This is how Russia spends its oil and gas excess income on the war: a Novaya Gazeta. Europe exclusively conducted research

The total sum of payouts allocated to families of Russian soldiers killed and injured in Ukraine has surpassed 113 billion rubles (€1.78 bln). Out of that number, 89 billion rubles (€1.4 bln) have already been paid out. This could be evidence of Russia having lost at least 10-11% of its military personnel from the initial group of forces that invaded Ukraine in February, Novaya Gazeta. Europe has calculated. Meanwhile, many victims of the war are not getting compensated, yet the overall spending on the army, Russia’s National Guard, and the classified budget lines for this year could end up costing at least 8.2 trillion rubles (€129 bln). We share our findings on how much the Defence Ministry thinks a Russian serviceman’s life is worth and whether Russia will have enough resources to restore the war machine.

RESEARCH SUMMARY

• The Russian government has already allocated 113 billion rubles (€1.78 bln) for payouts to relatives of killed and the injured Defence Ministry, National Guard, and Internal Affairs Ministry employees. This could mean that the army’s irrecoverable losses are at least 15-17 thousand servicemen out of the 150 thousand people in the “invasion army”.

• The real losses of the Russian security forces and the LDPR forces, according to different estimates, could be anywhere from 15 to 37 thousand deceased. However, the payouts sometimes come with a big delay. Legal experts report hundreds of complaints due to rejected payouts for an injury.

• Overall, Russia has spent 3.6 trillion rubles (€56.8 bln) on the army, the National Guard, and the classified budget lines over the past six months — a trillion more compared to the January-June period of 2021. By the end of the year, that spending could amount to at least 8.2 trillion rubles (€129 bln). That is a third of the yearly federal budget. But even that will not help to quickly restore the losses in military equipment.

• Another beneficiary of the war has been Rosmolodezh, the Federal Agency for Youth Affairs. Its expenditure has grown eight times compared to the period of January-June of last year: from 3.5 billion rubles (€55 mln) in 2021 to 30.7 billion (€484 mln) in 2022. In particular, 18.6 billion (€296 mln) have been allocated to the Institute of Internet Development, which publishes content “aimed at the strengthening of moral values”.

• The war has made Russia not only experience additional expenses but also excess income from oil and gas sales. Overall, the additional income over the past half a year has surpassed 3.3 trillion rubles (€52.1 bln). This is close to the amount that Russia has spent on the army, the National Guard, and the classified budget lines.

How much is a soldier’s life worth?

On 3 March, at the beginning of the war, before Bucha or Mariupol, Vladimir Putin made a declaration. “Our soldiers and officers strive not to allow any civilian death, and, unfortunately, are experiencing losses themselves,” he said.

During the same speech, he proposed to increase the payouts in case of an injury or death of a soldier fighting in Ukraine: up to 4.5 million rubles (€71,052) to an injured conscript, up to 6 million rubles (€94,736) to an injured contract serviceman, and up to 9.5 million rubles (€150,000) — to families of a killed soldier. Additionally, all servicemen get military insurance in case of injury or death, up to 3 million rubles. The insurance is paid out by the company Sogaz. All in all, 12.5 million rubles (€200,000) for the life of one Russian serviceman, an unprecedented number in Russia.

By 10 March, two weeks after the beginning of the war, the money for the promised payouts started to be allocated. The Ministry of Finance allocated 1.5 billion rubles (€23.7 mln) to the National Guard and 15 billion (€237 mln) — to the Ministry of Defence. This is about the same as the payout amount calculated after the first week’s fighting losses — during that week, 498 Russian soldiers had been killed, and 1,597 wounded.

At the end of March, the payouts reserves were increased up to 32 billion rubles (€505 mln). At the beginning of April — up to 60 billion (€947 mln). Despite the fact that the Defence Ministry only officially confirmed that 1,351 soldiers had died and 3,825 had been injured.

During the “second phase of the special operation”, when Russian troops began their capture of the Donetsk and Luhansk regions, the speed of the increase of the allocated funds dropped dramatically. During the first 40 days of the war, 60 billion rubles (€947 mln) were allocated for the payouts to families of killed soldiers; during the next 90 days — 53 billion (€837 mln).

