Procurement: Russian Military Production


December 22, 2023: For over a decade Russia has been trying to make their economy more efficient and productive. This has been crippled by corruption, economic sanctions, and a shortage of qualified personnel. As a result, growing Russian defense spending produces less and less of what the military needs. This includes weapons, equipment, and the ability to repair or even maintain weapons and complex equipment. In 2022 the Russian military budget was $86 billion, which was up from $61 billion in 2020 but down from $88 billion in 2013. Only about a third of the military budget was spent on procuring new weapons and equipment. The rest goes or paying and maintaining the troops, most of them now highly- paid volunteers. There is also the expense of maintaining bases, reviving decrepit Cold War era bases and building new ones.

After 2020 Russia began increasing its military procurement budget from $12 billion to $31 billion by 2023. Most of the money was spent on nuclear weapons and strategic systems to transport them. This included new SSBNs (nuclear powered ballistic missile subs), SLBMs (Sea Launched Ballistic Missile) and ICBMs (Inter-Continental Ballistic Missiles). Less priority went to spending on artillery rockets for MLRS (Multiples Launcher Rocket System) vehicles, armored vehicles, surface warships, including refurbishing Russia’s only aircraft carriers. Russia also needed a new generation of jet fighters and large rockets that served as SLVs (Satellite Launch Vehicles) for new space satellites to replace that that were too old to function. The overall defense budget went from $40 billion to $67 billion. While that's a lot of money, it won't be enough to replace all the Cold War era weapons still in use. This despite the fact that armed forces personnel was cut 80 percent from its Cold War size of five million troops. Russia has noted the success of the American military, and their Western allies and revised most of the Soviet era thinking. This meant older weapons were to be discarded, and Western concepts adopted to build new ones. That was the plan, anyway. Plans in the old Soviet Union, and its Russian replacement, have always been more aspirational than real.

Russia had to modify their use of the American approach because the Americans' way of doing these things was a lot more expensive. For example, U.S. military operations in Iraq, Afghanistan and elsewhere have, since September 11, 2001, cost about a trillion dollars. That seems like a lot, and it is. But it's not a lot like it used to be. For example, World War II cost the U.S., at the time, in current dollars, over four trillion dollars. That amounted to over 33 percent of World War II U.S. GDP. At the same time World War II cost Russia more than half its wartime GDP, and they continued spending over 20 percent of GDP during the Cold War. The U.S. was able to spend much less of the national wealth on military matters. The current war on terror is costing about one percent of U.S. GDP. So, while war may appear to be getting more expensive, relative to the amount of money available, it's actually getting cheaper.

The initial cost of World War II, and most wars that came after it, will eventually double because of the cost of taking care of the veterans. There were over a million casualties in World War II, many of them serious, with long range effects. The long range health problems were not anticipated, nor were the more expensive treatments. You have to pay. The vets are owed a debt that cannot be avoided.

As a percentage of GDP, American military spending continues a decline that has been going on since the 1960s when, because of the $686 billion cost of the Vietnam war, defense spending was 10.7 percent of GDP. That went down to 5.9 percent of GDP in the 1970s and, despite a much heralded defense buildup in the 1980s, still declined in the 1980s (to 5.8 percent. With the end of the Cold War, spending dropped sharply again in the 1990s, to 4.1 percent. For the first decade of the 21st century, defense spending is expected to average 3.5 percent of GDP. Most of the current defense budget is being spent on pay and benefits for military personnel, and buying new equipment to replace the Cold War era items that are wearing out. In addition, there was the cost of operations in Iraq and Afghanistan.

This trend is all because of the industrial revolution of the 19th century, which created a lot more money, much of which nations promptly squandered on wars they could not have afforded earlier. The American Revolution, for example, cost the United States less than $2 billion, when adjusted for inflation since then. The main reason for the low cost, compared to later wars, was that there simply was not a lot of wealth, as in money or goods to scrounge up for the war.

The United States has always been enthusiastic about spending enormous amounts on weapons, ammunition, supplies and equipment for the troops, with the idea of keeping U.S. casualties down while still winning the war. Thus, during World War II, U.S. combat deaths were 300,000, plus 100,000 non-combat dead. The Soviet Union, on the other end of this scale, lost 10.7 million dead in combat, including 4.4 million captured and missing, and nearly 20 million civilians killed as well. Of all the major combatants in World War II, the U.S. had the lowest casualty rate, of about 2 percent. Russia lost about 15 percent of its entire population during the war. The U.S. kept its losses down partly because of the amount of money spent per person in the military, which was over $250,000. The American military was all-volunteer after the early 1970s, which was a major reason why combat casualty rates thereafter were a third of what they were during World War II, and the amount spent per person has more than tripled. Exact comparison is tricky, as all military expenses were counted during World War II, while the late 20th century wars were being fought with only a small portion of American military might, while the navy and air force continued to take care of many non-war-on-terror responsibilities. While the dollar cost of war is good for a hot headline on a slow news day, the fact that the money saved lots of American lives never seems to make it to the front page. Russia wants to achieve the same efficiency, and low casualty rates, as the Americans, but on a lower scale. Even with lower production costs, SSBNs still cost them over $2 billion each.




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