Translated material
Military spending
The given data on the size of the budget of the Ministry of Defense of the Russian Federation [1] , their comparison with similar indicators of the leading military powers of the world should probably irrefutably indicate the current extreme weakness of the Armed Forces of the Russian Federation, since the allocated funds are clearly not enough even to maintain the life support of the army in terms of basic parameters. Especially if we take into account the global tasks set to reduce and reform the RF Armed Forces, the implementation of which requires huge funds. Let us recall that in accordance with the Concept of their construction, approved by the President of the Russian Federation in August 1997, reform should be carried out in two stages. If at the first stage (1997–2000) mainly serious structural transformations were assumed (the creation of the Strategic Missile Forces (RVSN) through the unification of the Strategic Missile Forces, the Military Space Forces and the Missile and Space Defense Forces; the creation of a single type of armed forces - the Air Force forces (Air Force) by merging with the Missile Defense Forces; reducing the number of military corps to six, giving them the status of operational-strategic commands in strategic directions; transforming the highest level of military command; reducing the total number of the Armed Forces to 1,200 thousand people), then the result of the second stage (2001–2005) should be a significant qualitative improvement and renewal of the Armed Forces, the core element of which is a sharp increase in the provision of the Armed Forces with material resources: twofold by 2001, threefold by 2005. Moreover, it was planned to most radically increase spending on such an item of the defense budget as the purchase of modern weapons and military equipment (WME): by 2001 - three times, by 2005 - four and a half times. The revision of another item of expenditure—R&D—looks no less eloquent. It is this that by 2005 at least 40 percent of military spending should go towards it, as well as equipping the army and navy with new types of weapons and military equipment, which will make it possible to annually update up to three percent of weapons and military equipment from 2005; By the same time, the re-equipment of the aircraft with the most modern weapons and military equipment should be completed.
It is still premature to judge the results of the implementation of the programs of both stages in aggregate. It is only obvious that on paper they look much more optimistic than the prosaic realities of the military budgets of the Russian Federation, both in the last years of the last century and in the first years of the new one. Even restructuring the army requires enormous costs. If we take into account the experience of military development in the USSR, then the structural reform of the Red Army in the first half of the 30s required a doubling of the country's military budget (subsequent technical modernization in the mid-30s led to an increase in defense appropriations by 12.8 times). As it turns out, reducing the size of the armed forces is also a very expensive endeavor. For example, maintaining one tank division for a year cost the treasury in the mid-90s 268.2 billion rubles (non-denominated), while its disbandment cost 342.7 billion rubles.
None of the budgets of the RF Ministry of Defense over the past years has provided for any significant increase in allocations for these purposes (in 1998, the share of defense expenditures in the federal budget even decreased by three and a half percent). As a result, the military budgets of the 90s acquired a pronounced social overtones. The main funds from them were spent on paying salaries, pensions, benefits to military personnel being transferred to the reserve, providing them with housing, etc. On average, from 53 to 63 percent of the financial resources allocated by the government for defense needs were allocated for these purposes; other expenditure items were cut to a minimum. The situation with R&D financing is particularly difficult. After the liquidation (1991–1993) of the sectoral ministries responsible for the creation of weapons and military equipment, the financial support for research and development work was entirely transferred to the shoulders of the RF Ministry of Defense, which was forced to carry it out on a residual basis. As a result of the continuous growth of the state's debt for unpaid R&D within the framework of state orders, work on 1,149 R&D objects was stopped in 1995 alone. The same situation has arisen with the financing of arms and military equipment purchases. In the same year, it was planned to allocate 10.3 trillion rubles (no more than 17.5 percent of the defense budget) for these purposes; in fact, 10.1 trillion rubles were allocated. Of this amount, more than three trillion went to pay off last year's debt. If we take into account that about 60 percent of all funds allocated for the needs of the Russian Defense Ministry were received only in the fourth quarter, then there is no need to talk about the full implementation of the defense order. This situation was typical for the period 1992–1998. We can only state that expenditure items relating to the defense department, prescribed in the federal law “On the State Budget,” have never been implemented in full since 1992. In 1997, for example, only about 15 percent of budgeted military R&D was financed, while the United States spent 30 times more money on these purposes, and European NATO countries - 10 times.
