Russia's growing military expenditure amid economic sanctions

Despite facing heavy economic sanctions from the West, Russia's financial expenditure on the military continues to grow as it persists in strengthening its foothold in the Ukrainian conflict.

By MAARIV

JULY 3, 2023 23:13

Service members of pro-Russian troops walk across a road before the expected departure of Ukrainian soldiers, who surrendered at the besieged Azovstal steel mill, in the course of Ukraine-Russia conflict in Mariupol, Ukraine May 19, 2022. (photo credit: Alexander Ermochenko/Reuters) — Service members of pro-Russian troops walk across a road before the expected departure of Ukrainian soldiers, who surrendered at the besieged Azovstal steel mill, in the course of Ukraine-Russia conflict in Mariupol, Ukraine May 19, 2022.

(photo credit: Alexander Ermochenko/Reuters)

Despite the Russian military's ongoing efforts to consolidate its presence in the Ukrainian conflict, tangible gains have been limited. Consequently, the Kremlin has escalated its financial expenditure on the military.

According to the Stockholm International Peace Research Institute (SIPRI), Russia's military expenditure reached $85.8 billion this year, equivalent to 6.6 trillion rubles, accounting for approximately 4.4% of the gross domestic product. This marks an increase from the pre-invasion figure of 3.6% in February of the previous year.

Russia's military expenditure and lack of transparency

According to SIPRI's report, Russia's financial investment in the military has exceeded the amount agreed upon by the Defense Ministry. However, the report notes that "the rate of increase was similar to that at the beginning of 2022, and does not suggest a significant jump."

The report further states that the Kremlin's lack of transparency implies uncertainty regarding Russia's true military expenditure, as "analyzing Russia's military spending has become increasingly difficult since the government has restricted access to budgetary information."

Service members of pro-Russian troops drive a tank along a street past a destroyed residential building during Ukraine-Russia conflict in the town of Popasna in the Luhansk Oblast, Ukraine May 26, 2022. (credit: Alexander Ermochenko/Reuters)

Furthermore, it is noted that "in the spring of 2022, the Russian Finance Ministry ceased publishing detailed budgetary expenditures for specific time periods, and only disclosed the total monthly income and expenditures."

Russia's economic viability

SIPRI was able to document the increase in military expenditures, though according to them, "Moscow is attempting to limit the financial expenditure on the war in order to minimize the economic impact it creates and to enable the pursuit of pre-war policy goals."

A SIPRI researcher has expressed that "the budget includes the Defense Ministry, military pensions, and payments to paramilitary forces such as Russia's National Guard and the Wagner force."

According to the report, "the Russian economy can afford such a level of military expenditure, despite severe economic sanctions. Russia still has the financial resources to finance the war, and even to increase military expenditure if it deems it necessary."

Earlier this year, Russian economist Boris Gryzlov claimed that the Russian government planned to spend $346 billion in 2022, with $46.1 billion allocated for investment in the military, and $36.9 billion expected to go to the Federal Security Service (FSB).