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Russian 2017 Defense Budget

Russian President Vladimir Putin on December 23 holds a major end-of-the-year press conference. The main savings for the Russian budget in 2017-2019 will come from the national defense section, Russian President Vladimir Putin said Friday at this annual press conference. "The main article of budgetary savings will be in the ‘National Defense’ section. When in 2011, we spent 2.7 percent of GDP on the ‘National Defense’ section, this year, for the past five years, we have greatly increased these costs, it is 4.7 percent now, next year it will be 3.3 percent and in 2019 — 2.8 percent of GDP. And for several years we will maintain it [this level of spending]," Putin said 23 December 2016.

Moscow’s military spending in 2017 was marked by a 20 percent decline, having reached $66.3 billion. Military modernization remains a priority in Russia, but the military budget has been restricted by economic problems that the country has experienced since 2014. According to a May 2018 released report on global military expenditure from the Stockholm International Peace Research Institute (SIPRI), China made “the largest absolute increase in spending in 2017, while Russia made the largest decrease.”

Michael Kofman, writing in Russia Matters on May 22, 2018, noted : "The announcement about its steep decline by the Stockholm International Peace Research Institute, or SIPRI, was erroneous. ... The main source of the error is readily identifiable, arcane though it may be: In 2016 the Russian government started paying off defense-sector debt that had piled up over the years, which created the illusion of much higher spending on national defense and, accordingly, a subsequent decline the following year. Before this, the Defense Ministry (MoD) had managed to rack up close to a trillion rubles in debt to defense contractors, who had been producing equipment on credit borrowed from various banks.... After the government decided to pay down the debt, the Finance Ministry provided 792 billion rubles for this purpose, a figure that seemed to boost 2016 defense spending from its actual 3.09 trillion rubles to 3.8 trillion. (Subsequently another 186 billion rubles was spent in 2017 on paying down debt, making the spending appear higher for that year as well.)...

"... defense cuts in absolute terms have been modest at best. Official spending on defense dropped by about 8 percent from 2016 to 2017, from 3.09 trillion rubles to 2.84 trillion, and the defense budget was only scheduled for cuts averaging 5-6 percent over the three-year period of 2017-2019....

"the same miscalculation was made last year by Jane's, which reported a 25-percent reduction in Russian defense spending from 2016 to 2017 based on Moscow's advance announcement of planned expenditures. Jane's later acknowledged the mistake and took down its original story..." "... Instead of the planned 2.768 trillion rubles, the Russian budget's defense chapter has already been amended to 2.953, a 6.7-percent increase; this higher 2018 figure likely includes carryover payments for armament procurement in 2017...."

According to the US Department of Defense, Russian government spending on national defense had generally grown over the last decade and in 2016 reached a post-Soviet record. This increase in defense spending was enabled by both a general increase in the size of Russia’s GDP and a political decision to increase the defense burden — the share of national wealth devoted to defense. In 2015, Russian defense spending reached a then-record $52 billion (in 2017 dollars) and the defense burden was nearly 4% of GDP. The 2016 budget, which was initially to decrease defense spending, was amended late in the year to increase defense spending to $61 billion, a 4.5% defense burden on GDP. By contrast, in 2006 defense spending was $27 billion, and the defense burden was 2.4%. Russian defense spending, however, was poised to decrease in 2017. The 2017 budget called for 2.8 trillion rubles to be spent on national defense, equivalent to $42 billion. This constituted a 30% real cut in defense spending.

Chairman of the Committee of Civil Initiatives Alexei Kudrin believes that Russia has taken a course to reduce military spending. "If you look at the three-year budget, you will see that military spending is significantly reduced: within three years they will be reduced by more than 1% of GDP - this is a very significant reduction, thereby reducing the military spending," Kudrin said 25 November 2017 to journalists after the completion of the United Civil Forum, which was held in Moscow.

Russia spends 11 times less than the United States on defense and one-third of China's defense spending, Russian Defense Minister Sergei Shoigu said 24 May 2017. He estimated the upkeep of one US soldier at $510,000 on average, $170,000 in China and $54,000 in Russia. "Our defense spending is 11 times less than in the United States, and one-third in comparison with China," Shoigu said at a government hour session in the upper house of parliament.




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Page last modified: 28-05-2018 19:31:38 ZULU