries. On
the other hand, the Soviets remain willing to continue
military assistance in Third World regions important
to US interests, because they view arms sales as a
major source of influence and foreign exchange.
Growing Hard Currency Problems
Soviet hard currency revenues probably will remain
level or even decline in real terms during the next
several years while the need for Western goods and
technology increases. The economy's slowdown raises
the importance of imports in helping to maintain or
increase productivity growth and reduce industrial
and food supply bottlenecks. However, the USSR's
hard currency position worsened in early 1981, pri-
marily because of stagnating world prices for oil, the
Soviets' largest export earner, and sharply increased
agricultural imports after a string of poor harvests.
Although the payment situation has improved since
mid-1981-partly because of reduced nonagricultural
imports-prospects for continuing this improvement
are bleak. Our analysis indicates that:
? Oil exports will decline.
? Rising gas exports will not completely offset the
drop in oil revenues, even if the pipeline to Western
25X1 Europe is built.
? Real earnings from other exports, including arms,
are unlikely to grow appreciably.
25X1
Moscow probably does not see substantially increased
reliance on Western credits as a solution to the
decline. The financially conservative Soviet leaders
and Western bankers presumably would be reluctant
to increase substantially the Soviet debt burden.
Moreover, some officials apparently believe that con-
crete Western credit restrictions might become a
reality, as suggested by Soviet press commentary prior
`o the Versailles summit in June. Although the vague
language of the credit agreement achieved at Ver-
sailles may have eased its apprehensions, Moscow
probably still recognizes that credits will be more
costly to obtain than in the 1970s.
Cutting Corners Around the Globe 25X1
With tighter hard currency supplies in mind, the
Soviets are reducing their foreign exchange expendi-
tures across the board. Trade with the West, econom-
ic support of Eastern Europe, and assistance to less
developed countries (LDCs) are being affected. Al-
though we cannot yet estimate precisely the overall
size or duration of the cutbacks, reductions in imports
of Western goods and in exports to allies of oil at 25X1
below-market prices could bring savings of a few
billion dollars.
East-West Trade. The Soviets have launched a major
effort to reduce foreign exchange expenditures in the
West, Several
domestic investment projects requiring Western goods
and technology have been scaled back or postponed.
Although most cutbacks reportedly will affect con-
sumer-oriented projects, purchases of some industrial
equipment also have been reduced below earlier tar-
Eastern Europe.) (hard
currency worries have been largely responsible for a
reduction in Soviet economic support to several East
European countries.
Moscow cited the pressures of financing
increased grain imports as a major reason for cutting
subsidized oil deliveries to Czechoslovakia and East
Germany this year to volumes at least 10 percent
below those previously planned, and to Hungary by 5
to 10 percent. The reduction could exceed 100,000
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barrels per day, roughly 6 percent of shipments to
Eastern Europe in 1981. Meanwhile, Bulgaria has
been denied increases in oil shipments, and cutbacks
there are possible. We believe that Moscow is moti-
vated primarily by a desire to increase hard currency
earnings. The USSR's projected requirement for
above-average grain imports in the coming years,
moreover, will probably extend the oil delivery cut-
back beyond 1982.
Developing Countries. In the Third World, Moscow's
belt-tightening apparently has affected its economic
support of some Communist clients. Some indications
in recent months of this tougher stance are that:
? Public Soviet statements suggest that Vietnam's
pleas for increased subsidized shipments of oil and
food have been turned down.
barter contracts, which minimize Soviet hard curren-
cy expenditures. The current foreign exchange prob-
lem has not affected that program but has left
Moscow no more lenient than before with LDCs
where hard currency is involved. Some recent indica-
tions of that position are that:
? Nicaragua, despite the economic cooperation
pledged during junta coordinator Daniel Ortega's
May visit to Moscow, has still not obtained the
substantial level of hard currency aid it has been
seeking since 1980.
cooperation programs, in part because Moscow has
demanded that Georgetown pay more of the hard
currency expenses associated with planned projects.
? Guyana has publicly criticized proposed industrial
The USSR almost certainly is more unwilling than
ever to make hard currency outlays for assistance to
non-Communist LDCs. Moscow rarely provides hard
currency aid to such countries, but instead emphasizes
project assistance repaid with the resulting LDC
products. Repayment terms have hardened over the
past five years, with 10-year repayment periods more
common than earlier 12-year credits. The primary
goal in extending development aid has been to sell
Soviet equipment, although more recently Moscow
has focused on procuring products important to the
Soviet economy through commodity payback and
Some Political Implications
The Soviets are aware that these actions carry a
political price, but they are apparently hoping that it
will be bearable. In Eastern Europe, their hopes
probably rest on the assumption that there is enough
fat in the East European economies to enable them to
adapt. As for the Third World, the Soviets' qualms
may be lessened by the fact that economic assistance
has rarely brought substantial political benefits.
