The Russian government passed the 2005 state defense order on December 30. Defense Minister Sergei Ivanov stated that, “the sum of the defense order will amount to 187 billion rubles next year”. This is 31% more than in 2004. It should be noted that this concerns only the Armed Forces. In the meantime, the state defense order includes other security ministries. The total sum of the state defense order is secret. However, it is known that it amounted to 341.2 billion rubles in 2004. This amounted to 14% of the state budget. If the proportion has not changed the 2005 state defense order amounts to 467 billion rubles.

In other words, the state defense order has increased by 37% in comparison with 2004. However, the structures of the state defense order changes. This year 59.9% of this budget (112 billion rubles) will be spent on new weapons, 33.6% (62.8 billion rubles) – on research and development, 6.3% (11.8 billion rubles) – on repairing military hardware. Before Russia spent over 40% on research and development, around 40% on modernization and repair, only 10 to 20% was spent on new weapons. The defense minister stated that at present the Army focuses on buying new weapons. Is it true?

The Russian Armed Forces will receive seven strategic missiles (one regiment), nine military satellites, five rockets, seven Su-27SM fighters, three battalions of the BTR-80 armored personnel carriers, 91 T-90 tanks (one tank regiment), two Iskander-M operational-tactical missile complexes, two new warships, one modernized and one new Tu-160 strategic bomber.

This is not enough for the Russian Army. For instance, the Ground Force will only be able to arm only a half of a division with new weapons. One military district has five to seven divisions. At the same time, this is substantial progress for the Russian Army, which has not been receiving weapons for years. For instance, only six Topol-M missiles, 14 T-90 tanks and several score of the BTR-80 armored personnel carriers last year. It should be noted that the industry must produce at least ten missiles a year in order to retain all technologies.

In the meantime, Russia is scrapping unique railway missile complexes, which could be used for a long time.

It should be noted that even such scanty expenses on modernization of the Army requires substantial effort from the Russian economy. The defense spending will exceed 3% of GDP in 2005. Official documents show that GDP will amount to 18,720 billion rubles ($668.6 billion) in 2005. Defense spending will reach 531.1 billion rubles ($18.96 billion). This means that the defense budget is equal to 2.84% of GDP. However, the defense minister stated at one meeting that “the total sum of expenses will amount to 573 billion rubles”, taking into account a range of federal programs linked with social benefits and building of military objects. This is 3.06% of GDP. This isn’t the highest expenditure in the CIS but is higher than in France and the UK (they spend 2% of GDP on defense).

Taking into consideration expenses on national security and law enforcement agencies, Russia will spend almost 930 billion rubles (4.97% of GDP) on defense and security in 2005. Some specialists state that this is a military-police budget. Such expenses are caused by the political situation in the North Caucasus where terrorists spread from Chechnya to neighboring regions.

IT should be noted that the government has not increased servicemen’s money allowances. At the same time, it has invalidated many fringe benefits. Compensations do not cover servicemen’s actual losses. The ratio of expenses on the maintenance of the army and development (including combat training) will amount to 60 to 40 in 2005. The ratio will reach the ideal value (50 / 50) in 2010.

In other words, the Russian leadership is trying to use the advantages of the economic situation when oil dollars flow to Russia for strengthening defense and security on the one hand, but does not spend enough on the Army on the other. This can undermine the Army’s combat readiness and morale.