Some nominal growth in military spending in the Russian Federation has been observed since 1999. For the first time this year, the defense budget was not cut. On the contrary, 116 billion rubles were spent instead of the planned 94 billion, i.e. 24 percent more. True, inflation (according to official data, 37 percent per year) made its own adjustments and significantly slowed down this growth.
Table 1
Line-item expenditure of funds allocated to the RF Ministry of Defense in 1999 and 2000 (in millions of denominated rubles)
| Expenditure | 1999 | V % | 2000 | V % |
| Total official defense budget | 109 000 | 100,0 | 143 000 | 100,0 |
| Personnel | 33 900 | 31,1 | 50 100 | 35,0 |
| Operations and Contents | 29 600 | 27,2 | 40 000 | 28,0 |
| Procurement | 23 800 | 21,8 | 27 300 | 19,1 |
| Research and development | 14 000 | 12,8 | 15 600 | 10,9 |
| Infrastructure | 3 500 | 3,2 | 4 000 | 2,8 |
| Nuclear forces | 1 900 | 1,7 | 3 000 | 2,1 |
| Ministry of Defense of the Russian Federation | 500 | 0,5 | 1 000 | 0,7 |
| Other | 1 800 | 1,7 | 2 000 | 1,4 |
Источник: The Military Balance 2000–2001 / The International Institute for Strategic Studies. London, 2001. Р. 116.
Despite the fact that the entire military budget in 2000 increased by 30 percent compared to the previous year, the share of spending on the purchase of weapons and equipment not only did not increase, but even decreased, as did spending on R&D. As before, the main item of expenditure is on personnel, which is associated with the ongoing painful and expensive process of reducing the number of the Armed Forces.
It is also necessary to note the difficulties that, according to experts at the International Institute for Strategic Studies in London (IISS), are associated with assessing the real level of Russian military spending. They are caused not only by the veil of secrecy that continues to shroud the military budget of the RF Ministry of Defense (in recent years, the density of such a veil has increased), but also by the fact that many expenditure items directly related to defense turned out to be dispersed across different parts of the state budget (military pensions, funds for military reform, industrial subsidies and financing of military scientific and technical developments through the Ministry of Economy, financing of defense programs from regional and local budgets and from income received from arms exports).
Russia's actual military spending was not 2.6 percent of GDP in 1999–2000, but about five percent. The same ratio was predicted for 2001–2002. In absolute terms, according to the IISS, Russia's defense spending was $57 billion in 1999, significantly higher than that of leading European NATO powers or Japan.
Corresponding amendments obviously need to be made in relation to Russia's military expenditures for 2002, data on which are actually classified. Based on the total size of the RF Ministry of Defense budget (according to official data, 282.4 billion rubles compared to 214.7 billion rubles last year), then it nominally increased by 24 percent with a projected average annual inflation of 20 percent. Consequently, we can count on a very insignificant real increase in the money supply. The main expenses, apparently, will again be related to the social sphere, given the upcoming reductions in the army (last year they amounted to about 100,000 people, in the coming years it is planned to dismiss 260-270 thousand people) and the announced increase in pay for military personnel from July 1 twice. True, five and a half billion rubles should be withdrawn from the budget item “Industry, Energy and Construction” for the implementation of the presidential program “State Housing Certificates”. In addition, expenses related to military reform have been increased three and a half times (from 4.5 billion rubles in 2001 to 16 billion rubles in 2002), for which a special line has been allocated in the budget. However, it is not possible to say definitively how much funds are allocated for the purchase of weapons and military equipment, R&D, organization of combat training, etc.
