Russia’s Military Spending: Frequently Asked Questions – Analysis

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Military parade in Red Square in Moscow, Russia. Photo Credit: Kremlin.ru

By SIPRI – Eurasiareview

By Siemon T. Wezeman*

In recent years, Russia has embarked on a military modernization programme funded by rapidly increasing military spending and has pursued a more assertive foreign policy. This has attracted attention to the level of its military spending.

The data in the SIPRI Military Expenditure Database is often used as a convenient way to compare two or more states’ military effort and, by implication, their military strength. Yet according to SIPRI’s data, Russia spends less than might be inferred from the scale of its military activities and the size of its armed forces.

The following answers to frequently asked questions explain the SIPRI figures for Russian military expenditure and how best to interpret them. They should be read alongside the general sources and methods and frequently asked questions for SIPRI military expenditure data.

What are the recent trends in Russian military expenditure?

Russian military expenditure has grown significantly over the past two decades. It increased by 30 per cent in real terms between 2010 and 2019 and by 175 per cent between 2000 and 2019. Although Russian military spending decreased in 2017 and 2018, it rose again in 2019 to reach $65.1 billion (see figure 1 and table 1).

The military burden on Russia’s economy—that is, military spending as a share of gross domestic product (GDP)—was 3.9 per cent in 2019. This was higher than in 2010, but much lower than the peak of 5.5 per cent reached in 2016.

The increase in spending in 2016 and the subsequent decline in 2017 can be partly explained by a large budgetary allocation in 2016 to pay the arms industry for past deliveries of equipment. This payment—which largely paid off debts accumulated since 2011—accounted for 17 per cent of Russia’s total military expenditure in 2016.

While Russia’s military expenditure grew by 9.4 per cent between 2018 and 2019 in nominal terms (i.e. excluding the effects of inflation and exchange rates), in real terms (i.e. measured in constant US dollars) it grew by only 4.5 per cent. In other words, about half of the nominal increase in 2019 was absorbed by inflation.

Full analysis on the evolution of Russian military spending over time is available in the SIPRI Yearbook (e.g. for 20162017 and 2018).

How does Russia compare to other major military spenders?

Russia has consistently been among the world’s top 5 military spenders in the past decade, according to SIPRI data. Russia was the fifth largest spender in 2018 and rose to fourth place in 2019, after the United States, China and India (see table 2), largely due to a fall in spending by Saudi Arabia. It should be noted that rankings for 2018 are based on updated military expenditure figures for 2018 in the current edition of the SIPRI Military Expenditure Database; they may, therefore, differ from the rankings for 2018 given in earlier SIPRI publications.

The USA’s military spending in 2019 was over 11 times greater than Russia’s, while China’s was four times greater. In contrast, Russia spent about 30 per cent more than the largest West European spenders—France, Germany and the United Kingdom. Russia’s military burden in 2019 was much higher than that of China and the other large European spenders and slightly higher than that of the USA.

How will Russia’s military spending develop in the near future?

While SIPRI does not provide forecasts of states’ military expenditure, Russia issues three-year budget plans from which it is possible to derive information. The most recent plan, for the period 2020–22, projects small annual nominal increases in military expenditure. However, the expected rate of inflation means that military spending is likely to fall in real terms.

These plans may still change, in particular in the context of the expected recession caused by the consequences of the coronavirus disease 2019 (COVID-19) pandemic. In addition, the income of the Russian Government is highly dependent on revenue from oil and gas exports. After the plans for 2020–22 were published in late 2019, oil prices entered a period of turbulence. These economic factors could constrain Russia’s future military spending.

How is Russian military expenditure estimated?

SIPRI applies a standardized definition of military expenditure when calculating each country’s military spending. The definition includes all government expenses dedicated to military purposes: as well as the official defence budget, this can include spending under other budget headings. Applying a standardized definition means that SIPRI’s military expenditure data may differ from what countries themselves report as their defence spending.

SIPRI includes the following items in Russian military spending (see table 3):

  • Spending on the ‘national defence’ budget;
  • Spending on military pensions;
  • Spending on paramilitary forces—the National Guard (known until 2017 as the interior troops of the Ministry of Internal Affairs) and the Border Service of the Federal Security Service;
  • Other spending by the Ministry of Defence (including education, healthcare, housing and social support for military personnel); and
  • Subsidies for Rosatom State Atomic Energy Corporation (which is involved in production of nuclear weapons and naval propulsion systems) and the Baikonur Space Centre (which is involved in military space operations).

