Don't you know then, my son, how little wisdom rules the world?

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]

However, CCI expert Alexander Grebenyuk has stated that those statistics are unreliable and incomplete. No one can count how many people left Russia for studies or on a work contract and simply never returned. For example, the SSS states that in 2014 4,780 Russians moved to Germany, although Germany records almost five times that number of Russian immigrants. For the U.S., the corresponding numbers are 1,937 and 9,079. But the greatest discrepancy concerns Spain, where the SSS says just 437 Russians emigrated in 2014, but Madrid reports the arrival of 8,286. Researchers say that, even by the most conservative estimates, State Statistics Service numbers bear tripling or quadrupling to reflect reality. [iv]

Most of those who emigrate to the West are scholars, college students, and business people. The number of independently wealthy Russian émigrés is gradually increasing. They are typically former government officials, families of politicians, and members of the financial and bureaucratic elite.

Whole regions are being stripped of people. Since the 1998 crash there has been a mass depopulation of Siberia and the Russian Far East. This development not only changes the balance of ethnic groups living there—few non-Russians are leaving, and many have higher fertility rates than the Russians—but also shifts the region’s broader geopolitical balance, given the size of China’s population and the increasing involvement of Chinese firms in Siberia and the Russian Far East.

The total population of Russia east of Lake Baikal grew throughout much of the Soviet period, sometimes as a result of forced movements of people—via resettlement and the GULAG—and later as the result of special premiums paid to those who agreed to work there. Both forces increased the share of ethnic Russians in the region as well. In 1991, the total population of the region was 8.1 million, a greater share of whom were ethnic Russians. But with the collapse of both coercion and subsidies, Russians began to leave the region in massive numbers. By 2003, the total population had fallen to 6.6 million, and the share of ethnic Russians had declined as well.

By the end of 2010, the situation appeared to have stabilized, but now the outflow of the population has resumed at an even greater rate, with the total falling to six million and the share of Russians once more declining. Indeed, so many working-age Russians have left that those businesses and government agencies that want to develop the region are having to import workers either from Central Asia or from China, both of which are triggering the departure of even more ethnic Russians and lowering their share of the population still further. If the current trend continues, there will be fewer than five million residents in the Russian Far East by the end of this decade, and the share of ethnic Russians in many areas will fall to 50 percent or less[v]

So, if Russia wants to build an oil or gas pipeline to China it will have to bring in contracted Chinese or North Korean workers to build the pipelines. The absence of an available labour force in Siberia and the Far East is a major impediment to Russian growth. These Russians aren’t only leaving because there are better job opportunities in Western Russia; they ae leaving because of the dramatic fall-off of amenities in the region and reliable quantities of food and hot water. It was a cardinal principle of the organisation of the Soviet Union that the state would provide piped hot water to heat every dwelling; that it would have food available at the place of work as well as the markets; and that health care would be accessible. The roads were always bad and muddy so that is no change. Today there are no funds to maintain many of these services in rural Russia; no state companies to distribute food; no hospitals or clinics with reliable supplies of medicines and doctors; and no reliable and affordable heating. In Siberia that is not a condition which can be overlooked.

In 2015, the estimated number of Russians living below the subsistence poverty line was calculated to be 20 million — a sharp increase of 2 million since 2014. Countersanctions imposed by Russia, especially on agricultural products, meant that the domestic prices of goods rose even faster, leading to a further decrease in consumer demand. By 2016 the GDP has fallen by around by 3.7 percent and the value of the rouble falling about 127 percent; all components of the domestic demand continues to shrink, and the economy continues to be in recession, now six quarters in a row.

In late 2016 it has been three years since Russia abruptly embarked on a course of political and economic isolation. Lower world oil prices, sanctions and the devaluation of the rouble dealt a serious blow to the population’s economic well-being. By its own evaluation, Russia’s middle class shrank by more than 16 percent, shedding an incredible 14 million people.

