Military budget of the Russian Federation

So when the Military shifts its funding from production to maintenance in the next decade, isnt that going to affect the military industrial complex? I mean, without new orders how would the factories maintain the production lines and technological expertise? Or maybe they wiill switch to dual purpose products and probably secure orders abroad

Kimppis wrote:

Viktor wrote:

Kimppis wrote:I did some VERY unscientific calculations...

It would be interested to see those calculations and perhaps even make some corections with the help of other members.

I showed pretty much all of them in that post. As I said, VERY unscientific.

Russian military spending was supposed to be $90 billion before the fall of the ruble. That still stands, because of Russia's domestic military industry. By purchasing power, Russia GDP is (was, before ruble lost its value) around 40% higher than in dollar terms. So I simply increased that 90 billion by 40%. I did the same thing with China.

They certainly get more bang for their buck than the western militaries, in dollar terms, as we can see with the current Russian modernization. So around $130 billion could be a more accurate figure when we compare Russian military spending to some other countries, especially in the west.

Interesting. Generally speaking international economic comparisons can be very misleading because they use the exchange rate, which in monetary terms might mean something, but in real economic terms it means almost nothing. I fully agree with Kimppis that Russia certainly gets more punch for their buck than western militaries in US dollar terms, but the purchasing power of the ruble in the internal Russian economy is much higher than it would appear to be when converted to an international currency. It all depends on the prices' level (including manpower costs), which in Russia are significantly lower than in western economies. Therefore, I would agree to raise Russia's GDP by something around 40% in dollar terms for the effect of international comparisons, although I would raise Russia's and China's military budget by a much higher level due to much lower wages. The cost-effectiveness of investing the equivalent of one dollar in the Russian or Chinese military is tremendously higher than investing the same dollar in western military countries. That's why Russia, with its much lower budget is building a military might that raises concerns in the US/EU.

Maintainence and attrition replacements will still be needed, plus hopefully export orders will have most plants busy.

Certainly civilian products will also keep the lines busy too.

As long as they scale production levels correctly they should be OK... their current production rates are not ambitious, so they should be able to continue working for longer.

Kimppis wrote:I did some VERY unscientific calculations... Russia's nominal GDP per capita used to be 14k before the fall of the ruble. It is 23k by PPP, IIRC. In other words, the nominal GDP is only 60% of the PPP value. So Russia's "real" military budget is also 40% higher. Military budget will rise 30% this year. That is $90 billion, old ruble rate. And let's increase that by 40% and we get roughly around $130 billion. US military budget is 510 billion. So Russia's military budget, without 10 supercarriers, hundreds of foreign military bases, etc., is pretty much exactly 1/4th of the US budget. IMO that is atleast much closer to the truth.  

China's situation is pretty much the same. This year, their budget should be around $150 billion. We get $210 billion.

Their combined budget would be around $350 billion vs. the US $510 billion. Not bad. And at this rate the Chinese budget will keep increasing considerably every single year. (And no, I'm not saying there's a military alliance between them, just for the lulz.)

Why people always think the Dollar vs RUble ration have any direct influence on Russian military defense budget?
As far as i know Russia defense industry does not depends on american technology of artificial manipulated benchmarks in jewyork wallstreet..  So if Russia orders 20-30 submarines and they cost in 2013 10 trillions rubles
in 2013.. the price will be the same in 2015 with the current undervalued ruble in the west.. because Russia does not depend on American dollars.. for its domestic industry .. only for trading with the west. So yeah Iphones will be way more expensive... but their yasen and borei submarines.. and 99% of their defense industry ,there is zero reasons for the purchasing power of the Ruble inside of Russia to be different.  So yes it is misleading benchmark how nations economy are valued by brainwashed people in the west.. because Russia defense industry does NOT depend on how wallstreet value the Ruble..   The americans could easily declare economic war directly to Russia..and stop accepting Rubles.. which means value = 0.. but that will not change the value of the Ruble inside Russia.


anyone who calculate Russian Defense budget.. based on manipulated numbers of ruble vs Dollars.. is misleading itself and others.  Ruble vs Dollars value is IRRELEVANT inside Russia domestic Industry.. So the Defense minister saying that their defense budget will increase by up to 40% only means.. more warship and submarines and military hardware.. NOT LESS. and how the dollar is artificially valued is wallstreet is meaningless . Because Russian Ruble have not lost its value inside of Russia..military hardware is valued in Rubles. not dollars and is made in Russia.