The last time the payouts limit was increased for the National Guard was on 27 April — up to 8.3 billion rubles (€131 mln). The Ministry of Internal Affairs was allocated 414 million rubles (€6.5 million), only once. The biggest amount for the payouts was allocated to the Defence Ministry. It received 104 billion rubles (€1.64 billion). The money is transferred from the government reserve fund. The fund is continuously receiving more money due to the excess oil and gas income, which has grown, in part, because of the war.

The infographic shows the regional budgets for the payouts to injured servicemen and families of killed soldiers, adopted as of 1 June (not all regions have published the data as of 1 July yet). It appears that, by the beginning of the summer, at least 63 out of 88 already designated billion rubles had been allocated to the regions for the payouts.

One can see which military units from which regions are taking part in the war (from almost all of them) and who suffered the biggest losses. The biggest amount of money has been transferred to the Rostov and Zabaykalsky regions. These regions are where the 8th Guards Combined Arms Army and 29th Combined Arms army are based. Rostov also hosts the Southern Military District Headquarters.

The biggest losses could have been suffered by the Southern and Western Military Districts — they are the most combat ready military districts of Russia. The lowest amount of money was received by the parts of the Eastern Military District (excluding the Northern Fleet).

It bears saying that the infographic gives only an approximate idea of the real number of losses. Later on, the Ministry of Defence could reallocate money between regions. For example, the funds for the payouts can first go to Rostov, then — be transferred to Volgograd, military expert Pavel Luzin thinks.

The army is not the only one suffering human losses in Ukraine. Volunteers, doctors, government officials, the Ministry of Emergency Situations employees are also suffering losses over there. They are also supposed to receive a 3 million (€47,800) payout in case of an injury or 5 million rubles (€79,688) are supposed to be received by their relatives in case of their death. The federal budget has already paid out 300 million rubles (€4.8 mln) of compensation in such cases.

HOW WE DID OUR CALCULATIONS

To map out the budget spending, the Russian Ministry of Finance uses different codes for different expenses. Some of them are permanent. Some are introduced temporarily for specific expenses — for example, for the COVID-19 payouts to doctors.

In cases when money goes to families of killed servicemen or to injured soldiers, the ministry uses a permanent code 30240. There is also a code for similar payouts to the Internal Affairs agencies employees — 30250.

However, on 10 March 2022, the government integrated information system Digital Budget started using new codes — 3024F and 3025F. In April, the ministry explained that these codes were also being used for the payouts to injured soldiers and families of the killed, only through the means of the Russian Federation government reserve fund.

How exactly did we connect these payments with the war in Ukraine? First of all, the date of the introduction of the codes — they were implemented two weeks after the start of the war. Secondly, it is the fact that these codes do not have a previously established payout limit (something all permanent codes have). The limits on the new codes keep increasing together with the number of killed in Ukraine. And thirdly, the expenses connected to the codes 30240 and 30250, and other codes that could potentially be used for the Ukraine war payouts, have not seen any significant difference compared to the first half of the year in 2021, and its established limits are not raising.

All in all, 113 billion rubles (€1.78 bln) have been allocated for payouts to the Defence Ministry, the National Guard, and the Internal Affairs Ministry. If we take into account the 1:3 ratio of killed versus injured (as previously stated by the Defence Ministry), then the government might have given payouts to families of about 4,100 killed persons and to about 12,400 injured soldiers. If we say that the ratio of killed versus injured is 1:2 (for example, a part of the wounded servicemen got better and went back to combat), then we would have around 5,300 deceased and 10,600 wounded. If the ratio is 1:1, then the number of those killed and injured is about 7,300 both.

The payouts to families of civilians killed in Ukraine are conducted according to a new code 3145F. They are also compensated through the government reserve fund.

“No body, no compensation”

113 billion rubles (€1.78 bln) have been allocated for the purpose of the payouts. According to approximate calculations, that money could be used to compensate for the death of 4-7 thousand people and 7-12 thousand people getting wounded. Thus, irrecoverable losses of the army are at least 15-17 thousand soldiers. That is 10-11% of the initial group of forces that invaded Ukraine in February.

These numbers are close to the estimates of the army’s losses verified by the journalists of Istories and Mediazone. Yet, most likely, these numbers are way lower than in reality. The last time the Russian Defence Ministry reported the number of losses was at the end of March — according to them, 1,300 Russian soldiers had died. But, for example, the UK Ministry of Defence estimated, back in May, that the Russian army had lost around 15,000 soldiers. According to Ukraine, 37,400 servicemen had died, including all other pro-Russian forces.

