Making Sense Of Russia’s Arms Binge

In the wake of Putin’s article on national security for Rossiyskaya Gazeta, there has been renewed interest in Russia’s ambitious military modernization plans for the next decade. I am not a specialist in this (unlike Dmitry Gorenberg and Mark Galeotti, whom I highly recommend), but I do think I can bring much-needed facts and good sources to the discussion.

1. This is not a new development. In fact, the massive rearmament program was revealed back in 2010 (I wrote about it then). Russia’s armed forces were neglected in during the 1990’s and early 2000’s, and enjoyed only modest funding until now; relative to Soviet levels, they are now far degraded. The main goal is to create a mobile, professional army equipped with modern, high-tech gear by 2020.

2. To recap. With oil prices high and Russia’s fiscal situation secure, it IS affordable; it’s not like the old USSR (or today’s US for that matter) spending money it doesn’t have. I also don’t necessarily buy the argument that most of the additional funds will be swallowed up by corruption or inefficiency. Massive new procurement can create temporary bottlenecks, which raises prices, but on the other hand it also allows for economies of scale. The real question is whether Russia absolutely needs to retain the hallowed One Million Man Army, which would appear far too big for the modest anti-insurgency or local wars it may be called to fight in the Caucasus or Central Asia. (There is no possibility of matching NATO or Chinese conventional strength in principle, so that consideration is a moot point).

3. Putin argues for 700,000 professional soldiers by 2017, with the numbers of conscripts reduced to 145,000. This is a huge change, as today – with the failure of the attempt to attract more contract soldiers under Medvedev – conscripts still make up the bulk of the Russian Armed Forces. Many are ill-trained; even things like dedovschina aside, it is impossible to create a good soldier capable of fighting in modern wars in one year’s time. So if successful this will undoubtedly be a change for the better.

4. Will this effort be successful? Based on the results of the previous attempt, Streetwise Professor argues not. I disagree. The previous attempt was marred by the inconvenient fact that salaries were ridiculously low; few reasonably bright and successful people would want to make a career of the military. But since January 1, 2012 military salaries have been radically increased, so that whereas before they were below the average national wage, they are now about twice as big. According to this article this is how the new salaries look like in international comparison.

Lieutenant salaries (pre-bonus)
Russia (2011) $500
NATO East-Central Europe $800-$1400
Russia (post-2011) $1600
France $2300
US $2800
Germany $3000
UK $3500

When one also bears in mind that living expenses in Russia tend to be lower than in most developed countries, it emerges that the new pay scale is only slightly below West European standards. Furthermore, whereas the West European rates are similar to their prevailing national average salaries, the average salary of the Russian lieutenant will be twice higher than the average national salary, which was $800 as of 2011. Remarkable as it may seem based on current culture*, but it’s quite possible that the military will come to be seen as an attractive career choice in Russia.

Below is an infographic from Vzglyad which gives you some idea of the extent of the increases. There are three rows of figures for each rank. The third one represents the average salary (including bonuses). The dark column represents 2011, the lighter column represents post-Jan 1st, 2012.

5. The total cost of the program to 2022 is 23 trillion rubles: 20 trillion for modernization, 3 trillion for defense plants.

According to Vesti, 1.7 trillion rubles will accrue to the additional costs of higher salaries and military pensions in 2012-14 alone. Extending this to 2022 gives a figure of 4.2 trillion rubles. However, we can expect the costs after 2014 to increase further, because of the growing share of contract soldiers and probable further increases in military salaries. So in practice that would probably be something like 7-10 trillion rubles on personnel costs.

So while the rearmament program which focuses on “hardware” is gargantuan, the increases in spending on “software” are very substantial as well.

6. Another myth is that the increased military spending will bite hard into social spending, education, and healthcare. After all, the projected federal budgets show declines in the share of education and healthcare spending, while military spending increases. I bought into it, until I found this article by Sergey Zhuravlev, a noted Russian economist.