The propaganda in the west is amazing ,that Ruble will not even have value to buy toilet paper and other nonsense.
because of how weak is in comparison with over valued dollars.. and thats completely FALSE.. because again Dollar value means nothing for Russian Defense industry.. it only matters for importing foreign products in Russia..

Russia is already independent on its defense industry. Not many nations can say the same.. and fully independent too in their space technology too.. Russia only need to do the same with their food industry and civilian technology either for business ,health or entertainment.. which pretty much they can do.. and become a truly free nation of western manipulated economies.

The moral story here.. is that NATIONs economy is much more than wallstreet and american financial system . A nation can build its economy completely Independent of western markets manipulation and be very very rich..with a fully developed modern nation , while at the same time its currency have ZERO value in the west. In fact not even paper money is need for trading..  Looks at Argentina.. and IRAN ,under American financial system its currency have zero value.. but their economy continue developing its nation ,business as usual. For foreign trade they not even use paper money.. Same with IRAN..  The real economy is not paper money.. but goods.. real material things. You can see that more clearly in war times.. that nobody use paper money for trading.. but Gold..  i bet you didn't knew that. US dollar only matters for importing  american products.. same with Euro currency. This is why this western currency war is a good opportunity for RUssia  to move their economy to Asia but more importantly to develop fully its nation industry.. and build Russia economy completely irrelevant of US dollar domination in the financial market.

The dollar value ,how fraudulent is the western system should be obvious for anyone ,when the Ukraine currency was rated better than the Russian Ruble..     How can anyone believe such bullshit? A nation that cannot feed its army ..and depend everything from the outside.. do not have anymore anything of value to sell other than its womens  ,that is on the middle of a war and losing territory and needs US and EU to get energy from Russia???

The only thing misleading here.. is US financial petrodollar system. US sells paper money as if that was goods..
and print paper money from thing air..and continue expanding its debts and never pays it. Once BRICS countries start trading only in their own currencies it will significantly impact US dollar presence in the world and its value will sink.

GarryB wrote:Maintainence and attrition replacements will still be needed, plus hopefully export orders will have most plants busy.

Certainly civilian products will also keep the lines busy too.

Uralvagonzavod produces civilian equipment as an example:
- Railway cart systems like tankers and carts (transportation of goods via rail)
- Construction working equipment like excavators and miniloaders
- Railmover
- Tractors

This company is known for producing T-72 and T-90 type tanks and heavy tank like systems.

Kamaz produces military grade trucks but also produces majority of Russia's shunting trucks and semi's used for logistics.  This same goes for UAZ and Zil and all the rest.

In the future, there should be more.  At one point, Izmash used to produce cars and motorbikes, but it doesn't look like it anymore.  Would like to see other products from Izmash on the market like cutlery, tools, etc.

Kyo wrote:

Kimppis wrote:

Viktor wrote:

Kimppis wrote:I did some VERY unscientific calculations...

It would be interested to see those calculations and perhaps even make some corections with the help of other members.

I showed pretty much all of them in that post. As I said, VERY unscientific.

Russian military spending was supposed to be $90 billion before the fall of the ruble. That still stands, because of Russia's domestic military industry. By purchasing power, Russia GDP is (was, before ruble lost its value) around 40% higher than in dollar terms. So I simply increased that 90 billion by 40%. I did the same thing with China.

They certainly get more bang for their buck than the western militaries, in dollar terms, as we can see with the current Russian modernization. So around $130 billion could be a more accurate figure when we compare Russian military spending to some other countries, especially in the west.

