Putin's Grand Military Upgrade Hit A Snag

Russian soldiersREUTERS/Maxim ShemetovRussia’s military spending makes up a greater percentage of its GDP than either of the other two nations.

Russia is in the midst of an intense military buildup, and the country’s deteriorating economy is magnifying the cost.

During 2015 alone, Russia’s national defence budget is expected to be 3.3 trillion rubles. At the time of the announcement in October, this was worth $US81 billion, but with respect to today’s conversion that’s worth slightly over $US60 billion.

Meanwhile, Russia is expected to enter a deep recession in 2015 as its economy contracts.

Nevertheless, the Kremlin plans on spending over 20 trillion rubles ($US364 billion right now) over the next five years, with almost 80% of the funds being used for the purchase of “high tech weapons” involved with nuclear, space, reconnaissance, and communications.

The plan includes major upgrades for its land, navy, and air forces: New missiles by 2020, new submarines by 2016 (and nuclear submarines by 2020), and 150 new aeroplanes and helicopters by 2015 — and much, much more, according to the St. Petersburg Times.

Originally, the upgraded military plans were designed when the government was expecting 6% GDP growth through the decade.

‘We Just Cannot Afford It’

Back in October (before the ruble crash), the new Russian finance minister Anton Siluanov expressed concerns about financing the new defence expenditure plans, according to Reuters.

“A new defence program will be prepared now, and it its framework we want to reconsider the amount of resources that will be spent from the budget in order to make it more realistic,” Siluanov stated.

“When we were adopting the defence program, the forecasts for the economy and budget revenues were completely different. Right now, we just cannot afford it,” he added.

Despite Russia’s recent economic troubles, Russian president Vladimir Putin has been publicly supportive of the continued military expansion and modernization.

Russian military spendingElena Holodny/Business InsiderA look at how much the Kremlin spent on defence from 1993 to 2013, adjusted to the 2013 US dollar.

Significant Investment Already

For 2013, the Stockholm International Peace Research Institute estimates that Russia’s military spending was around $US87.8 billion.

Although this sum is significantly less than both the US and China (at $US640 billion and an estimated $US188 billion, respectively), Russia’s military spending makes up a greater percentage of its GDP than either of the other two nations.

As a share of GDP, Russia’s military expenditures are an estimated 4.1% for 2013, an increase from 2004 when they made up 3.5%.

Contrastingly, the US is at 3.8% (a slight decrease from 2004’s 3.9%), and China is a an estimated 2% (a slight decrease from 2004’s 2.1%).

“Russia’s spending has risen as it continues to implement the State Armaments Plan for 2011-2020, under which it plans to spend 20.7 trillion rubles on new and upgraded armaments. The goal is to replace 70% of equipment with ‘modern’ weapons by 2020,” according to SIPRI’s report.

Ukraine crimeaREUTERS/Vasily FedosenkoThe ‘Little Green Men’ aka Russian special forces who annexed Crimea in March were an example of Russia’s modernized military.

‘A Real, Full-Fledged Economic Crisis’

Not everyone in Moscow is gung-ho about the whole military expenditure plan.

Back in 2011, former Finance Minister
Alexei Kudrin was reportedly asked to step down from his position by then-president Medvedev after a dispute over budget priorities.

Among things discussed that day? Defence spending.

Evidently, those in favour of increasing the military expenditures have gotten their way since then. In nominal terms, the Kremlin has upped its military spending by a whopping 92.3% since 2010, according to IHS Jane’s Information Group.

On Monday, Kudrin stated that Russia’s economy is entering crisis mode.

“Today, I can say that we have entered or are entering a real, full-fledged economic crisis. Next year we will feel it clearly,” he told a news conference. “The government has not been quick enough to address the situation … I am yet to hear … its clear assessment of the current situation.”

It remains to be seen how exactly the ruble’s collapse will affect the Kremlin’s military overhaul. Going by the comments of Russia’s last two finance ministers, Putin’s grand plan is currently unaffordable.

Putin military russiaRIA Novosti/ReutersPutin walks to watch military exercises upon his arrival at the Kirillovsky firing ground.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.