No. 1

2001

SECURITY VECTORS '01

Equal Proximity to Power Centers a Priority By Sergei ROGOV, Director of the Russian Academy of Sciences' Institute of the USA and Canada One specificity of the new international situation is the activity of a number of countries that claim the role of power centers. The 1990s were characterized by a stable economic growth of the leading Western powers and accelerated development of China, India and some other developing nations. Russia was thrown far back.

Yet of all power centers, only the United States possesses the whole range of the power components - economic, military and political.

This circumstance makes the system of international relations unique - multipolar and unipolar at the same time.

The Race

The global military expenditures went down by some 30% in the 1990s, and by nearly a half compared to the peak of the Cold War (1985) in constant prices. Over the fifteen years, the share of military expenditures in the global GDP has dropped by nearly a half - from 5.5% to 2.8%. In the majority of the industrialized nations and in China the military expenditures stand at less than 2%, and in the USA, at 3%. The share of military expenditures is higher only in those states that are in the state of de-facto military confrontation that can instantly degenerate into an armed conflict - Greece, Turkey, Israel, Saudi Arabia, Kuwait, Taiwan, and the two Koreas. But the race for arms continues. The share of the USA and other developed states in the global military expenditures has somewhat grown: the share of the USA has grown from 27% to 37%, and of the OECD countries (i.e. the West), from 48% to 65%. The countries of the West are especially prominent in the production of weaponry and military hardware. The USA accounts for nearly a half of the global arms production (including three-quarters of military research expenditures), Britain and France for 10% each, Japan for 5% and Germany for 4%. On the whole, the OECD countries account for approximately 85% of the global investments into new-generation weaponry.

The countries of the West control the global arms market: they account for over 80% of the arms exports, with the USA accounting for a half of it. The OECD countries account for nearly 40% of the global arms imports, and the countries in the orbit of the West - Saudi Arabia, Taiwan, Israel, etc. - for another 40%.

In this sphere, the share of two large powers that used to play secondary roles in the Cold War period (China and India) has grown, too. They will presumably become even more active in the early 21st century. These countries spend heavily to purchase modern, i.e. fourth-generation, arms, but their contribution to the global expenditures for military research is negligible, and expenditures per soldier are several times below the developed nations.

Although their bilateral ties have improved, relations between China and India are still conflict-prone. In the 1990s, the American military expenditures went down by approximately 30% in constant prices, thanks to which the Clinton Administration could rectify the federal budget deficit.

The above notwithstanding, the United States has made an unprecedented surge ahead in its military expenditures, leaving all other countries far behind. The Pentagon's budget equals those of the seven largest nations that follow the USA. The gap in expenditures for the arms modernization is even larger: the United States spends more to upgrade its arms than all other countries taken together.

The year 1998 was marked by the beginning of the Pentagon's growing expenditures in constant prices. The Defense Department's procurement expenditures went up from 40 billion to 60 billion dollars, and are likely to reach 80 billion dollars' worth in a few years. The situation is unique - the United States is racing for arms against itself.

The past few years were also marked by a revolution in weaponry, based as it is on the use of the latest information technologies in the military command system and intelligence. The USA believes that the application of these technologies in the military sphere will result in revolutionary transformations equal to those in the civilian economy ('virtual economy').

Instead of ordering arms to specifications, the Pentagon prefers to apply civilian technologies. The revolution in weaponry aims to qualitatively upgrade the new-generation conventional arms. The high-accuracy long-range conventional arms are now approaching the nuclear weaponry in their potentialities. The Pentagon's doctrine says that the revolution in the military sphere should ensure absolute safety of the United States, including the protection of its armed forces and territory.

The fundamental changes in the world's economic and geopolitical structure and the new technological challenges undermine the pillars of the arms control regime that has shaped at the concluding stage of the Cold War. To start with, following the collapse of the bipolar system of international relations, the principle of parity - i.e. numerical equality of certain types of conventional and strategic arms - proved to be ineffective. Objective criteria of multilateral arms control are yet to be devised even on the conceptual level.

Secondly, the revolution in weaponry devalues the traditional formulas of assessing the military balance that make no allowance for the currently instrumental systems of combat command. The new possibility of concentrating long-range, high-accuracy weapons makes cheap the principle of concentrating forces and the territorial and zonal limitations applicable to weaponry, into the bargain. As a result, effectively all basic elements of today's arms control regime have to be appreciably modernized, or the regime may be derailed

. Russia: Challenges of Time

The same 1990s were also marked by an unprecedented economic slump in Russia, triggered by the accumulated ailments of the Soviet economic system, the USSR's disintegration and the ill-considered and incompetent post-1991 reforms. As a result, Russia's GDP fell, compared to 1990, by over 40%, the production of machinery by 55%, agricultural production by 43%, and cargo haulage by two-thirds; the living standards plummeted, there appeared colossal social stratification, and the nation plunged into a protracted demographic crisis.