Interesting. Generally speaking international economic comparisons can be very misleading because they use the exchange rate, which in monetary terms might mean something, but in real economic terms it means almost nothing. I fully agree with Kimppis that Russia certainly gets more punch for their buck than western militaries in US dollar terms, but the purchasing power of the ruble in the internal Russian economy is much higher than it would appear to be when converted to an international currency. It all depends on the prices' level (including manpower costs), which in Russia are significantly lower than in western economies. Therefore, I would agree to raise Russia's GDP by something around 40% in dollar terms for the effect of international comparisons, although I would raise Russia's and China's military budget by a much higher level due to much lower wages. The cost-effectiveness of investing the equivalent of one dollar in the Russian or Chinese military is tremendously higher than investing the same dollar in western military countries. That's why Russia, with its much lower budget is building a military might that raises concerns in the US/EU.

Problem with Nominal GDP comparisons is that once your currency drops in value greatly, so does its GDP nominal value compared to other countries (which are all compared within USD). This is a flawed logic as this is mentioned under GDP PPP:

For example, if the value of the Mexican peso falls by half compared to the US dollar, the Mexican Gross Domestic Product measured in dollars will also halve. However, this exchange rate results from international trade and financial markets. It does not necessarily mean that Mexicans are poorer by a half; if incomes and prices measured in pesos stay the same, they will be no worse off assuming that imported goods are not essential to the quality of life of individuals. Measuring income in different countries using PPP exchange rates helps to avoid this problem.

Which is the exact thing happening in Russia. Just because the value of the Ruble dropped in half, does not mean that their wealth or the nation itself is half as rich as before. This is important as Russia produces all goods for military and imports have dropped significantly for military production (technically, reason for MCST and Mikron is to replace imports of semiconductors for military production. Elbrus 2C+ processor is used for radar systems as an example).

At 32% of budget (if it is even close to that, don't know total budget numbers), that is still less than what US spends on a budget for their military. Russia also has a significant amount spent on social welfare (people are given free education through the state run universities, now free housing for families with 3 or more kids, public medical care system so you don't go broke for a basic doctors visit, etc). After all of that, that still leaves the nation with roughly 35% left in budget to spend on infrastructure projects, venture funds, etc. That is still a lot of money. Not to mention that the previous two ties into the third aspect in bringing in a higher budget and helping reduce governments work in infrastructure development as many companies who work in the military and civillian sphere, will get enough money to expand productions and increase workforce (which creates more taxable income), example is Almaz Antey as of recent (building two new facilities as example), and medical needs and schooling needs which creates new technologies that can be used in multipurpose.

One major aspect to all of this is the cost of a soldier in Russia and the Cost of the equipment vs anywhere else. A T-90A tank, which is equivelent to any other modern MBT, costs roughly $2M per unit, while an Abrahms or Leopard II (which are usually on par with the T-90A in performance) is estimated at around $4 - $5M per unit. That is double or more than average price of T-90A. Another one that is coming up recently is the India's Rafale Bid. A Rafale costs roughly $150M per unit in what the contract states (mind you, that also includes maintenance and what not), while the Su-30MKI (which is arguably either better or the same) costs about a 1/3 of that (this is export price, which is higher than Russian prices by normal) at a $50M per unit. Su-30MKI has a farther ferry range, high payload, and about similar electronics onboard (actually, both use same Thales HUD, Domacles pod and possibly EW equipment) while Su-30MKI has a more advanced PESA radar with the Bars-M while Rafale is possibly more low observable than Su-30MKI (not verified). PAK FA aircraft at first may cost upwards to $100M per unit, and you will get yourself a 5th gen jet with advanced AESA radar similar to the Irbis-E Hybrid Radar on Su-35S, far more advanced electronic suite, its own Optoelectronics pod, internal weapon bays, greater range and speed than a Rafale, while still being $50B cheaper. After the devaluation of the Ruble, it now allows Russian military equipment to be even more cheaper for outsiders to purchase, thus exports will be greater. In the coming while, Iraq and Egypt are interested in more Russian mil equipment, and that can expand to Argentina, Brazil, further orders with India and China.

talking about miliatary budget I am curious why India budget is so small.
Coz India is the biggest buyer in military market recent years. They buy a lot of weapons and they need find a way to integrate weapon from different sources . it need money
Plus they have more than 1 million soldier to feed. How could they get a smaller budget than japan only has 200,000 man in service .
And a lot domestic weapon research programs need money .
It's a miracle

^^^ PPP what a $1 can buy in India , US or Russia. We are third largest economy by PPP method

