The rest, including Lee, worked directly with Soviet data and did not attempt to build from blocks in physical units. If they estimated defense activity in real terms, it was usually at the final stage of deflating nominal values. Lee, for example, began from the residual of the nominal gross output of the machine-building industry in each year after subtracting reported or estimated net intermediate and final deliveries to other sectors and inventories. He attributed what was left over to military procurement, and this became the keystone of a calculation of the wider military budget. As Table 7.5 indicates, Lee’s result was a range of figures that approximately straddled the central estimates published by the CIA.
Rosefielde also worked with the machine building residual and approved of this method. Against it may be made a general point: working with small residuals left after subtracting one large number from another is always hazardous because small errors in large numbers lead to large errors in small ones. But there was also an important point in favor of it, one that could not have been made at the time. A document in the Soviet archives for 1937 shows that officials understood exactly the danger of publishing information that might permit computation of a heavy-industry residuaclass="underline" it could reveal the value of secret military procurement.[391]
Beyond Lee and Rosefielde, several others attempted to estimate Soviet defense spending by decoding Soviet official data in different ways. Among these were both academic scholars and staff researchers at the DIA. They generally began from the official military budget figures, which they understood as most likely representing a subtotal of outlays on the pay and subsistence of troops. To cover other military items such as procurement, operations, construction, and RDTE, they then added varying shares of other items taken from published information concerning purportedly civilian outlays on the national economy or the accumulation fund or additions to state reserves. (We will see that this line of enquiry more or less predicted the efforts of Russian insiders in post-Soviet times to reconstruct the Soviet defense budget.) Working on these lines, DIA estimates generally turned out larger than those made by the GIA, but estimates made on similar lines by other Western scholars were sometimes smaller and occasionally much smaller.[392]
Some estimates of this general type were very elaborate. Most complex was the apparatus developed by Steinberg, who began from the hunch that most Soviet defense production and activity was excluded from the official national accounts.[393] Steinberg’s framework aimed to account for hidden flows, both real and financial, and to distribute them among producers and users in such a way as to consistently reveal the true scale of Soviet defense.[394] But the hunch itself remained untested and has not been confirmed since. Unlike those of others in this group, as Table 7.5 shows, Steinberg’s estimates were relatively large and close to those of the CIA.
Cleverest was the method of Peter Wiles, who began from the idea that weapons are a form of capital asset that depreciates rapidly because of technical obsolescence. He called this depreciation the “weapons writeoff.” He argued that the Soviet defense accountants had hidden most of military procurement by reporting it only in net terms, after subtracting the weapons write-off.[395]
There was a promise in the methods of Wiles and Steinberg that Rose-fielde for one acknowledged at the time.[396] But the promise remained unfulfilled, and the underlying intuitions have not been substantiated.
While the rivalry was often heated and the range of estimates showed little sign of converging, it is important to note that there was more agreement among the rivals than might have appeared at the time. There was universal acceptance that Soviet official budget figures were deceptive. Alternative estimates in rubles—the currency that is of interest for this chapter—were mostly clustered in a fairly narrow range that was clearly separated from the Soviet official figures of the time. Thus, the acrimony arose more from the mutual questioning of motives than from radically different outcomes.
The range of alternative estimates for 1970 and 1980 can be judged from Table 7.5. For 1970 the mainstream lay somewhere between 42 and 49 billion rubles (10-13 percent of Soviet GNP); only Wiles stood outside (and far below) that range. By 1980 SIPRI had left the mainstream with a greatly reduced estimate, and Lee had gone to work for the DIA, which now set the upper limit. As a result, the mainstream had lifted and widened to between 81 and 107 billion rubles (13-17 percent). An error margin of several percentage points of GNP could not be grounds for complacency. But the problem was of enormous scope, and the uncertainties were intrinsic. For these reasons, demands for greater precision might well have been unreasonable.
Mikhail Gorbachev became the leader of the Soviet Communist Party on 11 March 1985. At that time, the Soviet Union was already in a “precrisis” situation. That is, the country was visibly beset by problems, none of which was critical in that moment; but all of them were growing.[397] Gorbachev was determined to break out of the “era of stagnation”—a term that he coined to describe the outcome of his predecessors’ attitude of persisting with past policies while waiting for the country’s luck to change.[398]
Among Gorbachev’s priorities was a comprehensive arms control agreement with the United States. The United States was engaged in a decade-long rearmament and modernization of atomic weapons. Rearmament began during the administration of President Jimmy Carter (1977-1981) and was pressed forward by President Ronald Reagan (1981-1989). Between 1979 and 1986, the GNP share of US defense outlays grew from 4.5 to 6 percent—the biggest slice since the end of the Vietnam War.[399]
Meanwhile, thinking about arms control on both sides was being complicated by the widening range of new weapons that were entering the balance. In addition to nuclear missiles to be launched against the adversary’s cities from underground silos and underwater submarines, there were now mobile land-based missiles armed with miniaturized nuclear warheads for use against ground forces in Europe, and a US project for space-based antimissile defense. Both sides felt a growing threat.
Gorbachev wanted to persuade the West that the Soviet Union was neither a strategic threat nor a growing one. In public, he announced a unilateral nuclear test moratorium and renewed proposals to limit the deployment of theatre-based mobile nuclear weapons. In private, he had become convinced that the Soviet Union’s longstanding secrecy over the size of its armed forces, and the deception over its military spending, were now damaging its external security.
Meeting with Reagan at Reykjavik, Iceland, in October 1986, Gorbachev felt he had come close to agreement, and the failure made him all the more aware of the longstanding mistrust of Soviet official claims and assurances.[400] The Soviet government’s initial silence concerning the Chernobyl nuclear disaster a few months before the Reykjavik meeting had done fresh damage to confidence in the Soviet willingness to negotiate frankly over military affairs and to confidence in Gorbachev personally.[401]
392
Higher DIA figures are presented in Michaud, “Paradox of Current Soviet Military Spending,” but the methodology was also represented by Duchêne, “How Much Do the Soviets Spend,” Duchêne and Steinberg, “Soviet National Accounts,” and Mochizuki, “Estimating Soviet Defence Expenditures,” and it had its roots in Becker, “Soviet Military Outlays. The latter scholars are among those that tended to come up with estimates lower than the CIA. A similar methodology underlay the SIPRI figures shown in Table 7.5. The reasons why shared principles could give rise to a wide range of estimates were explored by Matosich, “Estimating Soviet Military Hardware Purchases.”
394
Steinberg, “Estimating Total Soviet Military Expenditures”; “Trends in Soviet Military Expenditure”; The Soviet Economy, 1970-1990.
399
The White House, Office of Management and Budget, Historical Tables, Table 3.1 (Outlays by Superfunction and Function: 1940-2025), https://www .whitehouse.gov/omb/historical-tables/.
401
The Chernobyl catastrophe began in the early hours of 26 April 1986. Two and a half days passed before the first reluctant official admission. It was addressed by US president Reagan in a radio broadcast of 4 May. Ten more days passed before Gorbachev broke his own silence. Plokhy, Chernobyl, 233-35.At the time of Reagan’s broadcast, Secretary of State George P. Shultz was quoted as saying that “while Chernobyl has no ‘one-on-one connection’ with the arms control process, ‘the problem of verification is a very important problem’ that must be addressed completely before any arms control agreement can be reached.” Jack Nelson, “Reagan Criticizes Disaster Secrecy: Soviets ‘Owe World an Explanation’ for Chernobyl Blast, President Says,” Los Angeles Times, 4 May 1986, https://www .latimes.com/archives/la-xpm-1986-05-04-mn-3685-story.html.