MAD Economics: U



Buying Back MAD: The Fiscal Realities of Future Nuclear Arms Races

Kevin Clemency

Dan Lindley[1]

May 13, 2008

Introduction

From the great powers of China, Russia, and the US, to a number of states in the Middle East, the world faces the prospect of renewed or new nuclear arms races. This article shows that it would be fairly easy for a number of states to afford to build large numbers of nuclear weapons. In the early days of the Cold War, the US and Soviets quickly scaled up the capacity to build thousands of nuclear weapons a year. At the peak of the nuclear arms race, the US produced about 5000 nuclear weapons a year in the late 1950s, while the Soviet Union produced a couple of thousand a year from the 1960s into the 1980s.[2] Due to global economic growth since the early days of the Cold War, it is ever easier for many states to rapidly construct substantial nuclear arsenals – if they have the will to do so, and if they have access to nuclear materials. This article shows that cost is not a barrier for many potential proliferators. Because of this, it should be an urgent priority to reduce incentives for arms races, and to place much more stringent controls on the distribution of nuclear materials.

Background

Keir Lieber and Daryl Press ignited firestorms with their analysis contending that the United States has achieved nuclear primacy over Russia and China.[3] Nuclear primacy means that the US could conduct a nuclear first strike on Russia or China, and remain virtually unscathed in the aftermath. Prior to this analysis, it was widely assumed, at least with respect to Russia, that a state of mutually assured destruction (MAD) existed. MAD means that whichever side was struck first could still retaliate with a devastating strike. MAD is a prerequisite for robust nuclear deterrence.

Lieber and Press’ analysis underscored the fact that nuclear weapons and their political and military implications are still with us. And their work, combined with a number of political, economic, and military factors, makes renewed nuclear arms racing that much easier to contemplate.

This article answers the following questions: from a cost perspective, how easily might Russia and China challenge American nuclear superiority, if not primacy? From a cost perspective, how easily might other potential proliferators build large nuclear programs?

These concerns are vital. Since its post-Cold War decline, Russia has been making a bid to regain its global power and standing. Thanks to its resurgent economy, Russia has more than doubled defense spending since the late 1990s.[4] Part of its buildup includes new nuclear forces, including the Topol-M intercontinental ballistic missile (ICBM). Recently, Russia resumed long-range bomber flights that have flown provocatively close to Japanese air space and the U.S.S. Nimitz.[5] Economically, Russia appears to be flexing its muscle with threats to cut off critical oil supplies to Europe by state-controlled Gazprom.[6] Although he blamed the West for starting it, Russian President Vladimir Putin’s remarked that “a new phase in the arms race is unfolding in the world.”[7]

Further to the east, China continues its rise to superpower status. While Chinese actions have remained relatively pacific in recent years, its booming economy is financing yearly double-digit percent increases in its defense spending. Moreover, the U.S. estimates that China’s real spending is perhaps two to three times the budget announced by the Chinese government.[8]

Unfortunately, new nuclear arms races may not be limited to just the US, China, and Russia. With the prospect of an Iranian nuclear capability looming on the horizon, a number of countries including Egypt, Saudi Arabia, and Turkey may also develop nuclear weapons. While the prospect for an arms race in Latin America seems slim, Argentina and Brazil have both pursued nuclear programs in the past.[9]

Analysis

We now turn to assessing how easy it would be for Russia to restore mutually assured destruction (MAD), and for China and other states to build a substantial nuclear capability in fairly short order. To do this, we first assess how much the US spent on its nuclear program in the early Cold War. We measured the aggregate costs, and also show what these costs amounted to as a percent of GDP and what they represented in per capita spending. We then use this spending as a rough indicator to show what it would cost other countries to produce 2000 and 100 nuclear weapons a year. Our calculations are conservative, and they are hopefully persuasive in their simplicity. It would be surprisingly cheap for a number of countries to produce large numbers of nuclear weapons. For seventeen countries ranging from Argentina to Turkey, only Israel and North Korea would have to spend more than one percent of GDP to produce 100 weapons a year.