A Sberbank CIB survey found that in Autumn 2014, prior to the devaluation of the rouble, 61 percent of Russians considered themselves members of the middle class. In 2016 that number stands at 51 percent, with the “missing” ten percent now members of the lower class. The reason: costs are rising faster than revenues. Those with the lowest incomes must reduce consumption of all but vital necessities and find cheaper options for the goods and services they do purchase. As of this summer, real incomes had fallen by 7 percent year on year, and real pensions were down 4 percent after adjustments for inflation.[vi]

Moreover the gap in incomes between rich and poor has grown dramatically. According to a recent Credit Suisse report,  10% of Russians own some 89% of total household wealth in the country. Over the past year this figure has increased by 2%, and is significantly higher than in countries such as the United States and China (78% and 73%, respectively). Moreover, 70% of Russia's adult population is among the poorer half of the global population, with a quarter in the poorest 20%. The average Russian adult has some $10,344 in net assets: roughly $2000 in financial assets, $10,000 in non-financial assets, and $2000 in debt. On average for 2016, the wealth of Russians shrunk by 14.5%, due primarily to the devaluation of the rouble.[vii]

In addition to the quantitative problems, the Russians must deal with a catastrophic brain drain. After suffering a major brain drain in the 1990s, Russia is once again witnessing a rise in emigration. For the already under-populated Russia, emigration poses an increasing threat due to the loss of demographic, social, economic, and intellectual capital. According to the State Statistics Service (SSS), approximately 4.5 million people moved out of Russia between 1989 and 2014. Researchers say that, even by the most conservative estimates, State Statistics Service numbers bear tripling or quadrupling to reflect reality.

Most of the people who leave the country lived in border areas or the more prosperous regions. Those people have a potential to develop that they cannot realize in Russia. Most of those who emigrate to the West are scholars, college students, and business people. The number of independently wealthy Russian émigrés is gradually increasing. They are typically former government officials, families of politicians, and members of the financial and bureaucratic elite.

Not only capital is leaving the country, but also businesses. People leave Russia due to the volatile business environment, the lack of competition, widespread corruption, fears for personal safety and business assets, the lack of funding for science and education, and low salaries. [viii]

In late October2016 the Russian government announced it was preparing to slash government spending across the board over the next three years. Deep cuts are looming for health, education and defence — which is slated for a 27 per cent reduction in expenditure in 2017, according to a draft budget that the government submitted to parliament. The government forecasts that gross domestic product will drop by 0.6 per cent in 2016, a third straight annual contraction. As part of its plan to reduce Russia’s fiscal deficit from 3.7 per cent of GDP this year to 1.2 per cent in 2019, the draft budget calls for a 1 per cent cut in total federal expenditure in 2017 and further 1.3 per cent and 0.33 per cent reductions in 2018 and 2019, respectively. Moscow expects federal expenses on healthcare in 2017 to drop to Rbs466bn, a 22 per cent cut compared with this year’s revised budget.

The country’s defence spending remains relatively high by international standards but Rbs800bn of the Rbs3,889bn total for 2016 went for the repayment of debt for past procurement. Military expenditure for 2017 is slated to plummet to Rbs2,835bn, representing 17.5 per cent of total spending and 3.3 per cent of GDP.[ix]

This drop in funding has had several major effects on Russian military capabilities. In late 2016 the Russian press (“Nezavisimaya gazeta”) highlighted the rise of the “Homeless Regiment” at the Monument to the Heroes of 1905. More than 10,000 veterans of the Russian military in Moscow – and 30,000 members of their families -- who have been promised housing are not getting it because the defence ministry has redirected the money allocated for construction to the current military build-up required for the Kremlin’s aggressive foreign policy. The Russian government has a long history of not keeping its promises to veterans, a shortcoming that is increasingly infuriating those who aren’t getting what they were promised and certainly is doing nothing to boost morale of those who are still serving and may have increasing doubts that Moscow will live up to its promises when the time comes.  According to the Moscow paper, there are now 10,297 military veterans who have not received new housing when they were promised it, and “for most of them, prospects for acquiring it in the visible future are practically lacking. Moreover, most have families, and thus “no fewer than 40,000 people are suffering” as a result of defence ministry malfeasance.[x]

Another, more critical effect of this ‘build-up’ in the military has been the chronic deficiency in officers. In February 2017, the chief of the Main Directorate for Personnel within the Russian Ministry of Defence, Colonel General Viktor Goremykin, announced that, in 2016, the Armed forces found 11,000 officers for positions that otherwise would have gone empty (Krasnaya Zvezda, February 5). In his words, the military used “non-standard” methods to fill these staffing gaps. In particular, reserve officers who left the Armed Forces were recruited again.

