Nezavisimaya Gazeta website, Russia
March 17 2010

Russian report examines CIS countries’ military expenditure

Article by Vladimir Mukhin under rubric "CIS": "Commonwealth of
Militarized States: The Crisis Did Not Limit the Growth of Military
Expenditures in the Post-Soviet Space"

Presidents of Commonwealth countries are not economizing on their
armies; Reuters photo

The post-Soviet space continues to be a zone of potential conflicts.
An analysis of military budgets of Commonwealth countries and Georgia
indicates they are especially likely in the South Caucasus and Central
Asia. By the way, even CIS countries distant from possible hotspots
are not economizing on their armies. The impression is that
preparations are underway for a large-scale war.

Despite an average 7% decrease in cumulative gross national product
(VVP [GDP]) of post-Soviet countries, their military expenditures
increased 5% in a dollar equivalent compared with 2009, and almost 15%
compared with 2008 (see table). Among the leaders in the arms race
were Georgia (4.56% of GDP), Armenia (4.07%), Azerbaijan (3.95%), and
Uzbekistan and Ukraine (3.5% each). The fact stands out that among the
leaders in the militaristic race, a growth of economic indicators was
observed in 2009 only in Azerbaijan and Uzbekistan. A decline in GDP
was seen in the other states, and the decline in Armenia was the
largest in the CIS at almost 15%.

We will note that data cited in the table do not take into account
military assistance from abroad to a number of the countries as well
as expenditures for support of allies. For example, the Nagornyy
Karabakh Self-Defense Force supplements Armenia’s military potential.
As a result, according to expert assessments, cumulative expenditures
of Armenia and the unrecognized republic are at least $600 million.
And this is understandable, since the peacekeeping process to settle
the Karabakh conflict is not moving off dead center, and the
leadership of Azerbaijan, which believes that Armenia holds 20% of its
territory, made statements more than once lately about the possibility
of resolving the conflict by military means.

Petrodollars and the establishment of military industry of Azerbaijan
(a corresponding ministry has been established there with a
corresponding budget, which is not included in national defense
expenditures), as well as a significant mobilization reserve created
in recent years provided this country’s leadership with an opportunity
to build up its military potential even higher, estimated at $3-4
billion (9-10% of GDP), in case combat operations are initiated. It
seems it is not by chance that the OBSYe [OSCE] is so concerned with
this problem. Recently Goran Lennmarker, OSCE special representative
for the Karabakh conflict, stated that "Azerbaijan must reduce the
military budget, which can be part of the Nagornyy Karabakh conflict
settlement process." Lennmarker believes that "the economies of
Armenia and Azerbaijan are suffering and people are suffering" from
the dragging-out of this conflict.

Georgia’s military expenses are a special subject. Compared with 2008,
this country’s GDP declined by more than $1 billion in 2009. By the
way, this does not keep Mikhail Saakashvili’s regime from spending in
relative terms the largest share of its budget on defense in the
post-Soviet space, $519 million (4.56% of GDP). To this figure must be
added US and NATO military humanitarian aid. US Deputy Secretary of
State James Steinberg declared in Tbilisi in February of this year
that by this time the United States had fulfilled its promise of
assistance to Georgia in the amount of $1 billion since the August
2008 war. Pure military expenditures were almost $50 million of this
amount. Funds also are coming to Georgia along the NATO line on a
similar scale. Thus, there was a North Atlantic Alliance Council
session in Brussels last week within the framework of the Georgia-NATO
Commission at which there was a discussion of Tbilisi’s annual
national program for cooperation with the bloc for 2010. According to
a statement by Georgian Vice Prime Minister Giorgi Baramidze, the
program envisages continuation of reforms not only in strengthening
democracy, but also in the spheres of defense, economy, security, and
so on.

Evidently it was not by chance that the Russian military-political
leadership recently concluded that there was the possibility of
Georgia initiating a new military conflict. True, it should be noted
that Russia too is wasting no time. It is rather actively building up
the military infrastructure in Abkhazia and South Ossetia, which were
annexed from Georgia. And cumulative military-economic assistance to
these states from Moscow exceeds Georgia’s military budget. Last year
in Sukhumi, Russian Prime Minister Vladimir Putin announced that
Moscow will spend R15-16 billion in 2010 for facilities construction
of military bases in Abkhazia and for development of the border
infrastructure. According to the prime minister’s estimates, it will
take around another R4 billion to implement infrastructure projects
connected with development of transportation and facilities
construction of border crossings.

We will note that no less an amount also will be spent on South
Ossetia, with which the RF government recently approved a military
agreement.