This is because of the changing structure of government spending. First, under Medvedev there was a big increase in spending on anti-crisis measures (which are temporary and have now ebbed away), then on big increases on social spending in the run-up to the elections. So naturally, as revenues grow, there will develop room to increase military spending without decreasing social spending, e.g. on pensions. The sum total of the increase in military (and general security, police) spending is not going to be more than 1.5% points of GDP.

In practice, most of the increased spending will accrue at the expense of declines in spending on the national economy and (a very modest) amount of new debt. The former is substantially associated with the end of spending on the Sochi Olympics. So the picture, as Zhuravlev argues, isn’t so much “guns instead of butter”, as “guns instead of Sochi.” As for the debt, it will only constitute an additional 3.5% points of GDP to 2014, which is an insubstantial sum, especially considering Russia’s minimal aggregate levels of sovereign debt.

It is true that as a share of GDP, spending on education and healthcare will fall; this isn’t too desirable, since – especially on the latter sector – they aren’t high in the first place. But it is important to note that this refers to the federal budget, and that the total GDP is projected to increase substantially to 2014; in practical terms, federal spending on education and healthcare will remain flat. But most healthcare and education spending occurs at the regional level. Regional spending in turn will not be under the constraints imposed on the federal budget by rearmament, so in real terms aggregate total education and healthcare spending will continue increasing.**

* Even here I need to make a caveat. Whereas the Army is very unpopular in intelligentsia, Moscow, and emigre circles (of which I am, admittedly, a part) this isn’t quite the case at the all-Russia level where opinions are on balance ambiguous, NOT negative. A majority consistently approves of the Army, and as shown in this Levada poll, even opinion on conscription is typically split 50/50. Only 21% think that Army service is “a waste of time.”  The lesson is not to make general extrapolations from unrepresentative samples.

** This is assuming that the whole military spending thing isn’t just pre-elections braggadocio that will be quietly dropped in favor of boring, useful stuff like transport, education, and healthcare as argued in a recent Vedomosti article citing anonymous government sources. I guess that’s a possibility, but I doubt it will happen; the big military spending rises have been in the works far too long to be just dismissed this May.


  1. “According to Vesti, of those 1.7 trillion rubles will accrue to the additional costs of higher salaries and military pensions in 2012-14 alone. Extending this to 2022 gives a figure of 4.2 trillion rubles. However, we can expect the costs after 2014 to increase further, because of the growing share of contract soldiers and any further increases in military salaries. So in practice that would probably be something like 7-10 trillion rubles on personnel costs.”

    That’s absolutely not true and misunderstanding. 23 trillions will be allocated for military modernization only: 20 trillions for arms procurement and 3 trillion for defense industrial complex modernization.

  2. Alexander Mercouris says:

    I am not an expert on matters military so I am going to keep my comments here to a minimum. I would just say two things:

    1. Viz Anatoly’s 2010 comment I would not entirely discount the argument that development of the military could enhance the technology base of the economy. Historically that is exactly what happened in the west in the period of the two World Wars when investment in military technology led directly to the mass development of air transport, advanced chemicals, electronics and radio equipment, metal alloys etc. More recently even something like the microprocessor and the internet were originally driven by military develpments. I would add that military technology is an area where Russia plays to its traditional strengths. You do not have to be a military buff to know that Russia has historically been a producer of outstanding weapons systems. Who has not heard of the MiG fighter, the SAM missile, the Kalashnikov rifle and the T34 tank?

    2. I have read Putin’s article and I think he is completely in earnest about developing the military. Incidentally it contains a striking passage in which he calls the people who sought to destroy the military in the 1990s traitors. It is the strongest language I have ever read or heard him use with reference to the liberals. Though the article is obviously addressed to a military audience I have no doubt he means it.

  3. Alexander Mercouris says:

    I have followed up the link on this post to Mark Galeotti’s blog. I remember him as an outstanding commentator on Soviet affairs in the late 1980s and early 1990s and it has been a pleasure to find through this blog that he is still active.

