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Proceedings Workshop | 97th Congress JOINT COMMITTEE PRINT SOVIET MILITARY ECONOMIC RELATIONS PROCEEDINGS OF A WORKSHOP ON JULY 7 AND 8, 1982 SPONSORED JOINTLY BY THE SUBCOMMITTEE ON INTERNATIONAL TRADE, FINANCE, AND SECURITY ECONOMICS OF THE JOINT ECONOMIC COMMITTEE AND THE CONGRESSIONAL RESEARCH SERVICE LIBRARY OF CONGRESS rindotuoteotom C Printed for the use of the Joint Econom~ic Committee U.S. GOVERNMENT PRINTING OFFICE 12478 0 WASHINGTON: 1983 JOINT ECONOMIC COMMITTEE (Created pursuant to sec. a(a) of Public Law 304, 79th Cong.) HOUSE OF REPRESENTATIVES SENATE HENRY S. REUSS, Wisconsin, Chairman ROGER W. JEPSEN, Iowa. Vice Chairman RICHARD BOLLING, Missouri WILLIAM V. ROTH, JR., Delaware LEE H. HAMILTON, Indiana JAMES ABDNOR, South Dakota GILLIS W. LONG, Louisiana STEVEN D. SYMMS, Idaho PARREN J. MITCHELL, Maryland PAULA HAWKINS, Florida FREDERICK W. RICHMOND, New York MACK MATTINGLY, Georgia CLARENCE J. BROWN, Ohio LLOYD BENTSEN, Texas MARGARET M. HECKLER, Massachusetts WILLIAM PROXMIRE, Wisconsin JOHN H. ROUSSELOT, California EDWARD .M. KENNEDY, Massachusetts CHALMERS P. WYLIE, Ohio PAUL S. SARBANES, Maryland JAMIEs K. GALBRAITH, Executive Director BRCCE R. BARTLETT, Deputy Director SUBCOIMMITTEE ON INTERnATIONAL TRADE, FINANCE, AND SECURITY EcoxomIcs HOUSE OF REPRESENTATIVES SENATE GILLIS W. LONG. Louisiana, Chairman WILLIAM PROXMIRE, Wisconsin, FREDERICK W. RICHMOND, New York Vice Chairman STEVEN D. SYMMS, Idaho ROGER W. JEPSEN, Iowa MACK MATTINGLY, Georgia (II) CONTENTS WORKSHOP PARTICIPANTS WEDNESDAY, JULY 7, 1982 Page Gude, Hon. Gilbert: Opening remarks---------------------------------- 1 Hardt, John P.: Opening remarks--___________-_-________ 1 Proxmire, Hon. William: Opening remarks-- ___________-_-_______ 2 Kaufman, Richard F.: Opening remarks-------------------------------- 5 PANEL I. SOVIET MILITARY PERCEPTIONS Holloway, David-The Political and Historical Context of Soviet Military Eixpenditures------------------------------------------------------ 11 Anderson, Richard D., Jr.-The Defense Council, Succession Politics, and Soviet Military Spending-- _____-- _______________-__-__-___ 53 MccGwire, Michael-Soviet Military Requirements--- 69 Kaufman, Richard F.-Perspectives on Soviet Defense and the Economy-- 108 PANEL II. MEASUREMENT AND BURDEN OF DEFENSE ALLOCATIONS Welsh, Paul-The Estimated Cost of Soviet Defense Activities, 1965-1980 128 Doe, Frank-Understanding the Soviet View of Military Expenditures---- 154 Bond, Daniel L.-Macroeconomic Projections of the Burden of Defense on the Soviet Economy--_______--_____--___________________-________-_ 180 Cohn, Stanley H.-Economic Burden of Soviet Defense Production: Qualitative and Quantitative Aspects-- ________-_-_____-__-__- 192 THURSDAY, JULY 8, 1982 Hardt, John P.: Opening remarks--_______ 223 Kaufman, Richard F.: Opening remarks-- ___-_______-___- ___-_____ 223 PANEL III. INTERNATIONAL AND DOMESTIC POLICY IMPLICATIONS Rush, Myron-Guns Over Growth In Soviet Security Policy -__-__-_____- 225 Simes, Dimitri-The Policies of Defense in the Soviet Union - __-_____- 241 Whelan. Joseph G.-Brezhnev's Peace Offensive, 1981: Propaganda Ploy or U.S. Negotiating Opportunity?-------------------------_ 249 Selin, Ivan-Questions on Soviet Military Economics-- _____-__________ 269 (III) SOVIET MILITARY ECONOMIC RELATIONS WEDNESDAY, JULY 7, 1982 Room S-207, THE U.S. CAPIrOL, Washington, D.C. The workshop was convened at 9:10 a.m. by Hon. Gilbert Gude, Director, Congressional Research Service, Library of Congress. John P. Hardt, Congressional Research Service, Library of Congress, and Richard F. Kaufman, Joint Economic Committee, moderators. OPENING REMARKS OF HON. GILBERT GUDE Mr. GtDE. I'd like to bid everybody a good morning. I'm Gilbert Gude, director of the Congressional Research Service. We are very pleased to join with the Joint Economic Committee in sponsoring these 2 days of workshops on Soviet Military Economic Relations. The Congressional Research Service is represented here this morn- ing not only by the people in our Foreign Affairs Division, but also Senior Specialist Charlie Gellner in the back here by the American flag, very appropriately, and Joe Whelan. I'd like to introduce Mr. John P. Hardt, our Senior Specialist in Soviet Economics and Associate Director for Senior Specialists at the Congressional Research Service. John did his undergraduate work and part of his graduate work at the University of Washington, received his doctorate and also a Rockefeller award at Columbia University, has written and published and lectured extensively on Soviet eco- nomics, including Soviet economic statistics and mathematics and computers in the Soviet plan. He feels very much at home in the Soviet military economic sphere. Mr. Hardt, please proceed. OPENING REMARKS OF JOHN P. HARDT Mr. HARDr. Thank you very much. Mr. Kaufman is comoderator from the Joint Economic Committee. He is the long-time general counsel with the full committee. and he will read opening remarks from Vice Chairman Proxmire of the Subcommittee on International Trade, Finance, and Security Eco- nomics. Mr. KAU-FMAN. On behalf of Senator