(Bloomberg View) -- During Russian President Vladimir Putin's annual press conference on Thursday, a friendly journalist asked Putin whether the escalating tension in relations with the U.S. and the crumbling of arms control treaties would draw Russia into an unsustainable arms race. "We will ensure our security without engaging in an arms race," the president replied, citing widely diverging dollar numbers for the U.S. and Russian defense budgets.
That's a simplistic answer from a politician starting an election campaign (of sorts: Putin is headed for re-election in March without giving anyone else a chance). The more pointed question that should be asked is this: How, with a relatively small and decreasing military budget -- 2.77 trillion rubles ($42.3 billion) for 2018, down from some 3.05 trillion rubles this year -- is Russia is still a formidable military rival to the U.S., with its enormous and increasing budget of almost $692.1 billion in 2018, up from $583 billion this year?
The equalizing value of the two countries' well-balanced nuclear deterrents is enough of a reason to avoid direct confrontation. But leaving that aside, Putin may well understand the nature of modern military challenges better than U.S. President Donald Trump and U.S. legislators -- and Russia's authoritarian system may be more efficient when it comes to military allocations. Note that Russia is now almost an equal to the U.S. as a power broker in the Middle East, where the Russian military has just helped Syrian President Bashar Al-Assad effectively win a civil war -- in which the U.S. was helping the other side. At the same time, Russian defense spending numbers are deceptive. The country is far more militarized than its defense spending suggests. That level of security spending is only sustainable at the expense of Russia's future.
Trump's military spending hike, which makes it necessary to remove the existing cap on defense expenditure, is a dubious and likely outdated response to decreased global security.
Quite aside from the cost of maintaining the world's most powerful military, the U.S., according to the Washington think tank Center for Strategic and International Studies, has spent at least $2 trillion on its wars since 2001. But, considering the less transparent costs, such as those of caring for veterans, war-related increases to the Department of Defense base budget and interest on the debt taken on to cover defense spending, it's closer to $4 trillion at the very least. The Afghan conflict has cost the U.S. at least $840 billion -- more than four times Afghanistan's cumulative GDP since 2001. Since the 2018 U.S. defense budget contains additional funds for sending 3,500 more troops to Afghanistan, the results of the massive outlay over the years are clearly suboptimal.
Today's wars aren't fought with fat wads of money. The adversaries are mostly small, agile forces that aren't as well-resourced as nation states. Fighting them requires a combination of local knowledge, brute force applied only at important points in a conflict and ability to shift risks onto the shoulders of irregular fighters. Russia kept cutting its defense budget all through its participation in the Syrian war. Yabloko, an opposition party, earlier this year put the cost of the Syrian operation for Russia at about 140.4 billion rubles ($2.4 billion at the current exchange rate) since September, 2015; that's some 4 percent of what the U.S. allocated to overseas contingency operations in 2017 alone -- and the outcome is as good as Russia could have expected.
The U.S. is pumping money into comparatively inefficient warfighting -- and into preparing for the kind of large-scale war that's not likely to take place because of existing nuclear arsenals and unauthorized nuclear proliferation. Even North Korea, with its unknown but probably small nuclear capability, is dangerous enough to deter the U.S. from attacking. At his press conference, Putin made the point that the U.S. couldn't know for sure where to strike in North Korea -- and if the Kim regime managed to get a single long-range, nuclear-armed missile in the air, the results could be catastrophic.
U.S. defense budgets, of course, feed a large, powerful domestic industry; even the indirect U.S. involvement in a conflict lifts the stock prices of major defense contractors, research has shown. In Russia, the biggest contractors are state-controlled; they have far less lobbying clout, and the technocratic Russian government has kept them on a short leash, though some of the military's purchasing decisions have served regional development rather than defense purposes. Such an arrangement, which would have been inefficient in most other industries, probably reduces wasteful spending in the budget-dependent military-industrial complex.
That said, in relative terms, Russia is spending more on force-related functions than the U.S. does. Trump's budget proposal allocated $71.8 billion to the Department of Homeland Security and the Justice Department. Add that up with the defense spending, and the total security budget will stand at $764 billion, less than 19 percent of total federal spending. Russia will spend a combined 29 percent of its federal budget -- some 4.8 trillion rubles -- on defense and domestic security. That's probably not all of the security-related outlay either, as Mark Galeotti pointed out earlier this year: Even some of the education and development spending in Russia goes toward military goals.
In the U.S., federal law enforcement outlay is a fraction of defense spending. In Russia, the two areas of government expenditure are almost equal. That's the difference between a country with a relatively liberal domestic order and a near-dictatorship, which relies heavily on the suppression of dissent and must keep large law enforcement agencies under centralized control.
Russia could show the world how to spend efficiently on more than adequate defense -- but instead it is engaged in an arms race against its own development. For years, it has been underfunding areas such as education and health, undermining what Putin told the press conference was his vision of the country's future -- flexible, technology-driven, highly productive. Judging by Putin's answers to reporters on Thursday, he still prefers not to notice that.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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