Costs and Size of the Early United States Nuclear Program

The 1950’s and early 1960’s marked the most active period in the Cold War nuclear arms race, especially in terms of production on the US side. In just fifteen years, the two states combined produced 37,737 nuclear weapons (31,613 for the U.S., 6,124 for the U.S.S.R.). As seen in Table 1, the U.S.’s Strategic Forces 1951-1965 cost a little over $1 trillion, averaging $74 billion annually.

Table 1: Total Estimated Costs of US Strategic Forces (in 2007 US dollars)

|Year |Total Est. Costs of US Strategic Forces (Billions) |Percent of GDP |Cost Per Capita |

|1951 |$67.12 |3.02% |$435.46 |

|1952 |$97.32 |4.18% |$620.15 |

|1953 |$83.89 |3.43% |$525.24 |

|1954 |$41.95 |1.72% |$258.10 |

|1955 |$58.73 |2.32% |$355.22 |

|1956 |$75.51 |2.83% |$449.10 |

|1957 |$90.61 |3.34% |$530.10 |

|1958 |$83.89 |3.11% |$482.92 |

|1959 |$87.25 |3.08% |$494.27 |

|1960 |$75.51 |2.56% |$421.06 |

|1961 |$90.61 |3.04% |$498.60 |

|1962 |$83.89 |2.66% |$455.66 |

|1963 |$70.47 |2.15% |$377.83 |

|1964 |$60.40 |1.74% |$319.74 |

|1965 |$41.95 |1.15% |$219.26 |

|Total |$1109.09 |--- |--- |

|Average |$73.94 |2.69% |$429.51 |

Source: Total Estimated Costs of US Strategic Costs of US Strategic Forces derived from Kevin N. Lewis’ Historical U.S. Force Structure Trends: A Primer (July 1989) RAND Corporation, Santa Monica, CA, p. 16. GDP and GDP deflators used to convert to 2007 US dollars from The White House “The Budget for Fiscal Year 2009, Historical Tables: Table 10.1 – Gross Domestic Product and Deflators used in the Historical Tables: 1940-2013 – continued” p. 194-5; Population from U.S. Census Bureau (1940-1990 from Urban and Rural Population: 1900 to 1990, 2000 and 2010 from Projected Population of the United States, by Race and Hispanic Origin: 2000 to 2050)..

An expense averaging $73.94 billion a year may appear daunting to many states seeking to build a nuclear arsenal. However, the table above represents the entirety of the U.S. Strategic Forces. Table 1 goes beyond the research, development, and mass production of nuclear arms, and includes everything from the building of hardened silos for ICBMs, to maintaining a fleet of bombers designed solely to carry nuclear weapons, and deploying a nuclear-armed navy.

In the following analysis, we call these “deployed weapons” expenses to reflect the costs of the weapon, the delivery systems, and so forth. This is in contrast to the expenses devoted to only building the warheads, which we call “warhead only” expenses.

Many states will choose not to deploy a full blown and expensive nuclear triad. Indeed, various legs of the triad are being phased out by Britain and France in favor of cheaper means of deployment. Britain eliminated its land-based platforms in 1963 and retired its nuclear-bomber fleet in 1994, relying on its submarine fleet to provide a nuclear deterrent. France has eliminated its land-based program and reduced its fleet of nuclear bombers and continues to maintain the nuclear-armed navy. Other states such as India, Pakistan, and Israel, appear to have adapted current aircraft to deliver nuclear weapons rather than develop single-purpose Cold War – style bombers.[10] Thus, using US costs as a baseline for the affordability of nuclear programs is conservative because it represents the highest possible expense.

To provide a lower end estimate, we also looked at what the US spent just to produce each warhead. Table 2 summarizes these expenses. Note that this also includes costs for warheads for tactical nuclear weapons.

Table 2: Costs of U.S. Nuclear Warhead Production: 1951-1965 (in 2007 US dollars)

|Year |Estimated Annual |Estimated Annual AEC/ERDA/DOE |Total Estimated Expenses |Percent of GDP |

| |AEC/ERDA/DOE Spending on |Spending on Nuclear Weapons |(Millions) | |

| |Nuclear Weapons Materials |Research, Development, Testing, | | |

| |(Millions) |and Production (Millions) | | |

|China |285 |105 |193 |194 |

|France |350 |350 |348 |349 |

|India |50 |50 |60 |53 |

|Israel |150 |80 |80 |103 |

|North Korea |8.5 |7.5 | ................
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