The Russian government has doubled this year’s national defense spending target to more than $100 billion — a third of all public expenditure — according to a government document reviewed by Reuters. The increase is well beyond what the authorities were planning as the costs of the war in Ukraine spiral and place growing strain on Moscow’s finances. The figures shed light on Russia’s spending on the conflict at a time when sector-specific budget expenditure data is no longer published.
In addition to higher defense spending, the war in Ukraine has also caused significant damage and disruption to the economy, a situation that is making it increasingly difficult for policymakers to balance military and economic priorities. Rising defense spending could widen the deficit further and crowd out domestic investments. The economic costs of the war are already soaring, with a report by a U.N. agency warning of a humanitarian crisis this winter.
Russia’s official plans for 2022 only called for a slight rise in defense spending to 4.8 trillion rubles ($58.8 billion) — but actual spending on national defense rose over twofold during the period from 1 January to 14 March, according to the data available on the government’s Electronic Budget portal studied by Novaya-Europe. This was mainly due to the war in Ukraine but also partly reflects a collapse in energy sales to Europe and secondary sanctions against Chinese entities that helped the Russian government and military-industrial complex evade Western sanctions.
According to the data available on the site, military salaries accounted for more than half of the total national defense expenditure. The total amount paid to military personnel is also a record high, which suggests that the conflict in Ukraine is having a substantial impact on the country’s budgets and the welfare of its soldiers.
Other sectors, including social policy and healthcare, are getting a smaller share. However, it should be noted that the proportion of all public expenditure allocated to these categories is higher than in previous years.
The figures come as NATO leaders prepare to meet in December to discuss increasing defense spending, with allies pledging to invest at least 2% of GDP to counter the threat from Russia. Some European countries, like Poland and Finland, have sharply increased their defense budgets since the Ukraine invasion. The purchase of modern and costly weapons primarily explains the rise in Poland. At the same time, Finland’s increased spending on defense is partly a result of contributions to the Ukrainian war effort. However, the 2% threshold remains a slippery goal, given that it can be hard to maintain a stable growth rate in a global economy that has experienced a series of booms and busts over the past decade. The underlying problem is the deteriorating state of many European economies, creating conflicts between spending on defense and economic priorities.
