liU tlUtN IIAL L L MEMORANDUM OF CONVERSATION 2 October 1989 SecDef Cheney and Soviet MOD Yazov and Delegations Guide to Topics Discussed Topic Introductions l National Policy and National Strategy Decision-Making 2 Soviet Pricing Productions Budgets 5 Strategy Doctrine Forces 6 Defense Budgets and Production 11 Bilateral Defense Military Relations 16 Arms Control 17 Regional Issues 20 Classified by Dir RegPol IGP eelassify on OAD'ft rf'· · a DEClASSIAED 1'JltlB Jc 3 3 Date 2 2 12o2 o COr FIBENTIAl MEMORANDUM OF CONVERSATION 2 OCTOBER 1989 SECDEF CHENEY and SOVIET MOD YAZOV AND DELEGATIONS ¢ MORNING PLENARY SESSION 1030-1200 Cheney I want to welcome you again to the United States There are important subjects to discuss which involve both of our militaries This continues our military to military contacts allows us to exchange views on peace and other topics of mutual interest and enhance our mutual understanding My predecessor highly valued his three meetings with you I propose that we have discussions on 3 general topics - how decisions on national security are made - strategy doctrine and future force structure of our military and - our respective defense budgets and what is in them in some detail I hope these discussions will prompt more discussions on other questions of interest Next we can discuss other topics of general interest our ongoing dialogue and bilateral relations arms control and other issues on the US-USSR agenda ¢ INTRODUCTIONS Yazov Yes I understand We agree to discuss you have presented them I would also like to invitation to come to Washington to have these is the first visit of a Soviet MOD to the US introduce the members of my party these topics as thank you for the discussions This I would like to - Gen Maksimov Chief of the Soviet Rocket Forces Gen Shaposhnikov 1st Deputy Chief of the Soviet Air Forces Vice Adm Kuz'min Deputy Chief of the Soviet Naval Forces Gen Achalov Commander of our Airborne troops Gen Lt Burutin First Deputy Chief of our Main Directorate of the General Staff - Gen Col Chervov whom you know well and who has travelled here many times - and several others who have helped us to prepare In advance I would like to say that this is a goodwill mission and that we have no desire to have any confrontation on any issue We instead wish to concentrate on those issues which unite us We agree that the issues you have proposed are important and we agree to discuss them as you proposed - The Committee on National Security and Armed Forces First of all I would like to say that we are pursuing perestroika and are dealing with a committee -- the Co mmittee on National Security and Armed Forces -- similar to those in your own US Congress It is thus with interest that we learn how you deal with your Congress This is a unique experience for us -2- I would be pleased to tell you how our doctrine is being applied When we met with your predecessor Mr Carlucci he was taken aback by our defensive doctrine at that time there had been no reductions of Soviet forces Now there have been changes and they can easily be seen We want to tell you about them and also tell you what is planned for the future We can exchange data on budgets and information on defense requirements Cheney Thank you for your comments I would also like to introduce the very talented people that we have on our delegation and who helped prepare for these discussions - Mr Atwood formally with General Motors manages the Defense Department on a daily basis He will make the presentation today on the Defense Budget He is also in charge of improving the management of the Defense Department - Gen Powell is in his first day on the job as CJCS Prior to this he served as the FORCES COMMAND Commander and was also on the National Security Council He also commanded a Corps in Germany - Mr Hadley and the others on my right have responsibility for Defense policy regarding affairs between the US and the USSR - Mr Kanter from the NSC staff is my watchdog He is here to keep topics to military discussions and ensure that these do not become negotiations - LTG Soyster is from DIA I welcome your goodwill visit We can leave confrontation to our Foreign Ministries and others NATIONAL POLICY AND NATIONAL STRATEGY DECISION-MAKING Cheney Now I would like to make the first presentation on how we make decisions on national policy and national strategy In the United States the President is the head of state and also is the Commander-in-Chief He sets the p o licy for the government He is assisted in this by the National Security Council perhaps analagous to your Defense Council Our NSC is composed of the President Vice-President and Secretaries of State and Defens The CJCS Gen Powell and Director of Central Intelligence are advisors Gen Powell is the President's and my own top advisor on military issues Each President determines who he wants in the NSC meetings and under President Bush the Director of 0MB and the Secretary of the Treasury are also on the NSC The President's National Security Advisor Gen Scowcroft manage s the NSC Staff Much of the work supporting the NSC is done by staffs in the Deputies Committee which is composed of the second or third in command of various agencies such as Mr Wolfowitz Mr Ea g leburger and Mr Kerr The Deputies Committee is served by Policy Coordinating Committees which prepare papers for review by the Deputies Committees The papers serve as the basis for di scussions at the Deputies' Committee meetings This system was used in the Nati onal Security reviews which took place earlier this year at the President 's direction •· -3- I meet on Wednesday mornings for breakfast with the National Security Advisor Gen Scowcroft and Secretary Baker to discuss policy issues While these are not formal meetings you can imagine that a lot of work can get done Here we coordinate foreign and defense policy to implement the President's policies Congress plays a major role in providing for and maintaining our military and has a major responsibility in approving the DoD program and authorizing and appropriating funds This can sometimes be a frustrating process Congress does not always do things as I would prefer Answering Congress is one of the strengths of our systems While at times it may seem easier to do without them having their help can build public support Answering questions and explaining policies provide a test of the credibility of our policy National securi ty policies which do not have broad public support cannot be sustai ned over time Congress is representative of the people If we can make our case and be persuasive in the reasons behind our policies and the requirements for funds then we