Russia’s economy and military expenditures

Authored by: Susanne Oxenstierna

Routledge Handbook of Russian Security

Print publication date:  February  2019
Online publication date:  January  2019

Print ISBN: 9780815396710
eBook ISBN: 9781351181242
Adobe ISBN:


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During the 1990s, Russia’s military sector underwent a transformation from being the most prioritised part of the Soviet economy to becoming a sector lacking resources and trying to survive the winds of market reform. During Soviet times, military expenditure had amounted to 14–15 per cent of the economy or more, and Soviet society was in a constant state of mobilisation where military needs always had priority over people’s living standard and the civilian sector in general. When the Cold War was over, the Armed Forces found themselves in a new situation that required economising on scare resources. Low oil prices and the newly created tax service could not generate sufficient income to the federal budget to sustain either a high defence budget or the large armament acquisitions to which the defence industry had been accustomed. The situation for the Russian defence sector improved in the 2000s, when oil prices rose and the economic reforms started to generate growth. Military expenditure began to increase, but more money is not the sole precondition for building military strength. The war in Georgia 2008 revealed many deficiencies in Russia’s military capabilities, and it became obvious that the Armed Forces needed to be reorganised and modernised. In 2008, the then Defence Minister Anatoly Serdjukov launched a military reform that was supposed to give the Armed Forces a ‘new look’ (novyj oblik).

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