What Russia spends on its barbaric war
Open sources, expert estimates, and systemic quirks give clues
This exceedingly cruel summer, I did some research into how much Russia is spending on its war on Ukraine + tried to figure out when this spending will become unsustainable.
It was a difficult task. The difficulties say a lot about Russia as a country:
1) Russia is not transparent. I’m not just talking about state secrets. Russia’s defense sector is mired in corruption, famous reforms notwithstanding.
2) “Estimated spending” doesn’t necessarily equal “estimated costs,” i.e. how much something costs doesn’t necessarily reflect how much the Russian government spends on it. This is true because of corruption AND other factors. Take something benign — you just bought a bunch of boots. Great, what about the cost of shipping the boots? Budgets are difficult to quantify in the easiest of scenarios, but especially so when you’d expected to win a war in three days.
3) It’s extremely hard to quantify the financial impact of soldiers both KIA and WIA.
4) Russia has fast moved toward a weirdly autarkic system since the easy “win” they planned on in February 2022 did not happen.
5) Equipment stockpiles vs. new equipment presents a separate calculation issue.
6) There are different actors at play with regard to the budget — state coffers, donations, shadowy networks that operate semi-independently (think of Evgeny Prigozhin’s network as one example here — the link talks about Africa, but this is actually important, because we don’t know how much manpower, equipment, and funds have been re-routed from the African continent and other places to fight this current war). The system is not transparent by design.
7) There is the phenomenon of cascading costs. As in, “you start losing money on X because you’re spending it on Y, but here come sanctions on Z and further drive up your costs” to put it in very simple terms. There are, at various stages, cascading financial effects from any number of decisions being made both on the front and in the Kremlin.
Here is what I was able to do:
Talk to experts who have been studying the Russian military-industrial complex for years
Break down some known/well estimated equipment costs into categories
Look at fundraises for Russians in Ukraine in the public domain and consider their implications
I’m not going to use my platform to link to any of the fundraisers, but study enough of them — including the crypto ones — and you can see the frustration. People are worried about money running out for volunteers, mercenaries, and regular troops. People are also worried about transparency. They want to know where their money is going, and that’s not always clear.
“But Ukrainians are fundraising for their own all the time!” Yeah, well, Ukraine is funding a defensive war. The dynamics are very different. I explained more in my post about Amnesty’s colossally bad report on Ukrainians using civilian infrastructure.
You can’t derive financial estimates from the fundraisers. But you can gauge the mood. The question I asked myself going on was this: Is there desperation settling in or nah? Based on my findings, I personally don’t believe there is desperation, though discontent is building.
Expert opinions and estimated weapons costs were much more straightforward. We discussed all of the caveats I presented above and the clues sprinkled throughout funding networks featured on open sources.
The conservative figure we reached about a month ago was $200-$300 million a day spent by Russia directly on the war, with cascading financial effects unknown.
Why is this important? Well, first of all, I’d really like to re-assess this figure in the coming year and see if it’s close to correct.
Also, there is the continued myth of a robust Russian economy that’s able to withstand sanctions. That’s not the case — not with these figures, not with other figures, and not with the long-term effects of the sanctions themselves, sanction evasion notwithstanding (yes, you can evade sanctions — it also drives your costs up in the process).
Finally, we can see why the Russian war effort isn’t yet sputtering. Russia is flush with cash due to lack of imports right now. This creates the illusion that costs outlined above are sustainable. And so the deaths continue. The self-assured blather of Russian propagandists continues.
Now, when do the war expenses truly become unsustainable? Again, a number of factors are at play, and the chess pieces are moving fast on the board. However, based on everything I just talked about, the first half of 2023 was the estimate we’ve arrived at. This is aside from the other issues on the economic front.
Of course, what we think of as “sustainable” can have a very different meaning in Russia. Consider the experts who thought that there was no way that Russians would tolerate heavy losses and so much meaningless death. Oops! They do. This isn’t meant to paint the Russian leadership as strong — they are amoral, ready to sacrifice their own people for nothing, as they have done many times before — but it should caution us when it comes to predicting the Russian government’s decisions.
“They couldn’t possibly do this to their own people!” They are. They’ve done it before too (look at the millions of unnecessary losses in WWII as the most obvious example — it is well established that the USSR could’ve suffered less casualties if its leaders simply valued human life).
We have to consider how a similar attitude will impact financial decisions, while also understanding that Russians do need to balance risk as far as financing subsidies and financing particular key regions is concerned. To put it in simple terms, places like Chechnya are used to being flush with Russian federal cash. If things go south, national security risks emerge. However, that downward spiral can be a slow one.
All of this shows how an offensive and barbaric war becomes its own, self-perpetuating mechanism. It’s not sustainable in the long run, but no one’s thinking about the long run. A massive propaganda effort and current cash bloat mask the corrosion setting into the mechanism, even as it continues to kill more people.
All of this is fairly devastating, but if you think about it, it’s just another great excuse to support Ukraine against this war of imperial conquest. I may be biased on that count — but I also know I’m right.
With thanks to certain Russians, who must go unnamed, and who helped me tremendously with my calculations. With thanks to the Armed Forces of Ukraine, who continue to do the seemingly impossible.
200-300M a day may be bearable if the cash from oil and gas purchased by west is higher. :( And the EU still has at least one Russian foothole in the union - Hungary - that resists restrictions and buys like crazy from Gasprom/Lukoil.