Medvedev Curbs Hope for More Russian Defense Industry Spending

Dmitry Medvedev
Russian Prime Minister Dmitry Medvedev chairs a meeting with his deputies at the Gorki state residence near Moscow, June 20, 2016. Dmitry Astakhov/Sputnik/Reuters

Russian Prime Minister Dmitry Medvedev has warned his cabinet that the country is unlikely to pour more money than planned into its defense industry over the next three years.

Medvedev is in the process of outlining Russia's budget for the next three years, holding regular meetings with cabinet members to fix spending and offset the effects of lower oil prices.

Russia's investment in its military-industrial complex was the topic of discussion at a meeting Thursday and the prime minister was keen to curb hopes among defense officials that added funds would be released.

"Currently, in the defense-industrial sector there are six government programs developing the defense, aviation, ship building, radioelectronic, nuclear and space sectors," Medvedev said at a meeting in Gorki, outside Moscow. "The limits of their funding in the next three years have been broadly approved at a government meeting on July 7."

"On the topic of additional funding, I have said it numerous times, our reserves are very small for this," Medvedev highlighted, adding that in exceptional situations some numbers may be "corrected."

Medvedev added that, in such a case, projects such as developing Russia's three cosmodromes or ensuring nuclear safety, both from civilian and military facilities, would take priority. He also highlighted that Russia will continue investing in its efforts to destroy chemical weapons.

Russian President Vladimir Putin instructed Medvedev earlier this month to capitalize on the strengthening ruble, while Russia's key export—oil—continues to be volatile. The budget for the next three years intends to take into account low commodity prices and the extension of U.S. and EU trade sanctions on Russia, imposed after the annexation of Crimea in 2014.

Russia's defense spending is estimated between 4 and 5 percent of GDP by the Ministry of Finance, which has advised reining this figure back before 2019. Ministers are expected to agree on a budget by October and present it to parliament for a vote.