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Russia recently announced that it would spend $132 billion modernizing its navy over the next seven years. That’s 20 percent of the $657 billion being spent on modernizing the Russian military in that period. This comes after two years of debate over whether it was worthwhile to pay what it would cost to rebuild the armed forces. Two years ago the government tallied up the costs of modernizing their aging military forces equipment and concluded that it will total about $700 billion. To pay for this, the military needs another 1.5 percent of GDP, meaning 5 percent of GDP would be devoted to defense. The military is getting what it wants but there is some doubt that there will be enough oil income in the future to pay for it all. Once more it’s the damn Americans lowering the price of oil (as they did in the 1980s, an effort that helped destroy the Soviet Union). The Americans have implemented new extraction techniques (fracking) in the last decade and are in the process of flooding world markets with cheaper oil and gas. The U.S. will become an oil and gas exporter by the end of the decade. American oil imports alone will cause oil prices to drop. This will cut Russian oil income and may force cuts in their military modernization plan.
A Russian modernization plan has been underway for most of the last decade, as the government realized it had to do something about rapidly aging military equipment. In many cases, these purchases are essential because buying new gear basically halted (with a few exceptions, like ballistic missiles) during the 1990s. Because of that, most of the armed forces are still using Cold War era gear manufactured in the 1970s and 80s. Fortunately, even older (50s and 60s era) equipment was junked as the armed forces shrank 80 percent in the 1990s.
According to the new government plan, in the next decade, at least a third of current gear will be replaced and in some categories (usually high tech) over 80 percent. The government has been telling the troops about these big plans. If the government does not deliver, morale will take a big hit. This will happen quickly in the navy, for they have been told that more ships will spend more time at sea and very soon. Existing ships can't handle that kind of workload. Thus there are some grounds for optimism in the fleet, for in the last seven years the air force has resumed long range air patrols over areas off the Russian coast, which have not seen Russian navy or air force activity in over a decade. Since 1991, Russian warships have spent most of their time tied up at dock, meaning an entire generation of sailors has little experience at sea. This spells defeat in wartime and the sailors, especially the senior commanders, know it.
The Russian armed forces have already come to grips with the fact that it will never return to the glory days of the Soviet Union (which dissolved in 1991). The army was called "the Red Army" back then and the mighty Soviet naval force came to be known as “the Red Fleet.” Back during the Cold War the armed forces had five times as many troops (over five million) and dibs on over ten percent of the national GDP (no one is sure of the exact amount, as the communists were not big fans of accountants and accurate financial reporting). Currently, Russia is playing by West European rules when it comes to military spending, meaning no more than 3-4 percent of GDP going to the military. With a $1.9 trillion dollar economy, growing at 7 percent a year, the generals can expect a lot more cash to work with. But most of this money is going to replace Cold War era weapons, which are now considered out-of-date and of limited usefulness. But all this will only happen if the price of oil and natural gas remains where it is. That is not likely to happen and the future Red Fleet will be a much fainter shadow of what it once was.