Sanctions will not Affect Russian Military Spending in 2015

A leading Russian newspaper has reported that despite various sanctions on Russia, in view of the Ukraine crisis, the country’s spending on defense will continue to grow as planned in 2015. The current economic problems that currently face the country will reportedly not affect its military spending, the newspaper reported this week. In its report, Vedomosti cited figures from the draft of the 2015-17 federal budget.

The draft indicates that in the upcoming federal budget, defense allocations will see an increase of 21.2%. With this, the total spending on military in Russia will soar to nearly US$79 billion (3.032 trillion rubles).

What this means is that defense industry in Russia will witness real growth in terms of expenditure on military equipment and other expenses. The draft also states that inflation in 2015 will stand at 6%. However, according to the newspaper’s report, the real defense expenditure growth rate in Russia will be close to negligible considering the inflation rate. In 2016, the growth will be 7.8%, which would mean US$84 billion. In 2017, growth will be 4%, touching approximately US$87 billion, according to the newspaper’s report.

Earlier in September, the Russian defense industry was slapped with new sanctions from the Western countries. The European Union has banned three leading defense players from Russia from raising finance via the capital markets in Europe. These companies are: United Aircraft Corporation, Oboronprom, and Uralvagonzavod. These fresh restrictions from the European Union also bar the sale of equipment based on dual-technology platform to Russian companies.

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