Russia’s Skyrocketing Defense Spending, 2022–2023

Russia’s continued aggression against Ukraine and the Kremlin’s attempts to escalate the political situation and prevent defeat on the battlefield through mobilization, nuclear blackmail and possibly even sabotage on gas pipelines in the Baltic Sea raise the question: How do all these factors influence the Russian defense budget?

Since May 2022, the Russian government has not released much data on the defense budget. Nevertheless, defense spending from January to April totaled almost 1.6 trillion rubles ($26.4 billion), with about 500 billion rubles ($8.3 billion) of spending per month for March and April. Considering these dynamics in comparison with Moscow’s defense spending in previous years—roughly 300 billion rubles ($5 billion) per month—and the fact that the original defense budget in 2022 was 3.85 trillion rubles ($63.6 billion), the true amount for Russian defense spending in 2022 may well reach as much as 5.5 trillion rubles ($90.9 billion) by the end of the year (Budget.gov.ru, May 2022).

This estimation correlates with two key facts. First, in June 2022, the additional planned spending for arms manufacturing was officially estimated at 600–700 billion rubles ($9.9 billion–$11.6 billion) (Interfax-AVN, June 10). Second, after revising it in September 2022, the estimate for the entire Russian defense budget in 2022 was adjusted to 4.7 trillion rubles ($77.7 billion), and this change will definitely not be the last (Vedomosti, September 23). In this way, defense spending itself is throwing the Russian state budget out of balance. And this spending does not include funding for security and law enforcement agencies, such as Rosgvardia (Russian National Guard) and the Russian Federal Security Service, which are also involved in the war against Ukraine. Originally, the 2022 budget for security and law enforcement organizations was set at 2.8 trillion rubles ($46.3 billion), but evidence shows that the plan has been significantly changed a number of times since then (TASS, September 21, 2021).

The turbulence in Russian defense spending will probably increase in 2023. The budget proposal for 2023 considers almost 5 trillion rubles ($82.6 billion) for defense and 4.2 trillion rubles ($69.4 billion) for security and law enforcement, up from the previously planned 3.6 trillion rubles ($59.5 billion) and 2.9 trillion rubles ($47.9 billion), respectively (Ach.gov.ru, October 12, 2021; Vedomosti, September 23). However, the ongoing mobilization casts doubt on this plan from the outset, as clear parameters for this process have not been delineated, and it is already carrying on in quite a chaotic manner. In this way, if the war continues into 2022, then Russian defense spending will most likely be significantly higher than 5 trillion rubles ($82.6 billion).

The skyrocketing defense budget means less flexibility and efficiency for Russian government spending. Consequently, Moscow made the decision to share the burden of defense spending with regional and local budgets. As such, regional and local administrations will now purchase dual-use equipment, commercial unmanned aerial vehicles, laser-guided systems and other supplies through direct requests from the Russian Ministry of Defense (Publication.pravo.gov, October 3). This process is closely paired with the ongoing mobilization, which is facing not only chaos but also a deficit in basic equipment, medicine and combat support systems for the newly mobilized soldiers. Thus, the Russian defense budget in 2023 may receive additional money, but that will depend on the scale and success of mobilization.

Yet, the problem here is that, now, no regional budget in Russia is independent from the Kremlin’s whims, and, as a result, not one local budget is independent from regional directives. This means the government’s decision to utilize regional and local budgets for defense needs has created further imbalances and instability within the Russian political-economic system (Roskazna.gov.ru, March 31). And that is especially true as the Kremlin grapples with a deep economic crisis, an international embargo on supplies of technologies and industrial equipment and a decrease in its exports.

Despite the fact that the main causes for the increase in Russian defense spending have been the massive losses of manpower and arms, this boost will most likely only drive up the costs of manufacturing and purchasing arms and military equipment, rather than improving the amount and quality of supplies. The deficit of employees in the Russian economy, including in the defense industry, was a serious issue even before the war, and Moscow’s ongoing aggression in Ukraine coupled with the mobilization only serves to further exacerbate this deficit (Nezavisimaya gazeta, December 29, 2021; Tpprf.ru, January 27).

Therefore, the facts testify that, regarding defense spending, the Kremlin’s typical approach for solving troubles by throwing money at them does not promise positive and sustainable results. Although, despite the lack of tangible results, a short-term side-effect of this rampant spending is maintaining loyalty to the Kremlin among the armed forces and defense industry. Nevertheless, further imbalances in the Russian defense sector are inevitable, even if the intensity of the war in Ukraine decreases in the coming months. Moreover, considering that the ruble is not a freely convertible currency anymore and that it could unexpectedly depreciate in the foreseeable future, Russia’s skyrocketing defense spending may lose its purpose for the Kremlin without a further restoration of the command economy.