An Army Out of Work

By BRUCE W. NELAN MOSCOW

In the calculus of world politics, the Soviet Union had only one credible claim to superpower status -- its immense military strength. The country's domestic economy was always a shambles, and its Marxist-Leninist ideology has long been threadbare. But for decades Moscow relentlessly built up its armed forces to defend communism at home and advance its cause abroad. The military had first call on the nation's resources, and civilians got what was left.

When it came to forging Soviet power, Joseph Stalin and his successors more than fulfilled their plan. Now Boris Yeltsin and, presumably, his successors have to undo it. The country simply cannot afford such oversize armed forces, and the civilian economy desperately needs the money, talent and productive power locked inside the military-industrial complex. But demobilizing on such a scale poses an especially Herculean challenge to a country that barely has a functioning economy and has no national consensus on how cutting down the troops, the arsenal and the production lines ought to occur.

At their peak in the late 1980s, Soviet forces, if they did not actually dominate the world, were certainly capable of destroying it. Moscow boasted an army of more than 4 million soldiers, an air force with thousands of planes, four surface fleets and the world's largest flotilla of submarines. Most formidable of all were its 1,400 land-based intercontinental missiles tipped with nuclear warheads. While most of the world regarded this arsenal with dread, Soviet citizens proudly viewed it as a symbol of national greatness.

The panoply and the pride behind it collapsed with the Soviet Union itself. In Russia, which inherited most of the former state's military, 2.2 million troops are officially still in uniform, but with many young men dodging the draft, the actual number is probably only 1.8 million. The former far-ranging Soviet navy is staying close to its home ports, and much of the air force is grounded.

Russia has removed all tactical nuclear warheads from neighboring republics and is dismantling them. Ukraine, Belarus and Kazakhstan -- the three other states where intercontinental missiles are based -- have agreed to hand over those warheads to Russia for destruction as well. Ukraine is dickering for better terms, including a share in any profit from sales of the nuclear material taken from the missiles, but Western officials are still confident all three will live up to their pledges.

Russia does not intend to eliminate its armed forces entirely, of course, but it does not know precisely what external dangers it will have to defend against or what it might need for the purpose. Military planners in Moscow say they want to organize a relatively small, fast-moving high-tech force that could react swiftly to security threats along the troubled periphery. The generals expect to bring troop strength down to 1.5 million officers and men sometime after 1993. How soon depends on finding ways to house and employ the hundreds of thousands of professional officers who will be demobilized. The housing shortage is severe: more than 200,000 officers and their families are already living in run-down barracks and drafty tents in Russia.

More soldiers are pouring in all the time from former outposts in Central Asia, Eastern Europe and Mongolia, and 80,000 are still stuck in the Baltic states, where they are treated as foreign occupiers. In Russia too, returning officers are often resented because they compete with civilians for scarce apartments. "It's not the same army," says Colonel Vitali Moroz, deputy editor of the defense daily Krasnaya Zvezda. "Everyone was proud of it. They don't feel that way anymore."

In fact the whole of Russian society is shifting gears in what reformers call konversiya, or conversion. It means the resources that were poured into the armed forces and defense production are to be redirected to boost the struggling civilian economy. The potential for such a transformation is gigantic: the military-industrial complex directly employed 10 million people, including the most highly trained scientists and best-educated workers, and accounted for 25% of the Soviet Union's gross national product. In the Russian republic, half of all manufacturing was for the military.

A year ago, when the Soviet Union broke up, konversiya took on a whole new meaning. As central price controls were lifted, costs soared. Inflation of 25% a month makes government budgets almost meaningless. Defense procurement has dropped 80%, and many military factories now have no orders.

Yeltsin's government and defense industrialists agree that the most modern and advanced plants must be maintained to provide for security needs and keep a competitive edge in world trade. "It is vital to preserve high-level technology," says German Zagainov, director of the Central Aero-Hydrodynamic Institute, a modern installation outside Moscow. "If we try to convert to producing garbage cans, we will disappear."

But the bulk of the giant enterprises turning out ordinary ships, tanks and munitions face a different choice. They can either shut down or find new $ sources of financing. The government has its own ideas. Mikhail Malei, Yeltsin's chief adviser on conversion, proposes switching these factories, in whole or in part, to civilian production over the next 15 years. The problem is that Malei estimates the plan will cost the equivalent of $150 billion -- money Moscow does not have.

Until then, Russia's leaders have seized on arms sales as a magic wand to turn surplus weapons into cash. Though it may irritate the U.S. and other Western countries, Russia is eagerly fulfilling the arms contracts it inherited from the U.S.S.R. -- and looking for new customers. It is selling planes and ships to China, Iran, India and most other applicants who can pay in hard currency. "Arms are exported by highly moral Germans and by Americans concerned about human rights," says Malei. "Why can't we do the same thing now that we are hit by a crisis?" Even Yeltsin claims such sales, if properly controlled, are "one of the best ways to solve the defense sector's problems."

Washington does not see it that way. "We differ," says a concerned U.S. official, "on who is an eligible, responsible buyer. We have real differences on Iran, for example." Sergei Karaganov, deputy director of the Academy of Sciences' Institute of Europe, responds, "Overseas sales of weapons, which the West does not like, earn more hard currency than aid from the West provides."

Possibly so, but the international arms market is overflowing with surplus supplies, and sales are down dramatically. Few of Russia's traditional customers can pay cash. Malei hopes to earn $10 billion a year from weapons sales, but Russia's sales last year were worth only $5 billion. That kind of income will not approach the level Malei estimates the factories need. "The rest must come from elsewhere," says Moroz. "Where? No one knows."

Most directors of defense enterprises hope to make up the shortfall from foreign investments. They have little faith in government promises and are looking for joint ventures, foreign partners and funding from overseas. Russian oil and gas companies, the aviation and aerospace industry, optics and other advanced technologies have had nibbles from abroad; perhaps two dozen enterprises have attracted some investment.

But the great majority of the 1,500 arms factories, and the millions they employ, will probably have to go out of business. American executives who have inspected the plants say too many of them are old, overstaffed and unsafe. + They believe it would be better to shut them down and start over on new lines like toxic-waste disposal or efficient energy and transportation systems, rather than retool the existing plants. "To reform the Russian economy," says a senior U.S. official, "the military-industrial complex must be closed. You can't rationalize it." Many leading Russian reformers agree. "The energetic people will survive and convert their industries," says Alexei Pankin, a specialist on security issues at the monthly Mezhdunarodnaya Zhizn. "The unsuccessful will fail, and their industries will die."

This is a bitter prescription but surely the right one. The days of centrally planned economic programs are over, and Russia is setting loose the market forces that will remake its economy. The highly trained engineers and managers being released from the uniformed services will lose their feelings of resentment when they begin to find jobs where they can use their technical skills. The military-industrial complex, like the rest of society, will not be transformed by some master plan from Moscow but by Russians free to seize the new opportunities of the nascent marketplace.

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CREDIT: [TMFONT 1 d #666666 d {Source: Arms Control Association}]CAPTION: DISARMING