In 1976, the CIA made what appeared to be an astounding discovery about Soviet defense outlays. News outlets throughout the country headlined the story, "CIA Doubles Estimate of Soviet Defense Spending." The media were very poorly briefed. Nobody at CIA thought the Soviets had suddenly increased their defense spendng by 100 percent. But the impression was allowed to stand and has not been clarified.
A recent study published by the U.S. Air Force and prepared by the U.S. Strategic Institute said: "Estimates prepared by the Central Intelligence Agency, as well as by U.S. academic economists, have been in error by as much as 100 percent. The CIA estimates were accepted without question until 1976, when they were acknowledged to be grossly in error and doubled. Economists have not yet recovered from the shock of that experience."
Former President Richard Nixon in his new book, "The Real War" says: "In 1976 the CIA estimates of Russian military spending for 1970-1975 were doubled overnight as errors were discovered and corrected . . . When the first concrete steps toward arms control were taken, American presidents were being supplied by the CIA with figures on Russian military spending that were only half of what the agency later decided spending had been. Thanks, in part, to this intelligence blunder, we will find ourselves looking down the nuclear barrel in the mid-1980s."
Congress recently authorized the largest U.S. defense budget in history because most members of Congress also have come to believe that the Soviets have doubled their defense spending during the decade of the 1970s.
But the facts are very different. At no time has the Soviet defense budget been increased by more than 3 percent a year.
The CIA has an admittedly difficult job estimating what the Soviets spend on defense because so much is secret. The figure which the Soviets publish in their annual budget doesn't come close to approximating Soviet defense totals. The CIA tries to estimate the dollar cost of the Soviet military by determining what it would cost the United States to duplicate the Soviet defense establishment. This is obviously subject to considerable error because there are such vast differences in the costs of U.S. and Soviet defense programs.
The most glaring difference is in military manpower. The Soviets have about 4.4 million military personnel compared to a U.S. figure of 2.1 million
The CIA makes an estimate of the dollar cost of the 4.4 million Soviet force multiplied by U.S. military pay and allowance rates. This results in a significant distortion because U.S. military personnel are volunteers with relatively high levels of pay and allowances. The Soviet forces, on the other hand, are drafted and paid about one-fifth the U.S. rate.
When this method of costing Soviet defense began in the early 1970s, the CIA concluded that the Soviets were spending between 6 and 8 percent of their gross national product (GNP) for defense. At the time, the United States was expending about the same percentage of its GNP for defense. Today, the U.S. figure is closer to 5 percent. However, it is often forgotten that the U.S. has a GNP which is about double that of the Soviets.
During the period from 1973 to 1976, as CIA analysis refined their methodology and obtained better intelligence, they made an important breakthrough. In costing Soviet defense production they had been crediting the Soviets with efficiency which was close to that of the United States. What they discovered was that Soviet defense production, in fact, was not very efficient. Thus, the Soviet defense effort was absorbing a greater share of the GNP than previously believed.
Here is what the published 1978 CIA report said: "The new estimate of the share of defense in the Soviet GNP is almost twice as high as the 6-8 percent previously estimated. This does not mean that the impact of defense programs on the Soviet economy has increased -- only that our appreciation of this impact has changed. It also implies that Soviet defense industries are far less efficient than formerly believed ." (Emphasis added.)
The CIA increased the percent of GNP from 6-8 to 11-13, but there had been no doubling of the rate of actual Soviet defense spending. There was merely an increase in CIA's estimate of the share of GNP expended for defense. What should have been cause for jubilation was never adequately explained to the Congress and the public. Instead, for the past four years, a misperception that there has been a great surge in Soviet defense spending has gone uncorrected.
In fact, there have been no dramatic increases in Soviet defense spending during the entire decade. Here is what the CIA paper published in January 1980 said for the 1970-79 period: "Estimated in constant dollars, Soviet defense activities increased at an average annual rate of 3 percent." In other words, the Soviets have indeed been increasing their defense budget, each year, at about the same rate as the United States and most of its NATO partners. The U.S. defense budget for next year calls for an increase, in real terms, of about 5 percent.
From the standpoint of weighing the essential defense burden of the United States and Russia, there are several factors that should be given much greater emphasis when the executive branch is presenting the facts to Congress.
The first is the great difference between the defense contribution made by the European allies of the United States and the Warsaw Pact allies of the Soviet Union. In 1978, the European NATO members expended $75 billion for defense and France, a non-NATO ally, spent $16 billion -- a total of $91 billion. The Warsaw Pact members, other than the U.S.S.R., expended $23 billion, or one-fourth of the defense spending of our European allies.
Perhaps even more important in considering the relative defense burdens is the cost shouldered by the U.S.S.R. in defending against China. The U.S. Defense Department says: "At least 22 percent of the increase in the Soviet defense budget during these 13 years [1964-1977] has been attributed to the buildup in the Far East . . . The high construction costs in Siberia suggest that the intelligence estimates may understate the cost of the Soviet buildup in the Far East substantially." In addition, according to the Defense Department, the Soviets "station as much as 25 percent of their ground forces and tactical air power on their border with China."
The Soviet burden of defense against China comes more sharply into focus when note is made of the fact that the Soviets have 44 divisions facing China and 31 divisions facing NATO. Of the 31 divisions in Central Europe, four are standing guard in Hungary and five have remained in Czechoslovakia since the invasion of that country in 1968. In other words, there are about twice as many divisions committed to the China front as to the West German front.
Furthermore, the U.S. does not have to match the Soviet forces facing China. Those forces are at the end of a long and tenuous line of communication that can be severed, in time of war, by missile strikes. These are not forces that can be readily transferred to combat in a European war. On the other hand, if it is argued that the U.S. defense budget should provide forces to counter the Soviet threat to China, then the Chinese defense budget should be included on our side -- a total of $35 billion.
The combined NATO defense budgets are greater than the combined Soviet-Warsaw Pact defense budgets, and if the China factor is included, the Soviet proportion of defense facing the U.S. and its allies is less than 75 percent of that of the NATO powers.
These are facts which Congress should have before it when it weighs the budget appropriation decisions in the next few weeks. The Soviets have an ample defense budget, but it still does not equal its potential adversaries. The perception of Soviet military superiority is an illusion based, in large part, on a misunderstanding of the facts.