Following a multiyear modernization effort, the Russian military is able to provide for Russia’s security, even with some recent cuts to the defense budget.
The military has passed the “peak of modernization,” President Vladimir Putin said at a government meeting this week, which enables reductions in defense spending. He noted that the cuts “aren’t related to us letting things slide when it comes to these issues, but due to the fact that the main planned initiatives [are] connected to the need to intensify work on ensuring the country’s security… and with regard to the need to ensure the renewal of military equipment and hardware, and we have passed the peak of this work.”
Russia’s defense budget is currently under $50 billion, far below the collective spending of the North Atlantic Treaty Organization (NATO) as well as the Chinese defense budget. Some of this erosion in the dollar value of the budget stems from exchange rate depreciation, making spending cuts in terms of the ruble appear more pronounced when converted into dollars.
The Russian president noted that the government will focus on reducing the “military burden” on the economy. While some level of defense spending can prove beneficial for economic growth in the short term, there is a risk that over-spending on defense will use up revenue that could have been applied to other sectors of the economy, potentially inhibiting economic development over the long term.
Russian officials have generally suggested that the pace of defense budget growth – which increased tremendously in the late 2000s and early 2010s – will taper off. Spending under the latest State Armament Program is less ambitious than the previous iteration of the program, during which Russia focused heavily on bringing the level of new and modernized systems in service with the military to 70 percent.
The Russian military will not engage in an arms race with other countries, President Putin said last month. He noted, “An arms race is a bad thing, and it will not be good for the world. However, we will not be dragged into exorbitant budget spending games.”
Last year, President Putin unveiled a number of new-generation weapons – dubbed the “March 1st” weapons for the date of the event where he discussed them – that aim to preserve the Russian nuclear deterrent.
Fears have grown that, with the collapse of the Intermediate-Range Nuclear Forces Treaty, Russia and the U.S. will resume an arms race in the production and deployment of short- and medium-range missiles. Russia has warned the U.S. and Europe that any deployment of those systems in Europe will cause Russia to follow suit. There is also concern that the New START arms control regime, which limits the number of deployed and nondeployed launchers and nuclear warheads, will not be extended or replaced. The collapse of that agreement would theoretically enable the two sides to field an unrestricted number of launchers and nuclear warheads.
Despite the cuts to the defense budget, the Russian defense industry needs to remain competitive and innovative, President Putin said this week. He said that the industry should not resort to “making pots and pans,” a reference to civilian conversion efforts, such as in the 1990s, when defense firms, in the wake of a collapse in state contracts, sought to diversify their product base into civilian markets. Those efforts proved difficult, especially as many firms attempted to begin producing civilian products completely unrelated to their portfolio of defense products.
President Putin emphasized the importance of establishing “clear-cut and understandable” plans for defense projects.
He added, “It’s necessary to ensure the strict, targeted use of funds allocated for the purchase of machinery and equipment. I want to emphasize that we must reach absolute transparency in this area. The flow of funds should be clearly monitored at all levels of government and for all types of budget expenditures.” Corruption remains a persistent problem in the Russian defense industry, in some cases leading to the loss of sizable amounts of rubles as well as project delays and cancellations.
Military markets analyst, covering Eurasia, Middle East, and Africa.
