RUSSIA TO RAISE DEFENSE PROCUREMENT SPENDING: WHAT IS IT GOOD FOR?

An announcement by Acting Russian President Vladimir Putin late last month that Moscow will increase defense procurement spending by some 50 percent this year has grabbed headlines in Russia and the West. Yet, several weeks later, the Russian government has still not provided specific figures clarifying precisely what Putin’s announcement means for either the armed forces or Russia’s defense industries. The numbers which have been bandied about, however, suggest that the increase in procurement spending itself will likely not be a particularly large one. There have also been suggestions that the increased spending for procurement will come in large part from a reallocation of funds within the established military budget rather than as part of a significant broader rise in overall defense spending. For a number of reasons, therefore, Putin’s announcement seems as likely to raise tensions within the armed forces as to ease them. The vagueness of Putin’s announcement, moreover, not to mention the continuing failure of the Kremlin to clarify what it means, suggests that the promise to raise procurement spending may have as much to do with getting Putin elected president as with addressing the armed forces’ real budgetary needs.

Putin’s announcement came during a January 27 Russian cabinet meeting. In it, the acting Russian president said that the government intended to increase procurement spending for the year 2000 by some 50 percent over 1999. Putin denied that the spending increase was driven primarily by the war in the Caucasus. Instead, he said that it was part of a broader planned effort to address the army’s financing needs and to revive the country’s struggling defense industrial sector. According to Deputy Prime Minister Ilya Klebanov, who was present at the cabinet meeting and who oversees Russian procurement policies, the government intends also to raise spending on arms research and development by some 80 percent in 2000. Neither he nor Putin provided any specific figures relative to the spending increases, and Klebanov failed to indicate whether the research and development spending was a separate item, or whether it was part of the 50 percent increase in procurement.

Reports quoting Klebanov did suggest, however, that the procurement spending increases would be targeted at specific programs, and that they would be part of a broader restructuring of defense allocations in this area. The big looser, according to these reports, will be Russia’s strategic missile troops. They reportedly had been receiving approximately 80 percent of all procurement allocations. That figure will apparently be cut to about thirty percent this year, with the remainder to be directed toward improving Russia’s conventional forces instead (Itar-Tass, January 27; Kommersant, Rossiiskaya gazeta, January 28).

More specifically, increased funding will reportedly go to improving the army’s radio and communications capabilities; launching new military satellites; providing individual protection equipment and night-vision devices for the ground forces; and upgrading helicopters and ground-attack aircraft such as the Su-25 jet, which will be fitted with night-vision equipment and new, high-precision missiles and bombs. Construction of additional Topol-M ICBM’s will reportedly also continue to receive financing. Klebanov himself was quoted as saying that while nuclear deterrence would still be “the top priority” for Russian defense planners, purchases “will be increasingly directed toward the development and production of weapons for conventional forces.” A Russian defense analyst made a similar point, saying that “the emphasis [henceforth] will be on weaponry used in low-intensity conflicts, like Chechnya” … because “the threat of global war is receding, while the danger of regional conflict has grown” (AP, January 27; Wall Street Journal, January 28).

Given that Russian procurement spending has fallen so precipitously over the past decade, however, even a 50 percent increase will not amount to a great deal. Indeed, Russian reports estimate that procurement spending will rise from a paltry 24 billion rubles in 1999 to 36 billion rubles this year. Given changes in the ruble-dollar exchange rate, one Russian source suggests that real procurement spending for 2000 will be a little over US$1 billion–not much more than last year’s figure (Vremya MN, January 28).

Aides to Klebanov, moreover, have indicated that much of the increased spending on weaponry will actually be realized through a reallocation of monies within the defense budget rather than through any significant increase in overall defense spending (UPI, January 27). That raises more than a few important questions. How, for example, will Russia accelerate production of the Topol-M ICBMs and upgrade other elements of its strategic forces–as it has warned the United States it intends to do–while simultaneously moving scarce funding from those forces to its conventional troops? In the same vein, how can the Kremlin also meet its commitments to raise pay for the troops (and to fulfill especially generous pay arrangements that it has promised to soldiers serving in Chechnya and Kosovo) and to improve currently abysmal living conditions more generally? Army morale depends on positive changes in this area, as does the government’s ability to retain the services of disgruntled officers scheduled to renew their contracts.

There is also the question of government arrears to Russian defense providers. Klebanov has admitted that 1999 defense contracts were paid for only 50-60 percent. He has also pledged that the government would clear up arrears for 1999 defense contracts by the end of April, and that all debts accumulated in the 1990s would be paid over the next two to three years. But it is not clear where the government will find the money to meet those commitments as well.

The political contract which has won Acting President Vladimir Putin the support of the armed forces–and which serves as the basis for much of his current popularity more generally–is one grounded in his support for the military and his commitment to strengthen Russia’s security. He has managed to fulfill that contract thus far by giving the army free rein in the Caucasus and by backing it with both funding for the war and supportive rhetoric. Higher Russian oil revenues have been a key to the successful functioning of this relationship thus far. But those revenues are not guaranteed to continue, and tensions could quickly emerge both within the armed forces and between even a popularly elected Putin and military leaders if budget squeezes become a fact of life once again for the Kremlin.

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