MEMORANDUM FOR THE HONORABLE JAMES H. SCHLESINGER, THE SECRETARY OF DEFENSE FROM W. E. COLBY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80B01495R000300070007-8
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 5
• Document Creation Date: January 4, 2017
• Document Release Date: June 30, 2005
• Sequence Number: 7
• Content Type: MF

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MEMORANDUM FOR:
Jim -
The Honorable
James R. Schlesinger
The Secretary of Defense
You have occasionally chided me for not
being of greater assistance to you in defending
your budget requests. i now have independent
and unsolicited evidence to the contrary.
Attached is one of the pieces of fan mail
generated by a U. S. News and World Report
article. The writer, evidentally an expert on
Soviet defense expenditures, has cut through
the gobbledegook of economic analysis and
discovered that my testimony before Congress
was "propaganda designed to prevent a
reduction in our defense budget for 1975".
W. E. Colby.
`Di.rector
1vAUGry54 101 REPLACES FORM io.101
(DATE)
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i;:r . :r i 11 ia::a r: ? Colby,
Director CI.
as~in~ton, D.C.
Dear Er. Colby:
v .S f18 r0~ ~L ;)Jl t
contained the folloin sta,
The Soviet Union is na Sp
en
~
e
:lll
e de If an l ? core' in dollar
se ;~;n the U,. t_rms on
. ...... ~.ae cost: More than 80- billi
dollars a year--- about 4 bil car.
'
a e tha
n, e y er_ai ter es. for t_le 1x 73 - iscal yeart IT'8. ili ary .`~
- a .. II .....ended 1as t Sane 30
defense outlays exceeded Jthe~s
ta1970
tf
a- ed
e
m
doll
arcst .o.f the
effort. Since 1970 the Soviet effort coin-
et,
lollar:,terms,
has e eeedeu that of the United States. Thi
s ctah
result of steady increases in Soviet spending .D _ ,s a
in-, Measured in constart, ~?I11~.,,. , .S eZld-}~
tt, t~. r_1S A.n1inom,4 !t - . .. .
UDVI.aUSJ_t, 2 this is propaganda desi
d t
gne
o prvent
e. a' 'reaLzation in
or 1:;777
'
.
. 1
everthelesse
,.am sur an a nvL; U -anon would 'prove tae above res 003 ctiV;;
figures to be complete miles rise
In fact 8JV 13t
aeicr,
__se bud:;et for. 1973 was
collar;- not `Q billion dollars
asr
ort
,
e
edaoaveTil
.... , r - :. l llian
c presents a decrease of 303 r i e llion
ov
:
er ti a
. the previous year; hi 1e
U.S. budgeted over 85- an increass 'of 3 bi? lioa "cava:ri.the-1973':;'
amount-- eventhough the Vietnam f ar 'rasa
u
s
s
p o
....e pat:
ed t bs
he Gruth is, the Russians ,S_ ;ins
= billion more t_ an the U o ~1y one-fourt2
,1-
U.S. in 1973.
:got'i c a nt _e R.:.ssuns keen a:iea
ait
of us mil1tarl
only one-fourth as ? U01
ar:,a th ey sx~e
anril
-
u:11is
~ 4S: Tue. only logical ans rer is
t ;~? -ava
t 1 ._ in lJ ion d also. oerziy t w
an c'ro- itS o:'1d-e f'_nse 3 aSt , GO;?'tlJtio n, and eXpass
L- J U,5
3O--it o s om-r_
little ,,;as ta_~a no co-_
orat:Lon prolits. rill pro ~
i stributed to all t;: e ujiis are
a ;lti
care for all, 'rp ay r~i y1the fore of full ?-ployment e
birth to death, fret' f ! Z rye'
ar ,`ter is { t:,rouo,~ i education ror~ l%ind
~ h Unive..rty for all o~.. those capa 1.. of ,
an i lay; coat h , beoe?itin
o as i~_ and tr ans ~ortat ion ";'or
l
a
l iti
out the
Soviet Union. zens thrcru~h-
In ' n.;:- future, Colby 1 _ur t .
e
~
G O th
t f a. c~~' ts
ing such te?ne
n
..Respeotfull y
/I "J 71
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Americans are now able to get a
rare glimpse of the Soviet Union
through the eyes of this country's
intelligence chief.
William E. Colby, Director of the
Central Intelligence Agency, in re-.
cent reports to?con ressional com-
mittees pictured Russia as race
ard to ai e r~~ IbP-,~ i .S-but still
lagging in strategic nuclear power
and trailing even more in econom-
ic performance.
What follows is the CIA Direc-
tor's size-up, based on the latest
information gathered and analyzed
by this country's secret intelli-
gence organization.
Soviet Defense Spending
The Soviet Union is now spending
more in dollar terms on defense than the
clangorous Soviet build-up in the Indian
Ocean.
