Can Russia Afford To Invade Ukraine? With Russian forces surrounding Ukraine’s borders, the international community awaits anxiously. But, observers wonder if Russian can really afford this war? A war that will cost untold billions. Maybe with the price of oil at such a high level Putin feels this is his chance?
If the Kursk disaster represented the nadir of the post-Soviet Russian military, then it also served as a catalyst that undoubtedly galvanized Putin’s resolve to rebuild the Russian military and restore it to something resembling or surpassing the former glory and prowess of the Soviet military at the height of the Cold War.
To that end, the Russian government, at the direction of President Putin, began an ambitious process of military modernization and recapitalization beginning in the mid 2000s.
These modernization programs represented a badly needed overhaul of the Russian Armed Forces. The remnants of the Soviet military had, even by the mid 90s, become not only a national embarrassment but also a liability—as evidenced by Kursk. Thus, the military modernization programs not only became a priority in order to regain basic military capability, but they also became a priority in order to regain a sense of national pride and to reestablish Russia as a major global military power.
The modernization efforts, or Strategic Armament Programs as they are officially titled, aimed to bring nearly every aspect of the Russian military into the 21st century and reestablish Russia as a military superpower. However, owing to the state of the Russian military and the ambitiousness of these programs, the associated costs reached enormous proportions, with a total price tag stretching into the tens of trillions of rubles.
Initially, the modernization seemed to proceed smoothly.
Moscow Victory Day Parade
Supported by dramatically climbing oil prices in the late 2000s, Russia’s annual defense expenditures skyrocketed. New equipment design prototypes, such as Sukhoi Design Bureau’s SU-35, SU-37, and SU-57 fighter aircraft, demonstrated impressive capabilities. The new Borei and Yasen-class nuclear submarines began sea-trials and initial production respectively—also boasting a suite of exponentially improved capabilities.
The Army began receiving the new T-14 Armata main battle tank, and the Strategic Rocket Forces began slowly upgrading their ICBM arsenal with RS-24 and RS-26 strategic missile systems and continued development on the RS-28.
Virtually every major entity within the armed forces stood to receive upgrades not only to their flagship weapons systems, but also upgrades to the supporting infrastructure and equipment as well. Indeed, during his tenure as president, Dmitry Medvedev—no doubt in close coordination with Putin—stated that the military modernization and rearmament program is “comparable to what we had during and after [World War II].”1
But the largess enjoyed by Russia’s economy with oil exceeding $100 per barrel was not to last.
Zhivopisny Bridge built in 2007 cost $250 million to build
By 2010, oil prices retreated below $100 and in 2014, fell into the $30 range. A variety of other geopolitical factors, not the least of which included a wide proliferation of modern search and extraction techniques—particularly in the United States—conspired to produce a significant challenge for Russia’s energy-based economy and, correspondingly, government revenues and expenditures. As such Russia’s continued plans for military modernization have begun to look very different.
While the ambitions for continued modernization persist. The reality of Russia’s economy may force concessions that limit the ability to fully realize the extent of such ambitions. As the initial 10-year Strategic Armament Program draws to a close, it has become apparent that many of the expected upgrades will not be fully realized.
As such, a second 10-year Strategic Armament Program (SAP 2018-2027) was organized and a further 19.1 trillion rubles allocated for defense modernization and restructuring.
But the landscape surrounding this second plan has changed dramatically. And the ability of Russia to fully execute the objectives of this plan are tenuous at best. Additionally, the effects of the unique domestic political landscape within Russia over the last 2 decades. And in particular the influence of Putin’s regime will factor heavily into how Russia will respond to the financial challenges of this new modernization program.
While Russia’s military goals may be quite lofty, its financial constraints are much more grounded–literally speaking.
Russia’s dependence on oil and natural gas production inextricably link the fate of its spending programs with the geopolitical fate of oil itself. As such, changes in the global petroleum industry will undoubtedly present significant challenges to Russia’s ability to succeed:
In both reaching the stated spending target as well as achieving the desired level of military modernization.
In fact, by using oil as an economic proxy for Russia’s defense spending capacity, it is possible to statistically model spending abilities, with at least some degree of reliability. And extrapolate those spending abilities according to various possible geopolitical scenarios and the corresponding price of oil.
By subsequently comparing theoretical spending capacity based on this type of predictive modeling with the desired spending thresholds. It is possible to determine the likelihood that Russia is able to attain its modernization objectives. Without diving into the analysis itself. Suffice to say there are very few scenarios over the next decade in which Russia meets the requisite spending parameters to achieve a full military recapitalization as ambitions as the SAP program.
Regardless of the actual outcome however, there is little doubt that the public narrative surrounding the progress of the modernization programs will parrot Putin’s vision of Russia’s restored military greatness.
Furthermore, in the course of this pursuit, Russia will likely enter a period of financial instability. And subsequently prioritize high visibility projects, such as its flagship submarines, while cutting corners on support, training. And infrastructure, and ultimately not only being forced to relearn many of the difficult lessons of the Soviet period. But also cause significant damage to its national and international image.
Additionally, given Putin’s sensitivity towards Russia’s international image and status. And given his outsized influence on Russian affairs, as a result is likely that many of Russia’s impending challenges will be largely self-induced. Moreover, potentially avoidable, and all the more disastrous because of it.
Lastly, although Russia’s modernization program may fall short of realizing its full ambitions. Russia does not summarily invalidate the efficacy or potential of the Russian state to leverage its military. And the modernization programs that it does achieve, to heavily influence geopolitics of the 21st century. Owing largely to the fact that the very nature of what constitutes a global superpower are rapidly changing.
Carrier strike groups make for great headlines. But they are unconscionably expensive and, in our modern world of massive interconnectedness. Becoming less of a direct play in great power politics as the struggle literally goes digital. Russia’s ability to deploy asymmetrical capabilities that produce effects completely disproportionate to their costs will be, perhaps, one of the defining characteristics of our transition to life in the 21st century.
A modern super carrier will cost several billion dollars. While an army of Twitter bots and teenage hackers costs virtually nothing; which one has been producing the most significant effects lately?
Back to our original question, it looks like Putin will seize his chance and invade Ukraine.
With the price of crude hovering at near-term highs and Russia deriving nearly 90% of their budget from the commodity. Now would be the logical time for Putin to seize Ukraine. But, can they afford a protracted war? Probably not, however Ukraine will most likely fall quickly.
Written by Jules Hirschkorn & Edited by Alexander Fleiss