In Central Asia, Uzbekistan continues to stand out in the scale of
military expenditures. It is apparent from the table that its military
expenditures in 2010 will exceed similar expenditures of neighboring
Kazakhstan. Although Kazakhstan’s GDP is almost double that of
Uzbekistan, Astana will spend less than 1% of GDP on defense in 2010,
while this indicator in Uzbekistan is 3.5%. Why Uzbekistan continues
militarizing so actively is fully understandable. First of all, there
is a complex interethnic environment in the country, and the country’s
overpopulation intensifies social dissatisfaction despite all its
economic successes. The country’s leadership is parrying these threats
by strengthening the repressive apparatus. Secondly, Tashkent has
permanent conflict relations with its neighbors, especially Kyrgyzstan
and Tajikistan. Plus the Islam Karimov regime is helping NATO troops
in the northern provinces of Afghanistan populated primarily by
Uzbeks. Karimov is privately setting the goal of totally subordinating
neighboring Afghan provinces to himself, and this requires having
powerful military resources.

In Central Asia Kyrgyzstan and Tajikistan, the poorest countries in
the post-Soviet space, continue small defense expenditures. Their
military budgets largely are supplemented by military assistance from
Russia, China, and certain NATO countries operating in the region. The
military expenditures of neutral Turkmenistan and Moldova remained at
almost the same level in 2010, although the arrival of a so-called
"democratic coalition" to power in Chisinau may change much in the
Moldovan leadership’s plans. Moldovan Defense Minister Vitalie
Marinuta stated after his appointment to this post last year that
demilitarization of the country, which ex-President Vladimir Voronin
proposed as one of the most important steps for confidence-building on
the Dniester, "is not urgent either at the present or in the future."
Summing up results of his contacts with the United States, the head of
the military department stated that the Pentagon will increase the
funding of educational programs for the Moldovan military. In
particular, the United States is prepared to broaden its involvement
in the "International Military Cooperation" program, the general
budget of which is $9.5 million. And in the future this budget will
almost double. "The United States is interested in moving cooperation
with Moldova to a higher level in the defense and security sphere,"
Minister Marinuta says. In this connection there is persistent talk
among the opposition to the effect that in the future, when the
authority of the "democratic coalition" will be strengthened, the
question will be raised about Chisinau’s rejection of neutrality and
Moldova’s possible entry into the North Atlantic Alliance.

Ukraine plans to increase its military expenditures considerably to
$5.2 billion, although it is not a fact that this will manage to be
done. In connection with pre-election musical chairs, the country’s
budget for 2010 just has not been adopted and funding of the country’s
Armed Forces continues to lag considerably behind the real needs of
the Ukrainian Army and Navy.

Despite the crisis, funding of the Army in Belarus is at the previous
level of over $900 million, which is 1.5% of GDP. True, several years
ago the country’s leadership promised to take military expenditures
for 2010 to the level of 2% of GDP. The budget of the Union State of
Russia and Belarus is increasing Minsk’s military expenditures
somewhat. In 2010 around $63 million, which will be 39% of the entire
Union budget, will be spent for military purposes, joint defense, and
military-technical cooperation of the Union State.

If one figures in a ruble equivalent, military expenditures also have
increased in Russia by 3.4% in absolute figures. The decline in GDP
and the increase in the dollar to ruble exchange rate, however, led to
where RF military expenditures fell by almost $1.5 billion in 2010
compared with 2009.

Military expenditures of CIS states and Georgia 2008-2010

Country_Defense expenditures in past two years and planned this year
(in $millions)_Percent of GDP (average value in total)_Growth
(decline) in percent of GDP, 2009 compared with 2008 (average value in
total)

2008 2009 2010 2008 2009 2010

1. Armenia 382.3 495.3 347 3.7 3.6 4.07 -14.4

2. Azerbaijan 1300 1446 1585 3.6 2.76 3.95 +9.3

3. Georgia 900 574 519 5.95 4.4 4.56 -4

4. Moldova 12.6 30 29 0.3 0.39 0.56 -7.6

5. Kazakhstan 1385 1490 1152 1.1 1 0.95 +1.1

6. Kyrgyzstan 23.7 22 96 0.5 0.6 1.7 +2.3

7. Tajikistan 63 88.2 84 1.7 1.46 1.5 +3.4

8. Turkmenistan 213 250 261 0.9 1.21 1.5 +15.3

9. Uzbekistan 1080 1238 1422 4 3.4 3.5 +8.1

10. Ukraine 1960 1204 5200 1.1 0.85 3.53 -15

11. Belarus 681 910 926 1 1.3 1.5 +0.2

12. Russia 38861 43100 41800 2.7 2.67 2.9 -7.9

Total 46581.8 50782.9 53335 2.22 1.96 2.51 -0.85

Table compiled based on an analysis of unclassified data on the
economies of CIS countries and Georgia and of their 2009 budgets. The
average exchange rate of the dollar to the national currencies has
been used as was specified in the budget laws of CIS countries for
2009. The statistics for Turkmenistan are calculated based on data of
the expenditure side of this republic’s budget for 2009-2010.

[translated from Russian]