The government payouts and, respectively, our calculations do not take into account the losses of the LDPR military, which could also be in thousands. We do not know if all the “volunteers” fighting in the Wagner group get compensated in case of injury or death. Not to mention that not all soldiers get the payout, even while fitting the criteria. Lastly, there are always delays: the time from a contract serviceman’s death to the allocation of funds for the payout could be weeks or more.

It could take months before a family of a killed soldier receives compensation, says military expert Pavel Luzin. “The army is one big bureaucratic machine. If you don’t have a body, a report, then you don’t get the money,” he explains. His estimate of the number of dead Russian servicemen is 16,000. The other losses, including the LDPR militia, countless “volunteers”, Russia’s National Guard, according to him, amount to about 20,000 killed or severely injured. These units are badly equipped and get almost no training, the mortality rate is “horrendous”, says the expert.

Maxim Grebenyuk, lawyer and head of the human rights defence project Military Ombudsman, says that he receives hundreds of complaints due to rejected compensations for an injury.

“At first, there weren’t clear guidelines of what is considered to be wound, trauma, concussion, or injury. And everyone who had applied got paid, really quickly, even if they had the slightest injury or concussion,” he explains. “But on 22 April, the Defence Ministry established a procedure for getting compensation, and serious problems followed.”

Now, the government provides benefits only according to a list of injuries enumerated in the governmental resolution #855. If a wound is not on the list, then the soldier is refused any compensation.

“That resolution would be more fitting for peacetime. What we ended up having is a soldier with a broken finger receiving both the insurance and three million rubles. Meanwhile, if a soldier, for example, has a penetrating flesh wound or multiple shrapnel wounds following a mine-field trauma, which, however, did not lead to tendon, muscle, great blood vessels, or nerve damage, then that person is not fit for compensation. I have got a lot of clients with serious injuries, too,” Grebenyuk adds.

It is rare, but sometimes even the families of the killed soldiers are refused compensation. The payouts are for a strict number of relatives only: parents, spouses, and children get equal parts of the money. “There was a case when a soldier, a single and childless orphan, died. His brother and sister, whom he grew up and was very friendly with, unfortunately, got no compensation,” he says.

War budget

The war, overall, has been pretty expensive for Russia. Every third ruble from the federal budget goes to either the Defence Ministry, the National Guard, or the classified budget lines that include the purchase of arms and the work of special services. These expenses cost the Russian government 3.6 trillion rubles (€56.8 bln) over the past six months — a trillion more compared to the January-June period of 2021.

By the end of the year, that spending could amount to at least 8.2 trillion rubles (€129 bln). The Finance Ministry has already pre-approved this sum. Basically, the government has decided on its own to increase the “military” expenses by 2.2 trillion rubles (€35 bln) compared to the previously approved 2022 budget.

The government has spent over a trillion rubles (€16 bln) on “purchasing arms and military equipment” only. That is almost 440 billion rubles (€7 bln) more than the same period of last year.

“These 440 billion, most likely, go towards major repairs and modernisation of existing technology. Currently, not only repair companies but also the companies that produce these machines — UralVagonZavod in Nizhny Tagil, Omsktransmash, Kurganmashzavod — are busy with major repairs and modernisation. The roads leading up to their factories are filled with tank and armoured car echelons. The factories are full,” says Pavel Luzin.

He is certain that Russia cannot increase its military equipment purchases, seeing as not enough of it is getting built. Usually, the Russian army just modernises Soviet machines. For example, T-80 tanks get modernised into T-80BVM. “Even if all factories introduce three shifts per day, no one will be able to provide them with enough material, staff, appliances, or needed parts.”

Considering its current losses, Russia will need from three to ten years to restore the number of missiles, planes, and armoured vehicles back to its February level. If the war drags on, even longer. Furthermore, technology sanctions could lead to the losses being irrecoverable. “All the modern equipment at the factories is Western, most of it American and European, some Japanese stuff. Everything that was bought before 2014,” explains Luzin. Without new Western parts and new equipment, the production volume will gradually decrease, with the arms getting less and less modern and losing their quality.

A big part of the budget goes to servicemen’s salary and other benefits. An upkeep of the army is not cheap even in peacetime. Meanwhile, during the war, these expenses increased by 62 billion rubles (€988 mln) and reached 440 billion (€7 bln) in the last six months. That is more than was spent on the entire system of higher education during the same time period.