can get Congressional support and this is vital to broad public support for national policy All of our Armed Forces are voluntary Public support is key to our attracting and retaining quality people in our Armed Forces We need such a base upon which to build an adequate capability for defense Perhaps I should stop here Yazov I would like to say now after I have heard you that our forces have many common features You have a President which is your Commander-in-Chief and we have the Chairman of the Supreme Soviet to whom we report Like your National Security Council we have a Defense Council which has many members The Defense Council is chaired by the Chairman of the Supreme Soviet Members include Premier Chairman of the Council of Ministers Ryzhkov the Minister of Foreign Affairs the Minister of Defense and the Fir st Deputies to the MOD Working under the Defen s e Council is the Main Military Council which advises the Defense Council Its members include all CINCs of the Branches of Service chiefs of the fighting services and Commanders of Military Districts The Defense Council meets 2-3 times per year to address central issues and the Main Military Council meets once a year--usually at the end of the year in December- -to make a critique of the training of military f o rces at the end o f the year We now have a legislature which is called the Supr eme Soviet and it has a number of com_mittees I won't tell you of all of the committees but will tell y o u of the Committee on Nati o nal '· • •· • t -4 Security and Armed Forces Defense It has military members Marshal Akhromeyev Gen Shabanov Commander of the Baltic Fleet and a number of lower ranking officers--not low ranking but not as high as some others There are many civilian members on the committee which represent various sectors of Soviet Society--industrial managers people from design bureaus miners engineers workers and so forth These member s are all selected from those in the Supreme Soviet We have not yet worked the full procedures of how these committees will relate to the MOD The budget is proposed by the Government and given to the MOD The budget is starting to be addressed by the Finance Committee and the Committee on National Security and Defense So far there is no quarreling but these committees are nevertheless giving summons for people to appear before them to answer questions It is known that all weapon systems eventually become obsolete and must be replaced The committee members must be educated about this Right now they ask why do you need more missiles You already have a lot of missiles Of course missiles come to the end of their service life and must be replaced with new systems To our regret we did not train our commmittee members very well They do not understand that military equipment must be replaced In the US your members of Congress are trained or experienced Our Finance Committee wants the Defense budget slashed by two times believe this means cut in half We are in for a great deal of work to explain why money and systems are needed We do not conceal from them the systems of the US and the armed forces of NATO nations They must know that the world is interdependent that Soviet forces are a response to NATO forces The Congress of Peoples Deputies asks us how much the US spends on defense When we tell them $300 billion their eyes get very big When we compare however we are afraid that the comparison may lead to a new arms race We must explain that while the US spends much more it gets about the same Excuse me for a small reservation but many members don't understand an army of conscripts compared to a professional army Many believe a voluntary force costs less Today we must build a military under the security of the entire population Everyone in our country has his own idea on how to construct our military Many are speaking out with these ideas Now there is heated talk on what type of army we should have today There are many problems with this issue right now Our economic potential is not comparable to that of the US There are more problems than prospects to solve them Cheney Thank you for your comments We believe that one of our strengths is the openness and dialogue in the US over our defense budgets and policies This should be reassuring because we have have to explain and defend policies and requests openly C0- t rr 'Ir fJ 't f We have welcomed greater dialogue glasnost and p erestroika in the USSR We noted with interest the release of figures on your defense budget However release of more specific information would enhance our understanding Do you anticipate release of more information ¢ SOVIET PRICING PRODUCTIONS BUDGETS Yazov This is not an easy question to answer There is a different status in our two societies and economies I would underline the difference in the price structure of our two systems During an interview with a Western reporter I said that when one works in the US he gets paid for what he does and then pays for what he gets while in the Soviet system much of the funds earned are made publ i c funds with nearly free housing medicine schools and even now it is possible to go to a sanatorium vacation spa for no cost There are many differences Because of these the prices do not show the true costs The costs of military hardware is different The cost of weapons systems is different We spend 35 billion rubles on military hardware while the US spends $100 billion to get comparable numbers of weapons What is the average wage in the US--about $1000 each month In the USSR it is 200 rubles If you take the costs of coal steel and other items and figure the costs they come out much lower in the USSR than in the US We are transitioning to a new system of self-management and prices Prices and wages will keep rising and the costs of weapons systems will thus continue to rise Under perestroika the MOD is shifting to a contract system of purchasing weapons systems This is a major change Eventually the prices in the US and USSR will be roughly comparable but now the figures which we use are accurate Now the 72 sic--77 3 announced publicly billion ruble budget figu re for the USSR for this year is what is spent under the current pricing system One reason for the difference be tween the 72 billion rubles for the USSR and the $300 billion for the US is that the USSR has conscription A Soviet soldier gets no real pay--he only gets a few rubles for a haircut or maybe some cigarettes I don't know what a soldier gets in the US but personnel expenditures are · about $80 billion Your soldiers are well paid In the USSR pe rsonnel expenditures are 8 b illion rubles ten times less One should not compare our