State Armaments Program is doomed to fail

Recently, the Minister of Finance of Russia has allegedly agreed with the Ministry of Defense of Russia on the reduction of SAP expenditures in years to come. According to mass media with reference to the State Duma1, it would mean that a part of the federal budget expenditures would be "deferred" from 2014-2016 to 2017-2018.

Therefore, in years to come, military expenditures might be cut off by Rb 70,3bn in 2014, Rb 87bn in 2015 and Rb 95,5bn in 2016 against the previously expected values. However, the amounts to be reduced are being disputed. It would be pointless to go deep into analysis unless the federal budget is adopted. It should be noted that the program period (until 2020) and total expenditures of around Rb 20 trillion are supposed to remain intact in all of the proposals. In other words, advocates of huge expenditures on the State Armaments Program (SAP) keep adhering to their strategy.

What are the potential consequences? Even a simple calculation shows that such an increase (given the deferral) in army equipment expenditures is impossible. Given around Rb 500bn spent on Air Forces and other branches during the initial year of SAP implementation, an average of Rb 2170bn should be annually spent on the SAP in the remaining period. No economy can show such growth rates, at least in times of peace. In other words, the SAP is doomed to fail.


It is the behavior of government administrators that aggrieves rather than expected SAP failure. Indeed, government officials are familiar with knots and bolts of arithmetic. Furthermore, many of them have academic titles in economics. However, they seem to have no guts to say to the President that he has been misinformed about the military-economic policy.


In the meantime, a new failure is impending in the Arms Forces manning policy. They fail to draft the required number of army conscripts. The contract enlistment program has been facing many difficulties. A basic monthly service pay of around Rb 20,000 against a countrywide monthly average of around Rb 28,000 is insufficient to find a sufficient number of young, healthy and smart nationals, even in economically depressed regions. Furthermore, having obtained a first-hand experience with service conditions and military pay, many contract enlisted servicemen are reluctant to extend their contracts2.


Government administrators-economists harp on the same string, saying that there is no way to increase military pay and improve the service conditions. A different story is their plan to increase (by 2.4 times) civil servant wages by 2018, whose current average monthly wage is Rb 72,1003.


However, a simple administrative solution would seem to be self-evident:
1) increase the service pay for contract enlisted servicemen and keep it above the countrywide monthly average level at the cost of "surplus funds" which are currently provided for the SAP;
2) and further maintain the costs of Armed Forces development at a level which should not be much higher than the level typical of the majority of modern states.


In other words, military expenditures should not be only reduced but also harmonized, or even increased per serviceman to ensure a minimal strength in Russia's Armed Forces.

The Government keeps silent about a potentially approved administrative solution of the issues relating to military-economic and staffing policy. Instead, the Government has initiated other initiatives: conscribe young females, attract higher school graduates to 1-year military service with an opportunity to obtain a free second university degree afterwards, etc. However, these initiatives lack solid substantiation.


There is another significant factor. Our military expenditures shouldn't have skyrocketed so ridiculously above a level which is typical of the majority of civilized states. This is how other countries might interpret what President Putin said about expected values this year at Security Council's meeting on July 5, 2013: "...we have actually reached a 50x50 formula, i.e. budget funds are allocated in equal shares to maintain and equip the Armed Forces and their long-term development"4 .


Therefore, government administrators are reluctant either to admit inaccuracy of basic assumptions to be able to substantiate all items and types of military expenditures without resorting to disinformation, or make them clear for all nationals. It would have helped attract a baseline minimum of ‘elite' volunteers against the guarantee of high status and decent military service conditions.


V. I. Tsymbal, Doctor of Engineering, Chief Researcher of Economics of the Military-Industrial Sector Department


1 Сморщков П. Бюджет разоружили на 253 миллиарда // Газета.ру. 2 июля 2013. (Smorschkov P. The budget has been disarmed by 254 billions// Газета.ру. July 2, 2013.
2 Ю. Букреев. Система разбалансирована полностью // Военно-промышленный курьер № 26,10-16 июля 2013. (Bukreev Y. The system is totally misbalanced // Voenno-promyshlenny kuryer No.26, June 10-16, 2013)
3 Ф. Стёркин. На себя денег не жалко // Ведомости, 10 июля 2013. (Styorkin F. They are ready to spare as much as possible on themselves // Vedomosti, July 10, 2013)
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