Russia can fully maintain its defence spending; here’s why.

Russia’s Deputy Defence Minister Yury Borisov on Thursday let slip some information about ongoing Russian weapons programmes.

There has been some discussion in the West and even in Russia about whether Russia can afford to maintain its current pace of defence spending for much longer, with certain commentators highlighting falls in budget spending for the military over the coming years, and with defence spending set to fall as a proportion of GDP.

Russian President Putin provided the actual figures during his recent press conference.

National defence is the biggest spending item in the budget. In 2011, we spent 2.7 percent of our GDP on defence. This year, and over the last five years, we have substantially increased defence spending. This year’s figure will come to 4.7 percent of GDP. Next year, the figure will be 3.3 percent, and in 2019, 2.8 percent. We will arrive at this level of 2.8 and maintain it there over the several years to follow. This will not affect out plans to strengthen our country’s defence capability because, as I said, we have invested substantial funds in this sector over the last five years. What is very important is that we will pay off all debts to defence companies this year, and this makes it possible for us to programme the financing levels I just mentioned.

This explanation is perfectly clear, but has been widely misunderstood.  What Putin is saying is that after 2011 Russia embarked on a major programme to renew its armed forces, which had been severely degraded during the long post Soviet years.  The result was a sharp but temporary increase in defence spending to 4.7% of GDP in 2016.  With Russia’s armed forces now substantially re-equipped, and with the defence factories refurbished, defence spending as a proportion of GDP is set to fall to a fully sustainable level of 2.8% of GDP.

As to Russia running out of money, including to maintain its military – as it did in the 1990s – I have previously discussed at length why this is not the case (see for example here and here).

In the event Russia’s budget deficit in 2016 turned out to be just 3.5% of GDP, low for a country exiting recession though higher than anticipated in the economic forecasts prepared during 2015 because of the unanticipated sharp fall in oil prices at the start of 2016, but still lower than predicted at the start of 2016, or even a few weeks ago.

Russia is fully capable of financing a budget deficit of just 3.5% of GDP, besides which, because of the ongoing recovery and the likely higher oil price this year, the size of the budget deficit is anyway going to fall, even if no retrenchment on spending takes place.

Ultimately, with a government debt to GDP ratio of just 17.7% – as compared to 71.8% in the US, 70.1% in Germany, 89.1% in the United Kingdom, 98.2% in France and 135.5% in Italy – Russia would have no difficulty sustaining even higher levels of defence spending if it wanted to.

In any event, not only is Russia fully able to afford its ongoing conventional military programmes – the Armata tank, the SU-T50 fighter, the Kurganets and Bumerang fighting vehicles, the Yasen class submarines etc – whilst maintaining and even upgrading its nuclear strategic forces – but as Borisov has said, it is also able to fund ongoing programmes into new types of weapons

Coming next are hypersonic weapons, which require the use of principally new materials and control systems that operate in a completely different medium, in plasma [and] completely new principles of troop operations’ control, because today one who learns to detect the enemy quicker and give the target designation – and all this has to be done in real time – is the one who actually wins.

Interaction between the Russian Academy of Sciences and the Defence Ministry has specific goals, first of all, in developing the scientific and technical potential. We expect an especially serious breakthrough in the field of laser issues, electromagnetic weapons and so on.

We [the Defence Ministry and the Russian Academy of Sciences] have mapped out a plan of action. On the one hand, our officers are learning in the direct meaning of this word – special courses are being organised for them. On the other hand, we have kindled academic institutes with our ideas to some extent and they are beginning to think about new approaches to modelling serious operations.

In his press conference of 16th December 2016 US President Obama admitted that Russia is a military superpower.  In terms of the range of capabilities of its military – exceeded only by that of the US – that is true, though as The Saker has written, it is a mistake to think of the Russian military as simply a smaller version of the military of the US.  Borisov’s comments show that the Russians intend to keep it that way, and the economic facts show they can do so.