militaries by only looking at budget numbers and one should not conclude that the USSR is concealing information Amb Dubinin We are concerned that the US understand the dif ference -6Yazov When I say the US spends 300 billion people are suprised When I explain what e a ch side buys with their respective funds they underst and and are mollified It would be good to have representatives like Gen Powell and the Soviet General Staff explain the differences to our public and that our militaries are not preparing for war We are spending for defense Cheney Thank you for your comments Exchanges of information enhance understanding and serve to reduce tensions When we pursue military contacts I hope we can exchange information ¢ Strategy Doctrine Forces Cheney Next I will ask General Powell to talk on strategy doctrine and forces It is important to talk about and understand each other 's doctrine and strategy It will add to our confidence and understanding Gen Powell Thank you Mr Secretary I wish to extend my welcome to your group It is good to see you again In the next few days you will have an opportunity to see troops in various facilitie s in the US I have met with Soviets many times in the past And I have also met with MOD Yazov several times And General Achalov I believe we were neighbors some time ago when I commanded V Corps and he commanded the 8th Guards Army We were only 115 kilometers apart Yazov Gen Achalov was the Command er of the 8th Guards Army This was the Army of Zhukov which has a very distinguished hi sto ry It was the most seasoned army of the Second World War We knew you Gen Powell and had a picture of you when you commanded V Corps and were a young good-looking chap Powell That was a long time ago Now I have lots of gray hair I also had a picture of Gen Achalov on my wall and I pointed it out to people and said that is my neighbor Gen Acha lov Yazov Excuse a personal question Gen Powell --do you have a PhD in science During a tour of Washington on 10 1 MOD Yazov insisted--despite the US escort officials expression of doubt--that Gen Powell had a PhD in physics saying that Gen Powell had tol d him so during a visit to the USS R Yazov may have confused Gen Scowcroft and Gen Powell Powell No Only a Ma sters degree as that of my collegue Gen Achalov My education is not c s distinguished Dubinin You must be very proud to be such a young grandfather chuckles t p _ Powell What Secretary Cheney sa id about strategy was important Strategy is the wisdom of peopl e and their thinking Their view of the world is constantly changing and their views are sent to elected representatives and influence elections The President conveys US National Security Strategy to the people in an unclassified document with this titl e which I helped prepare while assigned to the Office of the President This document tries to convey to the people and others goals values and what he hopes to achieve When the Department of Defense gets this document the CJCS and JCS prepare advice to SecDef the President and the NSC on military components of the strategy I am the principal military advisor I do not command any forces I advise and work with othe r advisors--the Vice Chairman the other Service Chiefs and the Service Secretaries We make our assessments of other nations and potential threats We make our best judgments of the situation and offer our best advice Our strategy has not changed much since the end of WWII Our doctrine tactics and forces have changed but the strategy has remained much the same The Chairman works with the commanders and advisors and prepares our best estimate as a guide for Congress and the people on national mi 1 itary strategy We provide this document to the SecDef who the n adds his own comments and f orwards it to the President When the President approves it it comes to the SecDef and then to me to distribute to the CINCs This is also incorporated into the Secretary's Defense Pl anning Guidance which guides the Defense budgeting process We also work on strategy in conjunction with our allies The doctrine of the US belongs largely to t he Services They develop and implement it A recent trend in the Department has been the emphasis on Joint Doctrine As I am sure you are aware in a modern military environment there is a greater need for coope ration between the services This has expanded the need for Joint doctrine Recently we have undertaken efforts to develop such a Joint doctrine There are constraints on the resources we have available to carry out our strategy and doc trine As I am sure it is with all militaries we always want more in order to do what we are asked to do Constraints have become more binding in recent years The people public want more spent on drug contro l and other important programs This has affected the defense budge t and thus has affected our forces We have a had a 14% r e duc tion in ou r budget in recent years We will not be surprise d if there are further re duct ions -8Yazov What lies at the basis of your military doctrine Powell The basic value is the preservation of the US as a free country the defense of our people and the desire that there at no time be a threat t h at c o uld result in the extinction of our country as we know it This freedom is very important to each of us Lincoln wanted to preserve the Union a s you know Yazov I asked this question in order to show what we have in common You work t o preserve peace and security in the US We work to preserve peace and security in the USSR We can both say our doctrines are defensive doctrines We are not preparing to declare war on any nation The USSR will never be the first to use nuclear weapons Why won't the US pledge not to be the first to use nuclear weapons This would add to the peace and security of the entire world It is wrong to sit on a heap of nuclear weapons It would be appreciated by the people of the world to reduce these weapons as we are doing in implementing the INF agreement If we follow this road our doctrines will pursue common goals towards peace Our nations and other nations will be seeking peace and non-proliferation We are not sure and you are not sure that no other nation is pursuing nuclear technology Not long ago Israel tested the launch of a missile with a range of 300 kilometers--if this was not for use with a nuclear warhead then why a missile of that range India t e sted a missile to 2 500 kms Iraq has tested a long-range missile They would not need these lo ng range missiles if there were no nuclear weapons Many nations are seeking nuclear technology More danger might come from third parties than from our t wo nations Cheney We believe th a t nuclear weapons and