Political Risk

The Bear Has No Claws: Is Russia’s Massive Military Modernization Over?

“Russia’s ambitious, decade-long plan for the modernization and expansion of its military capabilities is imperiled by current trends in the global economy. Economic slowdowns combined with more sources of supply—especially as previously inaccessible reserves have come online as a result of new technologies—are producing a glut of both oil and natural gas on world markets—decreasing prices and thus the export tax revenue which sustains the Russian federal budget. On top of that, the current expenses being generated as a result of Russian policy on Ukraine—the costs of absorbing Crimea (and the potential expenditures to support the separatist regions of southeastern Ukraine) plus the spending needed to cushion the impact of Western sanctions—are growing. In addition, sanctions are likely to shave at least 1 percent from Russia’s planned economic growth for 2014, putting the economy into recession. Russian finance minister Anton Siluanov has bluntly noted that, in reviewing the defense program, the government needs ‘to reconsider the amount of resources devoted in the course of this new program, so that they are more realistic.’ At the same time, however, Deputy Prime Minister Dmitry Rogozin, who oversees the Russian military-industrial complex, has vowed that the plan will stay on schedule.

Source:The Bear Has No Claws: Is Russia’s Massive Military Modernization Over? | The National Interest

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