The international community appears to be fixed on the idea that the Russian State and its military is rising in power and influence in world affairs because of Russia's announcements of vast sums being poured into its military forces and its outspoken commitment to regain the status of a Great Power. The press is full of stories about new and threatening weapon systems; nuclear rearmament of the Russian inventory; bigger and better missiles of increased sophistication; improved fighter aircraft with modern equipment on board; and a major commitment by the Russian military to dominate the Arctic Region; and new and expanded forces spread across Western Russia and the Ukrainian border.
While, no doubt, terrifying to the readers if these announcements were true, they are not even an approximation of the actual truth. They are as valid as President Trump's "alternative facts" about the size of his inauguration and his hands, inter alia. Like Trump's 'facts' the Russian 'facts' are partially true but mainly self-serving "maskirovka".
On various occasions in the last two years President Putin has announced that Russia would be spending many billions of dollars in modernising its military and acquiring new equipment. In 2014, Russia's military budget of 2.49 trillion roubles (about US$69.3 billion at 2014 exchange rates) was higher than any other European nation and dedicated to a wide range of new tanks, ships and missiles. However, the catastrophic collapse of the rouble in the face of a drop in the international price of oil reduced the dollar-value of the 2015 Russian military budget to US$52 billion. There were even greater demands for military expenditures in 2015 and 2016 by the Russians to fund their Syrian campaign and in sustaining their Crimean/Ukrainian wars and occupations. These were further drained by having to deploy real soldiers instead of "ghost soldiers" in their efforts to pose a threat to the Baltic states.
Since the end of the Cold War in 1991, Russia has lost over 90 per cent of its non-nuclear (troops, ships, aircraft) combat power. It was disarmament by starvation (massive cuts in the defence budget) and neglect (the military leadership tried to hold on to more equipment than they could afford to maintain or operate, making the situation worse.) Digging out of the hole is going to cost over half a trillion dollars and over a decade of effort. To that end, the government increased the annual defence budget and is spending over $25 billion a year (through most of this decade) to rebuild the conventional forces. It takes time to rebuild fleets and armies. The Russian government has tallied up the costs of modernizing their aging military forces equipment and concluded that it will total about $700 billion. That is a prodigious sum, even if the Russians that that to spend.
In addition to the restricted revenues coming to the Central Bank from the oil and gas industry, the Russians are hampered by many other fundamental problems which have impinged on their program of rehabilitation. The most immediate problem was the large overhang of Soviet debt. Vladimir Putin has gifted almost 200 billion dollars to other states by waiving outstanding debts owed to the Soviet state. The Soviet Union conducted an expansionary external policy which encompassed countries such as Afghanistan, Cuba, North Korea, Syria, Ethiopia, Mongolia, Angola, Algeria, Yemen, Iraq, Vietnam and others (mainly African, which received military and other aid.
In addition to the currency value losses due to the high inflation rate which beset the rouble after it was taken over by the Russian state, it became necessary to conduct negotiations on the settlement of mutual claims. These negotiations took place in the 1990s, although an agreement with Montenegro was reached as late as in 2007. The following countries had the largest debts prior to Russia's succession of the Soviet Union: Cuba, North Korea, Mongolia, Vietnam, India, Syria, Iraq and Afghanistan. However, most of the political leaders of these countries did not want to pay back their Soviet debts in principle and hence payments were made by only India, Mongolia and Vietnam.
