Russia cuts military spending for first time in two decades

Russian spending on defence has been gradually increasing since 1998, but last year it showed a dramatic 20% decline. The Kremlin is expected to continue cutting military expenses in the next few years, while social infrastructure, such as healthcare and education, will receive more budget funds.

Russian military spending fell by a fifth last year, reports Reuters citing a report by Stockholm International Peace Research Institute (SIPRI). The decline, which has been the first since 1998, is likely to affect Moscow's military activity ahead, the researchers suppose.

In 2017, global military spending rose one percent to $1,739 billion, but Russia spent only $66,3 billion, which is a 20% decrease compared to 2016. The government's spending plan until 2020 supposes that defence costs will stay flat from 2017 or even fall somewhat adjusted for inflation, said Siemon Wezeman, senior researcher in the SIPRI Arms and Military Expenditure Programme. He considers that it has a direct impact on procurement and on operations. ''Those are the quickest things to cut,'' the expert told Reuters.

''Russia definitely has a very clear feeling it has to show that it is still a major power, and you show that by undertaking operations in for example Syria, by showing up on the Atlantic Ocean with your navy,'' Wezeman commented. ''But I am sure that there will be serious cost cuts to those.''

Russian military jet in Syria, 2015. Photo: Russian Ministry of Defence

The Russian economy is still recovering from an economic downturn due to Western sanctions and a collapse in global oil prices. However, the budget has now got accustomed to the current commodity prices and is likely to post a small deficit or even a surplus in 2018. Last year, higher crude prices helped the economy return to growth of 1,5%, although the government aimed to reach 2% increase.

In March, the Kremlin announced that Russia would cut its military budget to less than 3% of GDP within the next five years. Lower military spending can free up funds for the initiatives suggested by President Vladimir Putin in his annual address to the Federal Assembly. He has called for higher living standards and higher spending on social infrastructure, such as healthcare and education.

As a result of the last year's cuts, Russia dropped to the fourth place in the list of the world's biggest military spenders, while Saudi Arabia took the third place. The United States remains the world's champion as it accounts for 35% of global expenditures. The US is currently spending on defence more than the next seven highest-spending countries altogether. The American defence budget hasn't changed for two years, but it is expected to surge in 2018. China's share of world military expenditure increased to 13% last year compared to 5,8% in 2008.

By Anna Litvina