Russia boosts defense ­procurement

Russia continues to increase its defense spending in a bid to reequip the national armed forces. This effort is combined with the general reorganization of the military service with the aim to transform them into a smaller but more effective force.
According to the draft federal budget for 2011 and through 2012-13, which was passed in the first reading by the State Duma (the lower chamber of the Russian parliament) in October, 1,521 billion rubles ($49.5 billion at the current exchange rate) is expected to be spent on national defense in 2011. This indicates a 19.3% growth on the previous year’s level. It means that the growth of the Russian defense budget is returning to the pre-crisis rates after a temporary slowdown earlier this year, when it increased by just 3.4% compared to the 2009 level.
The military is likely to get further growth of funding in the forthcoming years. The draft budget calls for an increase in defense spending by 9.2% in 2012, and by 26.6% in 2013. The share of national defense in the total budget spending will grow from 12.5% in 2010 to 14.2% in the following year, and further to 17.2% in 2013. The share of military spending in Russia’s GDP will amount to 3.01% in next year, 2.97% in 2012, and 3.39% in 2013. The State Duma’s Defense Committee notes that this is a significant increase compared to last year’s level of 2.84%, but is still under the target level of 3.5% of GDP set by Russia’s Security Council.
The Defense Ministry will be the largest recipient of federal defense funding, and its main focus will be shifted from development of new weapons to re-armaments programs. The ministry’s defense procurement budget will grow in 2011 by 20% compared to the previous year, to reach 460 billion rubles. By 2013 this figure will have more than doubled, to 980 billion rubles. Purchases of new weapons will account for 64% of total procurement costs next year; 15% will be spent on repairing existing arsenals, while another 20% will be allocated for defense research and development. In two years’ time the ministry will boost acquisition of new armaments, whose share in the total procurement budget will reach 70% in the year 2013. The State Duma’s Defense Committee says this is being done at the expense of R&D funding, which will account for only 15% over two years.
The Defense Ministry also plans to change the balance between the military operational spending and procurement programs. The lawmakers mention that this ratio can reach 66.6/33.4 in favor of procurement by 2013, bringing the Russian military closer to the earlier set goal of reaching a 70/30 ratio in 2015.
The new federal budget is expected to be approved by the end of the year, but long-term defense procurement plans will be backed by the new re-armament program for 2011-20, also expected to be adopted by year-end. The Defense Ministry has announced earlier that the program’s budget amounts to 13 billion rubles, with the focus on re-armament of the strategic nuclear forces, the Air Force and Air Defense Troops. According to Defense Minister Anantoly Serdyukov, the re-armament effort will be split in two stages. "New weapons should account for as much as 30% of the Armed Forces’ [arsenal] by 2015, and about 70% by 2020," he said. The intensified procurement is combined with the re-organization of the Armed Forces that started a year ago. The military is moving away from Cold War-era large armies to smaller, but more effective and easier controlled constant combat readiness units. According to Serdyukov, the military reform should be completed in 2020.