Chinese Military Analyst Yao Cheng on Defense Minister's Statement that China Cannot Accept Russian Defeat in Ukraine, Adds: China Gave the Houthis in Yemen Their Advanced Missiles
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Memri
5 hours ago
- Memri
Can Russia Cut Its Military Spending?
Last month, Russian President Vladimir Putin made headlines as he admitted that Russia may cut its military spending,[1] which had reached a post-Soviet high of 6.3-7.7 percent of GDP this year. Official allocations for the Ministry of Defense stay at 13.5 trillion rubles, or 6.3 percent of projected GDP,[2] while some alternative assessments put them – usually together with a part of those used for "security policy" – as high as 16.5-17 trillion rubles, or 7.5-8 percent, especially if some funds originating from regional budgets[3] and those used for military purposes by the Interior Ministry are counted as well. (Source: X) "The Special Military Operation" Will Remain The Federal Budget's Priority For 2026 The scope of military expenses has been a source of quarrels inside the Russian government for some time, and this summer, as top bureaucrats assembled in St. Petersburg for an annual economic forum, their discontent with the Kremlin's policies became almost obvious as many officials claimed that the current economic strategy seems to be "exhausted."[4] I had argued that the "technocrats" in the government actually attempted to limit the amount of funds predestined for the military for 2026, or at least not to allow the amount to grow significantly from what it would become in 2025. No one actually knows how much the Kremlin will spend by the end of the year.[5] While Russia's war against Ukraine has been ongoing, the Russian military budget has been marked by two distinctive features. The first was the overall amount of the spending – every year it had exceeded the previously approved amount enshrined in the country's federal budget for one or another year. For 2022, the State Duma approved the military allocations at a mere 3.51 trillion rubles,[6] but the final spending for the year reached, by the lowest estimates, 5.8 trillion rubles, which was at least explicable since the deputies had voted for the budget at a time when it was never forecast that a full-scale war would break out.[7] However, in 2022, a new budget for 2023 presupposed that 4.98 trillion rubles would be spent on the military,[8] while heavy fighting on the frontline together with the "commercialization" of the Russian army, which I used to call "deathonomics,"[9] had pushed up the amount of money needed, with the actual expenses reaching at least 7.2 trillion rubles.[10] For 2024, another hike was approved – the Duma released a budget that channeled 10.77 trillion rubles for the military,[11] and, during the year, more than 13.1 trillion rubles were spent clearing a path for the adoption of the record 13.5-trillion-ruble military budget for 2025.[12] As of today, no one actually knows how much the Russian army will spend in the current year, but one may be sure that the financial backing of the war remains almost the single part of the budget that has been financed without any delays or excuses. Russian Finance Minister Anton Siluanov, addressing quite recently Putin's appointees at the Federation Council, reiterated that "the Special Military Operation" will remain the federal budget's absolute priority for 2026, putting[13] this objective before all others. The second feature has been the budget "promises" for a more distant future. Since 2007, the government in Russia has presented the State Duma with a budget proposal not for a one single year, but for three years at a time:[14] For the first one, the figures have become a kind of a law (often amended several times during the following year), while those for the second and third remain "indicative," reflecting the general dynamics and direction of the evolution of the state finances. Here, it should be noted that, every year since 2022, the government in fact presented its military spending for the upcoming year as extraordinary, assuming that later they would be cut – and this makes Putin's remark not too original. His government, as can be seen, actually made the same promises for many years so far. For example, the budget for 2023-2025, approved in October 2022, stated that the military spending would reach 4.98 trillion rubles in 2023 before decreasing to 4.65 trillion rubles in 2024 and further to 4.21 trillion rubles in 2025.[15] The next budget, however, enacted 10.77 trillion rubles in military allocations for 2024 (or 2.32 times higher that was expected just a year before),[16] but also forecast a later decrease to the much lower level of 8.5 trillion rubles in 2025.[17] To finalize the picture, I would remind the reader that the most recent 2025-2027 budget has popped the military funding up to 13.5 trillion rubles for 2025, but once again promised it would go down, even while much less dramatically – to 12.7 trillion rubles in 2026 and to 13 trillion rubles in 2027.