Putin Redirects Russia’s Economy to War Production

livemint.com:

Russian President Vladimir Putin is preparing the country’s economy for a long war in Ukraine. Military spending and war-related expenditures have already fueled much of Russia’s economic growth this year, helping the country weather the impact of Western sanctions. Next year, the government plans to increase military spending even more.

Outlays will rise by more than two-thirds to a post-Soviet record of over $100 billion, according to data from Russia’s Ministry of Finance. Military spending will hover at more than twice prewar levels until at least 2026, the current budget-planning horizon. Putin has placed a long-term bet that focusing the economy more squarely on the war will allow Russia to withstand a protracted conflict better than Kyiv and its Western backers.

Wars through history, though fought on the battlefield, have often been won or lost based on which side can muster the money and materials over the long haul. Doubts about financial support for Ukraine grew this week after a congressional budget deal didn’t include a fresh slug of money. On Thursday, Putin prepared the nation for the shift in production with remarks on the economy.

Speaking of military output, he said, “We are increasing production many times over, not by some percent, but by several times." The militarization of the economy has propped up industrial production, provided jobs and helped raise wages. The growth it generates, coupled with ample revenues from high global oil prices, means that Moscow can continue to fund the war for now, economists say. At the same time, the ramped-up defense outlays have fueled imbalances.