    There is however one point arising from his blog that I do want to make. I notice that he has drawn some parallels with the Russian political situation today and that of the late tsarist era. In this he follows a common trend. No less a person than Putin himself has got into the habit of seeking to lend authority to what he says by resurrecting the ghosts of what must in Russia be long forgotten late tsarist dignitaries who he quotes from in much the same way that Soviet politicians used once upon a time to quote from Lenin or Marx.

    In my opinion Russian politics and society today are so different from those of the late nineteenth and early twentieth century that no comparison or analogy drawn between the two periods is meaningful. Attempting to do so and to compare the situation in Russia today to that of (for example) 1905 or 1917 is a mistake and only causes misunderstanding.

  4. As always, though, the plan relies on constants that could become variables. While energy prices are likely to remain high for the forseeable future, supply may not.

    This article

    argues the Russian energy output is reaching its peak, and that the next president will face a decision between cutting taxes to maintain output, or splurging on social spending to quell protest.

    We’ve all heard warnings that Russia’s “oil boom” is about to collapse before, and they’ve always turned out to be based mostly on wishful thinking. Also, I tend to agree with you that the “simmering cauldron of unrest” that is supposedly brewing in Russia is likewise a product of wishful thinking based on what the west would like to see happen. However, it would pay to be cautious when forecasting long-term spending, and defense is a game you need to get into for the long haul. If you let it run down for a couple of years – or more – the startup costs to modernize now that you’ve skipped a generation or so of innovation are murderous. Likewise, stuff wears out fast in the military. Although it’s engineered for extreme environments, most everything these days except for some of the Army’s vehicles and light arms contains complex software and finicky electronics. If military salaries are going up, it stands to reason those of military contractors and suppliers must as well, or the people who build stuff for the military will be in the military; why would anyone build tanks for peanuts when you can drive around in them for twice as much. I’m generalizing, and there are other factors such as non-contract service, but I’m sure you see what I mean. Military equipment in a combat zone is frequently destroyed or abandoned; look at the hideous costs to the USA for equipment in the Iraq war. It probably didn’t help that KBR contractors abandoned brand-new trucks in they got a flat in a dangerous area, and Russia is not currently at war with anyone, but if you build your military assuming it will never have to fight you are making a big mistake, and again I’m sure you see what I’m driving at. Add to all that the fact that big-ticket items such as major warships typically take so long to go from design to acceptance that many of their systems are getting old before the ship first tastes salt water, so you have to build succession planning into your designs; how long can this ship realistically remain in serrvice, and when do wee have to start building its replacement so as to assure no drop in overall strength as new units come on line?

    I’m very much in favour of Russia developing a modern, professional military, and am a believer that owning such a military is a strong factor for regional peace – fewer people want to chance attacking you if you can clearly protect yourself and exact bitter costs for the nation that ventured it. But planners need to be aware that it’s a hungry beast, and never grows less so. The USA is able to maintain a large military not only because it has an enormous defense budget and a massive domestic arms industry, but also because it is the world’s biggest arms dealer by a significant margin. Russia’s share of the arms market has declined from Soviet years, and it would need to pump up international sales in order to inject needed cash into the defense budget.

    It’s certainly achievable – almost anything is if you have the imagination to get started and the determination to follow through. And the money to pay for it, which depends heavily on energy in Russia’s case.

  5. AK: “…it is impossible to create a good soldier capable of fighting in modern wars in one year’s time. So if successful this will undoubtedly be a change for the better.”

    Why is it imposible to create “a good soldier” in less than a year when it’s routinly done in the US? For new recruits specializing in infantry, the Infantry Training Brigade (ITB) conducts fourteen weeks of One Station Unit Training (OSUT) consisting of both Basic Combat Training (BCT) and Advanced Individual Training (AIT). The mission of the ITB is to transform civilians into disciplined infantrymen that possess the Army Values, fundamental soldier skills, physical fitness, character, confidence, commitment, and the Warrior Ethos to become adaptive and flexible infantrymen ready to accomplish the mission of the Infantry.

    • US recruits are enthusiastic about the Army (they are volunteers) and are all already at respectable or excellent levels of fitness (because there are entrance physical tests). The vast majority of them will also firearms experience. So the comparison isn’t valid.

