The main goal of Western sanctions against Russia is to make it impossible to finance the war, but so far the Kremlin is increasing military spending, increasing the production of military products and finding ways to import banned components.
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In 2023, the Russian Federation will spend $362 billion from the federal budget. A record 9.4 trillion rubles have been allocated to the army and security forces. This is 60% more than in 2021.
That is, every third ruble from the federal budget goes to the war in Ukraine or to support the regime, writes Economic Truth.
The Russian budget spends 118 billion rubles. for state financing of propaganda Another 20 billion rubles. goes to the Internet Development Institute, which sponsors propaganda content.
For the “patriotic education of youth” through the Ministry of Education of Russia this year will allocate 40 billion rubles. This is six times more than in 2022.
More than 200 billion rubles will be allocated from the Russian budget through economic support programs. for Roskosmos, which is actually part of the Russian military-industrial complex. The company manufactures military satellites and maintains the GLONASS navigation system, which guides missiles, and has its own armed formations.
Budgetary funds intended for the regions are also mobilized for the war. About 550 billion rubles. subsidies will be sent to the occupation administrations in Donetsk, Lugansk, Zaporozhye, Kherson regions and the Autonomous Republic of Crimea. Collaborators will spend these funds at their discretion.
The Ministry of Finance of the Russian Federation plans to make a “one-time fee” from income from private companies, which will add another 300 billion rubles to the budget. The authorities will also increase the excise tax on tobacco products and receive an additional 100 billion rubles from this.
In total, about a thousand Western companies still operate in Russia. In the proposals for the 11th package of EU sanctions, there was an idea to stimulate the exit of Western companies from the Russian market, but so far it has not received sufficient support. The sanctions regime allows Russian companies to sell certain goods to the US, EU and Britain and increase profits. In 2022, Russia received $20 billion from the sale of metals and diamonds to Western countries alone.
To wage war, the Russians need access to Western electronics. Without it, it is impossible to produce modern Russian missiles, aircraft, drones, radars and tanks. And now there are ways to circumvent the embargo, which are enough for the production of some equipment. Russians get some electronics by disassembling household appliances. Ukrainians have already found parts of refrigerators and industrial equipment in Russian tanks. Also deliveries to the Russian Federation pass through neutral countries. The export of semiconductors to the Russian Federation from Turkey, Armenia, Kyrgyzstan, Kazakhstan and Serbia has grown tenfold. None of these countries is a manufacturer of microchips, they play the role of intermediaries.
The head of the Strategy XXI center, Mikhail Gonchar, said that, together with the Institute for Black Sea Strategic Studies, they tracked how EU citizens with Russian surnames created a company in Switzerland, re-registered it in the US Silicon Valley, and then founded a joint venture with the defense company EDGE in Ob. United Arab Emirates. The new venture is developing drones and anti-drone technologies. Thus, the top management of the company with Russian and Belarusian roots got quite legal access to critical components from Western countries and the theoretical opportunity to send them to the Russian Federation through the UAE.
The network controlled by the FSB took out 22 tons of German equipment. The other was shipping microprocessors for satellites and rockets to Russia through laying companies in Germany and the United Arab Emirates. Smugglers have also been caught in Estonia while trying to smuggle 20 crates of American sniper rifle rounds. Ukraine proposes to first unify the list of prohibited goods in Western countries.
The data of the Ministry of Defense show that during the year of a full-scale war, the Russians under sanctions were able to build more than 500 cruise missiles.
Russians need Western technology mainly for precision weapons and equipment. As for more primitive weapons or equipment for defense, such as shells and artillery, Russia has always had a full production cycle,” said Archil Tsintsadze, a defense expert and former military attache of Georgia to the United States.
In the first quarter of 2023, the production of binoculars, monoculars and other optical devices in Russia increased by 73% compared to the same period in 2022. The production of radar, radio navigation products, remote control equipment, computers, electric motors, generators, batteries, special clothing and footwear increased by 40-110%. This may indicate both the replacement of products previously imported from Western countries, and an increase in production for the army.
The drone manufacturing plant in Dubna has switched to three shifts. And the Smolensk Aviation Plant, which manufactures cruise missiles, plans to increase the number of employees from 2,000 to 4,300.
On the one hand, the Russian economy does create new jobs and GDP in the defense sector. On the other hand, money and workers are losing industries that could receive real income. The military-industrial complex spends most of the budget funds, and does not generate new ones. During the Cold War, high military spending became one of the reasons for the slowdown in the development of the USSR and its collapse, Mikhail Gonchar noted.
Source: Racurs
I am David Wyatt, a professional writer and journalist for Buna Times. I specialize in the world section of news coverage, where I bring to light stories and issues that affect us globally. As a graduate of Journalism, I have always had the passion to spread knowledge through writing.