Under mounting Western pressure this year, Russian leaders have been repeatedly and unambiguously reminding the West of the ultimate weapon at Moscow’s disposal—nuclear mutual assured destruction. The Russian military is also rearming and conducting massive exercises, preparing for a possible global war.… The Russian economy has continued to stagnate and may go into recession in 2015. A contraction in household income is also expected. The finance ministry is considering cuts in budget spending, but it seems defense expenditures will continue to grow. The defense budget in 2015 is planned to reach an all-time post–Cold War high of 4.2 percent of GDP or 3.3 trillion rubles ($81 billion). In 2012, defense spending was 3 percent of GDP; in 2013, it reached 3.2 percent; and in 2014, it was 3.4 percent (Interfax, October 16). Overall federal budget spending to finance Russia’s massive intelligence services and other militarized services is almost as big as the defense budget per se. And as the new cold war–type standoff widens in scope and the Russian economy flounders, the Russian people will be increasingly paying for guns instead of butter. __ Russia Prepares for War
Although the price of oil is staying well below Russia’s fiscal breakeven, Putin is pushing Russia more forcefully onto a quasi-wartime economic footing — boosting military, intelligence, and propaganda budgets in prodigal fashion.
Global oil & gas prices are the key to whether Putin feels forced to speed up his war plans, or whether he feels that he can plan for war at his leisure. If Russia plunges into recession due to a deep and lasting global slump in commodities markets, he may feel he has no choice but to let slip the dogs of war.
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