Office of the Historian

330. Paper Prepared in the Directorate of Intelligence, Central Intelligence Agency1

SOVM–84–10200X
Washington, December 10, 1984

Assessment of a Recent Unofficial Soviet
Statement on Defense Spending

SUMMARY

[4½ lines not declassified] knowledgeable Soviet officials—albeit probably not privy to the tightly held actual cost data—are concerned about the impact of the defense burden on the overall Soviet economy. Neither official gave precise figures, instead they couched their statements in terms of general orders of magnitude. Consequently, it is impossible to compare directly our estimates of Soviet defense costs with the number they implied. Moreover, the wording used [less than 1 line not declassified] leads us to believe he intended a broad definition of defense burden that would include the costs of activities indirectly [Page 1174] supporting defense and not counted in our conventional estimates of Soviet defense spending. [portion marking not declassified]

[Omitted here is the remainder of the paper.]

  1. Source: Reagan Library, Executive Secretariat, NSC Country File, Europe and Soviet Union, USSR (12/05/84–12/16/84); NLR–748–25A–43–8–4. Secret; [handling restriction not declassified]. Prepared in the Defense Spending Branch, Econometric Analysis Division, Office of Soviet Analysis. Reagan initialed the paper on December 12, indicating he saw it. In an undated handwritten cover note to Poindexter, Matlock wrote: “The attached analysis is worth a quick glance, since it deals with an interesting comment by a Soviet ‘scholar’ which would indicate that the CIA may have been underestimating the real impact on the Soviet economy of the Soviet defense effort. I have personally long thought that this was the case, and that the Agency, relying greatly on Soviet published statistics, underestimated the real impact. Since much of the latter is qualitative, it is difficult to quantify in the statistical terms the Agency uses. Jack.” Poindexter wrote in the margin: “Thanks. I gave this report to the President yesterday. I agree with you. JP.” (Reagan Library, Jack Matlock Files, Chronological File, 1980–1986, Matlock Chron December 1984 (2/5)↩