Putin’s Rearmament: Can Moscow Afford It?


by Richard Weitz

What will President Putin’s  defense policy look like in reality?

The implications of Vladimir Putin’s return to the Russian presidency for his country’s defense policy became clearer after the Prime Minister published a lengthy article on the front page of the February 20 issue of the government daily Rossiiskaya Gazeta. The piece lays out plans for a massive military buildup as well as continued efforts at reforming the Russian armed forces and the country’s military-industrial sector.

In this sixth such campaign manifesto, Putin pledges to spend 23 trillion rubles ($770 billion) on defense during the next decade, which he claims would provide the Russian military with more than 400 new intercontinental ballistic missiles, more than 600 new warplanes, some 100 military satellites, and several dozen new warships and advanced air and missile defense systems.

Recalling the disastrous surprise NAZI invasion of the Soviet Union in June 1941, Putin insisted that Russia needed a strong military to protect its political and economic interests in what Putin still saw as a dangerous world, in which unnamed adversaries were seeking to intervene  in other countries to change their regimes and seize others’ natural resources.

In short, “We must not tempt anyone by our weakness.”

Putin seeks a significant expansion of Russian defense spending and re-enforcing Russian arms exports.

Although Putin acknowledged that other countries were unlikely to attack Russia or any other state possessing nuclear weapons, he expressed concern that scientific and technical developments were creating new military technologies that could, like nuclear weapons, also have strategic potential.

Russia also needed to respond to regional and local wars in its vicinity, by which Putin meant Georgia, Syria, and possibly Iran.

Putin’s comments are very much in line with Russia’s current Military Doctrine, which identifies four types of conflicts: small-scale armed conflicts; local wars such as that between Russia and Georgia in 2008; regional wars that can potentially involve many countries; and large-scale conflicts such as World Wars I and II.

The doctrine’s authors state that nuclear weapons will continue to help avert the last two types of wars, but not the other two categories.

In peacetime, the doctrine assigns Russia’s armed forces such tasks as fighting terrorism and maritime piracy, maintaining public order, managing emergencies, protecting Russian citizens and interests abroad, and contributing to internationally authorized peacekeeping missions, such as those undertaken by the United Nations or the Moscow-led Collective Security Treaty Organization, which Putin writes that he wants to strengthen.

Nonetheless, the list of weapons on Putin’s shopping list are so expansive as to imply a need to conduct major regional and perhaps even global wars, confirming that Russian national security managers like Putin still consider NATO and the United States their pacing adversary when establishing military requirements:

“In the upcoming decade, Russia will deploy more than 400 advanced ground and sea-based intercontinental ballistic missiles, eight nuclear-powered ballistic missile submarines, some 20 multi-purpose submarines, more than 50 combat ships, some 100 military spacecraft, more than 600 advanced aircraft including fifth-generation fighters, more than a thousand helicopters, 28 regimental kits of the S-400 anti-aircraft missile system, 38 battalion kits of the Vityaz air defense system, 10 brigade kits of the Iskander-M ballistic missile system, more than 2,300 modern tanks, some 2,000 self-propelled artillery vehicles and guns, and more than 17,000 military motor vehicles.”

According to Putin, during the next decade, the Russian government will prioritize its spending on nuclear forces, air-and-space defense technologies, C4I systems, unmanned aerial vehicles, military aviation transportation, personal protective gear, and high-precision weapons as well as the means for countering them.

The almost $800 billion proposed by Putin would raise Russian military spending well above three percent of Russia’s national GDP, an informal limit that Russian officials have used to limit the defense burden on the economy and avoid following the Soviet path to national bankruptcy.

According to Yaroslav Lissovolik, chief economist at Deutsche Bank in Moscow, Putin’s plan could elevate Russia’s defense spending to almost six percent of national GDP in a few years.

Putin argued that Russia had to spend more on the military than almost all other countries—including other middle powers like France, Germany, and the United Kingdom, which have larger economies—because of the Russian defense procurement holiday of the 1990s.

During this Boris Yeltsin presidency, the little Russian military spending that was available went almost entirely to support current operations and maintenance rather than the necessary modernization of the Russian military and defense industry. As a result, neither of these two institutions have yet recovered from the trauma of the breakup of the integrated Soviet  military-industrial complex. It was urgent, Putin argued, to make up this loss time while Russia still had the chance.

From the perspective of the Russian military-defense system, the 1990s did indeed represent a lost decade in terms of weapons design, development, modernization, and procurement. Even in the early years after Putin became president in 1990, most Russian military spending went toward the research and development (R&D) of new systems rather than to their actual purchase in large numbers.

