TIME: Almanac 1993/TIME Almanac 1993.iso/time/051391/0513002.000

Text File | 1992-08-28 | 10.7 KB | 225 lines

                                                                                WORLD, Page 35

SOVIET UNION

Moscow's Hungry Monster


The military-industrial complex is blocking Gorbachev's reforms,
but the rapidly deteriorating economy may finally tame the
behemoth into submission

By BRUCE W. NELAN -- Reported by John Kohan/Moscow and Bruce van
Voorst/Washington


    Amid deeply furrowed fields 25 miles southeast of Moscow
-- behind concrete walls, barbed wire and a sign reading
FORBIDDEN ZONE -- sprawls the Central Aerohydrodynamics
Institute. Employing 10,000 scientists and technicians, the
research center combines the theoretical study of aerodynamics
with practical experiments on airplanes and spacecraft. In one
hangar-size workshop, stress-testing sensors cling like
barnacles to prototypes of the new MiG-31 fighter and the next
generation of Soviet civilian airliners, the Tu-204 and Il-114.
Nearby is the T-128 transonic wind tunnel, where the space
shuttle Buran and the Energiya booster rocket were tested with
airstreams driven by a 1,000-kW compressor. The center is also
adjacent to the Ramenskoye proving ground, the largest airfield
in Europe.

    The institute is one of the jewels in the crown of the
Soviet military-industrial complex, the vast archipelago of
factories, ministries, design bureaus and think tanks that
exists to sustain and strengthen the country's armed forces.
While the Soviet Union's other power centers -- the Communist
Party, the army marshals and generals, the KGB -- are well known
in the West, the military-industrial complex has received far
less attention.

    Long hidden from the eyes of foreigners and ordinary
citizens alike, the complex is the reason the Soviet Union can
produce better MiG fighters than passenger cars and outproduce
the entire globe in missiles while coming up short on light
bulbs. It is also the reason the U.S.S.R. is nearly bankrupt and
economic reform has stalled. The leaders of the
military-industrial complex have long been accustomed to having
things their own way, and are trying to ward off change.

    To a large extent, the Soviet Union was originally
constructed as a military enterprise. After taking power in
1917, Vladimir Lenin and Leon Trotsky quickly forged the Red
Army to fight the White Russians. Lenin's successor, Joseph
Stalin, saw his first priority as building up powerful defenses
to protect against "capitalist encirclement" and to preserve the
"Socialist Motherland." Beginning with the first Five-Year Plan
in 1928, industries were divided into A (military) and B
(civilian) groups, with the A organizations having first call
on all resources.

    That is how it has been ever since. Kommunist, the party
journal, reported in 1988 that 62% of all Soviet engineering
output was military hardware, while consumer goods totaled only
6%. Because it has been secret for so long, quantifying the
magnitude of the military-industrial complex can be only an
approximate business. "We have no way of measuring its size,"
says Alexei Pankin, deputy editor of the journal Mezhdunarodnaya
Zhizn. "The defense industry just takes what it wants, and
whatever is left over goes to the civilian sector."

    At least 5 million and possibly as many as 8 million
highly trained, well-paid employees staff the thousands of
factories, laboratories and offices that plan and produce Soviet
weaponry. Almost all the installations are in the Russian
republic and the Ukraine, with heavy concentrations in Moscow,
Leningrad and the Urals. Production is checked by Gosplan, the
central economic planning agency, which operates on directives
and specifications from the design bureaus of defense-related
ministries. The bureaus, often named for chief designers like
Sukhoi, Tupolev, Ilyushin, Mikoyan and Gurevich, are the Soviet
equivalent of Boeing and Lockheed.

    The most remarkable aspect of this enterprise is that no
one -- not even the Soviets -- seems to know how much it costs.
The government sets prices arbitrarily, so they bear no
relation to the actual market value of the planes, tanks and
missiles produced. The weapons programs were measured by input:
so much steel, titanium and manpower. "The Defense Ministry
simply ordered up weapons," says Abraham Becker, a senior Soviet
specialist at the Rand Corp., "and the Ministry of Finance paid
the bill. Finance didn't know whether the weapons were needed,
and Defense didn't know whether they were worth the cost."

    While Moscow publicly puts its defense budget for this
year at 96.6 billion rubles ($171.9 billion at the official but
meaningless exchange rate), about 35% of the national budget,
most Western analysts say the figure masks as much as it
reveals. For the past 20 years, the CIA has employed laborious
computations to estimate the Soviet defense outlay. They have
usually calculated it at 15% to 20% of the country's gross
national product. Experts in Washington now put the real
expenditure at about 30% of GNP. When Richard Nixon visited
Moscow recently, Defense Minister Dmitri Yazov used figures
indicating that the cost is closer to 40% of GNP and that the
Soviet GNP is smaller than Western estimates. Says Becker: "No
society can endure that level of defense spending."