 

a ‘National defence’ includes expenditure on the Russian armed forces, mobilization and training of reserve forces, the nuclear weapons complex, international military-technical cooperation, applied military research and development, and some other military-related activities.                                                 b This includes expenditure on social support, housing, education, health, culture, etc.

Note: Figures and percentage shares may not add up to stated totals or subtotals due to the conventions of rounding.

What are the sources for Russian military expenditure data?

SIPRI uses open sources to collect data on military expenditure and to generate country-specific assessments. SIPRI prioritizes data from primary (i.e. official) sources, such as budget documents published by government ministries and agencies or parliaments.

For Russian military expenditure, SIPRI works in consultation with Professor Julian Cooper of the University of Birmingham, UK, a SIPRI Associate Senior Fellow who is one of the world’s leading experts on Russian military expenditure. His assessment is based on analysis of draft budget documents sent to the State Duma (the lower house of the Russian Federal Assembly), the approved version of the budget and the final accounts of actual spending.

How reliable are the sources for Russian military expenditure?

SIPRI has no reason to believe that the official sources are unreliable. However, they lack detailed information on each spending category. This means that is it not always possible to determine if all the spending under the headings that SIPRI considers to be military is actually for military purposes.

In addition, large parts of the national defence expenditure are classified (i.e. not made publicly available). This means that the specific purpose for this spending is unknown: all that is known is that it is for the military. This is not unique to Russia as many other states do not provide detailed accounts of their military expenditure.

Why does Russia appear to be a military superpower despite its relatively low levels of spending?

Russia seems to have a much stronger military than is suggested by just looking at its military spending. However, military spending alone cannot be taken as a straightforward indicator of military capability or strength. There are two main reasons for this. First, military spending is an input measure, while military capability refers to output. This output depends on a range of factors in addition to the financial resources dedicated to military activities each year. These more qualitative factors include ‘morale, military preparedness, combat experience, doctrine and organization’. Second, while military expenditure data represents annual input, it does not measure existing stocks, such as the inventory of major weapon systems and other assets.

Relevant factors that may explain why Russia seems to have a much stronger military than its military spending levels suggest are described below.

The relative cost of purchasing military goods and services

SIPRI uses market exchange rates (or, where applicable, fixed official exchange rates) to convert military expenditure data from local currency into US dollars. Market exchange rates can fluctuate significantly from year to year, which has an impact on the apparent value of military spending when converted into US dollars: for example, whereas in 2010 about 30 roubles bought $1, by 2019 this required more than 60 roubles.

In addition, market exchange rates do not always accurately reflect differences in price levels between countries. An alternative is to use purchasing power parity (PPP) conversion factors (or PPP exchange rates). The World Bank defines the PPP dollar rate of a country’s currency to be ‘the number of units of a country’s currency required to buy the same amount of goods and services in the domestic market as a U.S. dollar would buy in the United States’.

The only PPP rates available for all countries are based on a basket of the goods and services that are major components of GDP. Such GDP-based PPP rates are designed to control for differences in price levels and thus to provide a measure of the real purchasing power of the GDP of each country. However, such PPP rates are less reliable than market exchange rates, since they are statistical estimates. Furthermore, the accuracy of comparisons using GDP-based PPP rates depends on it being possible to purchase the goods in the PPP basket in every country, which is not the case. As well as this general inherent imperfection, there is no specific PPP index for military goods, although there is ongoing academic research in this field (including specific research for Russia). Due to these uncertainties, SIPRI uses market exchange rates to convert military expenditure into US dollars.

Nonetheless, there are strong indications that military goods and services cost less in Russia than in the USA or most of Europe and, therefore, that Russian military spending has a higher purchasing power. For example, unlike the USA and other large European states, Russia still relies on conscription. In addition, Russian career soldiers have lower salaries: for example, in 2019 a Russian lieutenant colonel received approximately $1330 per month, whereas a (lower-ranked) captain in the British Army received more than $4000 monthly. Adequate data to make a similar comparison of the cost of acquiring military equipment is not available.