Following the implosion of the 1990s, the Russian defense budget has increased steadily in nominal ruble terms since reaching nadir during the 1998 financial crisis. This increase resulted from both the importance Putin’s team placed on having an effective military and from Russia’s economic revival, spurred by higher world oil and gas prices, which has generated the resources needed to boost spending on the Russian armed forces. Russian military expenditures have increased by double-digit figures in recent years, but whether Russia can achieve and sustain the even higher level of military spending over the next decade envisaged by Putin is questionable. In addition, it is questionable whether, even if all the money becomes available for the military buildup, that Russia’s military-industrial complex will soon be in shape  to procure the large quantity of high-quality advanced weapons systems on Putin’s shopping list.

From this perspective, the record of recent Russian State Armaments Programs (SAPs) is not encouraging. They all envisaged providing the Russian armed forces with hundreds of new weapons, but their execution was undermined by insufficient financing, pervasive corruption, and the inefficient and ineffective practices of Russian defense firms.  According to the Stockholm International Peace Research Institute, Russia has been increasing its defense budget in ruble terms every year since 1998, but with little to show for it.

Whether Russia can afford this costly projected military buildup remains dubious.

When Finance Minister Alexei Kudrin resigned in September 2011, his stated reason was to protest plans to spend more money on defense, which he considered unnecessary, wasteful, and a diversion form higher priority sectors such as education, healthcare, and other public services.  (There was also speculation that Kudrin wanted to become Prime Minister and resigned upon learning that Putin would give Medvedev that job.) Kudrin later explained that a major defense buildup “is completely impossible to implement with our defence industry in the current state.” His warning about the budget-busting potential of the military buildup has only become more credible in recent months as Russia’s financial situation has deteriorated and as Putin has had to make more election-related spending pledges to counter an unprecedented wave of popular protests.

Putin claims that investing in modernizing the Russian defense industry will impart a more positive fillip to the rest of the Russian economy than the previous modernization efforts focused on the civilian sector. “Sometimes they say the revival of the defense industry is a yoke for the economy, an extremely heavy burden that ruined the Soviet Union,” Putin writes. “I am convinced that is a profound mistake.” He believes that a restructured military-industrial complex would serve as a locomotive that would push many other important sectors of the Russian economy forward, “including metallurgy, engineering, the chemical and radio-electronic industries, as well as the entire range of information technologies and telecommunications.”

Putin acknowledges that this process did not occur during the Soviet era, but argues that the USSR failed because it violated free-market principles, ignored popular needs, did not provide integrated direction of the defense industry, and did not encourage technology transfer from the military to the civilian sectors. He also promised to revise “obsolete approaches to the protection of state secrets” to enhance the exchange of scientific and technical information between military and civilian enterprises. Putin cited the Sukhoi Superjet, a modern civilian passenger jet that Russia has begun selling on international markets, as an example of how the two sectors could collaborate effectively. Even so, Putin’s approach is risky since it entails diverting a vast amount of financial and other Russian resources into a branch of the Russian economy plagued with corruption, price distortions, concealed information, and other barriers to rational decision making.

Of course, one reason for the generous spending pledges to Russia’s military-industrial complex is that Putin wants to rally support among the ten million Russians who either now serve in the military, are veterans of past service, or who work in Russia’s defense industries. Many of these vote for the Communists or the Nationalists rather than for Putin and the other candidates of his party, United Russia.  Putin has made a number of expensive campaign pledges recently; once elected, he will have to decide which of them actually to fund. The mass protests in North Africa and the Middle East will make Russian leaders cautious about cutting back on social welfare spending even after Putin’s reelection.

Furthermore, the Russian government continues to depend heavily on oil and gas exports for revenue, leaving the country vulnerable to the next energy price collapse. When oil prices fell sharply in 2009, Russia’s GDP contracted by almost eight percent and several defense modernization projects were shelved.

Meanwhile, the Russian defense industry depends heavily on exports to sustain its output, achieve economies of scale, fund research and development, and modernize its equipment.

Russian arms exports for 2011 approximated $12 billion and might exceed $14 billion this year.

But in a sort of vicious circle, only those Russian defense companies that can compete internationally for exports have been able to earn the money needed to modernize their equipment and retain skilled employees, which keeps them competitive. The other firms must rely on subcontracts from these successful exporters, but these are still not large enough to help them upgrade outdated equipment and entice highly talented workers, who have skills valued by civilian corporations, to join their companies. The Russian government has yet to adopt its long-awaited multi-year program designed to modernize the defense industry.

Credit Photo: http://www.guardian.co.uk/world/2012/mar/04/russia-presidential-election-vladimir-putin