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12 December 2016

The degree of militarism

What is the planned 2017 cut in Russian military spending indicative of?

According to the 2017 draft federal budget of the Russian Federation (RF), a cut in national defense spending is planned. Some experts interpret this as a reason for optimism as it would seem that Russia is not seeking to escalate military conflicts in the coming year. What is really behind the planned reduction in military spending? Will there really be a cut? And is the degree of military spending indeed directly commensurate with Russia’s combat readiness?

Military spending: from “reset” to confrontation

In 2011, back in the days of the “reset” in relations with the US, even prior to Putin’s decision to occupy the presidential throne once more, Russia adopted the State Armaments Program for 2011-2020 (SAP-2020). According to this program, Russia was to spend 20.7 trillion rubles on manufacturing and procurement of new military equipment.

It is noteworthy that the growth dynamics of military spending in Russia has never been a  reaction to its relations with its neighbors and the West. This dynamics is rather a reaction to more fundamental factors: 1) the need to maintain the Russian military industrial complex in order to ensure that power remains in the hands of the ruling elite; 2) the need to adapt to conditions of the global world through the use of military force given that the Russian political-and-economic model has been in a deadlock since 2008.

It is also interesting that the bulk of these enormous expenses – more than 14 trillion rubles – was to be incurred between 2016-2020. The main reason behind this imbalance is clear: the bulk of spending was shifted to a later date in light of initial doubts over the program’s feasibility and so that it could be revisited depending on the political and economic situation.

As a result, spending on the purchase of equipment as well as R&D and national defense in general was as follows from 2011-2016:

Billion rubles/ per annum*

2011

2012

2013

2014

2015

2016 (plan)

2016

January-October

(actual)

Procurement and R&D

585

727

1166

1400

1650

≥1500***

≥1000***

Total expenditure in section “National Defense”

1517

1656

2099

2400

3181**

3080**

2181**

*Data by the Center for Analysis of Strategies and Technologies

**Data by the Ministry of Finance of the RF

***Rough estimates based on figures in previous years

As we can see, 5528 billion rubles i.e. nearly 27% of the entire SAP-2020 was spent on weapons from 2011-2015. However, obviously, the program has become unfeasible against the backdrop of the long-lasting economic downturn in Russia. On the other hand, more than 50% of resources earmarked in the section “National Defense” has been spent on the procurement and development of weapons since 2013.

According to the unclassified extract of the 2017 draft budget being considered by the State Duma at the moment, 1021 billion rubles is to be allocated for national defense. At the same time, the overall amount allocated for “National Security and Law Enforcement” (special services, police and prosecutor’s offices), at least those which have been made public, is even higher at over 1270 billion rubles. However, classified expenditure in 2017 amounts to nearly 2772 billion rubles and is also distributed under these two sections.

Therefore, slightly over 5 trillion rubles is to be spent on the army and special services next year. This figure is unlikely to change significantly as a result of parliamentary hearings. Total planned expenditure under the 2017 Russian federal budget is 16.24 trillion rubles.

In order to arrive an understanding of the proportion of Russia’s spending on military and police in the coming year, taking into account classified items, one can compare the figures cited with percentages from previous years. 5.15 trillion rubles was allocated to the army and special services in 2015. Of this, the “National Security” share comprised 1965.6 billion rubles of the 15.6 trillion budget total. The proportion remained unchanged in 2016: approximately 3/2 in favor of military spending.

Billion rubles/ per annum *

2015

2016 (plan)

2016 January-October (actual)

2017 (draft)

Total spending on the army, special services and police

5147

5042

3603

5063**

National Defense

3181

3080

2181

1021***

National Security and Law Enforcement

1966

1962

1422

1270***

*Data by the Ministry of Finance of the RF

**Data including classified items according to the draft law

***Public data, according to the draft law

In other words, the proportion will definitely remain unchanged in 2017 and military spending in Russia will approximate 3 trillion rubles (or a little less) despite the crisis. At the same time, spending on special services (the Federal Security Service (FSB), the National Guard, the Federal Security Guard Service (FSO) and the Foreign Intelligence Service (SVR)), police and prosecutor’s offices will come in at around 2 trillion rubles. Hence, just under 1.5 trillion rubles will be spent on the procurement and development of weapons.

