Russian Military Expenditure: Data, Analysis and Issues

By volume of spending on the armed forces the Russian Federation is now the third country in the world, rising from fifth in 2010 and ninth in 2005. While present-day Russia is more open about military spending than the ex-USSR, there is still a lack of transparency that makes the analysis of the scale of the defence budget and of total military expenditure, and trends over time, a challenge for researchers and the policy community. This report outlines the budgetary process in Russia, its principal actors and the stages through which a draft federal budget passes, from initial preparation to eventual approval by the country's parliament and President. The place of military expenditure within the budget is analysed in detail, with consideration of the budget chapter devoted to "national defence" and also other budget chapters that contain some military and security related spending. Attention is given to spending on arms procurement under the annual state defence order. Notwithstanding the limited transparency, as the report show, the budget documentation made available permits the determination of the volume of spending on the military with an acceptable degree of accuracy. The report then considers a number of specific issues. Firstly, it explores the inheritance from the Soviet Union of an elaborate system of state secrecy that serves to limit access to open data on the full scale and structure of budget spending on the armed forces. Secondly, it considers Russia's military expenditure within the framework of international reporting conventions, including Russia's own reports to the United Nations. Thirdly, the report addresses the problematic issue of establishing spending trends in real term, with consideration of the merits and demerits of the use of various price deflators. Finally, there is discussion of the processes of reform now underway in Russia to transfer the federal budget to a programme basis.