To pay for a 'Russia first' agenda, Putin takes ax to military spending

Inaugurated for his fourth official term as Russia's president Monday, Vladimir Putin surprised many by declaring what sounds like a “Russia first” program: a relentless focus on domestic development, to be partially paid for by sharp cuts in defense spending.

It may sound contrary to Western perceptions of Russia's global intentions. But the priorities listed in the new Kremlin strategic program suggest that Mr. Putin has decided to use what seems likely to be his final term in office to cement his already substantial legacy as a nation-builder.

The projected surge in spending on roads, education, and health care will have to be paid for. A key source of that funding will be the military budget, which had been growing by around 10 percent annually for much of the Putin era. 

“The times when the external threat was used to make cuts in social expenditures palatable has passed. We can't go on like that any longer,” says Pavel Zolotaryov, deputy director of the Institute of USA-Canada Studies (ISKRAN), which is part of the Russian Academy of Sciences. “A lot of the goals of military modernization have already been accomplished, so we can afford to slow it down, make selective cuts to fund social goals, while continuing the basic path.”

War weariness

In his decree, Putin ordered the new government to draw up a detailed plan by Oct. 1, aimed at social objectives that polls show many Russians find attractive. Those include increasing real incomes, raising pensions, improving housing, cutting poverty, and expanding access to quality health care. He also called for plans to invest in high-tech and export-oriented industries, and to create “transport corridors” to strengthen Russia's road, rail, and sea connections with the wider world.

Cuts to defense spending will go toward underwriting that agenda. But in fact, Russian defense spending has already started to decline. According to the Stockholm International Peace Research Institute (SIPRI), Russian military spending fell by 20 percent last year, the first major decrease in two decades. While critics dispute the amount and suggest there may be budgetary machinations at work, most analysts agree that the share of military spending as a percentage of GDP is set to fall, from 6.6 percent in 2016, to 5 percent this year and to 3 percent by the end of Putin's current term in 2024.

Recent opinion polls suggest that Putin's priority shift coincides with a war weariness on the part of Russians, who have indulged their president as he shored up Russia’s great power status in the face of Western hostility and sanctions, by annexing Crimea and intervening in Syria. A survey last month by the independent Levada Center found that at least half of Russians appreciate their country’s return to great power status. But 45 percent fault Putin for “failing to ensure an equitable distribution of income in the interests of ordinary people,” up from 39 percent in March 2015 when the last survey was conducted.

Another poll by the state-funded VTsIOM agency confirmed that Putin’s personal approval rating is at a near all time high of 82 percent. Paradoxically, at the same time almost 90 percent of respondents said the country needs some degree of reforms, while just 2 percent said they didn’t think any changes were necessary.

Another sign that mass discontent remains distinctly possible were the large rallies, inspired by Kremlin opponent Alexei Navalny and featuring the slogan “Not Our Tsar,” that took place in several Russian cities on the eve of Putin’s inauguration. They did not approach the scale of the rallies that shook Moscow and other cities before Putin’s inauguration six years ago. Nonetheless, they were remarkable for the huge numbers of very young participants, and for the sophistication of their specific grievances – such as opposition to the Kremlin’s ham-handed attempts to shut down the Telegram messaging app.

“Six years ago Putin was forced to concentrate more on the external agenda. It worked for him. Russia looks like a great power again,” says Andrei Kolesnikov, an analyst with the Carnegie Moscow Center. “Now it’s time for a domestic focus. The plan looks quite cautious and rational. It balances various interests, and appeals to different lobbies. Military spending is still very important. And how these grand declarations will be brought to life is still an open question.”

A hold on new projects

Russia's strategic nuclear forces, which represent the country’s first line of defense, are likely to suffer the least in any cutbacks. Indeed, countering US missile defense systems remains the central problem for Russian strategic planners. Barely two months ago, Putin unveiled a menagerie of exotic new weapons designed to defeat or circumvent any possible anti-missile systems. But at the same time a range of planned new conventional weapons, and even some strategic ones, have been put on hold or scaled back.

Sweeping reform of Russia’s Soviet-era military machine has been in full swing since the brief summer war in Georgia revealed its shortcomings a decade ago. It began with a major restructuring of the armed forces to create leaner, more mobile, and professional units, and was followed by a ten-year procurement program to reequip all services with modern, post-Soviet weaponry.

Among the projects that have suffered major reductions are Russia’s Su-57 stealth fighter, which will put in an appearance at Wednesday's Victory Day parade on Red Square, but whose production runs have been sharply cut for the foreseeable future. The postponements plaguing the Su-57 may not be simply about saving money; the aircraft is rumored to have a great many technical glitches. Another program that’s seen huge production cutbacks is the new T-14 Armata main battle tank, which will also feature on Red Square, but not so much on the Russian Army’s front lines, where the older T-90 tanks are slated to prevail for several more years.

According to Viktor Litovkin, military editor for the official ITAR-Tass news agency, none of the more exotic ideas that have been talked up by the military brass in recent years, such as building a US-style giant aircraft carrier, make any appearance at all in the State Procurement Program for 2018-25.

“There will be minimal purchases of new equipment in the coming period,” he says. “The key thing is to master the technology and start production [of new weaponry], not to complete rearmament. The main idea is to have ‘necessary and sufficient’ tools to do the assigned tasks.”

‘Our new normal’

Analysts say there could be another dimension to Putin's new focus on domestic development: fresh efforts to mend fences with the West.

“There is no doubt that Putin wants better relations. His liberal advisers tell him the restoration of economic growth requires an easing of sanctions and better access to Western finance and technology,” says Alexei Mukhin, head of the independent Center for Political Information in Moscow.

“But that’s easier said than done. What to do about Ukraine? In fact, most of our leaders have already adjusted to the permanence of sanctions, and the reality of isolation. The new program of development will simply work within that virtual state of war with the West. It's our new normal.”