It is worth noting that, on February 22, while speaking before the State Duma (lower chamber of parliament), defence Minister Sergei Shoigu clarified that due to shortages of personnel in 2015, 15,000 troops previously dismissed had been returned to service (TASS February 22). Obviously, this, practice continued in 2016.

The situation of Russia’s military pilots is particularly critical. defence Minister Shoigu revealed that the deficit reached 1,300 pilots. To resolve this massive shortfall, the professional lifespan of pilots in the Armed Forces has been extended by five years (TASS February 22). In addition, according to Colonel General Goremykin, “for the first time, a [shortened] 1.5-year pilot training course was organized for highly educated technical staff officers. Last year, the first 49 such pilots graduated. Today, training was completed by another 50 troops” (Mil.ru, February 2). An obvious danger exists that such initiatives could potentially increase the number of flight catastrophes and accidents.

Following the reforms of former Minister Serdyukov and the gradual rollback of many of his most important reforms, the present Russian military manning system appears on the verge of breakdown. The reason is clear: Based the country’s strengths, national interests, demographic situation and economy, Serdyukov and his team specifically created military forces capable of winning in a local conflict inside the post-Soviet space. But as a result of the Kremlin’s current policies, Russia has locked itself into a conflict with the North Atlantic Treaty Organization (NATO), which is superior to the Russian Federation across all quantitative indicators—all types of weapons and numbers of personnel. The only logical military response for Moscow in this situation, therefore, is to return to the ineffective and extremely cumbersome mass mobilization army. Indeed, this is happening now, as highlighted by defence ministry’s promise to create new military divisions.

Speaking to lawmakers earlier this month, Shoigu announced the intention to complete the formation of four divisions: three in the west and southwest and one in the Kurile Islands. But the total number of the Armed forces increased by only 10,000 in 2016. This can only mean that Russia in in the midst of deploying Soviet-style “paper” skeleton divisions, in which five hundred officers command a hundred soldiers in peace time—in other words, the types of formations explicitly abandoned by Serdyukov. To stand up such units, an excess number of lieutenants is required. These types of divisions are appropriate if one’s goal is to report to the president about the increasing power of the Russian army; but they are useless for increasing the country’s military might in reality.[xi]

Some of these deficiencies might have been compensated for by dramatic developments in the planned Russian military hardware department. These ambitious targets announced by Putin have proven very difficult to achieve; both within the time framework for their introduction and in the quality of the end product. Although expenditures on nuclear weapons in the new budget have not changed significantly—they will amount to 51 billion roubles ($875 million) in 2017 —Russia’s overall economic and domestic production problems are already negatively affecting the development of new types of strategic arms. A case in point is the RS-28 “Sarmat” intercontinental ballistic missile (ICBM).

The heavy, liquid-fuelled Sarmat ICBM is being developed as a replacement for Russia’s older R-36M missile (NATO Reporting name: SS-18 Satan). The Sarmat’s large payload will allow for up to 10 heavy warheads or 15 lighter ones, or as many as 24 hypersonic Yu-71 glide vehicles Production of the new missile and its prototype was entrusted to the Krasnoyarsk Machine Building Plant (Krasmash), which suffers from serious equipment depreciation issues—in 2010, fewer than 20 percent of machines at its fabrication facility were less than 20 years old. The quality and lead time of the order will depend on the modernization of the production facilities at Krasmash.