I think Russia military budget is big enough compare with their GDP. 4% of GDP is high in major military power .
Ussr failed coz they use more than10%gdp in military and ignore develop their economy
Russia can slightly slow down their weapon modernization .cos Russia has more than 5000 n bomb . Russia is safe no one really wants to has a hot war with Russia . So just keep the intercontinental missle and nuclear sub program .
Economy is the foundation of military ， no. Economy= no military. Even though Ussr has very powerful military mic ,they can't stand long .
Now Russia economy rely on nature resource export . It's dangerous . Russia need modify their economy structure. So does china

USSR had a mil budget of 40% of GDP. It was bad.

Austin wrote:^^^ PPP what a $1 can buy in India , US or Russia. We are third largest economy by PPP method

Not quite. It is what 1 rupee can get you in india. What you described is nominal. Because the Su-30MKI and T-90S are partially made and all assembled in India, that greatly reduced costs and that means India can get away with a budget in mil, calculated in USD and still get a lot of weapons.

sepheronx wrote:USSR had a mil budget of 40% of GDP. It was bad.

No way it was 40%, that's ridiculous. Maybe 20-25, we'll probably never know the exact figures. They had a reasonable standard of living, especially during the 60s and 70s. That would've been totally impossible with a military budget of 40% of the GDP. But yes, it was bad, and most importantly just got worse and worse.

Kimppis wrote:

sepheronx wrote:USSR had a mil budget of 40% of GDP. It was bad.

No way it was 40%, that's ridiculous. Maybe 20-25, we'll probably never know the exact figures. They had a reasonable standard of living, especially during the 60s and 70s. That would've been totally impossible with a military budget of 40% of the GDP. But yes, it was bad, and most importantly just got worse and worse.

i think USSR had around 15% of GDP for military budget

George1 wrote:

Kimppis wrote:

sepheronx wrote:USSR had a mil budget of 40% of GDP. It was bad.

No way it was 40%, that's ridiculous. Maybe 20-25, we'll probably never know the exact figures. They had a reasonable standard of living, especially during the 60s and 70s. That would've been totally impossible with a military budget of 40% of the GDP. But yes, it was bad, and most importantly just got worse and worse.

i think USSR had around 15% of GDP for military budget

Yeah, In my opinion that's a figure that would make the most sense. First of all, USSR's economy was something like 50-60% of the US, by PPP. And If I remember correctly, US allocated something like 6-8% of GDP for the military. So that way their military spending would have been very similar. Regarding the USSR military budget, I've read how the Soviets had 40% or 50% of their GDP for the military according to some, but usually the numbers are at around 20, which is atleast plausible. The numbers are just all over the place. They were extremely secretive about their military spending.

Kimppis wrote:

George1 wrote:

i think USSR had around 15% of GDP for military budget

Yeah, In my opinion that's a figure that would make the most sense. First of all, USSR's economy was something like 50-60% of the US, by PPP. And If I remember correctly, US allocated something like 6-8% of GDP for the military. So that way their military spending would have been very similar. Regarding the USSR military budget, I've read how the Soviets had 40% or 50% of their GDP for the military according to some, but usually the numbers are at around 20, which is atleast plausible. The numbers are just all over the place. They were extremely secretive about their military spending.

yes and consider that 6-8% of USA military budget was the highest rates (vietnam war, 80s build up)

It wasn't the Soviets military budget that was the problem... look at Cuba or North Korea or Iran.

It is economic isolation and sanctions from the west that did in the Soviet Union.

Look at Communist China and the enormous growth it enjoyed when it was being used as a pawn against the Soviet Union in the wests game of the enemy of my enemy is my friend logic.

GarryB wrote:It wasn't the Soviets military budget that was the problem... look at Cuba or North Korea or Iran.

It is economic isolation and sanctions from the west that did in the Soviet Union.

Look at Communist China and the enormous growth it enjoyed when it was being used as a pawn against the Soviet Union in the wests game of the enemy of my enemy is my friend logic.

