Putin’s expensive war
Russia’s arms spending is exploding
08/04/2023, 10:35 am
Russia’s war not only destroys large parts of Ukraine and costs tens of thousands of lives. It also costs Moscow dearly. Expenditure on armaments alone now accounts for a third of all Russian government spending.
Russia is spending far more on armaments this year than originally planned. More than $100 billion is earmarked for 2023, according to a government document seen by Reuters. That’s a third of all government spending. The government in Moscow had originally budgeted for armaments expenditures of 54 billion dollars.
Rising war costs are bolstering Russia’s modest economic recovery this year through higher industrial production. At the same time, however, they have already resulted in a budget deficit of around $28 billion – a number that is being exacerbated by falling export earnings. The Russian government and finance ministry did not respond to requests for comment on the figures.
Finance Minister Anton Siluanov recently said that the deficit could increase to 2.5 percent of gross domestic product. In the first half of the year, the deficit therefore increased to around 2.6 trillion rubles. At the same time, income from energy exports fell due to western sanctions. But Russia has enough resources to meet the planned spending, Siluanov told the news site Argumenty i Fakty.
Only in July did the Russian parliament pass a one-time special tax for corporate profits from previous years. “An excess profit tax will be introduced for organizations with an average profit of more than one billion rubles (around ten million euros) in 2021 and 2022,” the Russian State Duma said. All in all, the Russian leadership hopes that the measure will bring in extra income equivalent to around three billion euros.
Global arms spending has risen sharply
Russia is not the only country whose armament costs are rising sharply. According to the Stockholm peace research institute SIPRI at the end of April, the countries of the world put more money into the military for the eighth year in a row than in the previous year. The USA came first, followed by China. In a global comparison, Russia jumped from fifth to third place in arms spending. Germany is in seventh place with 55.8 billion dollars.
Russia-attacked Ukraine saw a whopping 640 percent increase, according to SIPRI – the highest SIPRI has ever recorded for any country in a single year. With military spending now at $44 billion, not including financial support and armaments donations from abroad, Ukraine suddenly jumped from 36th place to 11th place.