deterrence have contributed significantly to maintaining the peace in recent d ecades In WWII it was conventional weapons tha t caused great slaughter until the ver y end of the war Nuclear weapons are key to our strategy of d eterrence We are prepared in START--similar to what was d one in I NF--to reduce nuclear weapons But I don't see in my li fe time th e elimination of all nuclear weapons We seek to re d uce nuclear weapons and work for non- pr oliferation of nuclear weapons and restriction of missile tech nology proliferation We are concerned b y the Afghanis Afghanistan Go vernment ob taining SCUD missiles We are worried by chemical weapons technol ogy It is i mportant to l imit nuc le ar weapon s as a g oal b ut I d on't see eliminati o n De t e rren ce ha s b ee n b ase d o n th e a b ilit y to use nuclear weapo n s -- · - t• - - · - _ i i i f d r HJ J1 tHL · -9- Yazov I am not talking about eliminating all nuclear weapons tommorrow We must work to reduce them by 50% If we are serious in negotiating nuclear reductions this will act as a restraint on third parties Recently Prime Minister Thatcher said that nuclear weapons could make war more distant To the extent that fear of war makes it a distant future this may be true At the same time unless we take steps to limit nuclear weapons proliferation may make things worse We must not give nuclear technology to anyone Even without US or Soviet technology some nations may be able to build nuclear weapons As an American scientist said if nuclear grade plutonium is available it is not a problem for someone with a 5 year polytechnic degree to build a nuclear weapon Plutonium is available in commercial nuclear power generation plants We are in danger of proliferating nuclear technology Chernobyl was not an explosion but was a problem created by the superheating and escape of plutonium in the air We have spent over 9 billion rubles to overcome the problems caused but have still not completed this We have removed soil vegetation houses roads etc but we still have a problem There are a lot of nuclear power plants and even a conventional war could be a catastrophe We look forward to hearing what you have to say on how we should seek to eliminate war There is a measure of mistrust which gets spread within our alliances and to other nations Proliferation of missile technology is a serious problem A long time ago we sold SCUD missiles to Libya and Iraq Iraq with the help of others boosted the range of the SCUD from 280-300 kms to more than twice this range and hit Tehran We must be careful about arms transfers In Bucharest the Warsaw Pact Consultative Committee said alliances should be called political-military alliances not military alliances We want to resolve issues through negotiations I am a graduate of war I was witness to many deaths War is a painful trial for the people We cannot accept such a trial We still have not healed from the destruction of the last war Belorussia still has not recovered what it was before Our military gets its tasks fro m the political lead ership Cheney I have visited Leningrad and laid a wreath there The Sov iet people certainly have first hand knowledge of war and we hope they never experience it again I also visited Chernobyl for a day in 1987 No one shoul d d oub t that the Presi d ent will d o all in his power to ensure there is no war Negotiations enhance understanding on both sides One reason we are interested in SDI is because of missile proliferation We are pursu i ng SDI to shift from o ffense to d efense '' · -- - - --- -10- I was also briefed in the USSR on Chernobyl as to what happened and the costs The accident was tragic The President DoD and the American people are committed to seeing that this does not happen again We need steps to ensure that proliferation does not continue in the Third World The President is moving ahead with SDI and other systems to seek a shift away from offensive systems Now I notice that it is almost noon for lunch I suggest that we adjorn Yazov If we are serious about working for peace maybe we should skip lunch and continue to work Cheney We can postpone the lunch but the search for peace is a long one and we might be more successful if we did it on a full stomach Yazov We can continue after lunch the guest Cheney You are the host and I am Then we will adjorn ' '' - • 11 - Second Plenary Session 2 October 1345-1540 f DEFENSE BUDGETS AND PRODUCTION SecDef Cheney opened the afternoon session by asking DepSecDef Atwood to discuss the budgetary process in DoD Atwood - Within DoD all agree there is a tremendous amount of Congressional scrutiny of everything we do We develop Defense Guidance to the Services setting out how they will fulfill our security strategy and defense strategy about which we spoke this morning in terms of manpower materiel and new developments Based on the Services' inputs we put together the anticipated budgetary costs in the 1-2 year budget and the DoD 5-ycar outlook Then we go through an exercise of shrinking those costs down People programs are the most important--pay family care training and increased readiness Our budget has shrunk now in real terms for the fifth year in a row We have two options for making those cuts - The undesirable option is not to spend so much and to stretch out programs which sends unit costs way up - The better way which SecDef and I have implemented is to find what is the least cost-effective and cut it out DoD then submits its budget to the President and he incorporates it into a total Federal budget package to Congress The big difference from a major industrial organization such as General Motors where I worked previously is that in industry because of the competitive nature of business we tend to be very secretive about our budgets and plans In DoD there are no such secrets and plans The Secretary's Re p ort to Congress is published i nformation illustrated with Carlucci's FY 90 Report to Congress and offered to provide copies to the Soviets and we also send Congress detailed reports on the budget Any time we cut a program or close a base someone in Congress represents that area so we have a long and tedious process of negotiation At the same time a s we are tied up with Congressional hearings on the FY 90 budget we are getting ready for the FY 91 and 5-year forecast This is quite an exercise one that makes us consider if we reall y need a program or s y stem My job is to make things cost less In th e atmosphere of today there is a tremendous feeling of great hope and expectation for lasting peace the friendship between the US and the Soviet Union seems to be developing and there is a cons equ ent desire to