Proxmire, who was to chair these proceedings but who is not in the city today, I will read the opening remarks that he had prepared for this morning: (1) 2 OPENING REMARKS OF SENATOR WILLIAM PROXMIRE Xfr. KAUFNIAN [reading]. I want to welcome the speakers and in- vited guests to the workshop on Soviet Mfilitary Economic Relations. and I also want to extend my appreciation to the Honorable Gilbert G(ude and the Congressional Research Service of the Library of Con- gress for cosponsoring this event. Cooperation between the Congressional Research Service and the Joint Economic Committee with respect to numerous subjects, but particularly the subject of the Soviet Union, dates back many years, to the 1950's. This has been a productive and useful relationsiiip, and I expect it will continue. Questions surrounding Soviet military economic relations are espe- cially pointed and relevant to current policy issues. I have been chair- ing annual hearings on the "Allocation of Resources in the Soviet Union and China" since 1974. The latest round of those hearings are now in progress, Gen. James A. Williams, Director of the Defense Intelligence Agency, having testified on June 29, 1982. We plan to receive testimony from the Central Intelligence Agency in September. The hearings and this workshop are taking place at a time when information about the Soviet economy and Soviet defense spending are of more than theoretical or passing interest. The annual allocations hearings were initiated as a way to keep abreast of changes in Soviet economic activities including defense spending. One of the problems has been the tendency of government officials with access to classified information to use intelligence esti- mates of Soviet defense activities in a selective and biased way. It was my hope that public disclosure of the intelligence estimates in a comprehensive form would discourage or correct the misuse of the estimates. I believe significant progress has been made toward achieving this objective, although much remains to be done. Certainly, there are many unanswered questions about the measurement and burden of Soviet military spending. Of course, the chief obstacle is Soviet secrecy. The Soviet Govern- mient persists in keeping up the pretense that its defense spending has not increased for a number of years in the face of overwhelming evi- dence to the contrary, both from physical activities, including its ex- panding arsenal of weapons in all categories, and from estimates pre- pared by intelligence experts in this country and abroad. No doubt there are margins of error in these estimates. Only the Soviets can know precisely how much they spend and how large their defense program is. The question the Soviet leadership should ask itself is: In whose interest is such secrecy? I would argue that Soviet secrecy about its defense allocations are not in the interests of the Soviet Union. Nothing creates suspicions and leads to doubts about intentions and capabilities so much as se- crecy. The Soviet leaders profess to be in favor of ending the arms race and avoiding a war. But the policy of secrecy leads in the oppo- site direction. The present U.S. defense buildup is in direct response to the con- sensus in this country that the costs of Soviet defense programs ex- ceeds U.S. defense spending by a wide margin. This consensus devel- oped over a period of years during which U.S. intelligence estimates 3 demonstrated the general direction and the composition of the Soviet defense buildup. If the Soviet Government disagrees with the estimates of its defense costs, it would be in the Soviet interest to point out where and why it disagrees. If the West is wvrong about the Soviet defense program, the Soviet Union's failure to correct the record would be to stand by si- lently while the United States and other NATO countries build up its forces to meet an exaggerated Soviet threat. In effect, the Soviet Government would be promoting the arms race which it has de- notunced as a disservice to mankind. Last year, the Defense Department published a pamphlet entitled "Soviet Military Power," purporting to document the growth of the Soviet defense program and the increased power of Soviet armed forces. In response, the Soviet Defense Ministry issued a publication this year entitled "Whence the Threat to Peace," purporting to refute the Pentagon's pamphlet and to present the truth about the East-West military balance. I find this initiative and response syndrome interesting for several reasons. Would that it were true that the difference between the two nations will always be fought as a wvar of words on a literary battle- field. I might add that it is significant to me that both publications appear in expensive formats with glossy, multi-colored photographs and drawings, as well as charts, maps, and tables. The message to me is that the Soviet Defense Ministry must be at least as pampered and well-fed as is the Pentagon. It is also significant that the Soviet publication dwells mostly on the U.S. defense program, showing how it has expanded, without directly refuting statements made in the U.S.
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