Russia increased it's defense spending 22 percent in 2006, to $24 billion. This was largely due to the rising price of oil, which has nearly tripled from a few years ago. Most of the increase in the oil price comes from skyrocketing demand from China, and fear of oil shipment interruptions in Persian Gulf. The Russian military needs several years of large increases so they can replace more aging Cold War error weapons and equipment. At the moment, the U.S. Army is larger, and much better trained and equipped, than the Russian Army. This is an intolerable situation for Russia, which has vast land borders, and many neighbors with current or potential disputes. Russia needs are larger, and more effective, army. But first they need a decade of larger budgets to pay for it.
Meanwhile, we are witnessing one of the most massive disarmament efforts in human history. Within the space of two decades (1991-2011), the largest peacetime army in history (the "Red Army" of the Soviet Union) is being dismantled, including junking over 100,000 armored vehicles and over 20,000 aircraft and helicopters.
Trucks, radios, tents and all manner of gear are becoming unusable because of wear and age. This stuff has to be replaced. In some units, decrepit gear has not been replaced, and this is creating embarrassing situations that cause troops and officers to leave the service. So the government is getting an increasingly urgent call from the army for more money, or else. This year, the army got 31 new tanks, 125 new infantry vehicles and 3,770 trucks. In addition, 139 tanks and 125 self-propelled artillery systems were refurbished.
While Russia is spending a lot more money on new military gear lately, the armed forces are still stuck with largely antiquated weapons and equipment. For example, some 80 percent of the weapons and equipment in the Russian army is twenty years, or more, old. After the Soviet Union collapsed in 1991, the military budget was drastically cut, to the point where there was barely enough money for payroll, food and heating fuel. Military manpower shrunk from 3.4 million to 1.1 million, and much older, unneeded, equipment was just abandoned. The army bought few weapons, and very little equipment, during the 1990s. In the last few years, it was decided to cut the armed strength a bit more, and eliminate conscription. This will cost a lot of money, because conscripts are paid very little (a few hundred dollars a year).