cut back in defense spending MOD Yazov I got the point about the situation which is associated with debating the defense programs Unless y ou consult certain Congressmen their constituents interested in providing jobs for people y ou wont't have the proper atmosphere I fully associate myself with you Howe v er I did not under s tand the last thing you said would you p lea e repeat it • f - i' - _ I j -€ 0 M r' I I' - E N 'fl E b · it j 12 - Atwood Some say there is too much micromanagement but the budget process also does us a lot of good because it forces us to consider do we really need this or that program Yazov Atwood budget I got your point Do you go through a similar process in preparing your Yazov The process you described I believe that's the rational the best way Recently we started the same procedure We demanded we be provided with the requirements of each of the five branches of our service army strategic missile forces air defense forces the navy and the air force We listened to reports of all these branches on their needs how many missiles became obsolete what new projects should be constructed We discuss how much money should be given to the upkeep of the services in general--for military pay upkeep clothing ammunition and technical training We are making the necessary calculations drawing up a plan and exactly like you do sending it to the Supreme Soviet committee But the US has long experience of this while we in the Supreme Soviet have just started to pick this up and members of the Supreme Soviet experience such euphoria in the process that to confirm their new responsibility they threaten to vote against the MOD plan There are some classified points in it some secrets The more secrets we have the more the deputies pay attention to that For example you do not publish the information on the CIA and DIA budgets you don't go into details We also have proper secrets The more secrets we have related to defense projects the more eager the deputies are to arrive at the truth on every aspect of the budget Even on the US scene it is difficult to arrive at the cost of any particular project because it depends on who makes the product Prices and productivity in military and industrial plants differ from civilian industry We have the same situation in the Soviet Union In recent years there has been acute interest in the money problem on the part of research institutes doing basic research and R D There is great interest in the defense-related projects A lot of organizations are begging for money But we can't afford to meet all their requirements We have to fund only those projects that show promise that are serious Do you have problems dealing with research institutions doing basic research Is it funded by firms or by DoD Atwood Much of the basic scientific research in this country is done by universities funded by their e ndowments or outside grants Some is done by commercial firms Bas ic sci e ntific research is only to a lesser extent fund ed by DoD We have our own national labs largely funded by DoD wh ic h do some basic research but do more a pplied science than fundamental basic research Most industry C O N F I D E N I A L does very little basic research and little applied science industry concentrates on development Mostly Our problem is sorting out the potential applications of research to see what is worthwhile We in DoD may see an industry we would like to have strong yet we cannot afford to be supporting all such industries Three of our largest defense contractors are also heavily in commercial sales Yazov What about MX research Is it funded by DoD Atwood We fund the development of systems ourselves through all the four phases of development conception demonstration and validation full-scale development and production Previously DoD would fund the early phases but not the completion of a system we would give the contractor a fixed-price contract This is the wrong approach which SecDef and I have now changed If we want a quality product we have to put in money up front and fund the project all the way through Yazov Our procedure is that we agree on producing a certain category of weapons system we talk to the design bureau and arrive at a figure--say half a billion rubles--for this system But then the design bureau may have spent the money and we get nothing in return So sometimes we have had to pay a lot more money than we originally decided Do you have the same mishaps SecDef Never Laughter Atwood No not all the time Laughter A good program manager meets the targets A mediocre program manager lets targets slip and a poor program manager produces nothing We need full-time managers who run the program not sell it and who discipline the process making sure it meets criteria at every step Yazov We also apply discipline and try to go by a schedule but sometimes a certain scientific organization gets into a jam It started research in one direction but failed We have to face such situations now and then While some other organizations go through the process very effectively So it is very difficult to plan how much money should be required for this kind of work because we have not had an exact mechanism for drafting the plan For example at one point we were confident we had manufactured the best plane in the world but time has elapsed and now some want a new system when we would only have to modify it--the MiG-29 for example Cheney I am curious how you decide just how many missiles to buy say SS-24s and SS-25s Yazov In ord e r to decide we start with how many in principle we have decided to possess If we have a certain number of regiments missile armies etc the number of weapons needed to supply those formations is decided by superior echelons and given to the d e sign bureaus We believe the service life of a missile is 20 years Ar r- - r· fie'T' ' ' - r ' -e--- A p T n R J J T I n t t _ • -€ 0 fq I r EH 'f' I - AL 14 - __ We proceed from this so we know how many missiles have to be phased out and replaced Aircraft and their engines also have their service period For some it is 25 years for others 35 years So depending on service life we make the decision to replace them with due account of the war fighting capacity of for example the replacement plane Two MiG-27s might have the capability to replace ten Mig-17s though their missions are the same for example The deputy commander in chief for armaments of a service is the service's chief engineer who keeps logs of all the service's military equipment and its technical condition and gives projections of future requirements The Minister of Defense also has his deputy dealing with armaments At this level we analyze the