102. Special National Intelligence Estimate1

SNIE 3/11–4—81

[Omitted here are the title page and preface.]

Dependence of Soviet Military Power on Economic Relations With the West


Acquisition of goods and technology from the West enhances Soviet military programs in two principal ways: by making available specific technologies that permit improvements in weapon and military support systems and the efficiency of military and civilian production technology; and by providing economic gains from trade that improve the efficiency of the economy and thereby reduce the burden of defense. Soviet military power is based fundamentally on the large size and diversity of the Soviet economy and the breadth of the Soviet technical and scientific base, on Soviet success in acquiring sophisticated technology in the West, and on the longstanding preferred status of the military sector.

The USSR recognizes that it will be hard pressed to maintain its relative position in the technical sophistication of its weapons compared with those of the West. Moscow will therefore continue to seek Western technology useful for its future weapon systems by all means, including those illegal means that have been successful in the past, such as clandestine acquisition, illegal imports, and third-country diversions. The Soviets will especially need equipment and technology for their electronics, aerospace, and shipbuilding industries.

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Soviet economic performance has deteriorated to the point that, if military expenditures continue to expand as in the past, there will be few if any resources left with which to raise living standards. Even slow growth of the Soviet economy depends in substantial part on continued imports of Western machinery, grain, and equipment for the energy sector:

• The USSR needs large-scale imports of Western food, especially grain, to increase food supplies even in good crop years, and to keep them from falling in bad years.

• Western pipe and compressors are essential for the rapid expansion of Soviet gas production, which will be the main source of additional energy supplies and hard currency in the 1980s.

• Western equipment also is increasingly important in oil production, and imports of Western production equipment, especially advanced machine tools, would help to raise labor productivity at a time when the labor force will be growing much more slowly than in the past.

Western restrictions on nonstrategic trade, if broadly supported and sustained, would aggravate Soviet economic problems appreciably. Short of comprehensive Western restrictions on trade, a Western embargo on oil and gas equipment would have the greatest impact. A denial of new Western credits would probably force a decline in overall Soviet hard currency imports. In none of these cases would unilateral US actions have much effect. Any decision to impose additional restrictions would have to consider their impact on the West as well as on the USSR.

Reduced economic capability would make allocations to Soviet military programs more painful but probably would not lead to cuts in these programs in the next several years. The Soviet military buildup has great momentum and domestic political support. Faced with what it would consider economic warfare, Moscow would be likely to turn to more autarkic economic policies, tighter internal discipline, and a more truculent foreign policy. At the same time, it is highly probable that these policies would result in increased popular dissatisfaction, reduced worker productivity, further reductions in long-term investment in order to meet short-term needs, and greater inefficiency overall in the operation of the Soviet economy.

The West could slow improvement in the performance of Soviet weapons by the late 1980s or the early 1990s by broadening controls over exports of military-related technology—and increasing its efforts to plug leakages. While there is little likelihood that even comprehensive and sustained Western economic sanctions in the near term would significantly affect Soviet military programs—many of which are already well under way—such sanctions applied for a number of years could retard qualitative improvements to Soviet weapon systems and [Page 353] give rise to significant pressures internally to reduce military spending at a time when the rest of the economy is in growing difficulty. This would be even more likely should the USSR’s economic problems be more prolonged than the Soviet leaders expect and the remedies harder to find and slower to take effect.

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  1. Source: Reagan Library, Executive Secretariat, NSC: Country File, USSR (11/21/1981–11/28/1981). Secret. Issued by the Director of Central Intelligence. Concurred with by the National Foreign Intelligence Board. The CIA, DIA, NSA, the intelligence organizations of the Departments of State and the Treasury, the Assistant Chief of Staff for Intelligence of the Department of the Army, the Director of Naval Intelligence of the Department of the Navy, the Assistant Chief of Staff for Intelligence of the Department of the Air Force, and the Director of Intelligence of the Marine Corps participated in the preparation of the Estimate. Casey sent the SNIE to the President under cover of a November 21 letter stating: “Knowing your interest in the ability of the Soviet economy to stand up under the massive military burden it is carrying, I thought you might like to read, as you fly west, this Estimate on ‛Dependence of Soviet Military Power on Economic Relations With the West.’” An unknown hand crossed out “as you fly west.” Allen forwarded the SNIE to the President under cover of a November 21 memorandum stating: “Attached is the Special National Intelligence Estimate which I mentioned in today’s Daily Report. It is an extremely important assessment of the Soviet economy and its ability to support its massive military build-up. I commend it to your attention.” In the upper right-hand corner of Allen’s memorandum, Reagan wrote: “RR.”