The Sarmat’s development has consistently fallen behind schedule. The rocket prototype should have been ready in June 2015, but, in fact, it was designed only in November. Furthermore, pop-up tests of the missile prototype were scheduled for 2015, but were postponed to the first quarter of 2016 because sub-contracting enterprises faced problems with meeting deadlines for deliveries of Sarmat components during the project’s implementation. In February 2016, the test was postponed again for 3­–4 months because the launch silo was not ready. According to media reports, the issue was a lack of funding. The silo was finally complete in May, but the test launch did not take place again, this time due to technical problems with the missile prototype. The pop-up tests were, thus, postponed to November–December. However, in October, media sources reported that the pop-up tests were being rescheduled for January 2017. January came and went, again without a test launch. As the month drew to a close, a source in the military-industrial complex said that the tests would be attempted in March. There have been no further announcements.[xii]

The Sarmat delays parallel the previous failures of the submarine missile Bulava—multiple failed tests and long delays in reaching operational capability. It is worth pointing out that the Bulava was declared operational only after eight years of testing. Meanwhile, the Sarmat is supposed to enter service in 2018, which seems overly optimistic at this point.

These delays are common in the development of Russian weapons. The new “Armata” tank has proved to be too expensive to deploy in large numbers and still technically unproved. The Russian threat of a push towards military parity with its opponents, especially the “glavni vrag” (main enemy –the USA) is a delusion. The reality of the comparison between NATO and the Russian military shows the disparity in size. In 2015, NATO spent around US $861 billion on its arms build-up - just about thirteen times Russia's military budget (US $66 billion). NATO nations - without the USA - are spending nearly the same amount per capita on their armed forces (US $440) vs. Russia's US $470, while the USA, alone, spends US $1,870 per capita on its military. 800,000 Russian soldiers are up against 3.41 Million NATO soldiers, 750 Russian fighter jets and 1,400 ground combat aircraft are up against NATO's 4,000 fighter jets and 4,600 ground combat aircraft. In a warfare situation, a single Russian aircraft carrier would have to take on 27 NATO aircraft carriers, 100 Russian frigates, destroyers or corvettes would confront 260 of the corresponding NATO warships, 60 Russian submarines would be confronting 154 NATO subs. Only in the domain of multiple rocket launchers (MRLs) and self-propelled guns (SPGs) would Russia hold a slight advantage over the western alliance. However, in modern warfare, the military advantage these weapons represent can be regarded as of subordinate significance. [xiii]

Perhaps the most worrying development in Russia’s military posture is not the strength of the NATO alliance or its will to balance the risks between Russia and the West; it is the spectacular expansion of the Ukrainian military production of weapons, missiles, planes and strategic equipment. Ukrainian President Petro Poroshenko announced, on February 11, 2017 that Ukroboronprom (a state-owned association of multi-product enterprises in the defence industry) had successfully tested a new type of domestically produced air-to-ground rocket with impressive technical characteristics. This 80-millimetre calibre munition can be launched from both attack helicopters and strike fighters. A round of 20 rockets can be fired within half a second. The Ukrainian-built munition and other recent defence-sector developments suggest that the timetable for modernizing Ukraine’s armed forces is meeting the target goal of bringing domestic standards up to those of the North Atlantic Treaty Organization (NATO) by 2020. There are a range of other developments in technology which puts a genuinely hostile, well-armed and motivated enemy on Russia’s border.

Another development which will weigh heavily on the Russian military is the inability of Russia, Iran, Syria and Turkey to work out an acceptable and workable cease-fire in Syria which will allow them to proceed against ISIS (Daesh). As this continues the strain on the Russian military resources will continue. Still more worrying is the fact that Russia is likely to be faced with a massive expense to assist in the rebuilding of Syria if there is a cease-fire (under the principle “If you break it, you own it”).

What is the most puzzling in all of this is why President Trump wants to increase the spending on the U.S. military in the next few years. The U.S. expenditure is more than the sum total of its counterparts.

Russia is not suicidal. It had decided to use its military against the those who find it hard to defend themselves and to bluster that it is capable to do the same against serious enemies. Until then is will pursue its course of “irregular warfare” by cyber stealth and interfering in the domestic political operations aginst its enemies. By concentrating on the military fiction, the West has disregarded or undervalued the campaign being waged against them by alternative measures. Perhaps that should be the focus of our defence policies; not only in acquiring more toys.

[xiii] Pavel K. Baev, "Military Force: A Driver Aggravating Russia’s Decline" Jamestown 27/6/16