requirements that come in from each military branch which are always very big But at the highest military level we are more realistic because we know our capability We tell the services they will get no more than this amount and make them limit their requirements The services then revise their requirements We calculate how much money is necessary for tactical training and ammunition We provide for natural losses planes are heavier than air for example and sometimes drop to the ground The amount of money needed for the upkeep of personnel does not chanqe radically because it is only subsistence POL stays the same annually The main par t of the budget goes for buying weapons systems We have lots of problems in this area We have to face the problem of the technical equipment of the industrial base which differs from factory to factory Some facilities are more efficient some are obsolete The same type of aircraft can be more cost-effective if produced at one facility rather than another For example we have just completed a new industrial facility but to turn out the best quality aircraft we should give the plant at least a decade to train people and do the highest quality work We also have to consult the State Planning Commission on the delivery of natural resources It has a military directorate that cooperates with the MOD and we get information on the raw material situation from them We base our judgements in planning on this Chene y We've seen public statements about the Soviet proposal to cut the military budget by 14% and reduce its percentage of GNP by one half to one third If one divides the budge t into manpower and procurement which wi l l have the most significant cuts Yazo v The most sig n ificant reductions will be at the expense of hardware a c quisition--about 19 5 % There will be a small reduction b y demobilizing manpow e r However during t h e first y ear of manpower reductio n s we will not sa v e an y mone y because officers r e tiring on pension a re p aid five mont h 's salar y as se v erance p a y We will also reconsider the funding of research work an c will prevent each institute from mak ing its own plans Th e MOD e · r 1 I r- ·· -r j' I J 10 · · ' · O N FI C - I Ab C O N P I O £ I I A L will fund only those projects where we're feeling assured of their success While we are saving some manpower we will also save on equipment for them So in general reductions will be on the order of 10 B rubles The exact amount is hard to know to the last ruble Atwood We find that if we have an industrial organization that is doing considerahle business in the commercial world and if we treat them as a defense contractor as they would be treated in the commercial world without all the oversight and checking that has been added on in the past we get better results Is this something you are considering doing Yazov Our enterprises get approximately 40% of their orders from other ministries and are turning out consumer goods for the national economy so as military orders decrease those industrial facilities will be turning out 30-40% military producti •- · · 3nd the remaining 60-70% for the consumer economy The enterpri_ are not pleased because their technological base is equipped for military hardware and not all facilities are readily accepting this de ision Some managers are saying that in order to switch they need one or even two years to convert depending on what kind of products are being planned Facilities making the Pioneer missile which we are now destroying required 1-2 months to switch to washing machines But facilities will have lots of problems switching from tanks to agricultural machines for example They can't discontinue military production today and produce sausages tomorrow Cheney At the end of WWII we found that it was sometimes easier to tear down old plants and build new ones Have you had that kind of experience Yazov Yes we have had approximately the same experience In some areas it comes down to an absolutely new working shop We have accumulated a lot of problems There are other kinds of problems too In the Great War we moved a significant part of our industry to the Urals and beyond along with part of our population After WWII those facilities stayed but the people wanted to go back to their native towns So we had to mobilize farmers and attract them to work at those plants The result was that many farmers left the farmland In the US the mechanization of agriculture was very gradually developed to the point where a small percent of the population can feed the rest of the population We did not experience this It happened quickly after WWII t h at a large part of the population left for the cities and we got a certain disproportion between industry and agriculture which we feel even toda y A second prob le m sterns from the sa me histor y We concentrated industry in major cities and towns of the Soviet Union which grew fast and over 20 cities became home for millions For e x ample my native Omsk in Siberia has a population of 1 2 M now and there are only 300 000 people in the rest of the region of which it is the capital We are n9 experiencing the problem of how to feed ' ' r 1-1 ' - ' y1 5 · • I _f -€ 0 N if F I O ' E i N 1 ' T I A I - C 0 - 16 - all the population in the cities Another example is that there are almost 2 M people in Yerevan capital of Armenia while there are only 3 5 M total in Armenia We are serious about trying to solve those problems Our defense budget is not approved yet in final form but the mechanics of debating it in the Supreme Soviet and debating your budget in Congress are similar The budget will always change and be modified because of inflation wage increases and a new pricing process We think the US and Soviet rnilitaries will never have a dull life BILATERAL DEFENSE MILITARY RELATIONS Cheney General we are very pleased with the progress in the twoyear Crowe Akhrorneyev program of military-to-military contacts My understanding is that when ADM Crowe was in the Soviet Union he and GEN Moiseyev worked out how we would pursue at the staff level deciding on a future program One area where we do have continuing concerns is that of our Attaches in Moscow and their relative ability to get out travel and visit facilities Last year we had 16 trips for the attache corps here and they visited 35 military and production facilities There were 3 trips in the USSR We wonder if it is possible to explore further similar access for our Attaches Yazov There is not doubt about that We can do that The meeting between Moiseyev and Crowe and the signing of a new agreement is of great importance for both sides At t h e outset we regarded corning