Paul Goble
Staunton, June 25 – Russia is currently spending 8.7 percent of its GDP on the military and security services, twice as high as any Western country, with 40 percent of its federal budget now directed to those ends. That spending is boosting the economy, and Moscow will be unlikely to cut back significantly even if the war ends lest the economy collapse, Oleg Itskhoki says.
The Russian economist at UCLA says the current growth of the Russian economy is “largely the result of the stimulus provided by large government expenditures on war,” with approximately a third of the growth driven by increases in the military-industrial complex” (theins.ru/opinions/oleg-itshoki/272645).
The dependence of the entire economy on military spending, Itskhoki says, is so great is that if the war end sand “even if there is no direct need for continuing to produce drones and artillery shells, Russia will nonetheless maintain a high level of military spending” well into the future regardless of its policies toward the West.
Such a course will not reflect “any sort of Kremlin logic about the need to maintain a perpetual conflict with the West,” he argues. Instead, it will be the product of “simple economic reasoning: abruptly cutting off the injection of more than eight percent of GDP in government spending is impossible without causing a severe economic collapse.”
And “that is precisely why high levels of military spending will probably remain an integral part of Russian economic policy until the budget and National Welfare Fund are depleted.” Reductions will come then only as a forced economic step caused by some budgetary crisis.”
“Until that day inevitably comes, though,” Itskhoki says, “the Russian economy will almost certainly continue pouring unconscionable amounts of its industrial and human capital into the production of death and destruction.”
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