    Gorbachev reached the same conclusion, and beginning in
1988 he ordered cutbacks in both military production and
manpower. He also directed defense plants to convert further to
civilian production. They have always had nonmilitary production
lines to take up the slack in weapons cycles, but now they were
told to increase the proportion of consumer goods from 40% of
their total output to 60% by 1995. If the military-industrial
complex was as competent as it claimed, Gorbachev wanted to use
it as the locomotive to power his economic reforms.

    None of that was to the liking of the bureaucrats in
charge of the factories. Of more than 5,000 military
enterprises, only 400 began the conversion process and fewer
than a dozen have completed it. "Conversion simply isn't
happening," says William Hyland, editor of Foreign Affairs and
a Soviet expert. "All sorts of hopes have evaporated."

    After parliament abolished the Communist Party's monopoly
on political power last year, radical democrats ran for and
took control of city councils in the military-industrial
bastions of Moscow, Leningrad and Sverdlovsk. Last September,
when it looked as if Gorbachev was actually going to abandon
central economic planning and accept the so-called 500-Day Plan
for a market economy, the military empire struck back.

    Forty-six chiefs of eight defense-related ministries
signed an open letter in Pravda. They complained that new laws
at both the national and local level were "aimed at destroying
our complex," which was becoming the target of "destructive
criticism and attacks." Such conflict, they fretted, even raised
doubts about the need for the military-industrial complex. They
declared that whatever changes might go on elsewhere, there had
to be a "centralized system of management of defense programs."
The next month Gorbachev rejected the 500-Day Plan, and
economic reform came to a halt. "We have solid information,"
says a State Department official in Washington, "that the
military-industrial complex played a critical role in blocking
Gorbachev's proposals."

    The Cabinet of Ministers formed last month by new Prime
Minister Valentin Pavlov, a former Minister of Finance, confirms
the complex's growing role in Kremlin politics. Two of Pavlov's
first deputies are alumni of defense industries. Of the 38
Cabinet ministries, at least 20 have a direct role in running
the military-industrial complex. At last week's Central
Committee plenum, a man in uniform was added to the Politburo.
He is Major General Mikhail Surkov, head of the Communist Party
organization inside the armed forces. At the same time, the
party secretary in charge of military production, Oleg Baklanov,
was named Gorbachev's deputy on the President's Defense Council,
the top military decision-making body.

    "The armed forces are more influential today than at any
time since Gorbachev came to power," says a senior U.S.
official. Gorbachev almost confirms that himself. He said last
month that the armed forces must have "everything necessary to
guarantee the security of the state and the preservation of
peace." He and his colleagues, he said, "will not permit any
underestimation of the role of the armed forces."

    The prosperity of the military-industrial complex,
however, may be short-lived. It is no longer sealed off from the
rest of the economy. Inflation is rising rapidly, capital
investment is drying up, and the supply system has broken down.
At least 500,000 skilled workers have left defense plants for
civilian jobs as their salaries and privileges have eroded.
People's attitudes have changed. "Once upon a time," a U.S.
official observes, "the Soviet worker didn't give a second
thought to walking to work and building a tank. Now he wonders
why it isn't a car."

    So bleak is the Soviet economic situation, says U.S.
Defense Secretary Dick Cheney, that it will be impossible "to
insulate the military-industrial base from the overall decay.
Clearly, there has to be an impact on the size and quality of
their forces and on their ability to produce weapons systems."

    This year the military men and their bureaucratic allies
won a 27 billion-ruble, or 37%, increase in the defense budget.
At the same time, the government's budget deficit for the first
three months of 1991 reached 26.9 billion rubles -- its highest
quarterly loss ever -- and the country's total production fell
9%. The downward spiral is picking up speed, and some Western
experts predict that the defense budget will be cut by a third
over the next four years.

    "Political institutions," said Lenin, "are a
superstructure resting on an economic foundation." Gorbachev
seems unable to control the vast and powerful institutions of
the military-industrial complex, but the defense monster may
eventually be tamed by the iron laws of economics.


________________________________________________________________
MOSCOW'S HUNGRY MONSTER

    -- The CIA previously estimated that Soviet defense spending
       consumed up to 20% of GNP.

    -- Current estimates suggest that the military-industrial
       complex accounts for as much as 40% of GNP.

    The Soviet Military-Industrial Complex . . .

    -- Accounts for up to 50% of total Soviet industrial output
       and employs more than 5 million people.

    -- Has direct connections to at least 20 of the country's 38
       Cabinet ministries.

    -- Has increased civilian production in less than 10% of its
       military enterprises.