Putin’s cost to fight the war in Ukraine is spiraling out of control

Some experts believe wars are won because of strategy and tactics, while others believe it is supply and logistics that matter. However, the most likely element of winning wars is the amount of money a country is willing to spend, something Russia has caught onto. 

According to Reuters, this doubling of Russia’s defense budget will work out to account for about one-third of all public spending by Moscow in 2023, a situation which the news agency said revealed the spiraling costs of fighting in Ukraine being placed on Russia. 

Reuters obtained government documents that showed in the first half of 2023 alone, the country had spent 12% more on its defense budget than initially planned, and defense spending for the first six months of the year amounted to 5.59 trillion rubles. 

The Moscow Times noted Russia stopped sharing detailed information on its budgetary spending in June, which has cast the Kremlin’s financial situation “deeper into secrecy.” However, there are some things we can learn from previous years of spending on defense.  

Military spending prior to the invasion of Ukraine amounted to between 3 and 3.5 trillion rubles annually from 2019 to 2021, according to analysis from the American-based think tank The Wilson Center, which put Russian military spending at $44.1 to $48.5 billion. 

These costs equaled between 14% to 16.5% of the Kremlin’s federal budget at the time. They only represented roughly three to four percent of Russia’s Gross Domestic Product (GDP), an amount Moscow kept consistent in the leadup to the invasion of Ukraine. 

“The Kremlin kept its plan to launch a war against Ukraine secret,” The Wilson Center’s Boris Grozovski wrote on September 7th. “Therefore, the amount of money allocated for the army in the 2022 budget law… did not surpass the long-established trend.”

Russia’s 2022 budget did not "betray" its invasion plans, according to Grozovski, but things began to change after the war was launched, and by the summer and fall, the Russian Ministry of Finance was forced to adapt to the country’s changing economic situation. 

Costs associated with the war exceeded the Kremlin’s budget by 57.4%, and the issues only got worse for Russia. By the end of 2022, Moscow’s military expenditure cost reached 81.7 billion dollars—an increase of 76% on its 2019-2021 budget averages. 

“Toward the end of 2022, the government realized that it was in this for the long haul,” Grozovski wrote, adding: “Military spending, including funding for the military-industrial complex, needed a significant boost.”

Russian arms factories began hiring more workers and increased their shifts from a two to three-a-day working schedule, and the federal government stopped publishing budget statistics that included a breakdown of expenses in order to hide its military spending.  

What we know about Russia’s military spending in 2023 comes from the leaked document that was shared with Reuters in August, and as shown previously, Russia has taken on a massive financial burden in order to win the war in Ukraine.

After analyzing the document, Reuters estimated that Russia would shell out upwards of 9.7 trillion rubles for its annual defense spending, a number that again represents about one-third of the country’s total spending of 29.05 trillion rubles.  

This would make Russia’s current spending on defense the highest it has been in over a decade, according to Reuters, which noted that between 2011 and 2021, Moscow spent between 13.9% and 23% of its defense. 

Reuters also reported that the document it reviewed showed that Moscow had already spent 57.4% of its new annual defense budget, a situation which likely doesn’t bode well for the country since the information looked at the first six months of the year. 

“The extra spending, combined with the effects of Western sanctions and a collapse in energy sales to Europe, have pushed Russia’s budget into a $28 billion deficit in the first half of 2023,” The Moscow Times noted after analyzing the August report from Reuters.