"Strength" of Russia's defense industry
Stockholm International Peace Research Institute (SIPRI) has recently released a report where, among other things, it says Russia's military spending has fallen for the first time since 1998 and stood at $66.3 billion in 2017, which is 20% less than in 2016.
However, it is important that the SIPRI stats do not always reflect the reality clearly, since this institution has been using its own methodology. For example, SIPRI regularly publishes rankings of arms exporters and importers, using a methodology that levels out the actual value of weapons and displays its own index. As a result, they have a T-72 tank costing the same as the latest version of Leopard.
The same applies to SIPRI's data on Russian defense budget cuts. If the organization did its calculations taking into account the exchange rate (it used to be RUB 30 to the dollar while now it's RUB 62 to the dollar), then the expenditures did fall, while Russia's aggressive policy did not change a bit. Also, for example, if an average Russian army officer was paid RUB 60,000, they still get the same amount today. For Swedish researchers, this means that it has shrunk 50 percent, while it hasn't really changed from the perspective of a military unit's book-keepers.
Things are about the same as regards other military expenditures in Russia. They haven't really changed, even slightly increased in some areas. Once again, it should be stressed that Russia pursues its aggressive stance, which is even escalating further. In particular, we see this happening in Syria where Russia has been actively employing private military companies (PMCs) in its campaign. They are no PMCs, in fact. In fact, they are all projects of Russian intelligence, simply using these structures as a cover. Maintaining these "PMCs" is a costly endeavor, because these contractors, or mercenaries serving under such cover, are paid a lot. We are now seeing a Russian PMC starting to operate in the Central African Republic… That is, their activities are expanding, which means that funding for these structures is not being cut.
Things are about the same as regards other military expenditures in Russia. They haven't really changed, even slightly increased in some areas
In Russia, the problem is not about the money, it's about technology. The thing is that all of its rearmament programs adopted in 2012, the ones that were supposed to have reached their climax by 2020, failed completely in all areas. Armored vehicles is one example of a total failure. Not one promising model of armored vehicles has reached mass production, although the target year was 2017. Navy technology is also a complete failure. Aircraft manufacture – same here. What Russia did was simply rename the program and set a new deadline – until 2027.
The overall situation in Russia does not seem to be changing anytime soon. The Kremlin won't be suddenly getting more money out of nowhere. Moreover, there will be less cash, because the Kremlin has piled up so many projects to implement... For example, let's take the infamous Crimea bridge, which was supposed to be opened this week but whose launch was postponed (this means that the experts were right saying that the bridge is a complex project which cannot be pushed too fast at Stalin's or Putin's pace, to be opened on a certain "big date"). Similarly, Nord Stream-2 still needs a EUR 30 billion injection. So is the FIFA World Cup, and so on.
That is, there is a huge technology problem for Russia, since all programs adopted in 2012 were designed to deepen cooperation with the West and NATO. Then there were big programs like Mistral. The same was the case with armored vehicles - Russia bought hundreds of them, bought hundreds of artillery units unmanned aerial vehicles, purchasing whole factories in Israel. That is, at that moment, Russia made a technological breakthrough by applying the tactic of Peter I, buying up specialists and technologies.
Russia is not intentionally reducing defense spending – it is not a conscious approach. This is happening because the economy cannot carry this burden
However, since the beginning of the Russian war against Ukraine and after the introduction of sanctions against Russia, this technological inflow has halted. And now it is clear that the Russian defense sector is on the brink of its capabilities. Nothing is working out...
The only thing she succeeded was to continue yet another modernization of Soviet models of BTR-82, T-72, and T-90. That is, Russians do not have any new samples at all.
Meanwhile, Ukraine, which seemed to be seeing a zero level of support of its defense industry until 2014, managed to create BTR-4, which is fundamentally different from Soviet models, and military transport aircraft that are leaders in the world market. But Russia has since created no military transport aircraft. It shows the real level of their defense sector. It might get even worse...
Ukraine, for some reason, likes SIPRI reports, considering them a kind of a benchmark. But in reality these reports do not give a complete picture. The picture is a bit different. Russia is not intentionally reducing its defense spending, it is not a conscious approach. This is happening because the economy cannot carry this burden. If they had the opportunity, if oil prices were increasing, they would also increase expenditures, because, I repeat, they are seeing a huge technology failure and failure in all programs. Reducing military spending in Russia is due to the clamorous economic policy of the Kremlin, the Putin regime that is not capable of effective functioning.
Mykhailo Samus is a Deputy Director of the Center for Army, Conversion and Disarmament Studies