Besides that, the military orders various services and construction. For example, Roscosmos received 79 billion rubles (€1.26 bln) in the framework of the state defence order that includes the development of the GLONASS system. The funding of the Federal Medical-Biological Agency has grown significantly. Rosatom, Federal Agency for State Reserves, and Federal Service for Military-Technical Cooperation are also taking part in the state defence order.

Arms repairs have also cost Russian taxpayers a lot of money in the last six months — 260 billion rubles (€4.1 bln). That is one and a half times more than in “peaceful” 2021. Expenses on fuel, food and clothing for soldiers have also grown by 44%, up to almost 190 billion rubles (€3 bln). About the same amount of money from the federal budget is being spent on fuel for tanks and other armoured vehicles and the entire cultural field.

The war expenses are also not compatible with expenses on refugees from Ukraine. All in all, there were 11.8 billion rubles (€188 mln) reserved for that purpose in the budget, 7.1 billion (€113 mln) of that sum has been spent. Out of that, 1.8 billion (€28.6 mln) was spent on housing and food, 4.7 billion (€74.9 mln) — on benefits and medical help.

HOW WE DID OUR CALCULATIONS

For figures connected to arms, major repairs, researches, service etc. we took into account all respective expenses made in the framework of the state defence order. For such figures as military salaries, food, clothing — we took into account expenses of only the Defence Ministry and the National Guard.

We also included the expenses from the classified part of the budget. We identified where the money went to by using budget codes. For example, code 201 — the Armed Forces of Russia, code 206 — the nuclear weapons complex, code 303 — the National Guard troops.

Some codes are harder to decipher. For example, 306 is “Law enforcement”, which could mean either the Federal Security Service (FSB) or the Federal Protective Service (FSO). Seeing as the FSB budget is a lot higher than that of FSO, we decided this code belonged with the FSB expenses. With a lot of codes, it is impossible to decipher what agency the money goes to (for example, “Ambulatory care”). We did not count such expenses in.

All the calculations have been made according to the factual expenses as of 1 July 2022.

Not all government bodies have benefited from the war the same way. At least, according to the non-classified part of the budget. The biggest increase in spendings, in percentage, came from the Federal Protective Service. In the first six months of this year, its expenses have grown up to 1.9 billion rubles (€30.2 mln).

The public expenses of the Defence Ministry and National Guard grew by 25-30%. However, up to half of these agencies’ budgets are classified expenses. Which increased by 70%. Overall, compared to 2021, these agencies have received more than a trillion rubles (€15.9 bln).

The Ministry of Emergency Situations is in the same boat. This agency organises rescue missions and provides humanitarian aid on the occupied territories of Ukraine. The non-classified part of the ministry budget increased by 20%. Meanwhile, classified expenses connected to “Civil defence” — increased 1.5 times. Overall, the Ministry of Emergency Situations expenses increased up to 128 billion rubles (€2 bln) in the last six months. FSB’s public expenses have actually decreased. Meanwhile, the classified ones — increased by 7 billion rubles (€111.5 mln).

Other agencies got their budgets reduced this year. The Investigative Committee of Russia, customs agents, and tax authorities have actually spent a little less money than in January-June of last year.

Another beneficiary of the war has been Rosmolodezh, the Federal Agency for Youth Affairs. Its expenditure has grown eight times compared to the period of January-June of last year: from 3.5 billion rubles (€55 mln) in 2021 to 30.7 billion (€484 mln) in 2022. It is Rosmolodezh that hires volunteers for the purpose of restoring the infrastructure on the occupied Ukrainian territories.

In particular, 18.6 billion (€296 mln) have been allocated to the Institute of Internet Development, which publishes “government content aimed at the strengthening of civil identity and moral values”. A non-profit organisation Russia — the country of opportunities has been allocated 5.6 billion rubles (€89.2 mln). It hosts the youth forum Territory of meanings.

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However, the war has brought not only additional expenses but also excess income from oil and gas sales. The prices have soared due to fears that Russia could stop deliveries. As a result, the expenses on the war are being covered by the additional income.

Only in April, the budget received almost a trillion (€16 bln) in excess oil and gas income. These means are separate from the income that was used to plan the 2022 budget. In total, in the last six months, the additional income has surpassed 3.3 trillion rubles (€52.1 bln). This is close to the amount that Russia spends on the army, the National Guard, and the classified budget lines.