Russia is no longer a leading economic power, and its per capita GDP is 30% below the average global level. The slight economic growth in 1999 (GDP 3% up and industrial production 8% up) was due to temporary phenomena - devaluation of the ruble and the high global prices of hydrocarbons - and for this reason cannot create conditions for an accelerated revival of Russia's economic might. In effect, this country wasted the petrodollars it received thanks to high oil prices. Of the 25 billion dollars of oil export revenues, the state gets 10 billion and pays the money to foreign creditors, and 15 billion dollars simply never return to Russia.

Russia that badly needed investments for its reforms, became a donor of capital for the global economy in the 1990s. It paid 85 billion dollars to repay its foreign debt, while the drain of capitals, including illegal export thereof, is estimated at 150-250 billion dollars.

The export of capital in the past ten years thus exceeded the volume of domestic capital investments. The volume of gross accumulation of capital dropped to 18% of the 1990 level. At the same time, foreign investments in Russia are below 1% of the global foreign investments.

The meager investments do not suffice to ensure reproduction and lead to a rapid aging of both production facilities and economic infrastructure. The rate of the fixed assets' renovation in industry fell from 7% in 1990 to 1% these days. As a result, the average age of industrial equipment grew from 10 to 16 years.

The number of R&D staffs dropped by a half. The country is fast lagging behind in informatics and communications. Russia is 13 times behind the global average in the per capita number of mobile phones, 2 times in the number of PCs and 8 times in the number of Internet addresses. When compared to the developed nations, the relevant figures are 60, 8 and 47 times. The World Bank's data indicate that high technologies make up only 19% of Russia's industrial exports, while the relevant figure in the USA is 44%, in Japan it is 38%, in France 31%, in Germany 26%, and in China 21%.

A crisis of Russian science and technology is the main threat to the country's security in the 21st century. Russia is effectively in a debt trap, and it will be able to get out of it only when its federal budget approximates 100 billion dollars at the current exchange rate. For this, the federal government's revenues should quadruple on today's level.

No Enemies, No Allies

The end of the confrontation has radically reduced the threat of a scaled military aggression against Russia. But a new system of international security with the participation of the Russian Federation has not been built. Today, Russia has no enemies, but neither does it have dependable allies or partners. Unfortunately, the CIS is largely a burden for Russia, rather than a factor that adds to its might.

In the eventuality of confrontation with a major power or coalition of powers in the medium or long term, Russia may find itself in isolation.

At the same time, such mechanisms of international security as the UN and the OSCE are weakening, while their functions are being exercised by NATO and other Western institutes. The latest trend is that of using the UN and the OSCE as instruments of applying pressure on Russia. Russia cannot thus count on military supremacy in case of a conflict in the West or the East in the foreseeable future. The procrastination of the long overdue military reform has gravely affected the country's defense capability. The armed forces were reduced by approximately 75 percent compared to the late 1980s - to a greater degree that in the rest of the world (30%). The armed forces' combat readiness plunged for a number of reasons. As distinct from the Soviet period, Russia is incapable of maintaining groups of troops on combat readiness in any of the strategic directions.

The balance of military forces in Europe appreciably worsened. Today, NATO has 3-4 times more basic conventional weapons than Russia. The West's qualitative supremacy is even more crying and is likely to further grow in the next few years. In the East, the correlation of forces with China is changing. Thanks to deliveries of Russian-made weaponry, the qualitative gap in conventional weapons between Russia and China is disappearing.

There is the prospect of the military-strategic balance tipping in favor of the USA due to Russia's incapability of maintaining parity on the level established by the START-1 and START-2 treaties. The United States intends to launch a national missile defense system. If these trends persist, the efficiency of the Russian potentiality of nuclear containment may be threatened in 15-20 years.

Chaotic Movement

The acute Russian economic crisis has entailed destructive consequences for the military-industrial complex. Although the Russian economy has had to demilitarize after the end of the Cold War, the defense industry's diversification didn't need to be so chaotic.

The defense production reduced by approximately 80%, including the production of arms and military hardware by 90% and that of civilian commodities by 75%. The serial production of arms and military hardware stopped in Russia, the technological chain of production was disrupted, and the qualified personnel resigned from the defense industry en masse. International evaluations indicate that Russia accounts for only 3-4% of the global production of armaments. The output is largely exported, something that allows to keep the production facilities partially running. But Russia has no access to the markets of Western and pro-West countries. Russia's share in the global trade in arms does not exceed 10-12% and can hardly grow appreciably due to the budgetary limitations of China and India, the two primary buyers of Russian-made arms.

The R&D work on fifth-generation arms continues, but financial shortages hamstring its completion and make the launching of serial production questionable.

The colossal gap between the volume of budgetary allocations and the structure of the armed forces inherited from the USSR presents the largest problem. Compared to the Soviet period, the Russian Federation's defense spending reduced by 93-95 percent - due to both reduction of military expenditures from the federal budget, and the huge cutbacks of the federal budget itself.