His assessment: "Tile Soviet naval
presence has grown, slowly but steadily
during these [past six] years, and has
helped Moscow increase its influence in
that part of the world. The forces the
Soviets have deployed in the Indian
Ocean, however, have been relatively
Ilow far and how fast the Russians
expand their naval presence in the In- -
dian Ocean in the future, the CIA
director predicts, will depend largely on
"If there is no substantial increase in
the. Soviet increase will be gradual, say, _
one to two surface combatants per
s > ^rM ., ':::.. ican naval presence would lead to a
U. S. The CIA estimate is based on pie: The Soviet Navy "stays at anchor It
extremely complex and sophisticated lot more than they sail."
calculations by intelligence experts of Also: The Bed Army spends less time
what it would cost America to maintain on maneuvers than U. S. troops, and
the kind of military establishment that Soviet airmen fly about half as many
the Russians support. hours as American Air Force pilots.
The cost: more than 80 billion dollars "In all of their forces," 14r. Colby
a year---about 4 billion more than U. S. reports, "they [the Soviets] operate
military expenditures for the 1973 fiscal much less extensively."
year that ended last.June 30.
In the v.ords of Mr. Coley: Superpower Missile Pace
"From the late 1,950s until 1970, U. S. At a time of growing American fears
defense outlay's exceeded the estimated about a Russian. drive to gain strategic
dollar cost of the Soviet effort. Since superiority, the CIA analysis underlines
1970 the Soviet effort, measured in this conclusion: The Soviets are still
dollar ter!n::, has exceeded that of the lagging behind the U. S. in the strategic-
United States. This catching tip is a arms race,
result of steady increases in Soviet To quote the chief of the U. S. intelli-
spending, while U. S. spending, mews- gence agency:
"red in constant terms, declined." "The complexity of their missile sys-
The main reason for Russia's higher tern their accuracies their various oche
r
believes would lead" to an intensified
Soviet presence in the Indian Ocean_
congressional approval of an. American
Navy proposal to expand its base on the
island of Diego Garcia.
. On the other hand, the U. S. intelli-
gence chief challenges the argument
that reopening, of the Suez Canal will
lead automatically to a significant in-
crease in Soviet naval strength in the
Indian Ocean. The Russians, he says,
terranean fleet through the Canal, but a
major increase is ruled out for this
reason:
"The U.S.S.R. probably recognizes
that the Canal is subject to closure in a
crisis. The Soviets would not wish to be
caught with a substantial proportion of
their available units on the wrong end of
level of defense spending: expansion of things, have traditional!/ been behind T echnolegy Gap
the armed force, by In additional 1, ours. There. is no quest on about that. This is "beca Ir hC a vexing political
As a result, the Soviets Ar1(.l they' airej.l,t Clr ~'in t'? cats l up.- dilemma for- Soviet lea rs, as well as
have about 4 million rnen tinder arms- Ile reveals that Soviet se=nding on the crucial economic proi fem." a
I.3 nrillion more than the U. S. production of new strategic weapons in The reason: "This gap is an Across-the-
??:? rx. recent years actually, declined. Now, this board one-from ICi3M [intercontinen-
'+"? :c envy downward trend is expected to be re- tai lxdlistic missile] systems to electric"
in Willi- versed with the deve'opme!1t of four r:!zors-andIS?Cr,'a:ii::~; C rn credits in the future and to pay cash s
hence experts at 660 billion dollars-is into the system.
for more or their imports. Most of the onl 1, ,, 1r !
a
k
y
ou t
u. t. tat of the U. S.
Ile points out that "the
increased funds to finance these cash It is in labor productivity , economic
purchast s v, ill p,- t , from p that the gap nltc t:-tnisrns devised by Stalin were e
obably come fro.n the between Soviet and U. S. performance is fectivc in pulling the country up by the f
of more gold.
;grc tat s`. 7 hr C1A str u'): bo
CIA sat dies show that the Soviets )t straps ,Mc, t.still)I tl t
I t f actor es: sp it p I t rdon-
of rolurnr of foundatio~ts OF an industri t ized coat--
gold resor\ es now are adequate. There- investment per worker nearly equal to orny. But these mechanisms" are not
fore, the. Kremlin "will bt' free to market U. S. levels in recent years, labor prxluc- suitable for meeting the needs f
most, if not. all, of current gold produc- o it
lla! f in Soviet industry only about mode rt society.
i%m in '.V yq 'rat markets.'" "Iht esti- half 01c U. S. I,'v.?l " The ~ ash, r t,i
:atrcl ;:n: , n For th., The Kremlin's dilemma: Ilow to ad-
from th ~. gl,i;l 1.!111:1?' '?~i tn1 gerial probate ns inherent just the S stem to meet ,_~?
s: 1.:~ 1)t!;,o,, cl.lilnn by '`J?4tt Y t t e t.~>eds
in it contr.clii d and burt.;ucraic system without in th:' end s,1-r ti:c a'i-
C u
J
'
1
economy v wproved For rc I s
~
(u u't
22 : CIA-RDP80B01 .#"Y,7MW, Ir9ercised by the
~.. ~~ ~t s t low t pco omie.. ,- Mr Coll),
No oatct~~
After a spurt in the 1950s, total output in the Soviet Union
the gross national product--started to slow. Since 1970,
Russia's economic growth has fallen behind that in the U.S.
U. S.
RUs3i'l
Total Output of Goods and Services
(in 1972 U.S. dollars)