Analyst: Recent sharp rise in Russian military spending shows Putin preparing for bigger war

Andrey Illarionov, Russian economist and former economic policy advisor to the President of Russia, Vladimir Putin. Currently, a senior fellow in the Center for Global Liberty and Prosperity at the Cato Institute in Washington, DC

Andrey Illarionov, Russian economist and former economic policy advisor to the President of Russia, Vladimir Putin. Currently, a senior fellow in the Center for Global Liberty and Prosperity at the Cato Institute in Washington, DC 

Analysis & Opinion, Military analysis, Russia

Russian military spending, even as officially given by the finance ministry, provides a remarkably accurate early warning indicator of Russian intentions, Andrey Illarionov says, and a dramatic increase in spending since January of this year thus suggests that Vladimir Putin is preparing for a larger war in Ukraine and/or elsewhere.

Between the time that Putin came to power up to January 2014, the Moscow economist and commentator says, Moscow has spent on average 2.5 to 3.2 percent of GDP on the military, with the figure tending to rise over time. During the first 13 years of his rule, Illarionov says, spending in constant prices went up 2.6 times.

But over the 14 months – the period of Moscow’s intervention in Ukraine – Russian spending on its military has not only gone up significantly as one would expect at a time of military operations but has tracked in a way that provides insights on Russian intentions for the future, the Moscow analyst says.

After Putin made his final decision to intervene in Ukraine in February 2014, he says, Moscow’s military expenditures “were increased by more than twice,” a figure that suggested the Russian government intended not only to seize and occupy Crimea but all of what it calls “Novorossiya.”

Military Spending as % of Gross Domestic Product (Image credit: kasparov.ru)

Russian Military Spending as % of Gross Domestic Product. Source of data: Russian Ministry of Finance (Image: Andrei Illarionov)

In February, March and April of last year, Russian military spending amounted to 6.7 percent of GDP and 27.7 percent of all budget expenditures.

At the end of April, the Kremlin halted its most ambitious plans and reduced its monthly military spending for the rest of 2014 by approximately a third compared to the first three months of last year, reductions that were possible even though Moscow increased its exercises near the Ukrainian border and supported military action within Ukraine.

Military Spending US$ Billion (Image credit: kasparov.ru)

Russian Military Spending, US$ Billion. Source of data: Russian Ministry of Finance  (Image: Andrey Illarionov)

According to Illarionov, official Russian government figures show that “the situation radically changed” in the first two months of this year, the latest period for which figures are available. Average monthly military spending increased 2.3 times, compared to the May-Deceber 2014 period, 3.3. times compared to the last pre-war period, and 8.8 times compared to 2000.

For those two months alone, he says, military spending was more than 1.3 trillion rubles – that is, more than 20 billion US dollars – and it constituted 43.3. percent of the federal budget and 12.7 percent of Russia’s admittedly diminished GDP.

Such a “sharp increase” in military spending provides addition evidence that Putin is preparing for military actions “on a far larger scale and much higher level of intensity than even those which [the world] has seen over the course of the last 14 months.” In short, Illarionov says, the Kremlin leader is preparing for a major war in Ukraine and/or elsewhere.

Edited by: A. N.

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