Russia's Defense Sector Shows Major Growth As Rest Of Country Struggles Under Weight Of Sanctions

Despite an economy that has been thrown into recession by European Union-led sanctions and a substantial drop in the price of oil, Russia's defense sector has been protected from public sector cuts and is showing substantial growth. The increase in weapons manufacturing by Moscow's mostly privately run defense companies is further evidence of the country's race to modernize its old Soviet-style forces and regain military parity with the United States.

"While industry is registering a decline in the current economic situation, the defense sector is demonstrating a growth of 10-15 percent and some enterprises that are speeding up their rearmament programs are expanding output by 50-130 percent," Oleg Bochkaryov, deputy head of the Military and Industrial Commission Board, said Wednesday at a working meeting held with Altai Territory Gov. Alexander Karlin, the government news agency Tass reported.

Russia's economy has suffered badly as a result of sanctions by the West for its annexation of Crimea in March 2014 and its continued involvement in the east Ukraine war, and because of the substantial drop in the price of oil that occurred earlier this year. Those factors have seen poverty increase substantially in Russia. In a population of 144 million, around 22 million are now below the poverty line.

Despite those factors, the country has maintained its aim to continue its $400 billion military modernization program, to be completed by 2020.

"We have a complex [military] goal in the current economic conditions, in which the country is working: not to disrupt the tasks and deadlines for the development and delivery of military hardware to our armed forces and to ensure economically acceptable parameters," Bochkaryov said.

Russia's recent defense programs include developing a fifth generation fighter jet, ballistic-capable nuclear submarines, tanks and increasingly advanced missile-defense systems. The Russian finance ministry released a report Friday showing Russian defense spending as a percentage of gross domestic product was higher than the average for members of the Organization for Economic Cooperation and Development and the BRICS group (Brazil, Russia, India, China and South Africa).

Moscow's defense spending is currently around 4 percent of GDP, compared with 1-2 percent for other BRICS nations.