Clearly, the abovementioned figures are lower than those cited in the 2015 pitch. However, the unfeasible SAP-2020 could potentially be reduced further without detriment to Russia’s combat readiness.

The 2020 armaments program: a cut and the fight for a new program

The current SAP is the result of bargaining. The military asked for much more money than they were eventually promised, although the earmarked 20.7 trillion rubles for 2017- 2020 initially exceeded the production capacity of Russian military industry even taking into account the procurement of new equipment and investment in R&D.

This conclusion can be drawn given the fact that both construction and scheduled delivery dates of new military equipment such as new tanks, nuclear submarines or aircraft are repeatedly postponed. Speaking of the implementation of the SAP, discontinued cooperation with Ukrainian military plants has brought about additional difficulties. For example, the production of new corvettes came to halt when Ukraine stopped supplying ship engines to Russia.

Under the SAP-2020, the navy and aviation are the priority: allocations of 25% and 24% of total resources, respectively. Another 17% is to be spent on air and missile defense. At the same time, as little as 15% of the entire budget of the SAP is to be allocated to ground forces and 14% - to communication systems, intelligence and control.

However, it is precisely boots on the ground which epitomizes Russia’s military strength. In other words, the relatively painless reduction in military spending will affect the navy and military aviation and can be achieved at the expense of projects which cannot be implemented anyway.

Thus, according to the SAP-2020, the Russian armed forces were to take delivery of 600 new aircraft and 1100 helicopters of different types, whereas in practice, the Ministry of Defense has signed a contract for the delivery of 30 heavy fighter aircraft Su-30SM and 30 combat-capable Yak-130 trainer aircraft in 2016-2018. Evidently, Russia is capable of producing 10 aircraft of each type a year on average. Su-35S fighters and Su-34 fighter-bombers are produced at a similar rate.

By 2020, Russia will not have managed to produce 600 aircraft over the 9 years since 2011 even including other, less numerous types of aircraft. Moreover, it has virtually refused to deliver the 5th-generation T-50 fighter (at least, until the end of the SAP-2020): as few as 9 prototypes have been built since 2010 and tests will only be completed in 2017 although mass production of this aircraft was scheduled to commence in 2016.

Therefore, expenditure under the SAP-2020 is to be cut in accordance with the results and problems demonstrated by the Russian military industry.

At the same time, the bureaucratic scramble is underway in the Kremlin over the arms procurement program for 2018-2025. It is not surprising that the new program coincides with the SAP-2020 in terms of timing: this is standard practice in non-market systems when plans are reviewed and finalized alongside their implementation. Moreover, the new program will paper over the cracks in the current SAP. In this deal, the Ministry of Defense is jostling for 22 trillion rubles whereas the Ministry of Finance is only prepared to offer 12 trillion rubles. The latter figure is close to what will be spent on the SAP-2020 overall.

The Kremlin cannot drastically reduce spending on arms procurement anyway for one simple reason: the military industry would plunge into a deep crisis leading to countless social and political consequences. And the experience of the failed conversion of the Soviet military-industrial complex in 1992-1993 has shown that the Russian system is incapable of solving such complex tasks. To do so, a different level of economic and even political freedom is required.

Therefore, the Kremlin will most probably try to maintain military spending at the highest feasible level for as long as possible. On the other hand, an attempted “soft landing” of military spending cannot be ruled out in case of continued economic downturn in Russia. However, this will only serve to postpone the resolution of systemic problems.

The crux of the matter is that there are only two principal ways out of this vicious circle: a) either real changes have to be introduced in the country based on intra-elite and/or public consensus; or b) another attempt to mobilize society and further isolate Russia will be made which will bring about potential for new wars in the face of aggravating difficulties in the country. 

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