Russia Plans 60% Increase in Defense Budget by 2013

Jul 30, 2010

By Oliver Bloom


This morning, the Xinhua News Agency and RIA Novosti bothcited reports from the Russian business daily Vedomosti that the Russian government plans large increases in defense spending by 2013. According to RIA Novosti,
Russian defense spending will increase by 60 percent, to more than 2 trillion rubles ($66.3 [billion]) by 2013 from 1.264 trillion ($42 [billion]) in 2010.
The spending will be spread out over three years. The largest increase will occur in 2013, when the budget is expected to jump by 500 billion rubles ($16.6 billion). According to RIA Novosti
Konstantin Makiyenko from the Russian Center for Analysis of Strategies and Technologies (CAST) told the paper that the government is likely to spend more on the Navy, as well as the aviation and space industries.
The Russians have planned expensive modernizations in these sectors. and are reported to have allocated funding for a variety of new naval vessels and aircraft. In the naval arena, the increased funds will go towards a whole scale modernization of Russia’s aging submarine and Black Sea fleets, including new Yasen and Borei class submarines, Bulava submarine-launched ballistic missiles, three new Talwar class frigates, three Improved Kilo class subs and up to four Mistral class amphibious assault ships. The Russian government plans to purchase two of the Mistral class amphibious assault ships/helicopter carriers from France and acquire the license to build two more of the vessels domestically. While the announcement of the Mistral class purchases is not new, they will likely continue to provoke worries in the United States and in NATO. When details of the specific purchase emerged earlier this month, the BBC explained that
The deal, which is the first of its kind between France and its Cold War enemy, has caused alarm in Nato, as there are fears it will give Russia more cutting-edge technology.
In February a US official told reporters the US "had questions" for France about the order.
On the aviation side, the budget also leaves significant room for aircraft acquisitions. RIA Novosti explained
Russia planning to spend 80 billion rubles ($2.65 billion) on 60 Su-family fighter jets starting 2010, and buy 26 MiG-29K Fulcrum-D carrier-based fighter jets, with the expected contract estimated at about 25 billion rubles (more than $828 million), a military aircraft plant manager told the paper. The plans also include the purchase of 32 Su-34 Flanker fighter bombers under the 2008 contract (a single plane then cost more than 1.1 billion rubles ($36.4 million), he said.
Information has yet to emerge as to what portion of the new defense budgets will go towards the development of Russia’s fifth generation fighter—the Sukhoi PAK FA—which had its maiden flight back in January but does not expect to be put into service until 2013 at the earliest. 
Whether the large increases in Russian defense spending will make a significant difference is still up for debate. Even at their proposed 2013 levels, Russian defense spending would be only around eight percent of current U.S. defense spending. What’s more, there’s no guarantee that Russia’s proposed expenditures are even feasible. Earlier this week the Russian government approved the sale of approximately $29 billion in minority stakes of state-owned companies in an effort to confront its large budget deficit. While Russia managed to harness its considerable oil and gas reserves for much of the last decade to generate budget surpluses, declines in the prices of oil and gas, along with the broader global economic contraction, resulted in a current budget deficit equivalent to 5.9% of GDP. While Russia does have $467 billion in foreign currency reserves, tapping into those quickly could spark domestic inflation and also leave the country exposed to a future dip in commodity prices. If Russia continues on its plans to reduce its deficit to 2.9% of GDP by 2013 (931 billion rubles), it’s unclear how a military spending increase of 500 billion rubles in that year alone will fit in. Maintaining, let alone increasing, discretionary spending at the same time it is attempting to cut its budget deficit (a quandary the United States also finds itself in) will either necessitate large increases in revenues (in the case of Russia, presumably through an increase in the prices of oil and gas), or large spending costs in other programs. 
Thus, while the announcement of Russia’s spending increase is news, whether it actually comes to fruition is a much bigger question. While the Russian government certainly has made a point of trying to revitalize its military after years of decay, fiscal realities will ultimately take a toll. What’s more, while there may not be much domestic opposition to the increased defense expenditures, it is unclear what military utility they have. While Russia would certainly like to increase its regional power projection capabilities, the large sums spent on expensive fighters and submarines seem to have little value except in the extremely unlikely case of a conflict with the United States, NATO or China. It’s unclear what exactly drives the desire for these sorts of weapons systems; perhaps an industrial base that relies on them, a defense strategy that still envisions conflict with the West, or a desire to maintain competitiveness with the United States.
Interestingly, despite the “reset” in relations between Russia and the United States and two decades of hindsight on the Cold War, the two countries continue to expend vast sums of money on weapons systems designed for bygone conflicts. While defense hawks in the United States who see us still engaged in fierce competition with the Russians may see these increases as further signs of looming Russian aggression, taken in the context of the United States overall military budget, and the larger questions that remain over the feasibility of the proposed increases, the increases aren’t quite as alarming. Rather than worry, one might really wonder why the Russians want to spend so much more when they can’t even afford their current budgets (though the Russians are hardly the only country spending beyond their means at the moment). As more details emerge about the proposed budgets, and as the Russian government and defense ministry explain what the acquisitions are for, outside analysts can determine what, if any, new challenges the planned Russian capabilities may pose, but it seems likely that the Russians will be prioritizing projects and weapons systems that may have less relevance in the 21st century. Ironically, the Russian defense ministry should be looking to the actions of U.S. Defense Secretary Robert Gates in his attempts to reform and cut some of the U.S. acquisition projects for lessons on their own defense future.     


// Leonid Dzhepko under a Creative Commons License