No it wasnt. The concept of gdp was pointless to Soviets. What did them in was their own stupidity in not financing other sectors of economy. Canada was exporting farming equipment to soviet union cause they didnt build their own (or at least not modern ones). Now they make their own. Sanctions hasnt brought down any nation. Iran has been blocaded for 30+ years and they are still around and not doing bad economically. They like to pretend that sanctions work, but they dont. No real example of them ever working. Sovoets let themselves fall apart with the spat between gorby and yeltsin. If that didnt happen, SU would possibly be around still.

sepheronx wrote: Sanctions hasnt brought down any nation... Sovoets let themselves fall apart with the spat between gorby and yeltsin. If that didnt happen, SU would possibly be around still.

I must agree. Ever since the Bukharin vs. Preobrazhensky debate in the 20s (which Preobrazhensky won) that led to the fall of the NEP (New Economic Policy) and an emphasis in industrialization, Soviet agriculture, with its kolkhozes and sovkhozes, was never a priority. The relatively limited agricultural output of the SU was mainly channelled to feed the massive Red Army, the bureaucracy and the industrial manpower.

Expenditures on state arms programme not cut yet: Rogozin

Interesting

By 2020, up to 70% of the budget will be allocated to the Ministry of Defense of the Russian Federation for the purchase of new equipment

Half of Russian Defense Ministry's expenditures in 2015 to be used on armament program

Expenses on the defense industry will not be cut regardless the current economic situation, deputy chairman of the Military Industrial Commission board Oleg Bochkarev said earlier

ST. PETERSBURG, January 23. /TASS/. Russian Defense Ministry will have more than half of its spending in 2015 to fund a state-financed armament program, Deputy Defense Minister Tatiana Shevtsova said at a lecture delivered for students of St. Petersburg State Economic University on Friday.
“This year the Defense Ministry will channel more than half of all expenditures to fund the state armament program,” Shevtsova said.
Expenses on the defense industry will not be cut regardless the current economic situation, deputy chairman of the Military Industrial Commission board Oleg Bochkarev said earlier. The state defense order will grow by more than 20% year on year in 2015 and by more than 40% in 2017, he said.

Defaults on defense order in 2014 made up for in 2015

Obligations under the state defense order in 2014 made 95%, but there are failures on a number of points, they are brought under control and will be completed within 1-2 quarters of 2015, said Deputy Minister of Defence of the Russian Federation Yuri Borisov.

MOSCOW, January 24 - RIA Novosti. Plucked obligations on state defense orders in 2014 were followed up and will be implemented in the 1-2 quarter of 2015, said on Saturday, Deputy Defense Minister Yuri Borisov.

GOZ-2014 reached 95%, but there are a number of failures on some points, recalled the official.

"They were all taken under control. Reconcile Now" dogonochnye "graphics performance of those outstanding commitments," - Borisov said in the program "General Staff" on radio RSN. He noted that in the 1-2 quarter of 2015, these obligations will be met.

Russia's military budget may shrink 10 percent in 2015 - Rostec

Russian Defense Ministry may spend up to $4.7 billion on new weapons in 2015

Russia to present more than 5,000 samples of new armaments at Army-2015 forum

MOSCOW, March 12. /TASS/. Russia’s Defense Ministry may this year spend some 270-290 billion rubles ($4.4-4.7 billion) on research and design work to create promising weapons and hardware, Deputy Defense Minister Yury Borisov said Thursday.

"We annually spend on R&D some 15-16% of the state defense order's volume," Borisov said speaking at the all-army conference of inventors and rationalizers.

He said the 15% is the minimum to be used to evaluate the intellectual property created as part of the state defense order.

"There is no upper limit. If the product is successful and finds its use not only in the Armed Forces of the Russian Federation, but also on the external armaments market, or if the invention or innovations find their application on the civil market, the effect could be a few times as high as expenditures," the deputy minister stressed.

Earlier, the deputy minister said the state defense order in 2015 will total 1.8 trillion rubles (around $29.5 billion).

In 2014 the state defense order stood at about 1.7 trillion rubles. According to Deputy Prime Minister Dmitry Rogozin, it was expected to grow by 20% in 2015.