An analysis of the main expenditure items of the US military budgets in recent years indicates that the main emphasis is on increasing combat readiness and achieving technological leadership. For these purposes, various training programs and plans to increase the efficiency of aircraft deployment, including an increase in the cost of equipment for warehouses by 20 percent, received constant financial support. For these purposes, as well as for the operation and repair of all services, funding increased annually by one and a half to two billion dollars (from $19.7 billion in 1994). Appropriations for the development of the latest weapons and military equipment and the modernization of existing models grew at approximately the same rate (from $9.3 billion in 1994).
As for the military expenditures of the leading European powers, over the period 1989–1998 there was a tendency towards their reduction. During this period they fell by 14 percent [2] . France, Great Britain and Germany, which accounted for about 58 percent of total military spending in Western Europe in 1998, reduced their spending in real terms by 12, 14, and 24 percent, respectively.
Table 2
Dynamics of itemized expenditures of the US military budget
(millions of US dollars)
| Expenditure | 1998 | 1999 | 2000* | 2001** | 2002*** | 2003*** | 2004*** | 2005*** |
| Personnel | 69 822 | 70 649 | 73 692 | 75 801 | 78 449 | 80 390 | 83 085 | 85 585 |
| Operations and contents | 97 214 | 104 990 | 104 862 | 109 285 | 107 485 | 109 112 | 112 230 | 114 780 |
| Procurement | 44 772 | 50 920 | 54 208 | 60 272 | 63 021 | 66 710 | 67 652 | 70 931 |
| Research and development | 37 090 | 38 290 | 38 357 | 37 863 | 38 371 | 37 564 | 37 452 | 36 351 |
| Military construction | 5 463 | 5 406 | 4 794 | 4 549 | 4 275 | 3 805 | 4 576 | 5 368 |
| Housing for personnel | 3 829 | 3 591 | 3 597 | 3 484 | 3 708 | 3 863 | 3 983 | 4 085 |
| Other expenses, including unexpected | 346 | 4 552 | 414 | –167 | –512 | –512 | –688 | –695 |
| Total | 258 536 | 278 398 | 279 924 | 291 087 | 294 797 | 300 932 | 308 290 | 316 405 |
| Ministry of Energy (defense-related expenditures) | 11 704 | 12 600 | 12 157 | 13 084 | 13 169 | 13 429 | 13 771 | 13 920 |
| Other expenses (defense related) | 1 014 | 1 149 | 1 202 | 1 250 | 1 262 | 1 284 | 1 325 | 1 357 |
| Total | 271 254 | 292 147 | 293 283 | 305 421 | 309 228 | 315 645 | 323 386 | 331 682 |
| Actual growth (%) | –1,6 | 5,6 | –1,6 | 2,1 | –0,7 | 0,1 | 0,5 | 0,7 |
* According to estimate.** Requested.*** According to plan. Note. The additional budget request for FY 2000 was $2.2 billion. Source: The Military Balance 2000–2001 / The International Institute for Strategic Studies. London, 2001. R. 19.
In 1998, France announced a further reduction in military equipment costs of three billion dollars by 2002, due to the decision to gradually reduce the number of conscripts by 2002. According to official data from the British Ministry of Defense, its budget by the 2001-2002 financial year will decrease by four percent in real terms, while spending on the purchase of weapons and military equipment will increase by five percent. In the military budget of the Federal Republic of Germany (1998), costs for the purchase of weapons and military equipment were given priority (they increased by 17 percent in real terms), which decreased slightly in 1999 (by 0.5 percent).
Japan, the undisputed leader in the Asia-Pacific region in terms of the level of development of its armed forces and one of the world leaders in this indicator, like the United States, gives priority to the modernization and development of new types of weapons and military equipment. Up to 30 percent of the expenditures of the Japanese National Defense Agency were annually allocated for these purposes. A particularly significant increase in allocations for scientific research and development of new weapons was observed in the 80s, when it outpaced the growth rate of general military spending by 30–50 percent. Moreover, up to 40 percent of these expenses were allocated to research, design and production of prototypes of aircraft and rocket technology. Although Japan has the smallest share of military spending relative to GDP (one percent), in absolute terms it reaches a very impressive figure ($43.2 billion in 1999, $45.2 billion in 2000), and in It is predicted, given the rate of economic growth, to reach $50 billion by 2005. Taking into account the specifics of the production of military products in Japan, which is carried out in parallel and simultaneously with civilian products, due to which maximum unification of the main parts and assemblies has been achieved, the military potential of this country can be easily increased in the shortest possible time.