[18] The Current Magnitude Of Russia's Military Expenses Might Become Unbearable In The Coming Years I am sorry to say that not one of these optimistic predictions has come true, devaluing Putin's projections about cutting the military funds amid the overall context of his words allowing one to believe he just wanted to present a "peaceful" Russia to Europe (and, more generally, to the West), which, citing the Russian threat as the main reason, has already started to seriously increase its own military funding.[19] However, as many experts have started evaluating Putin's words, I would say it seems necessary to try to understand whether there is some meaning behind them or one should treat them as pure propaganda. To my mind, these days the situation is not as simple and straightforward as it has been in recent years. First, it should be mentioned that the overall military allocations have reached extremely high levels – especially if one compares them to budget revenues. Historically, Russia has been critically dependent on its commodity exports, with the budget being filled with what is called "oil and gas revenues" comprised of a tax levied оn oil and gas extraction (НДПИ) and of "additional revenue tax" (НДД) introduced in 2018 and constituting a kind of a special profit tax applied to the oil and gas sector (export duties that constituted a large part of the revenue were abolished by 2023).[20] In the last ten years, these proceeds accounted for between 28 and 52 percent of all federal budget revenues.[21] Yet, what looks like a major change since 2024 is that the military spending started to skyrocket as a share of "oil and gas revenues": While between 2006 and 2013, the combined military allocations accounted for just 29.3 percent of these revenues, between 2014 and 2021 the ratio rose to 44.3 percent – and in 2025 the budget approved by the State Duma last year (with 13.5 trillion rubles for the military and 10.93 trillion expected in late 2024 to come in as "oil and gas revenues")[22] the level has, for the first time ever, been pushed over 100 percent. Moreover, it seems that by the year's end it may well exceed 160 percent as the current "oil and gas revenues" projection has remained at 8.32 trillion rubles after the "correction"[23] in late April (and the real figure might be even smaller if the adjusted "oil price cap" recently introduced by the 18th European sanctions package proves effective, not to mention U.S. plans to undermine Russia's oil exports by implementing 100-percent tariffs on the nations where those exports go most)[24] while no plans have been announced for cuts to military expenditure in the coming years. Second, during the years of the war, all the other groups of revenues collected by the Russian authorities rose in a robust way: The "non-oil and gas revenues" were up 25 percent in 2023 and by 26 percent in 2024 – in both cases compared to the previous year.[25] In the first half of 2025, their growth slowed to 12.7 percent,[26] even while the tax burden on both the Russian citizens and businesses was significantly elevated starting January 1.[27] Therefore, the overall budget revenues were up by a mere 2.8 percent in the first half of 2025 compared to the same part of the previous year while the spending skyrocketed by 20.2 percent. This trend caused a lot of doubts concerning the government's financial soundness, especially as the economy slows and the National Wealth Fund may be exhausted as early as in 2026.[28] I would add that there are few chances for a serious nominal rise in Russian federal budget revenues in 2026 as inflation has seemingly begun to calm and the growth rate of nominal disposable incomes also decreases due to the cooling of the national economy. So, I would expect that the current magnitude of the military expenses could become unbearable in the coming years and may cause irreparable damage to state finances starting if not from 2026 then definitely from 2027, if the Russian leadership does not change its course. This was one of the main reasons I and my colleague, Dmitry Nekrasov, argued recently that the Russian economy these days strongly prefer any move toward peace over an "endless war."[29] Putin Cannot Afford A Genuine Peace At This Time What should one expect under such circumstances for 2026? To my mind, the government will try to find a kind of compromise that may be reached if the military expenses are formally increased, but in a proportion that remains lower than official inflation figures or corresponds to them. Hence, it would not go higher in terms of Russia's GDP and would almost certainly reflect a decrease in market dollar terms since the ruble is poised to weaken significantly in 2026 compared to the excessively high levels it had achieved in recent months. Nevertheless, Russia's military spending will still remain close to its post-Soviet highs of 7-7.5 percent of GDP if allocations from all sources are considered. But this would mean that the Kremlin is still financing its war machine as much as it can, but also trying not to undermine Russia's economic capabilities or diminish the country's potential – and, by no means, seeking recourse from a "total war" that might need a forced mass mobilization. Such an adjustment, I would argue, cannot be seen as a turn toward de-militarization. Even while the resources of Russia's "military keynesianism" look mainly exhausted (and here one should agree with some of the Kremlin's advisors), President Putin cannot afford a genuine peace at this time. For him, the war with Ukraine had brought a lot of advantages – with getting a "real" enemy, he succeeded in governing his country with an iron fist, further limiting not only civil and political rights of his subjects, but also enjoying almost total control over Russia's economy, where no rules and laws seem to exist anymore. This, at least in theory, gives him another source of revenue he might use for funding the war. So one could say that after the "deathonomics," or monetization of Russian people's lives, the Kremlin might, at least for some time, monetize its capabilities of redistributing business assets, thus sucking more money from the ailing economy (there is not a coincidence that many officials are starting to call for a "big privatization" of recently confiscated properties – the major problem here is, however, that few entities and oligarchs, except, maybe, the state-controlled banks, would become enthusiastic enough to buy anything that the state may take away from them another day). When Putin says he might consider cutting the military allocations, one should realize that Russia is – as it has been for most of its history – a country not governed by an economic rationale. The state has been inventing illusionary goals and landmarks for decades, if not centuries, subjugating to them all the economic interests of its citizens, not to say sacrificing their lives for those doubtful "achievements." Therefore, I would be extremely cautious about predicting significant changes in Russia's budget policies even while it looks obvious that fiscal deficits will rise in the coming years. I will remind the reader of a popular Soviet joke from the times when the government increased the retail price of vodka to meet its ends since the proceeds from alcohol sales contributed greatly to budget revenues. The joke goes: a child rushes into the kitchen with a newspaper containing another announcement of a price hike, and says "Dad, I presume you will drink less from now on?" His father responds "No, my dear, rather you will not eat as much as before." The same can be applied to Russian military spending – there are few chances we will see them being cut: Maintaining them at current levels now looks like the best possible option for at least 2026 and 2027. *Dr. Vladislav Inozemtsev is the MEMRI Russian Media Studies Project Special Advisor, and founder and director of the Moscow-based Center for Post-Industrial Studies.
Shafaq News
5 hours ago
- Shafaq News
Syria's FM heads to Moscow in first post-Assad visit
Shafaq News – Damascus Foreign Minister Asaad al-Shibani will visit Moscow for the first time since the fall of former President Bashar al-Assad's regime, a Russian media outlet revealed on Wednesday. Syrian sources told Russia Today that al-Shibani is expected to meet several senior Russian officials during the visit, though it remains unclear whether a meeting with President Vladimir Putin is on the agenda. Following the collapse of the al-Assad government, Russia's Foreign Ministry announced that 'al-Assad left Syria and ordered a peaceful transfer of power,' adding that al-Assad and his family had arrived in Moscow, where they were granted asylum on humanitarian grounds. At the time, while initial signs suggested limited Russian troop withdrawals, Moscow has maintained control over its key strategic assets, including the Hmeimim airbase and the Tartus naval facility. The new Syrian leadership has expressed interest in preserving strategic ties, prompting Russia to engage through renewed diplomatic channels.
Memri
12 hours ago
- Memri
Chinese Social Media Video on Potential Impact of Iran being Defeated by U.S. and Israel: This Is a Battle China Cannot Afford to Lose
On June 20, 2025, the 'Steel Tooth Brother' account on the Chinese social media platform Xiaohongshu posted a video titled 'If Iran Loses, Will It Have an Impact on China?' In the video, the narrator discussed the critically strategic nature of Iran's location and the importance of the Strait of Hormuz with regard to oil exports, predicting that an Iranian defeat would give the U.S. control over Middle Eastern oil, breathing 'new life' into the U.S. dollar and reshuffling the balance of power in the region. The narrator also said that an Iranian defeat would allow U.S. influence to spread northward and 'entrap' China and Russia, also risking China's Belt and Road Initiative. The narrator suggested that in order to prevent this scenario from unfolding, China must provide Iran with military equipment, use renminbi to settle China-Iran oil transactions, and align closely with Russia on the international stage against the U.S. and Israel. He added: 'This is a battle China cannot afford to lose.'