Government optimizes the military budget

http://vpk.name/news/129153_pravitelstvo_optimiziruet_voennyii_byudzhet.html

Financing of the Armed Forces in 2015 will cut almost 100 billion rubles, compared with the approved budget

Introduced by the Government in the State Duma draft amendments to the budget 2015 funding of the Armed Forces reduced by almost 4%. As explained "Izvestia" the chairman of the Duma Committee on Defense Vladimir Komoedov, in particular, will be shifted deadlines for some projects in the state defense order. The first reading of the bill is scheduled for March 27.

- Almost all trims, including the Ministry of Defence, but the War Department minor cons, - said the deputy. - According to the article "National Defense" [from law enforcement agencies in 2015] withdrawn 157,217,000,000 rubles from 3.3 trillion. In particular, the armed forces be withdrawn from 99.741 billion originally planned 2.51 trillion rubles.
The general approach used in the draft amendment, - reduced costs for key spending budget by 10%. In this case, the budget allocation for national defense are listed in the exceptions list. In the State Duma Defence Committee explained that for the article "National Defense" it is a lower percentage of correction and reallocation of funds.

National defense expenditures include the purchase and repair of arms and military equipment, research and developmental work, the construction of special facilities, ensuring mobilization and non-military training, military training and logistics, as well as providing military personnel, military personnel and insurance other costs of law enforcement agencies.

The budget of the Armed Forces on 62% consists of the State Arms Program (SAP), and the remaining portion of the cost falls on the Defense Ministry troops and equipping public commitments.

State armament program - a framework document, the declaration of intent with the funding numbers of these intentions, said a member of the Public Council under the Ministry of Defense Igor Korotchenko. In addition, there is the concept of the state defense order (SDO) - a specific contracts, in which to pay the money and made the delivery of certain weapons systems.

- Social obligations and state armaments program sacred to us - no one touches, - the "News" in the Defense Ministry. - Nevertheless, a few percent of the funds for LG this year are transferred to the right. Most likely, it will be advancing on expensive contracts for equipment.

- The state defense order will not be reduced, but will be stretched in time - deadlines for some projects will be moved to the right, - said Komoedov.

The Defense Ministry explained that the problem is solved by the Office sequestration program "Effective army", which was adopted in early 2014 and allows the Ministry to reduce costs. A striking example - the installation of water metering.

- Previously, we have billions flowed into the pipe, because billed at the average rate, now at each crane belonging to the Ministry, it is worth the counter - says the source. - Similarly, electricity and heating.

Moreover, the military money saved introduction of model projects in the construction of military camps and the use of innovative technologies - fabricated structures and mobile tentoukryty.

Earlier this week, Deputy Defense Minister Yuri Borisov spoke about the possibility of a delay in the supply of troops multipurpose fighter of the fifth generation PAK FA. Who better to put in a larger number of less expensive fighter generation "4+".

Can be transferred at a later date, some orders for the Navy. This may be due to the short shipment powertrains from Ukraine, said "Izvestia", the first deputy chairman of the Duma Committee on Industry Vladimir Gutenev.

- Failure to supply is not critical, but somewhat shifted to the right date of commissioning of a particular technology - said Gutenev.According to a source of "Izvestia" in the Military-Industrial Commission (MIC) of Russia, under the optimization will get extensive and costly projects to modernize the large anti-submarine ships of project 1155 "delete" as well as shock destroyer project 956 "Modern".

- The idea to modernize outdated ships that decades earlier were at the dock, in my opinion, was quite controversial. And do not be surprised if by now she decided to give up - says arms expert Alexei Ramm. - It's okay if the savings will give billions on projects to develop other directions. For example, work on the creation of a hypersonic weapons are effectively, there may need to increase funding.

Savings will be achieved, and by eliminating the procurement of aircraft An-70 and possible adjustment programs for the purchase of other aircraft, said the source in the defense industry.
- At the same time budgets for some other programs will be revised upwards. For example, the financing of the corporation "Tactical Missiles" on 2015-2017 years will increase, - he said.

In the United Shipbuilding Corporation (USC) reported that official documents concerning the reduction or redistribution of funding the state defense order in the corporation have been reported. According to the corporation's president Alexei Rakhmanov, JSC "USC" in the established order is ready to participate in the consideration of proposals for the Ministry of Defense of cost optimization in Goza.