Page 69 - bne IntelliNews monthly magazine October 2024

bne October 2024 Opinion 69 Visually Confirmed Russian Equipment Losses, February 2022-April 2024
calculus and political will have so far constrained Russia from taking such a step,” says Massicot.
And all the new equipment needs to be paid for. Currently, direct Russia spending on the military is about 8% of GDP on defence or around $100bn a year. Military spending at the current level is likely to be sustainable to 2026.
The Federal Budget Law for 2024-2026 passed last year envisages another year of fiscal expansion in 2024, rising from total expenditure of RUB30.5 trillion ($330bn) in 2023 to RUB36.7 trillion in 2024. This increase in spending is driven by a planned hike in the “national defence” portion of the budget, which is scheduled to rise from RUB6.4 trillion ($70bn) to RUB10.8 trillion.
Other areas of the budget, such as the “domestic security and law and order” portion, are also used to finance military expenditure. Total defence spending is likely to exceed RUB13 trillion ($155bn). Social spending will rise by close to 20% in nominal terms from RUB6.5bn this year to RUB7.7bn; however, it will remain far below military expenditure. Other categories of spending are only expected to increase slightly, with most expected to rise in line with inflation.
Russian leaders continue to justify their reconstitution efforts by framing the need to replenish forces as a response to Nato expansion rather than admitting the high costs of the war
in Ukraine. For now, the country is relying on refurbishing older equipment and recruiting personnel, but many of the weapons deployed are qualitatively inferior to newer models, and stockpiles of Soviet-era equipment could be depleted by 2026 if loss rates continue at current levels.
The medium-term challenge for Russia, according to Massicot, is whether it chooses to expand its forces rapidly or manage a more gradual build-up, balancing military needs with domestic stability.
“If expanding the force is of paramount importance, the current reconstitution efforts will be insufficient. Leaders will likely be forced to take steps they have so far resisted, such as activating more mobilisation powers and expanding domestic production capacity,” she writes.
“If, however, Russia prioritises economic stability, it could accept the risk of relying on existing production levels and older Soviet equipment. This strategy would be feasible only if the conflict in Ukraine freezes or ends, allowing time for a gradual build-up of new equipment through the 2030s,” Massicot adds.
Capacity limitations
Russia’s ability to increase new military equipment production is currently hampered by several structural factors.
“Space at Russian defence factories is in high demand for multiple purposes – new builds, repairs and exports – and cannot be easily converted to increase domestic production without trade-offs,” explains Massicot. Expanding production would require new factories or halting exports, both unlikely moves in the short term.
Additional options include converting civilian factories
into wartime production facilities or importing military equipment, though such measures would signal a significant departure from historical norms.
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