Table 3
Dynamics of the main expenditure items of Japan's defense budget (in billions of US dollars; recalculated at the average annual exchange rate of the US dollar to the yen for 1999)
| Expense items | 1993 | 1994 | 1995 | 1996 | 1997 | 1998 | 1999 | 2000 |
| Personnel | 17,4 | 19,5 | 22,0 | 19,1 | 17,6 | 16,6 | 19,0 | 20,2 |
| Procurement | 9,7 | 9,8 | 9,2 | 8,4 | 7,7 | 7,2 | 8,2 | 8,4 |
| Research and development | 1,1 | 1,2 | 1,5 | 1,4 | 1,3 | 1,0 | 1,2 | 1,1 |
| Operation and repair | 6,8 | 7,8 | 8,8 | 8,0 | 7,4 | 6,9 | 7,8 | 8,2 |
| Infrastructure | 6,7 | 7,5 | 8,6 | 7,6 | 6,8 | 6,1 | 6,9 | 6,5 |
| Total military budget | 41,7 | 45,8 | 50,2 | 44,5 | 40,8 | 37,6 | 43,2 | 45,2 |
| Coast security | 1,4 | 1,5 | 1,7 | 1,5 | 1,4 | 1,3 | 1,5 | 1,6 |
| Veterans, reserve military personnel | 13,9 | 15,1 | 16,1 | 13,4 | 11,6 | 10,3 | 11,5 | 11,7 |
| Cosmos | 1,5 | 1,7 | 2,0 | 2,2 | 2,5 | 2,7 | 3,4 | no data |
Источник: The Military Balance 2000–2001 / The International Institute for Strategic Studies. London, 2001. Р. 182.
The issue of planning military expenditures deserves special attention. Recently, Russian military experts were forced to bitterly admit that the Russian Defense Ministry does not have a comprehensive planning system linking existing long-term, medium-term and current plans for the development of the armed forces into a single whole in terms of tasks, resources, timing and allocated financial resources, which significantly reduces the effectiveness of the use of military appropriations . “Almost none of the main and central departments knows how much resources in physical and value terms are spent on a specific type of the RF Armed Forces. Hence, the provision of various types of allowances is not interconnected and does not allow concentrating limited material and financial resources on solving priority problems ,” they note [3] .
In this sense, the experience of the United States is indicative, where since the early 60s, military budget planning has been carried out on the basis of target programs in the form of a PPB system (planning - programming - budget development). The introduction of such a system made it possible to simplify as much as possible the task of supplying the Armed Forces with the necessary material resources, made it possible to increase the efficiency of the development of weapons and military equipment, eliminate the dispersion of funds and eliminate duplicate costs when creating similar weapons systems, reduce the cost and time of development and production of weapons and military equipment.
At the first stage - planning - a military-strategic plan is developed based on the military strategy of the state. At the second stage - programming - target programs are drawn up that combine the functional types of military-economic activities of the state, thereby providing the necessary connection between needs (planning) and financial resources (military budget). Finally, at the third stage, the military budget is developed.
Thus, the necessary material resources are allocated for the implementation of specific programs, and not to meet the needs of military departments closely associated with the Ministry of Defense.
The US experience has found quite wide application in Europe. Thus, the PPB system was taken as a basis in Germany when developing the concept of a military planning system in 1964–1968 by the Central Operations Research Bureau, specially created for this purpose.
[1] See the reference “Military budget of world powers” in this issue of “Domestic Notes”.
[3] Storonin V.V., Snitsaruk S.V., Shkurko Yu.M. Principles and stages of program-targeted budget planning in the Ministry of Defense of the Russian Federation // Military Thought. 2001. 2. P. 8.