      But even if we assume it takes half a year to train up a Russian conscript to basic proficiency, that still means that at least half the conscript Army are noobies at any one time.

      • I think you’re just making stuff up as you go. In fact, Russian conscripts may be better prepared for the military service because the Russian school syllabus (see, they teach it in school!) includes Basic Military Training including lessons for pupils that teach how to strip and shoot an AK47, the best response to a chemical, nuclear and biological attack and introduciton to army regulations.

      • Ummmm…I’m afraid that’s not exactly correct. In fact, the U.S. Department of Defense Report “Too Fat To Fight”

        (authored and supported by an impressive collection of retired military officers and senior non-comms) inferred that 27% of military-age young adults in America were too out of shape to pass entrance requirements. You might conclude from that that your statement is still accurate, because those who don’t make it in don’t count, and that’d be accurate but for the fact that they DO make it in. According to Colonel Jeremy Martin’s report, “21st Century Recruiting Challenges for America’s Army”,

        (1) the number of waivers issued to allow substandard recruits to be accepted jumped almost 50% in 2006 over 2004, including waivers for moral turpitude, medical problems, criminal records and drug use, (2) recruitment from the least-skilled class of recruits climbed eightfold between 2006 and 2008, (3) the percentage of recruits who were high-school graduates dropped 13% between 2004 and 2006, and (4) the age of first-time enlistees was climbing steadily, resulting in 42-year-old recruits where the desirable age is 18-30.

        In 2008, Major General Thomas Bostick (at the time, Commander of United States Army Recruiting Command) testified before the Senate Armed Services’ military personnel subcommittee, “Less than three out of 10 of our nation’s youth are fully qualified for service in the Army due to disqualifying medical conditions, criminal records, lack of education credentials, or low aptitude test scores.”

        Conscript armies generally – almost always – retain a core command element of experienced professionals who are full-time military men. Even recruits who receive only rudimentary training can fight capably if they are properly motivated, inspired and led; good leadership, as in many professions, hides a multitude of sins. When I joined the Canadian Forces, back when dinosaurs still roamed the earth, Basic Training (which took you from yesterday-a-civilian, green-assed recruit to ready to start learning your trade) was about 14 weeks. Trades training was another couple of months, depending on what trade you were. I joined in March, started my Basic Seamanship in June and was posted to my first ship around September. But on conclusion of Basic Training we had all done all our weapons-handling training, first aid, damage control and firefighting and NBCD (Nuclear/Biological/Chemical Defense) training, and if we had been Infantry we would have been sent straight to the Regiment.

        There would have been a lot of conscripts in the 58th Army in August 2008. The Georgian Army could boast excellent training; the Georgia Train and Equip Program began in 2002 and gave way to the Sustainment and Stability Program, which continued right up to the opening of hostilities. The 58th went through them like a brick through a window.

      • Volunteers often volunteer because of monetary reasons. Conscripts may miss the enthusiasm of volunteers but make this up by being better people

        • Alexander Mercouris says:

          My only experience of the British army, which like the US army is a professional volunteer contract army, was about 20 years ago when I was involved in an advice project in Woolwich, a district of southern London where there is a big army barracks. Many of the people I advised were soldiers. They impressed me as a cheerful and friendly bunch very different from the gung ho image I as a civilian had of soldiers. They came across to me as young people doing a job, very much like other young people doing other jobs. I can’t say I detected any tremendous sense of enthusiasm amongst them.

  6. Ivan Ivanov says:

    One needs to bear in mind that Russian salaries are given post taxes, there is no personal income tax in Russia. However, the West European salaries are pretax. Therefore, since the European taxes tend to be about 50% of the gross income, the Russian leutenant salary is equivalent to twice the posted amount. Furthermore, with UK and most of Western Europe having the cost of living about 50% higher than in Russia, one has to increase 1,600$ of Russian salary by 50% first and then double it to make the tax adjustment. This would give us 4800$ which is the highest in Europe. Therefore, Russian leutenants can be effectively considered the highest paid in Europe and in the world in their rank.