to military and production facilities as an impossibility but it has quite easily turned into reality We will ha v e verification visits I do not think it is a problem because we can resolve it GEN Powell and GEN Moiseyev inherit the Crowe Akhrorneyev program and will work to promote military-to-military contacts This work should be moved forward I think we might agree on a visit of warships at Vladivostok on a plan for a US ship visit to Leningrad and on a Soviet ship visit to the US We can also exchange visits of servicemen from GEN Achalov's 8th Guards Army and the corps formerly commanded by GEN Powell Sa y 10 soldiers When one meets with war veterans in the Soviet Union one feels their most memorable moments were meetings with US war veterans Now the meetings with US servicemen when for example you made you ship visit to Sevastopol will be the most me morable moments for current servicemen After all you do not want a war and we do not intend to go to war but how can we become friends if we do not meet Do you agree Cheney I do indeed Yazov One concern we have is with single or group missile launches No one would lose anything if we agree to pro v ide prior notification Note altho ugh translator did n o t conve y specifics reference ma y have been to cruise missiles President Bush's Op en Skie s proposal can also be approached most favorably We agree to tackle an y p roblem on t he basis of a proper balance of mutual interests We will be re p ri manded b y our p ublics if we make concessions But so long as we h ave a mutual interest we will be supported rr r c1g r ·r L r 0 0 _ l 1- l 1 E L T Pl • - P tl rTl I 7 I A I a Agreements should not be at the expense of third parties and should not be directed against other parties We could agree to annually modify our program of exchanges for the corning year and could agree to do this through the defense attache channels Our proposals would pass to GEN Powell and be returned to us Thus mutually acceptable solutions can easily be found ARMS CONTROL Cheney We hoped to spend some time talking about arms control issues and perhaps regional issues We're deeply interested in moving ahead on a whole range of arms control negotiations We hope the pace will be maintained and that we can conclude CFE close to the timetable the President suggested Do you anticipate any problem with this Yazov We are in favor of the arms control process and are for verification But the most important thing is mutual interest President Bush's proposal on tanks we agree with His proposals on infantry fighting vehicles and on artillery could be easily resolved too But aircraft are a more difficult matter You are putting beyond the process naval aviation So long as you have naval aviation we have to possess a certain amount of fighterinterceptors We might agree on 2000-4000 aircraft on each side Soviet fighter-interceptor planes are equipped and armed to engage in air-to-air combat only We would not want to have fighterinterceptors included in the negotiation process If you insist on doing so then--why not --we shall also count all the carrierbased US aviation So this is a serious issue A second serious issue is the problem of manpower for both sides We could agree to 1 350 000 for both sides But how then would we count the British Dutch French and Belgians Would this be 160 000 NATO would get a serious advantage rig h t away There are verification problems Whe n we concl uded the INF treaty we aqreed to permit inspectors to visit bases and facilities We could also agree on verification here the procedures are not that difficult to arrive at We think that the CFE negotiations will succeed so long as we have mutual desire At the table now we have figures that unilaterally take into account the interests of the sides But we can't count only US and Soviet manpower So long a s we have two alliances we need to throw the numbers of the two into the process Cheney Of course in our original proposal on CFE we had no numbers for aircraft and manpower In the President's initiative we felt we made major concessions to the Soviet point of view in agreeinq to include these We feel very strongl y on crafting a definition of aircraft Our position is to include all combat aircraft On manpower it remains our point of view that superpower reductions would have a very positive effect and would move us €0t PIDEM'fIAh- 0 N F I - Q WT I A L 18 - close to parity The Allies should not constitute for the Soviet Union the same kind of problem the US does The superpowers are the only ones with significant forces outside their national territories in the ATTU area On START we were pleased with the progress in Wyoming We took the initiative to negotiate on mobile missiles and we noted with some satisfaction the Soviet decision to dismantle the Krasnoyarsk radar We believe the decision by the Soviets to delink the START and space and defense negotiations was also a positive step We still have many remaining significant issues how to deal with cruise missiles how to verify if cruise missiles are nuclear or conventional The problems are still with us and are not resolved Yazov We have proposed that both sides have 1 350 000 men in the ATTU region If manpower is not to be limited what should be limited after all In any warfare the manpower element is the first priority Just look for the logic of it We are not in favor of limits on planes and men without paying as much attention to missiles Once we conclude a START treaty with limits of 1600 launchers warheads but with no limits on cruise missiles we leave an arms race on cruise missiles open and you the US will have an advantaqe Cheney We have proposed a declaratory statement to Congress which would be binding on us For air-launched cruise missiles we agree something would be appropriate but the debate focuses on counting rules and range We are not going to solve the problems here Yazov What we are doing is engendering a medium and short range problem with cruise missiles also These would become strategic missiles from the point of view of the Soviet Union if they were in the Baltic or the Mediterranean What is the point in reaching a START agreement if at the same time there are missiles on ships What difference does it make to Murmansk if a missile hits it whether it comes from the continental US or a ship There is no takinq account of the interests of the Soviet side in this If you insist on having 1000 cruise missiles we are going to produce as many the Soviet Union will not fall behind Cheney One continuing concern is the verification problem It only sets the stage for a ratification problem We would not want to create problems that would