Record Military Budget Approval by Putin A Heavy Toll on Russia's Economy Amid the War in Ukraine

Tuesday 03 December 2024 - 11:35

Russian President Vladimir Putin has approved an unprecedented defense budget for 2025, allocating approximately $126 billion, or 13.5 trillion rubles, to the national defense sector. This amount constitutes 32.5% of the total government spending, marking a significant rise from the previous year’s defense expenditure by $28 billion. Despite this surge, projections indicate a slight reduction in military spending for the following years, 2026 and 2027.

The ongoing war in Ukraine, now entering its third year, has become the largest conflict in Europe since World War II. With Russia continuing to make strategic gains, especially in contested areas like the Kursk region, the prolonged conflict has drained resources on both sides. The war, often described as a battle of attrition, has put a severe strain on both countries, exhausting their financial, material, and human resources.

Ukraine, facing considerable challenges in terms of military supplies and manpower, has nonetheless received substantial military aid from Western countries. Recent pledges include over half a billion dollars in new equipment from Germany, bolstering Ukraine's defenses against Russian advances. However, the future of such support remains uncertain, particularly regarding the U.S. stance under a new administration.

On the Russian side, the increased military expenditure, coupled with a strained economy, presents serious challenges. Russia has significantly raised its military spending over the last two years, but the economic strain is becoming evident. Inflation remains high, and labor shortages are affecting businesses, prompting the Russian Central Bank to raise interest rates to 21%, the highest in decades. Despite these challenges, Russia still has more military personnel and weapons than Ukraine, although recruitment efforts are showing signs of strain. The Russian military faced issues with mass emigration during previous partial mobilizations, as many sought to avoid conscription.

International dynamics also play a key role. North Korea has stepped in to support Russia, providing both troops and military supplies. Around 11,000 North Korean soldiers are reportedly stationed in the Kursk region, and North Korean-made missiles account for a significant portion of the missile strikes Russia has launched against Ukraine this year.

While the influx of foreign assistance and the increase in Russia’s military budget may provide temporary relief, the ongoing losses in both personnel and resources could have long-term effects. The continuing war of attrition poses a growing challenge for Russia, as the economic and human toll escalates, even as it bolsters its military spending to maintain its position on the front lines. The future of this conflict remains uncertain, with both sides facing mounting costs as the war drags on.