In the former half of the 1990s, the top officials of the defense ministry were pressing for defense allocations worth 30-40% of the federal budget and 6-7% of the national GDP but were getting only 50-60% of what they requested. By the end of the decade, the defense allocations reduced to below 20% of the budget and 3.5% of the GDP.

In 1999, expenditures for the national defense stood at 19% of the federal budgetary expenditures, or approximated 4 billion dollars at the current exchange rate. The growth of military expenditures by a quarter starting with 1998 was explained primarily by the war in Chechnya.

This level of financing is hugely inferior to that of the leading Western countries and is comparable to the defense spending of such countries as Turkey, Brazil and India, which are in no way military superpowers. Moreover, Russia falls behind these countries in expenditures per soldier

. In the 1990s, the defense ministry was spending up to 60% of its allocations to pay salaries and for food and uniforms. The expenditures for the procurement of arms and military hardware did not exceed 20%, and expenditures for research, 5%, or 2-3 billion dollars.

Also, Russia receives up to a billion dollars a year from Western countries in line with the Nunn-Lugar program and other programs to scrap weaponry and pay for the conversion of defense industries and the maintenance of resigned officers. As a result, weapons are not modernized. Without modernization, the Soviet-epoch arms the army and the navy have today will grow obsolete in 2005-2010. The country hence faces the objective of starting to rearm its armed forces in the latter half of this decade.

To rearm its armed forces before 2010, estimates indicate, Russia will have to spend no less than 100 billion dollars, which means allocating up to 80% of the defense budget for R&D. What with the current level of expenditures, this is absolutely unrealistic.

The expenditures for modernization can be brought up to 50% of the current defense budget, but that would necessitate a reduction of allocations for the maintenance of the personnel, which in turn necessitates the reduction of the personnel to 600,000-800,000 men. Such deep incisions seem questionable. Also, this would necessitate a primary growth of allocations for these purposes, rather than for the modernization program. Meanwhile, the potentiality of radically increasing defense expenditures is very limited, indeed. In the conditions where only 14% of the federal budget are spent for social purposes (to compare, 70% in the US), and the average national salary does not exceed 55 dollars a month, the defense expenditures in peacetime can hardly be expected to grow over 20% (15% in the US).

There is the possibility of re-distributing resources between the 'power structures' in favor of the defense ministry, but in the conditions of political instability this maneuver is very unlikely, although it would allow increasing the defense spending to 23-24%. Nor can one expect a step-down in Russia's international commitments.

The main instrument of increasing the defense expenditures is a growth of the federal budget revenues thanks to economic growth and better collection of taxes.

Possibilities

An analysis of the international situation and economic potentialities of the Russian Federation prompts the conclusion that the military might of this country can only grow in a staged manner. The financing, armament and combat training of the armed forces can hardly radically improve in a short term. But Russia has no more than ten years to step on the road of stable and rapid development that would enable it to work for beneficial terms of integrating into the global market and to strengthen its defenses. A late emergence out of the crisis is fraught with irreversible consequences for the future of Russia. The main objective is to restore the country's economic might.

In the longer term, Russia can preserve the status of a great military power, having raised the level of defense expenditures to that of such states as China, Japan, Germany, France or Britain (15-20% of the US defense budget). Russia will be able to spend 50 billion dollars for defense purposes if the federal budget grows to at least 200-250 billion dollars, which necessitates a growth of the GDP to a trillion dollars and of the federal government's revenues to 20-25% of the GDP.

Making the military-industrial complex a 'ghetto' of sorts is pernicious. A diversified civilian production alone will be able to equip the armed forces with the latest technologies. Russia is advised against running in the race for arms. Even with the most authoritarian methods of mobilizing the economy, it is unable to allocate for the defense purposes more resources than the 10% that the Western community with the USA in the lead allocates.

A race for arms is incompatible with the coveted rescheduling of its foreign debt and automatically entails default and economic siege. The scenario of a 'besieged camp' is incompatible with the continuation of the democratic political process in the country.

The current situation calls for the continuation, rather than suspension, of the military reform. What with the current objective limitations, the task of enhancing the armed forces' combat readiness necessitates the effort to optimize their structure and reduce the numerical strength by 15-20%, something that would allow Russia to increase by as much its expenditures for R&D and arms procurement. But in the short term, modernizing the armaments that Russia has, rather than massive rearmament, will be a priority. It is especially important to rectify its lag in the means of reconnaissance and communication. The adoption of a new generation of weapons is only possible in the latter half of the current decade.

The special responsibility of Russia's diplomacy and foreign trade policy becomes especially clearly discernible in the light of the above. They should be spearheaded at ensuring beneficial external conditions for Russia's economic renaissance.

The task of having the Russian foreign debt rescheduled and of forming a brand new economic interaction between Russia and the European Union and Russia and APEC as an 'Eurasian bridge' come to the fore.

Secondly, the objective of preserving and enhancing the regime of arms control with a view to precluding a growth of military threat is as topical as ever.

Lastly, Russia should actively work to build a new system of international security on the global and regional levels while adhering to the principle of 'equal proximity' to the main power centers in the international arena.

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