Years of massive defense spending have driven Russia into a state of militarization that has transformed factories and put hundreds of thousands of workers to work. The boom has helped stave off economic decline. Moreover, Kremlin dictator Vladimir Putin believes Russia needs a long-term, well-equipped army.
Western leaders, in turn, fear that he could turn it against NATO within five years, and that he wants to include a thriving defense industry in his strategic plan, writes Bloomberg.
While he makes plans and Europe spends billions on rearming its armies, the main dilemma remains the fate of the tanks and missiles that continue to roll off Russian assembly lines, journalists believe. Moscow could try to turn the burden on the budget into a source of income by selling weapons to allies such as China. But by accumulating near NATO's eastern borders and destabilizing relations with Europe, these stocks risk becoming a burden on an economy already suffering from sanctions, an unstable banking system and weak growth.
Military production and the economy of Russia
The growth of military production has reached record levels. Before the full-scale invasion of Ukraine in 2022, it was planned to supply about 400 armored vehicles per year, but now they are being produced ten times more.
New technologies have also appeared: own production lines for drones have been launched, which have become key weapons. Previously, drones were imported from Iran, but now Russia produces 1,5 million units per year, compared to 140 in 2023.
But the costs of the war are colossal: defense spending alone for 2022-2024 will amount to at least 22 trillion rubles ($263 billion), according to media reports. And forecasts indicate that there are no plans to cut them in the next three years — annual holes in the budget are already visible due to sanctions.
Russia can draw on its experience after World War II, when the conversion of Soviet factories to defense production allowed the USSR to become one of the largest arms exporters. Therefore, after the end of a full-scale war, the most successful weapons solutions will most likely be sold abroad.
"Russia is unlikely to stop militarizing the economy even if the war in Ukraine ends. The broad confrontation between Moscow and the West will not stop: this is one of the reasons why much of the defense complex will produce more products than before 2022, preparing for new conflicts," — says Bloomberg expert Alex Kokcharov.
Russia was already the world's second-largest arms supplier (after the US) before the attack on Ukraine. Sales have fallen in recent years precisely because of the aggression against its "neighbor." But there are already signs of recovery. Defense companies are once again participating in arms shows in India, China, the Middle East, and Africa. For the first time in six years, Russian weapons were shown at exhibitions in Malaysia and Brazil. The range covers the full range of military equipment, and technology transfers and joint production are being considered.
State arms exporter Rosoboronexport, which is responsible for about 85% of foreign sales, reported a record order book of $60 billion, giving factories confident demand and long-term contracts. It is reported that Russia will be able to sell arms worth $17-19 billion a year in the first four years after the war.
However, the media writes that the strategy remains imperfect: despite a solid portfolio of orders, the amounts received from exports are less than half of the annual defense budget. In addition, buyers may face pressure from the West. It is quite possible that with the continuation of the work of defense enterprises, layoffs and wage cuts are possible, since exports will not be able to fully load capacities.
