chapter  6
19 Pages

The economics of Russian defence policy: in search for the roots of inefficiency VASILY B . zATSEPIN

In 2010 a number of important decisions needed to be made within Russia’s defence sector in order to determine its long-term development: the country’s leadership needed to adopt the next state armament programme (Gosudarstvennaia programma vooruzheniia, GPV) for the period 2011-20 and the related federal targeted programme (FTP) of reforming the defence industry until 2020. However, such decisions had been made in the past without effect. What were the causes? To work this out, it is necessary to understand what actually determined the level of defence spending in Russia; in other words, what were the key factors in the ‘guns-and-butter’ problem? While national defence policy cannot be reduced merely to solving this problem, it lies at the very heart of coming up with a successful defence policy. Of particular interest is a directly connected question, that of measuring the efficiency of the defence policy. Using statistics of national accounts to define an indicator of efficiency will help us better understand the peculiarities of the situation in the Russian defence sector. This chapter will also try to explain some of the causes for the inefficiency of Russia’s defence policy.