Russian Defense Spending
by STRATFOR and GLOBAL SECURITY
http://www.stratfor.com/sample/analysis/russias-problematic-defense-spending Non-subscribers use their email address to access the report.
Reviewed by John Handley, Vice President, American Diplomacy
Two recent articles address Russia’s proposed defense spending. One, from STRATFOR, entitled “Russia’s Problematic Defense Spending,” (http://www.stratfor.com/sample/analysis/russias-problematic-defense-spending) contrasts the Russian finance minister’s recommendation to cut $125 billion from the defense sector to President Putin’s March proposal to increase defense spending $120 billion by 2020. The second article, from Global Security (http://www.globalsecurity.org/military/world/russia/intro.htm) entitled “Russia—A New Cold War?,” addresses in much greater detail the problems the Russian government is having in modernizing its armed forces.
STRATFOR readers learn that the current European financial crisis has yet to cause much difficulty for Russia, which has some $600 billion in its “rainy day” cash reserve; however, this money is not meant for the budget. Even with oil recently selling at nearly $100 a barrel, the Russian government predicts a 1.5% budget deficit this year. Russia’s finance ministry is concerned that oil prices may not stay that high because Russia is literally a petrol-rubble state with oil and natural gas profits constituting 50% of government revenues. The ministry also hopes to avoid further difficulty for the Russian economy from a worsening European financial crisis, especially Greek departure from the Euro zone.
Rather than cutting education, health care, housing, or utilities, the ministry believes that $125 billion can be safely taken from proposed defense spending. That proposal collides squarely with Putin’s March proposal to increase defense spending from $650 billion to $770 billion from 2014 to 2020. Putin justifies this spending to counter the threat of NATO’s European ballistic missile defense efforts and to modernize Russia’s military.
If the past is prologue, Russia’s military requirements will trump domestic concerns. Moreover Russia’s defense industry must also resolve four specific problems: graft, production, declining exports, and demographics. Putin is nevertheless expected to approve a new Russian Federation Defense Plan that will establish defense priorities through 2016 while also addressing training, production (new large military equipment), alliance structure, military pay (a three-fold increase) and financing. Such spending may lead to a loss of Russia’s financial stability.
While the STRATFOR article lays out difficult choices for Russia’s military establishment, the Global Security article paints an even darker picture. Its author states that Russia stopped buying new military hardware 20 years ago and now has to find as many threats as possible to justify a major increase in military procurement. The Russian military possesses vast numbers of tanks and combat aircraft, yet few of either would be considered modern. Though Russia is the second largest arms exported in the world, its dated equipment suggests that the end of its arms exports is in sight.
The Russian defense industrial base is also in decay. Many of its workers left in search of better paying jobs, and those remaining are generally older. The design and production facilities are suited for legacy weapons rather than modern designs. Oil and natural gas exports allow the Russian government to purchase military hardware elsewhere, leading to further de-industrialization. Current facilities cannot sustain a world-class machine-tool defense industry.
Oil and gas revenues currently bring in $100 billion annually, yet as already noted these revenues cannot be sustained and will probably decrease. By comparison, the Russian military budget doubled from $25 billion in 2006 to $50 billion in 2009 while the US military budget averages $600 billion annually.
Transforming Russia’s military to a smaller, lighter, more mobile force remains a daunting task. The current troop strength of one million consists mostly of conscripts who receive 100 rubles ($3.50) a month. The service is full of aging officers, too few NCOs, and ongoing problems of discipline and brutal hazing. The Army’s HIV infection rates are as much as five times higher than the general population. In 2004, the Russian armed forces estimated 39.1 million males as available manpower, yet only a tenth of these males served. New recruits showed evidence of poor education, communicable diseases, and criminality. One might conclude that the tenth that were drafted did not possess the mental acuity to evade military service. The Russian government wants to create a professional army, but it does not have the means to do so.
The author concludes with two possibilities: either recent Russian behavior towards the U.S., NATO, and other European countries is symptomatic of tit-for-tat escalation or it is evidence of Russian imperial nostalgia. If the former, the U.S. should avoid provocations and continue business as usual; if the latter, Russia’s hostility is self-generated and beyond the capability of external actors to placate.