DECLASSIFIED AuthorityW - i 58 FOREIGN 93 33va DEPARTMENT OF STATE BUREAU OF INTELUGENCE AND RESEARCH ResearthMemorandum A 1963 Q0 The Secretary s s FROM INR - Thomas L Hughes i 5mm rial dim Signs of Kremlin Decision To Improve Its Strategic Posture Recent indications of a shift of_resource allocations in favor of the military appear to have been confirmed by actions taken at the special Party and Government meeting on March 13 This report analyzes the reasons for and significance of this shift ABSTRACT Several recent developments support the thesis that the Kremlin has made a decision in favor of significantly greater outlays for strategic weapons Khrushchev's election speech of February 27 emphasizing military demands on resources his remarks to the British Ambassador on March 6 alluding to augmented strategic force the March 13 organizational changes affecting defense production and the promotion of the headlofrthe Strategic Rocket Forces to Chief of the General f ll Moscewfs deciSion could refleot it determination to achieve 1 a strategic posture vie a vi the as which would give the A I Kremlin greater room for w Possible Types of Soviet Actions Postulated Following the Cuban fiasco the Soviet leaders undoubtedly undertook a further re evaluation of their strategic posture On the basis of available intelligence it seems clear that the Soviets will not accept an obviously inferior strategic posture Three courses of action the Soviets might undertake to improve their position are I attainment of a clear cut strategic superiority GROUP 1 Excluded from automatic downgrading and deolassification FOREIGN DISSEM m numy mm-m wm Authority 4 6 FOREIGN DISSEM 2 2 attainment of a rough parity in intercontinental weapons systems 3 offsetting US numerical superiority by such means as development of very highuyield weapons global 'missiles anti-missile systems and or military space programs For the Soviets to decide on any of these alternatives involves the expenditure of a greater share of their GNP than heretofore Our evidence suggests that a decision to this effect may have been reached in mideFebruary Timing of Decision The apparent decision on resource allocation was probably'made at a meeting of the Party PreSidium in mid February The meeting would have occurred between February 13 when fravda published the consumer-oriented thesis that production should exceed demand and February 27 when Khrushchev made it clear in his election Speech that the civilian sector had to yield to the military The presence in Moscow on February 16 of regional Party chiefs from the Ukraine and Uzbekistan who are Presidium 'members plus the necessity of a meeting on the CPSU letter dated February 21 to the Chinese Communists fixes the date more closely Resources Allocations and Strategic Posture we believe that allocation decisions favoring the military have been made and that they involve significantly greater outlays than heretofore for strategic weapons systems we cannot however say precisely what type and or number of weapons are contemplated nor can we delineate the lead time The purpose of the allocation decisions is however clear it is to create an image of enormous Soviet strategic power an image_which might well have more substance than it did in l958 59 thereby providing the Kremlin with greater room for foreign policy'maneuvering The evidence that a decision of this significance has been taken is indirect and is not conclusive While it is possible that the confluence of events is purely circumstantial we feel it pertinent to note the likelihood that they indicate a major decision affecting politicoemilitary 5 FOREIGN DISSEM DECLASSHHED Authority 45 FOREIGN DISSEM 3 strategy The reasoning behind our assumption that the Soviets may have opted for at least political parity in strategic posture is set forth below - Revision of Seveanear Plan Indicated The announcement at the special Partquovernment meeting on March 13 that work on the economic plan for lQ hu S as well as for the subsequent fivemyear period is under way is unusual in both its timing as a rule similar announcements are made later in the year and the fact that it involves a two year rather than one year period This strongly suggests that same of the principal goals of the SevenrYear Plan 1959 65 are being revised in line with changes in resource allocation in favor of the military The announcement is reminiscent of statements appearing in the press in 1957 prior to the scrapping of the Sixth Five Year Plan The forum chosen to make the announement a meeting of the full Presidium and Secretariat of the Party the USSR Council of Ministers the chairmen of the republic councils of ministers republic Party chiefs and representatives of central establishments is highly unusual ordinarily a Central Committee plenum would pass on these measures Since virtually all of the individuals present are members of the Central Cummittee and their numbers Would comprise the majority of its membership the meeting in effect appears to have been a rump Central Committee meeting excluding only the