Converting Russian military expenditure using GDP-based PPP rates (based on data from the International Monetary Fund) gives spending of $166 billion in 2019 (instead of $65.1 billion using market exchange rates). This is still less than one-quarter of US spending of $732 billion. A similar calculation gives Chinese military spending of over $500 billion (instead of $261 billion using market exchange rates).

The prioritization of certain segments of the armed forces

In its multi-year military modernization plans, Russia gives a high priority to certain parts of its armed forces. For instance, the nuclear forces have been a particular focus since the early 2000s, and their delivery systems have been extensively modernized. Not only do these prioritized forces receive relatively more new equipment, they also receive more media attention. Meanwhile, the relatively slower progress in other segments of the armed forces tends to be overlooked, creating a disproportionate sense of Russian military power.

The high share of procurement spending

Over the decade 2010–19 Russia spent nearly 40 per cent of its total military expenditure on arms procurement. This is a much larger share than most other states, including all members of the North Atlantic Treaty Organization (NATO). This means that, in absolute terms, Russia’s spending on procurement was more than twice that of France, Germany and the UK, although its total military spending was just 30–34 per cent higher in 2019. While such procurement does translate to some extent into greater military might, it overshadows the fact that other states may invest more in other, more qualitative, components of military capability, such as training and personnel (as mentioned above).

An inheritance of large inventories of major weapon systems

Russia inherited large inventories of major conventional weapon systems from the Soviet Union. A substantial share of these systems remains in operational use with the Russian armed forces, while another part is in storage.

However, most of these weapons have not been modernized in any significant way since the end of the cold war. In contrast, many other European states have retired from service most of their heavy weapons from the cold war period or have extensively modernized them. Thus, although Russia has much larger inventories of heavy weapons—for example, its inventory is larger than those of the European NATO member states combined—the raw numbers hide different levels of weapon capability.

A misleading narrative on military strength

The Russian media and official communications tend to project an image of progress in modernizing the armed forces across the spectrum of military capabilities. This has been most visible in the official information regarding the introduction of new equipment.

However, there is a discrepancy between announced levels of modernization and what can be accounted for by independent observers. Many major armament programmes have not reached their assigned targets and Russia has delayed or downsized procurement plans. For example, in its state armament programme for 2011–20, first published in 2010, Russia foresaw the introduction of 2300 new Armata main battle tanks and at least 55 new Su-57 combat aircraft by 2020. These weapons were presented as new generation systems that, had they been introduced, would have significantly upgraded the capabilities of the Russian armed forces. However, by 2019 the few Armata tanks and Su-57 aircraft actually produced were still prototypes and pre-production versions—none had been delivered to operational forces. Instead, older weapons in service have been upgraded and the production of older weapon types continued. Russia has significantly increased its military capabilities in the past decade, but not as much as it had ambitions to, and not as much as portrayed in some media outlets.

While Russia’s military operations also attract a lot of media attention, they are smaller than those conducted by Western powers. The USA has more than 220 000 personnel based and deployed around the world, including in operations in Afghanistan and Iraq. In contrast, Russia has around 20 000 troops deployed abroad (excluding 28 000 personnel in Crimea). While Russia’s military operations are arguably cheaper than those conducted by Western powers (for the reasons explained above), their effectiveness requires careful assessment. In Syria, Russia conducted successful military campaigns, based on air supremacy in support of its partners’ ground forces, against non-state groups of limited capabilities. In Ukraine, Russia has relied on hybrid operations in support of rebel forces against a smaller state whose military sector was weakened by corruption. This has resulted in a stalemate on the ground.

The above points show that assessments of Russia’s military capabilities cannot be based solely on military expenditure. More in-depth studies on Russia’s military power, including its power-projection, logistics and support capabilities, have been published by the Swedish Defence Research Agency (Totalförsvarets forskningsinstitut, FOI).

*About the author: Siemon T. Wezeman is a Senior Researcher with the SIPRI Arms and Military Expenditure Programme.

Source: This article was published by SIPRI

 

SIPRI

SIPRI is an independent international institute dedicated to research into conflict, armaments, arms control and disarmament. Established in 1966, SIPRI provides data, analysis and recommendations, based on open sources, to policymakers, researchers, media and the interested public. Based in Stockholm, SIPRI also has a presence in Beijing, and is regularly ranked among the most respected think tanks worldwide.

 

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