When it comes to military budgets, numbers could be quite misleading in Russia (or elsewhere, for that matter) - defense industry is hardly a model of open, competitive, market-driven economy sector. But it is not very often that the Ministry of Defense actually discloses the numbers, so they are certainly worth a look.

In 2005 the MoD is going to spend 187 billion rubles on "gosoboronzakaz" - the state defense order. It's about 35% of the total 2005 defense budget of 571 billion rubles. Of the 187 billions, 112 billions (60%) is allocated for purchases of new military equipment, 62.8 billions (34%) - for R&D, and 11.8 billion (6%) - for repairs.

If we go back a few years, we'll see this picture (this is a back-of-the-envelope estimate that assumes annual inflation of 16, 13.6, and 11.5 per cent in 2002-2004):

Acquisition budget, billion rubles Real growth, %
  Current rubles 2004 rubles
2002 80 105  
2003 113 128 22
2004 148 148 15
2005 187 168 13

As we can see, the overall trend is that the acquisition budget is constantly growing, but the rate of growth is decreasing.

It probably doesn't makes sense to convert these 187 billion rubles into dollars, for the conversion rate for defense industry is very different from the official exchange rate, but for reference purposes, it's about $6.7 billion (as of January 2005).

Not all this money goes to the strategic forces - the defense minister was careful not say how much of it will, but we could guess that it's probably about 30% (the strategic forces and the ground forces will share 50% of the acquisition budget beetween them). In the next few posts we'll try to see where exactly this money will go.