Russian defense procurement unaffected by crisis

Despite the economic recession, defense spending in Russia continued to grow in 2014-15. Last year, a total of 1.8 trillion rubles ($27.9 billion at the current exchange rate) was allocated for the purpose, against 900 billion rubles in 2013 and 1.45 trillion in 2014. The first indications of the crisis did not emerge until 2016, when the defense budget was cut by 5% of the originally planned figure. The reduction target was mainly achieved by spending 150 billion rubles less on procurement, but the country’s current military spending still equals the 2014 level, and is significantly greater than the figures for a number of previous years.

The budget savings were primarily secured in the form of suspending the development of a number of new weaponry types, and also through spending less on major construction projects. The programs to procure new equipment and upgrade existing systems were largely unaffected.

Very few existing defense contracts have been abandoned, mostly because the souring of relations with Ukraine made them impossible to implement. The most prominent example was the decision not to go through with the completion of three Project 11356 frigates for the Russian Navy, which had been planned to be fitted with Ukrainian powerplants. Purchases of Russian-Ukrainian Antonov An-70 transport aircraft for the Russian Air Force have also been canceled, and production of An-140 and An-148 airliners for the Russian security agencies is grinding to a halt. In addition, Russia has been forced to discontinue operation of Zenit and Dnepr launch vehicles.