oblast provincial Party secretaries as a group Khrushchev's Election Speech In his speech to his local constituency on February 27 Khrushchev laid considerablgwemphasis on military demands stating that life dictates spending enormous sums on maintaining our military might on a proper level Given the implied escalation of military demands on resources ihe admitted that naturally this diminishes and cannot but d' ash the opportunity for the pedple tc gain direct benefits Khrushchev Trevelyan Talk lye r In his Conversation With British Ambassador Trevelyan on March 6 as relayed by our Embassy in Moscow Khrushchev asserted that the USSR is committed to an augmented strategic-force regardless of the cost - and downgraded the importance of conventional arms His remarks while obviously intended for the ears of are in accord with the import of his election speech the preceding week and with the organizational and personnel changes announced the following week FOREIGN DISSEM DECLASSHHED Authority 4 FOREIGN DISSEM i Personnel and Organizational Changes In addition to announcing that work is under way on economic plans the Central Committee session revealed the appointments of long time defense production specialists D F Ustinov as a First Deputy Chairman of the USSR Council of Ministers and head Of the new Supreme Economic Council and former chief of the State Committee on Defense Technology L V Smirnov as-a Deputy Chairman of the Council of Ministers In addition the organizational changes following the session reveal that the agencies concerned with military production have been accorded an independent status under the Supreme Economic Council while those concerned with civilian production are subordinated to intermediary authorities In the highly bureaucratized Soviet Union policy changes are usually reflected in organizational and personnel changes The actions of the March 13 session clearly favoring the military sector probably represent the execution of such a decision Promotion of Marshal Biryuzov The replacement probably around mid March of ground oriented Marshal Zakharov as Chief of the General Staff of the Soviet Armed Forces by head of the Strategic Rocket Forces Marshal Biryuzov also suggests additional emphasis is being placed on modern weapons systems Biryuzov's promotion in the military hierarchy may parallel that in the economic field of defense production specialist D F UStinov Unresolved Questions we do not know which of the alternatives postulated and described above will be followednor whether some other course designed to improve the Soviet strategic posture has been adopted Nor can We now judge the extent of the_shift in resource allocations to defense lndiCationsrof the extent of the shift may be forthcoming when the Soviets publish the l96h budget and plan'later this year It does appear hOWever that some military requests for additional funds may have been turned dewn In his conversation with Ambassador Trevelyan Khrushchev stated flatly that the Soviets were not going to increase their ground forces In his election speech description of the difficulties involved in balancing - 'the needs of the economy and the requirements of defense Khrushchev concluded with the remark that neither one nor the other should be overemphasized His two references to a onemday war in this context imply that the traditionally groundworiented officer Corps may have had FOREIGN DISSEM Authority Nomfi 15 I 7 FOREIGN DISSEM to yield on the question of maintaining a large standing army much as the civilian sector had to in order to satisfy the ever increasing costs of the modern weapons systems Modern weapons advocate Biryuzov's re- placement of Zakharov as Soviet Chief of Staff also supports this inter preation Other Possible Interpretations Some observers have speculated that the confluence of events described above represents only another attempt by the Soviets to overcome basic problems of resource scarcity by administrative manipulation and conolude that no sharp increase of military expenditures is in the offing Some also explain the personnel and organizational changes since November 1962 as an effort to get the most out of the ruble in the economy at large All however are in agreement that the foregoing could signify a major decision on resource allocation in favor of the military we agree that the Soviet economy is taut and that the personnel and organizational changes are designed to get the most out of the ruble we feel that one import of the changes could be to delay as long as possible through greater efficiency the impact of increased costs on the Soviet con- sumer If the Soviets have decided to develop newer weapons systems rather 5 than to enlarge systems in being the initial costs need not be conspicuously large 'We do not see any indication of a war economy in the process of development although we do not rule it out as a pessibility What we do see is-the probable beginning of a serious attempt by the Soviets to gain at least political parity in strategic posture - 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