russian military expenditures: what’s behind the curtain
Post on 31-Dec-2015
41 Views
Preview:
DESCRIPTION
TRANSCRIPT
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
1
Russian Military Russian Military Expenditures:Expenditures:What’s Behind What’s Behind the Curtainthe Curtain
Vasily Zatsepin
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
2
ObjectiveObjectiveTo present an analysis of Russia’s current
practice in military expenditures field based on experience accumulated by the Institute for the Economy in Transition (Moscow)
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
3
OutlineOutline
Russian military Russian military expendituresexpenditures
Underlying institutional Underlying institutional factorsfactors
Prospects for the futureProspects for the future
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
4
Part IPart I
Russian Military Russian Military ExpendituresExpenditures
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
5
Learning the Lessons of HistoryLearning the Lessons of History
The Institutefor the Economyin Transition
CIACIA
WesternWesternAcademiaAcademia
InternationalInternationalOrganizationsOrganizations
The SovietThe Soviet
DefenceDefence
EnigmaEnigma
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
6
The Institutefor the Economyin Transition
Components of Military ExpendituresComponents of Military Expenditures
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
7
What Follows from This?What Follows from This?
The Institutefor the Economyin Transition
DefExDefExtill1998 till1998 – MP– MPtill1998 till1998 DefEx DefEx19991999–2004–2004
DefEx DefExafter2004after2004 + CTEx+ CTExafter2004after2004,,
Conformity equation*:Conformity equation*:
where MP where MP – military pensions;– military pensions; CTEx CTEx – civilian-type expenditures.– civilian-type expenditures.
* Valid for any from index years at least since 1994. * Valid for any from index years at least since 1994.
Civilian-type expenditures Civilian-type expenditures size problem:size problem:1998 Military Health & Education 1998 Military Health & Education 0.01% GDP 0.01% GDP
2006 Military Health, Sport & Education 2006 Military Health, Sport & Education 0.26% 0.26% GDP GDP
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
8
Russian Military Expenditures Russian Military Expenditures in Current in Current RoublesRoubles
The Institutefor the Economyin Transition
** **
* in 2004 budgetary classification.* in 2004 budgetary classification.
Average annual nominal growth Average annual nominal growth rate 34.1% (rate 34.1% (DefExDefEx))
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
9
Russian Military Expenditures in Russian Military Expenditures in Real Terms (Base Year 1999)Real Terms (Base Year 1999)
The Institutefor the Economyin Transition
** **
* in 2004 budgetary classification, using GDP deflator * in 2004 budgetary classification, using GDP deflator for 2005 for 2005 = 119.7%, for 2006 = 123.3 % (own estimate).= 119.7%, for 2006 = 123.3 % (own estimate).
Average annual real growth Average annual real growth rate 11.3% (rate 11.3% (DefExDefEx))
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
10
Russian Military Expenditures Russian Military Expenditures in Current US $in Current US $
The Institutefor the Economyin Transition
* in 2004 budgetary classification.* in 2004 budgetary classification.
** **
Calculated Calculated using official using official 19991999–2004 –2004 purchasing purchasing power parity power parity datadataOwn PPP Own PPP estimates for estimates for 2005 = 13.09 2005 = 13.09 roublesroubles/$,/$,2006 = 14.34 2006 = 14.34 roublesroubles/$ /$
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
11
Russia’s Defence & Military Russia’s Defence & Military BurdenBurden
The Institutefor the Economyin Transition
* in 2004 budgetary classification.* in 2004 budgetary classification.
** **
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
12
2005 Structure of Russia’s Military 2005 Structure of Russia’s Military Expenditures Reported to UNExpenditures Reported to UN
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
13
Part IIPart II
Underlying Underlying Institutional FactorsInstitutional Factors
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
14
What’s Under the Hood?What’s Under the Hood?
