Thursday, 1 October 2015

Russia moves in

I am having trouble trying to get the west to grip the situation around Vladimir Putin’s land grab programme, so I have decided to move onto finance.

Putin is allocating unprecedented amounts of secret funds to accelerate Russia’s largest military build up since the Cold War, according to data compiled by Bloomberg. The part of the federal budget that is so-called black -- authorised but not itemised -- has doubled since 2010 to 21 % and now totals 3.2 trillion roubles [£50 billion], an independent think tank in Moscow, estimates.

Stung by sanctions over Ukraine and oil’s plunge, Putin is turning to defence spending to revive a shrinking economy. The outlays on new tanks, missiles and uniforms highlight the growing militarization that is swelling the deficit and crowding out services such as health care. Thousands of army conscripts will be moved into commercial enterprises for the first time to aid in the rearmament effort.

Russia is assembling S-300 anti-aircraft defence systems to start shipments to Iran.

Since bringing the country back from the brink of bankruptcy a decade and a half ago, Putin has increased defence spending more than 20-fold in rouble terms.  Defence and the related category of national security and law enforcement now eat up 34 % of the budget, more than double the ratio in 2010.

After years of chronic funding problems for weapons makers, Russia has started to prepay for the goods and services it buys from the more than 1,300 organizations and 2.5 million people that make up the defence industry. About half of this year’s defence budget was dispensed in just the first quarter, though most of what was paid for is classified.

Russia also has about 2.5 million active reservists out of a total population of 143 million, according to Global Firepower, which studies the conventional war making capabilities of 129 countries. It ranks Russia No. 2, after the U.S. and ahead of China, India and the U.K.

Russia wants to expand and Syria in now in view.

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