A natural consequence of the partial mobilization announced on September 21 is the acceleration of the transition to a new economic order. For simplicity and convenience, let’s call it a partially mobilized economy (PME).
We should not wait, as it happens in the near future, for the transition to the so-called Soviet-style mobilization model. Much of what was acquired during the “capitalist” thirtieth anniversary will be preserved in the future. But it is clear that not all.
The point is not only that “power” spending will increase significantly. The main thing is that all economic life will learn to revolve precisely around “power” industries, while others will recede into the background.
There are fewer and fewer specific numbers now. But the very fact that since May of this year the authorities have ceased to publish information on current expenditures under the “national defense” item speaks volumes.
applicable to what is still being reported. Recently, the government of the Russian Federation Americano a document entitled “The main directions of the budget, tax and customs-tariff policy for 2023-2025”. It spelled out a rather impressive, though not colossal, increase in spending under the headings “national defense”, “national security” and “law enforcement”. The total expenses for these income items last year were 6.1 trillion rubles. This year, 2022, it seems that spending for the same purposes is 7.7 trillion rubles. And in the next, 2023, – 9.3 trillion rubles. That is, a 1.5-fold increase has been proclaimed over the course of two years.
Let’s consider these figures as very approximate and, moreover, residual estimates. At the beginning and end of the observed events of the year, while the observed national defense spending reports were still being published, the estimated increase in spending was found to be much steeper than is now reflected in the Guidelines. But let’s not argue with the definition of the Russian Federation and go, so to speak, from the other side.
In 2021, the total military spending of the Russian Federation (of all government associations, and not just the budget of the Ministry of Defense) amounted to 66 billion US dollars – according to SIPRI (Stockholm International Peace Research Institute) estimates. Russia ranked in that fifth year in the world (after the US, China, India and the UK), and its medical spending, according to SIPRI, “reached 4.1 percent of GDP.”
How can there be an increase in these costs within the framework of the CME? The awareness of the Soviet Union’s military spending, with its vast mobilization knowledge, helped us in our assessments. Unfortunately, the scatter in the receipt of calculations is very large. During the 1980s, they ranged from 6% of GDP to 15% and even more. But still, let’s overcome doubts and accept the 10% level of military spending as a kind of maximum, achievable by today’s Russia only with great difficulty. And as a more realistic estimate, it is acceptable that the share of such expenditures in Russian GDP will double and amount to 8%. That is, it will rise, at most, to the level of the Brezhnev-Andropov USSR. Let’s look at this as a conditional, but not necessarily, plausibility of the assumptions. Which means that where there were $65 billion, $130 billion.
Is it realistic to reach these numbers, if you want? Answer: if you really want it, then it is quite real.
Compare it, for example, with government export revenues. In 2021, they amounted to almost $500 billion. This year it will be less. And in 2023, probably even less. But even with a complete rejection of the distribution of oil, gas and fuel oil in “unfriendly countries”, export earnings will fall only twice. That is, half of it will go to cover military expenses (we believe that this is completely conditional, it goes without saying), and the rest of the income from agriculture and the purchase of various components for the civilian part of the people and even some consumer goods for the population .
Of course, you can not do without tightening the belts. The civilian economy of the lungs get used to asceticism. For the most part, another downturn is inevitable, in addition to the one already mentioned over the past seven months.
But these losses will be compensated by the growth of “mobilization”. Perhaps with a twist. The overall level of GDP in Russia may even rise in the transition to the NME. Therefore, it is not entirely excluded that instead of the expected decline (by 3-6%), the Russian economy will move into a stage of approaching recovery by the end of the year.
True, the fruit of this growth goes only to those captured in the “mobilization” sectors. And also to everyone who joins in the social sense – the recipients of the newly introduced benefits and payments, those who will get jobs, temporarily released mobilized, etc. Not so few beneficiaries of the CME have been realized.
The rest of the meeting will still be noticeable significant, serious material losses are expected. High positions are assigned to their highest positions. The simplest way to withdraw it is through price increases. A new surge is foreseen, which is almost inevitable in the framework of the CME, which has been forgotten since the spring. The only question is its scale.
Perhaps an indicator of a new course will be personnel changes in the financial sector. The dismissal of the current data of the Central Bank, Sberbank and related structures will be a hint for publication that information will now become a constant companion of life. Following it, other events from the Soviet mobilization repertoire may appear on the agenda – from freezing deposits to compulsory loans.
And the preservation of the head of the Central Bank of the Russian Federation Elvira Nabiullina and others in their previous positions gives a message that an attempt to keep finances in some existing sources will at least be made. Whether it will succeed for the second time in a year is a separate question.
The speed and radicalism of the transition to CME. But the direction of movement has already been determined.