Military spending is due to rise to $528 billion rubles ($18 billion) in 2005, up 28 percent from last year's 411 billion rubles ($14 billion).
Overall, spending is due to rise across most state-funded sectors, as the Russian economy enjoys sustained growth, thanks to increased revenues from oil exports. But the steep hike in defense has caught the media's attention. It follows Russian Defense Minister Sergei Ivanov's recent assertion that military reforms have been successfully completed and that the Kremlin now intends to modernize Russia's armed forces.
In reality, Moscow-based military analyst Pavel Felgenhauer told RFE/RL that there is less to the matter than meets the eye. First, Felgenhauer notes that years of neglect and under-funding have left the Russian forces in desperate need of extra funds. In essence, the 2005 budget continues to compensate for these lean times. And even with the increase, Russia's defense budget will remain 20 times smaller than U.S. military expenditures.
Secondly, inflation should be taken into account -- meaning the actual rise in defense spending is smaller than it appears. "The increase appears very large, but these numbers -- over 25 percent -- do not take inflation into account," he said. "Inflation up to now in Russia has been considerable. They say that next year, they'll be able to lower it below 10 percent annually, but it's not clear if they will be successful. So in reality, the increase in defense spending is around 15 percent."
Despite Ivanov's recent statement about successful reforms, Felgenhauer said the Russian military establishment remains hugely bloated and without a focused strategy. Defense spending, he notes, has to sustain more than 2 million Defense Ministry employees, plus another 2 million employees of the various security agencies and the Interior Ministry.
"We have an oversized military machine. If we look at colonels alone, who are on active duty, we have more than 100,000 of them! I'm not talking just about the Defense Ministry, but across the board. The president, last December, said we have 4 million military personnel and personnel of equivalent status. When you have so many colonels and so many servicemen, even if you give them all a salary increase of just $50 a month, it adds up to an enormous sum," Felgenhauer said.
According to military officials, much of the increase in the 2005 defense budget will go to modernize Russia's aging weapons systems, air force, and navy. But Felgenhauer notes that officials made the same promise last year, when extra money for purchases was also set aside. To this day, it is unclear how the money was actually spent.
"We have a scandalous situation, where last year 118 billion rubles [$4 billion] was set aside [for purchases], this year they were supposed to spend 146 billion rubles [$5 billion] and the end result is that two tanks or four tanks, two helicopters and one airplane are bought per year. We are talking about very large amounts of money that are disappearing -- no one knows where."
No one also knows how much of Russia's defense budget is going to fund the continuing war in Chechnya. The problem, Felgenhauer said, is that whatever figures the Kremlin periodically presents are highly selective and impossible to verify -- making oversight of Russia's defense spending practically impossible.
"The problem is that everything is secret, including the military budget. We know the overall sum and this is divided into several sections, which reveal next to nothing. We do not know how much weapons development projects cost, we do not know how much money is being spent on each individual project. We do not know how much the weapons that the army buys cost. We do not know the exact number of people in the military. Officially, this is secret information. Periodically, certain numbers are mentioned, but they differ from each other. There is a mass of departments and ministries and everything is secret. There is no civilian oversight. There can be no civilian oversight when practically everything concerning the Defense Ministry is a secret," Felgenhauer said.
In this context, analysis of Russia's defense needs and capabilities remains a very inexact science. Russia's State Duma is set to consider the draft budget in the first of four readings on 26 September. With pro-Kremlin deputies having a two-thirds majority in the chamber, Duma Speaker Boris Gryzlov says he expects the bill to pass easily.