To pay for a 'Russia first' agenda, Putin takes ax to military spending

Inaugurated for his fourth official term as Russia's president Monday, Vladimir Putin surprised many by declaring what sounds like a “Russia first” program: a relentless focus on domestic development, to be partially paid for by sharp cuts in defense spending.

It may sound contrary to Western perceptions of Russia's global intentions. But the priorities listed in the new Kremlin strategic program suggest that Mr. Putin has decided to use what seems likely to be his final term in office to cement his already substantial legacy as a nation-builder.

The projected surge in spending on roads, education, and health care will have to be paid for. A key source of that funding will be the military budget, which had been growing by around 10 percent annually for much of the Putin era. 

“The times when the external threat was used to make cuts in social expenditures palatable has passed. We can't go on like that any longer,” says Pavel Zolotaryov, deputy director of the Institute of USA-Canada Studies (ISKRAN), which is part of the Russian Academy of Sciences. “A lot of the goals of military modernization have already been accomplished, so we can afford to slow it down, make selective cuts to fund social goals, while continuing the basic path.”

WAR WEARINESS

In his decree, Putin ordered the new government to draw up a detailed plan by Oct. 1, aimed at social objectives that polls show many Russians find attractive. Those include increasing real incomes, raising pensions, improving housing, cutting poverty, and expanding access to quality health care. He also called for plans to invest in high-tech and export-oriented industries, and to create “transport corridors” to strengthen Russia's road, rail, and sea connections with the wider world.

Cuts to defense spending will go toward underwriting that agenda. But in fact, Russian defense spending has already started to decline. According to the Stockholm International Peace Research Institute (SIPRI), Russian military spending fell by 20 percent last year, the first major decrease in two decades. While critics dispute the amount and suggest there may be budgetary machinations at work, most analysts agree that the share of military spending as a percentage of GDP is set to fall, from 6.6 percent in 2016, to 5 percent this year and to 3 percent by the end of Putin's current term in 2024.

Recent opinion polls suggest that Putin's priority shift coincides with a war weariness on the part of Russians, who have indulged their president as he shored up Russia’s great power status in the face of Western hostility and sanctions, by annexing Crimea and intervening in Syria. A survey last month by the independent Levada Center found that at least half of Russians appreciate their country’s return to great power status. But 45 percent fault Putin for “failing to ensure an equitable distribution of income in the interests of ordinary people,” up from 39 percent in March 2015 when the last survey was conducted.

Another poll by the state-funded VTsIOM agency confirmed that Putin’s personal approval rating is at a near all time high of 82 percent. Paradoxically, at the same time almost 90 percent of respondents said the country needs some degree of reforms, while just 2 percent said they didn’t think any changes were necessary.

Another sign that mass discontent remains distinctly possible were the large rallies, inspired by Kremlin opponent Alexei Navalny and featuring the slogan “Not Our Tsar,” that took place in several Russian cities on the eve of Putin’s inauguration. They did not approach the scale of the rallies that shook Moscow and other cities before Putin’s inauguration six years ago. Nonetheless, they were remarkable for the huge numbers of very young participants, and for the sophistication of their specific grievances – such as opposition to the Kremlin’s ham-handed attempts to shut down the Telegram messaging app.

“Six years ago Putin was forced to concentrate more on the external agenda. It worked for him. Russia looks like a great power again,” says Andrei Kolesnikov, an analyst with the Carnegie Moscow Center. “Now it’s time for a domestic focus. The plan looks quite cautious and rational. It balances various interests, and appeals to different lobbies. Military spending is still very important. And how these grand declarations will be brought to life is still an open question.”