Nonetheless, they cannot be certain that problems
created by aid reductions will not ultimately harm
their relations with their allies and some important
Third World countries.
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Moscow's budget cutting will, in fact, almost certainly
increase tensions with Eastern Europe. Economic
stagnation, already likely in several countries, will be
aggravated by the reductions in important forms of
aid and will probably sharpen the debate over in-
creased East European contributions to Warsaw Pact
force modernization. The cutbacks also will compli-
cate Moscow's efforts to increase regional economic
Soviet influence with some Third World clients may
suffer as an already niggardly economic aid program
fails to meet those countries' growing needs. Moscow
has long incurred general Third World criticism for
its meager economic assistance, and it may now
encounter growing trouble with economically hard-
pressed countries that have been seeking increased
Soviet help. Ties with Vietnam are strained over the
issue of aid, and
Hanoi is seeking greater Western assistance. Rela-
tions with Cuba, where aid-related tensions do not yet
appear serious, could be affected if Cuba's economic
health declines as projected. Among non-Communist
countries, Ethiopia and South Yemen probably are
increasingly unhappy with their inability to augment
Soviet military assistance with extensive cooperation
in economic development. Angola, whose oil exports
give it more ability than most major Soviet clients to
make hard currency down payments on aid projects, is
the only one to obtain a major ($2 billion) new
assistance commitment.
On the other hand, the Soviets' hard currency prob-
lem almost certainly will not constrain their ability or
willingness to extend military assistance in regions
important to US interests or weaken their support for
revolutionary movements. Moscow will continue to
rely on its arms sales program as the most effective
means of competing with the United States and as an
important source of foreign exchange. Although many
LDCs are experiencing severe balance-of-payments
problems, we have seen no significant decline in
Soviet hard currency sales. Orders dropped to $6
billion in 1981, down from the 1980 record high of
$14 billion, but still reflected the sales pattern estab-
lished since the mid-1970s. Although concessionary
military assistance may be scrutinized more carefully,
aid to major clients such as Cuba, India, and Vietnam
probably will remain based primarily on political
rather than economic considerations
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Briefs
Soviet Concern Over Three articles in Pravda this month have depicted the Afghan Army as heavily en-
Casualties in gaged with the guerrillas. Soviet troops, on the other hand, are reported being fired
AfghanistanF___-] on only while working on civilian projects. The articles reflect Moscow's sensitivity
to the casualties that are being widely rumored in the USSR but are not
mentioned in the media. An increased number of similar articles in the Defense
Ministry newspaper last winter coincided with the adoption of a more aggressive
strategy in Afghanistan. The media normally focus on civilian projects and
military training to help allay extensive concern over the high costs of the fighting.
Mixed Signals on Viktor Pershin, head of the Soviet grain-buying agency, told the US agricultural
Soviet Grain attache in early September that there was "not much grain left in the pipeline."
Imports While it is possible that Moscow has a slightly more optimistic assessment of
Soviet grain production than we do, the summer-long lull in the purchasing of
foreign grain remains puzzling. This is especially so because some of the losses
cannot be recouped. Western grain shipments through the summer were far below
quantities that recently upgraded Soviet port facilities can handle. Tight feed
supplies resulted in the lowest July milk yields and slaughter weights of cattle and
hogs since monthly statistics became available in 1977, and reports of local distress
slaughter increased.
"buying season" (1 October 1982 to 30 September 1983) would be about 40 million
tons. Although some grain traders report no interest in grain buying from Moscow,
the USSR may be about to begin purchasing:
Soviet purchases in the 1983
tential hard currency burden of massive grain imports is easing.
? In late August, Soviet officials claimed shipment from US Gulf ports would
begin in October at roughly the rate of 1.5 million tons per month.
Unless the pace of grain imports picks up soon, total imports for the year will be
less than we have estimated and meat supplies over the period will be correspond-
ingly less. Because the leadership is concerned about the public mood, however, we
do not believe it will permit a significant decline. Moreover, with US grain prices
at a three-year low and the average price of gold up 30 percent since June, the po-
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The MI-26 has the same cargo capacity as the AN-12 medium transport and can
carry about twice the payload of the MI-6 Hook, which it probably will replace. It
can carry two airborne infantry combat vehicles and will be used to reduce the
number of helicopters required to lift air assault forces.
International Phone In early September the USSR drastically reduced direct-dialing service for
Service Cuts incoming calls from the United States, Western Europe, and Japan. The only
exceptions are foreign embassies and "trade missions" in Moscow. Telex and
International Telegraph Service communications reportedly remain normal. The
decision to limit incoming calls-allegedly to facilitate technical repairs-was not
reported in the Soviet media. This latest move follows the severe cutback in July of
direct dialing to the West. It is presumably intended to improve monitoring and
control over telephone contact between Soviet citizens and foreign callers
particularly emigres. The reductions will cost the Soviets hard currency.
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