Armament or disarmament: how the coronavirus affected the defense budgets of the US and Russia
In a quarantine and economic downturn, the Pentagon announced the start of a new large-scale and expensive project - the creation of a new missile for the country's missile defense system, writes Air force.
The United States Missile Defense Agency has posted a tender announcement on the US government contract site. The program is called Next-Generation Interceptor (NGI).
US authorities announce a new tender in difficult economic conditions. The International Monetary Fund believes that the US will face a recession this year amid an outbreak of coronavirus and quarantine: the country's economy, according to the IMF forecast, could shrink by 5,9%.
In the conditions of the tender it is written that the deadlines may be adjusted due to the coronavirus pandemic. So far, there are no signs that the United States is preparing to radically revise its military budget amid the crisis and the need to redistribute spending on business assistance and healthcare support. Nevertheless, American manufacturers of military equipment are faced with problems.
The same applies to Russia: according to the IMF forecast, the country's economy may decline this year by 5,5%, and the authorities need to support not only health care, but also business. But there were no official statements about the reduction of defense spending.
At the same time, Russia and the United States became one of the leaders in terms of defense spending by the end of last year. Why are countries still not daring to cut costs and how do manufacturers of military equipment feel?
What is the new Pentagon program and how much will it spend?
The Pentagon, according to the military Internet publication Defensenews, has requested $ 2021 million for the implementation of the NGI program in fiscal year 664,1, and it is planned to spend $ 4,9 billion in just five years.
The interceptor missile, which the agency plans to adopt, will become the basis of missile defense of American territory for a long time.
This is a missile interception system in the middle part of the trajectory when a warhead flies in space. This system will not be able to reflect the massive launch of missiles, in the case, for example, of a nuclear conflict with Russia. It is designed to guarantee the interception of single launches from countries such as the DPRK or Iran.
The new interceptors will be part of the Ground-based Midcourse Defense System, which includes two bases with anti-missile launchers in Alaska and California. They placed 44 interceptor missiles, the Pentagon ordered another 20 pieces in 2019.
The tender was announced until July 31, however, the Missile Defense Agency immediately warned that it could change due to the coronavirus pandemic.
The US defense industry is hit hard by the pandemic. The situation in the United States is one of the most difficult in the world.
The U.S. National Defense Industry Association published a study last week, polling 770 small businesses related to the defense industry. 67% of respondents said they were experiencing problems with finances, and 60% thought that the problems would be long-term.
The problems of small industries are reflected in large arms production programs, since they are subcontractors of large manufacturers and are included in technological chains.
The U.S. Department of Defense expects a three-month supply delay in most major programs as a result of labor problems and supply chain disruptions caused by the coronavirus pandemic, said Pentagon procurement department head Ellen Lord on April 20.
According to DefenseNews, the suspension of some subcontractors affected the hypersonic weapons development program. The publication does not provide details, but referring to a representative of the Department of Defense, it conveys that the program suffers from the fact that small subcontractors have closed as a result of quarantine measures.
So far, no serious reductions in US defense programs have been announced. The Pentagon is trying to find opportunities for financial support of critical industries and R&D, considering financing as the main and most effective tool to support the defense industry.
Is everything calm in Russia?
In Russia, there is no full information on how severely the defense industry suffers from a pandemic.
The information that comes to the press is rather optimistic. So, on April 22, the head of the UAC, Yuri Slyusar, announced that all the enterprises of his corporation had returned to work, although earlier the holding had significantly reduced production.
Nevertheless, Russian enterprises are obviously facing the same problems as American ones.
So on April 9, at a meeting of the Commission on Military-Technical Cooperation, the Governor of the Rostov Region Vasily Golubev said that only the Rostvertol enterprise out of 122 subcontractors worked 25. He also spoke about the shortage of working capital due to the suspension of work.
According to a military expert of the Russian Council on Foreign Affairs, Ilya Kramnik, the specifics of the problems of the Russian defense industry are that they suffer not so much from quarantine measures directly (production shutdown, lack of finances and breaks in technological chains), but from the economic crisis caused by the pandemic.
According to him, the government can use military spending as a way out of the crisis. The injection of money into the defense industry, according to him, will most likely be directed to the production of equipment to ensure employment and cash flow. Accordingly, support, he said, will receive those industries that provide maximum employment and cooperation.
Vasily Zatsepin, head of the military economics laboratory at the Gaidar Institute, believes that even if you have to save money, the state arms program in Russia cannot be reduced.
According to him, funds from the National Wealth Fund, where Russian reserves are stored, will first be used to financially support defense spending, and only when this ceases to be possible, the defense ministry will cut back.
“We have never reduced the state armament program. We reduced all current expenses, maybe even for fuel and lubricants, salaries of military personnel, salaries of civil servants of the Ministry of Defense, as well as their number, and we did not reduce the costs of the armament program, but transferred them, ”Zatsepin explains.
Ilya Kramnik admits that programs that require large financial investments in the early stages of research and development may suffer as a result.
For example, he does not exclude the possibility that the military may abandon the Burevestnik project. Vladimir Putin first spoke about it in his message to the Federal Assembly on March 1, 2018. Then in Russia it was reported that this rocket is equipped with a nuclear air-jet propulsion engine.
Some experts believe that this particular product exploded during tests at the testing site near Severodvinsk in August 2019.
According to Kramnik, costly developments in the interests of the fleet, such as a heavy ocean-going destroyer and an aircraft carrier, may be cut. Probably, deliveries to the ground forces of the latest systems of armored vehicles, including the series "Armata", "Kurganets", "Boomerang" and others, will be postponed.
Armament or disarmament?
According to a recent report by the Stockholm International Peace Research Institute (SIPRI), defense spending has risen dramatically in recent years, but the coronavirus pandemic and the economic crisis it will lead to will make countries spend less on weapons.
Last year’s spending, according to SIPRI, reached the highest level since the 2008 financial crisis. World military spending totaled $ 1,9 trillion.
The United States spends the most on defense - $ 732 billion (38% of world spending on weapons). China is in second place, with a military budget of $ 261 billion. Following the United States and China, India took the third place in spending on armaments (71,1 billion) - for the first time two countries from Asia were in the top five.
Russia took fourth place in the ranking with $ 65,1 billion, Saudi Arabia closes the top five with 61,9 billion. In Western Europe, Germany showed the most significant increase in military spending, having increased its defense budget by 10% over the past year.
But, as the authors of the report say, the coronavirus pandemic will make adjustments to defense spending: many countries will revise budgets for next year and are likely to spend more on health and education than defense.
“In the next year or three years, we may see a decrease in military spending, which will then replace another increase in the following years,” one of the authors of the report, Nan Tian, told AFP.
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