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
15
Under the Hood areUnder the Hood are
Federal budget and budgeting Federal budget and budgeting processprocess
Secrecy problemSecrecy problem DefenceDefence planning planning Quasi PPBSQuasi PPBS Actors and goalsActors and goals
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
16
Federal Budget and Federal Budget and Budgeting ProcessBudgeting Process The budget system is a subject to
annual changes in its legal framework
Formal and openly published budget request of the Ministry of Defence is lacking
Weak or lacking parliamentary control
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
17
Secrecy ProblemSecrecy Problem
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
18
Secrecy in Russia’s Federal Secrecy in Russia’s Federal Expenditures in 2003–2006Expenditures in 2003–2006
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
19
Secrecy in Federal Expenditures for Secrecy in Federal Expenditures for Public Order and Safety in 2003–2006Public Order and Safety in 2003–2006
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
20
DefenceDefence Planning Planning
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
21
Russian Russian MilitaryMilitary Planning Planning
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
22
Quasi PPBSQuasi PPBS
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
23
What is State Armament What is State Armament Program?Program? Inherited from Soviet times Introduced in 1980s when Soviet
leadership had to react to PPBS success in the US
Instead being a means of control over military-industrial complex became a tool of special interest groups for control over considerable share of military expendituresThe Institute
for the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
24
Comparison of Two Military Comparison of Two Military Programming SystemsProgramming Systems
PPBES (USA)PPBES (USA) State Armament State Armament Program (Russia)Program (Russia)
Cycle duration, years 2 (was 1) 5
Depth, years 4 (was 5) 10
Moving time horizon Yes No
Accountability Transparent Opaque
Secrecy Minimal Full
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
25
Actors and goalsActors and goals
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
26
Actors on Russian Actors on Russian DefenceDefence Management StageManagement Stage
Ministry of Finance; Ministry of Economic Development
and Trade; and at last Ministry of Defence
The Institutefor the Economyin Transition
Not only size of military expenditures but its structure are determined by:
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
27
One More ActorOne More ActorChief of Russian General Staff Yuri Chief of Russian General Staff Yuri
Balouevski in November 2005:Balouevski in November 2005:
“All the world develops according to the outline: about 60 per cent is spent on procurement, research and development; and about 30–40 per cent—on salaries and matters, connected with logistics and combat training of forces”.
The Institutefor the Economyin Transition
SourceSource: Rossiyskaya gazeta, 1: Rossiyskaya gazeta, 1stst November, 2005, November, 2005, translated.translated.
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
28
GoalsGoals Back in 2000 the Security Council
of Russian Federation has set a prospective goal for the MoD to achieve 50% share of capital costs in defence budget by 2010 following “best international practices”
In 2005 the goal was extended: to achieve 75% share of capital costs by 2015
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
29
Comparative Military Expenditures in Comparative Military Expenditures in 2004: Operating vs. Capital2004: Operating vs. Capital
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
30
Part IIIPart III
Prospects for the FutureProspects for the Future
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
31
Future of Military Future of Military Expenditures in RussiaExpenditures in Russia
Military expenditures in observable future will be determined not by level of threats or international environment but by interplay of group interests and inefficient defence management due to secrecy obsession and lack of high-grade military statistics i.e. by government failures
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
32
Tail Wagging the Dog Tail Wagging the Dog or or
Limited Control over Limited Control over BureaucracyBureaucracy
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
33
Russia’s Military-Industrial Russia’s Military-Industrial Complex DreamsComplex Dreams
The Institutefor the Economyin Transition
Prospective structure of RF expenditure for Armed ForcesProspective structure of RF expenditure for Armed Forces
SourceSource: Russian Military Review, 2006, : Russian Military Review, 2006, № 1№ 1, p.18, , p.18, translated.translated.
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
34
……and Realization of the Dreamsand Realization of the Dreams
The Institutefor the Economyin Transition
SourceSource: Military Industrial Courier, 2006, : Military Industrial Courier, 2006, № 1№ 12, p.6, 2, p.6, translated.translated.
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
35
Pestilence 2005Pestilence 2005 or or
Limited InformationLimited Information
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
36
Mysterious Disappearance of Mysterious Disappearance of Russian Military Pensioners in 2005Russian Military Pensioners in 2005
The Institutefor the Economyin Transition
(according to publications in mass media)(according to publications in mass media)
Sources: Sources: Rossiyskaya gazeta, 4Rossiyskaya gazeta, 4thth May; Independent Military May; Independent Military Review, Review, 2020thth May; Red Star, 19 May; Red Star, 19thth October; Red Star, 29 October; Red Star, 29thth December December
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
37
Conclusion Conclusion
The Institutefor the Economyin Transition
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
38
The Institutefor the Economyin Transition
Instead of Military Reform Instead of Military Reform Still Trying to Be as BeforeStill Trying to Be as Before
FederalFederalAssemblyAssembly Chamber ofChamber of
AccountsAccounts
ExpertExpertCommunityCommunity
RussianRussian
DefenceDefence
EnigmaEnigma
10th Annual Conference on Economics & Security, Thessaloniki, Greece, June 2006
39
Any Questions?Any Questions? Vasily B. ZatsepinSenior Research FellowDepartment for Military Economics
Phone: +7-(495)-629-0971E-mail: Zatsepin@iet.ruwww.iet.ru
5, Gazetny LaneMoscow 125993Russian Federation
The Institutefor the Economyin Transition
top related