4. Russia: military reform
The drive for military reform in the Russian Federation has been led by economic pressures and the need for savings on operations and for modernization of the armed forces rather than by changes in Russia's threat assessments, dramatic as these have been. For a short period after the spring of 1997, after the appointment of Defence Minister Sergeyev, some momentum built up for cuts and reorganization. Reform, paradoxically, involves costs, particularly those of demobilization and re-equipping the armed forces. With the continuing shrinkage of the Russian economy and after the financial crisis of August 1998, it is unlikely that Russia will now meet its target for reduction in troop numbers to 1.2 million by 1999 or achieve the change to all-professional forces.
The Russian budget allocation for 'national defence' for 1999 was 93.7 billion roubles, 2.3% of GDP, or about 120 billion roubles (3.2% of GNP) if some other budget items such as military pensions and international activities are added. This represents a nominal increase over the 1998 budget but will not cover the costs of demobilization, promised salary increases, outstanding salary payments or the accumulated Ministry of Defence debt to the arms industry (19 billion roubles in early 1998). Procurement and R&D have been particularly hard hit. Implementation of Russia's commitments to eliminate nuclear and chemical weapons is threatened. Above all, it is generally agreed in Russia that the nuclear forces should have highest priority in the Russian defence posture to compensate for the absolute and relative weakening of the country's conventional capabilities, as an 'umbrella' for implementing military reform and as the only remaining heritage of the Soviet superpower status.