Russian President Vladimir Putin (L) and Defence Minister Sergey Shoygu are facing tough budgetary choices as Russia’s defence industry struggles to overcome supply-chain disruptions caused by the conflict with Ukraine (photo: dpa)

Russian military faces budgetary ‘death spiral’ after cutoff from foreign suppliers

The crisis in Ukraine is wreaking havoc on Russia’s ambitious plans to modernise its armed forces. The most obvious cause is the combined impact of cheap oil and Western sanctions on state finances. Thus far, the Kremlin has insisted that military procurement be exempt from otherwise drastic budget cuts. But unless the price of oil starts climbing again very soon, that commitment will stretch to breaking point, forcing tough choices to be made.

Russia’s most visible procurement problem has been the termination of cooperation with Western arms producers as a consequence of international sanctions. The saga of the two Mistral-class amphibious assault ships ordered from France in the sum...

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Professor Stefan Hedlund
Budget planners face a ‘death spiral’ typical of high-cost defence contracts. Once procurement is reduced, unit costs go up, triggering further reductions in orders. The T-14 Armata tank illustrates this point. Only a handful of these armoured vehicles has been produced and their cost is steep
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