How Is Economic Crisis Affecting Russian Military Modernization?

Delays and scaling down of orders are real but they don't change the big picture

Thu, Apr 14, 2016
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The drop in Russian state revenues has affected Russian military modernization to some extent, though the Russian government has made an effort to insulate the military from budget cuts. Although the 2015 military budget was cut by five percent mid-year, the total allocation was still 25 percent higher than the previous year’s budget. This allowed the military to continue its modernization process, conduct operations in Syria, and fulfill its training and exercise programs.

With oil prices remaining low, the military is facing a more difficult financial picture in 2016. In November, the Finance Ministry announced that the total 2016 defense budget would be largely the same as in 2015. However, last month, an additional five percent cut was announced, which will result in the first annual net decline in Russian defense spending since Vladimir Putin became president in 2000.

As a result of the deteriorating financial outlook, the fulfillment of the 2011-2020 State Armament Program is now in question. The Russian military continues to develop new designs and receive new hardware but has been forced to reduce the quantities purchased of some items and to defer some big ticket items. For example, completion of the Yasen and Borei nuclear submarine construction programs has been pushed backfrom 2020 to no earlier than 2023 for the Yasen class and 2021 for the Borei class. Whereas Uralvagonzavod has previouslyannounced that it will provide 2300 Armata T-14 main battle tanks to the Russian army by 2020, experts believe that only 200-300 will actually be procured over the next five years, with 2300 remaining a goal for 2030. Completion of the Barguzin railroad-based ICBM system was initially delayed by a over a year and then canceled due to financial problems. Finally, orders of the T-50 fifth generation fighter aircraft were reduced in 2015 from 55 to 12 because of the country’s deteriorating financial situation.

Longer term projects have also faced delays, with procurement of a new long range strategic bomber being postponed in favor of modernization of existing bombers. Plans for building large naval ships have been particularly affected. Construction of a new 14 thousand ton nuclear-powered destroyer, once intended to start in 2016, appears to no longer be under discussion, while plans for large amphibious assault ships, meant to replace the Mistral project that was canceled due to Western sanctions, remain amorphous and may have been quietly put on the back burner.

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Overall, the constraints on procurement that have resulted from military budget cuts should not affect Russia’s strategic outlook in the near to medium term. The net effect of the procurement delays is that the Russian military will continue to depend on existing platforms and weapons to a greater extent and for a longer time period than originally hoped by the organizers of the military modernization effort. However, the Russian military is more than strong enough to hold its own in a conventional conflict against any likely adversaries other than the United States. And it could not hope to match the U.S. military even if the 2020 State Armament Program was fully implemented.

U.S. policymakers should not assume that Russia’s budget problems mean that they can stop thinking about the Russian military. While the Russian military is postponing and delaying many of its most ambitious military procurement projects, the financial situation has had a very limited impact on current military operations. The Russian military has shown that it can continue to maintain its schedule of exercises despite the financial constraints. The military has continued to regularly hold snap exercises, a practice that was begun by Defense Minister Sergey Shoigu soon after his appointment. The added financial outlays that resulted from the operation in Syria have been absorbed by the Defense Ministry without problem, with part of the cost being simply reallocated from the training budget.

Russia’s economic crisis has had at least one positive outcome for the Russian military. The number of applicants to serve as contract soldiers in the military has increased. For young men from small towns in the provinces, a military salary can provide a secure paycheck and reasonable living conditions. With the economic slowdown, the army has become a more attractive option.

The potential threat posed by the Russian military to Western states does not depend on the full implementation of all of the procurement plans. Russia’s existing complement of military hardware includes formidable air defense systems, high quality strike aircraft, and a growing number of ships and submarines equipped with land-attack and anti-ship cruise missiles. These forces have demonstrated their ability to conduct a small but effective air strike campaign in Syria, can present a strong A2/AD challenge to NATO forces operating near Russia’s borders, and have the capability of using cruise missiles to threaten targets up to 2500km away from ships located in enclosed seas (such as the Caspian and the Black Sea) where they are quite well-protected from potential adversaries. These existing capabilities will present a concern for U.S. military planners regardless of Russia’s ability to complete its larger military modernization program. 

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