only lead to rejection by the Senate Yazov We are not insisting on eliminating SLCMs though the best solution would be to agree to have none at all But you are the ones trying to develop them further The Soviet Union is not If we can visit production facilities for verification why can't we go to a ship and check the same thing on the vessel If we agree on 400 each and determine how they will be equipped we don't see how we can't accomplish verification We can tell you where they are and y ou can check them out If somebody has to cheat somebody wh y are we sitting down at the negotiating table C a M P I D E MY I A -C o a -Fv f' i Pif 1N1 l_r7 ½ - A L 19 - to fool each other Let us sit down and calculate how many of these missiles you need Is 400 too few You say 1000 Two thousand delivery vehicles could mean 6000 nuclear warheads Then what would we really be doing We have discussed the problem from all sides Don't you see what the advantage to you of 400 is Cheney General obviously our positions are not going to change here today The best place for negotiations to proceed is within the framework where they are already Yazov I think even next year we could sign START So far as the two-three issues not quite agreed yet we could it seems to me come to closure--on cruise missiles and ABM systems Last Saturday I went to Krasnoyarsk We took the decision to dismantle it even though it is not an ABM facility and its purpose and mission is not the same as the one you have in Greenland Here we have to mutually understand each other better You say in Greenland you are reconstructing You turned it into an ABM Our joke is that at first you put wood logs into the oven and now it is heated by a nuclear plant We don't know the purpose of the facility you are building in England but it causes a lot of concern with the Soviet public Naturally to dismantle Krasnoyarsk is a lot of work We looked at it from all sides but in the name of promoting peace we decided to destroy it We stopped construction of one antenna five years ago We had equipped one antenna 70% Let us consider it solved Cheney We repeat we are pleased We believe Greenland is a different proposition that doesn't have ABM capability Obviously we disagree If we are to be able to advance the cause of stability questions of compliance on previous agreements become very important for confidence GEN Powell The problem on cruise missiles has been the verification We hoped the way to solve that was our declaratory policy You know from our system that if we declare we are bound by that We are not looking for no limits on ALCMs but rather a discounting arrangement Yazov This requires additional study of counting rules counting nuclear warheads on strategic bombers We think what is fair is that we count on each bomber the number of missiles for which the bomber is designed If we do it any other way it would be an attempt to somehow circumvent the other side Somebody falls into a disadvantageous position Our aircraft carry a lot fewer missiles B-52s are very powerful and can carry up to 30 So if they are equipped for 30 they should be counted as that We do not object if you take them out of the strategic forces and make them conventional and then they count as that FM Shevardnadze talked to Baker about that No more than 100 was what they talked of Neither of our peoples want to be cheated or fooled Sure we admit we have more tanks You have more aircraft So if we start destroying we have to destroy more tanks and you more aircraft TIAL · 0 Tl 8L 0 C O N F I D E W I A - 20 r _ REGIONA L ISS UES Chenev I suggest we move on to u ne more area and we know time is short The area is regional issues Central America and the Carribean are of concern to us Cuba continues to supply massive infusions of arms to Nicaragua e v en though we stop ped lethal assistance 18 months ago Up until July of this y ear the shipments had been larger than in '88 With the plans for elections going forward continued shipments of arms are a probl e m Yazov I do not have any particular data I do know FM Shevardnadze 1s going to Cuba and has in mind going to Nicaragua I think this is not uninfluenced by his discussions with Baker The Ministry of Defense did not provide anything at all this year and we do not supply Nicaragua But I do not h ave any information on Cuba Officially our policy is that we strive for peace in the region The USSR is not without influence I think Shevardnadze is going specifically for discussions on this matter This is a position of principle We welcome this meeting I think we have to appl y some pressure ASD Rowen there On North Korea we are quite concerned with developments Yazov North Korea is not within my competence I am not a leader of No rth Korea We do not supply an y weapons to North Korea Rowen They h ave airplanes which are very close to the Soviet ones Yazov We did supply them once but not now I saw their 1985 I saw GAZ-5 1s which were prod u ced after WW II parade Rowen Assuming you have some r e lationship with North Korea North Korea has built a nuclear reactor which we have reason to belie ve is intended to make nuclear weapons If the y do t h i s would cause a lot of trouble a lot of trouble We want to conve y our concern and urge you to do what you can Yazo v The North Koreans are also reporting y ou hav e Honest Johns in South Korea wit h nuclear warheads That bother s t h e North Koreans Their minister o f defense told us of their concern when he was in the Soviet Union for medical treatment I am not e mp owered to say an y thing about North Korea and I honestl y do not know anything about North Ko rea It is in our interest s to establish a stable p eace in t h e region The warlike spirit t h er e it seems has calmed dow n quite a bit It seems nobod y there is going to take an y thing over I do not know about any reactor GE N COL Chervo v Yes there i s in fo r mation about a reactor and t he re is a concern abou t a r e a ctor Yazov I do not pa y atte nti on t o the press but I will g e t interested in that an d look int o it C O N f I b 8 T I A L - 21 Cheney There will be a meeting Tuesday 3 October at 1345 with the President Yazov Cheney Yazov I would like to know who else will be invited I think two or three of your advisors I would like to invite GEN Maksimov and GEN LT Larin Cheney We have a dinner planned for this evening and unless you have anything further to add I think you have another appointment Yazov Thank you for a very candid discussion It was a great pleasure for me to meet and get to know the leaders of DoD I learned a lot from the point of view of relations with Congress ·---·· Concluded C Q N P I D E tt 1540 I A L