The agreement on the settlement of the Cuban debt owed to Russia stipulated that the accumulated debt of 35 billion dollars would be expunged. In 2007, Afghanistan's 11-billion-dollar debt was written off. In Ethiopia a debt of approximately 4.8 billion dollars was written off at two junctures in 2001 and 2005. In 2014, 90% of North Korea's debt of 11 billion dollars was written off and the rest is very unlikely to be paid. Russia wrote off 9.5 billion dollars of Vietnam's 11 billion Soviet era debt in 2000 and took the balance in some future supply of Vietnamese oil. The same was true of Iraq where Russia absolved over 90% - i.e. 12 billion dollars - of Iraqi debt in February 2008, with the balance to be paid in oil. In Mongolia, the Russians cancelled a debt of 11 billion dollars; with a hope of taking shares in Mongolian mineral deposits but the Mongolians have refused to surrender any of these minerals to Russia. The Russians wrote off a 4.5 billion dollars of Libyan debt, even when Libya had plenty of money to repay Russia. Russia granted debt remission to the regime of Bashar al-Assad with respect to almost 10 billion of 13 billion dollars of debt in 2005. The Russians wrote off 4.7 billion dollars to Algeria; Algeria promised to buy items from Russia as recompense. In 1993, India agreed to pay back 7.5 billion dollars over 12 years and another 4.5 billion -- over 40 years. The debt is to be discharged not with hard cash but mostly goods and assets it is, however, being repaid. Thus, in total, Russia has written off more than 130 billion dollars of Soviet era debt [i]
Putin has already written off new loans he himself issued. Thus, in 2013, the Russian president granted the remission of debt in the amount of 500 million dollars to Kyrgyzstan. Uzbekistan's debt of 875 million dollars was written off amidst the financial crisis in December 2014. Venezuela, run by Soviet-type communists, regularly receives billions of dollars in credit despite overdue past loans. All of these are, or have been, a heavy burden on the Russian Treasury.
The dramatic drop in the price of oil and the increased military expenditures for the wars in Syria and the Ukraine (totalling around US$6.1 million a day) are only some of the problems faced by Russia and its economy. Russia has serious demographic problems as well.
When the Cold War ended, the Soviet Union had a total population of nearly 290 million, and a Gross National Product estimated at about $2.5 trillion. At that time, the United States had a total population of nearly 250 million, with a Gross Domestic Product of about $5.2 trillion. That is, the population of the United States was smaller than that of the Soviet Union, with an economy that was only twice that of the Soviet Union. Two decades later, Russia's population is about 140 million, with a GDP of about $1.3 trillion, while the population of the United States is over 300 million, with a GDP of $13 trillion. Today, the population of the United States is twice that of Russia, and the US economy is ten times as large.
Global tables of male life expectancy put Russia in about the 160th place, below Bangladesh. Russia has the highest rate of absolute population loss in the world. The Russian population is aging, and Russia remains in the throes of a catastrophic demographic collapse. The population is expected to fall to 139 million by 2031 and could shrink 34 per cent to 107 million by 2050. Eight out of ten elderly people in residential care have relatives who could support them. Nevertheless, they are sent off to care homes. Between two and five million kids live on the streets (after World War Two the figure was around 700,000). Eighty per cent of children in care in Russia have living parents, but they are being looked after by the state. According to data published by the Russian Federation Investigative Commission, in 2010 there were 100,000 child victims of crime, of whom 1,700 were raped and murdered. This means that four or five children are murdered in Russia every day. In 2010, 9,500 sexual offences were committed against underage victims, including 2,600 rapes and 3,600 cases of non-violent sexual relations.
There is a pervasive culture of abortion. Under Communist rule, abortion was the only practical method of birth control available to Soviet citizens, and it was employed extensively throughout the latter part of the Cold War. This has declined with the end of the Soviet Union but Russia still boasts one of the world's highest abortion rates. In 2015, according to official statistics, that figure was 930,000 - or an average of 106 per hour. Experts have estimated that the actual number of abortions performed in Russia every year could be as much as double the official figure, because of unofficial procedures that are performed outside the official medical system. If so, the true cost of Russia's abortion culture is the annual termination of more than one percent of the country's total population. [ii]
Now Russia is suffering from a mass emigration of its populace, especially among the educated. Russia has a very serious demographic problem. According to the State Statistics Service (SSS), approximately 4.5 million people moved out of Russia between 1989 and 2014. The smallest outflow occurred in 2009 when just 32,500 people emigrated, but the numbers began rising again after 2011, and in 2014 once again reached 1995 levels.
Today, the situation is significantly worse. "Russian government statistics show a sharp upturn in emigration over the last four years," notes professor Judy Twigg of Virginia Commonwealth University. "Almost 123,000 officially departed in 2012, rising to 186,000 in 2013, and accelerating to almost 309,000 in 2014 after the annexation of Crimea and even more in 2015." [iii]
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