Economic Crisis Deepens, Treasury Proposes 10% Cuts
Kremlin Mediates Amid Military's Fierce Opposition
[Asia Economy Reporter Hyunwoo Lee] The Russian government has denied the previously reported rumor in local media about a 10% reduction in the size of its military, stating that no decision has been made. It is interpreted that the military backed down due to strong opposition within the Russian armed forces against the reduction. Earlier, the Russian government announced a 5% cut in defense spending compared to the previous year for the first time since 2014 due to worsening financial difficulties, leading to speculation that the military size would also be reduced.
According to Russia's TASS news agency on the 20th (local time), Dmitry Peskov, spokesperson for the Kremlin, stated, "No decision has been made to reduce the size of the Russian military," and denied the claim, adding, "Discussions among experts may take place, but it is not an issue at the decision-making stage." The day before, the Russian daily Izvestia reported that the Russian Ministry of Finance proposed a 10% reduction in the size of the Russian military, which was met with opposition from the military. It is interpreted that the Kremlin intervened as most generals, including those in the Ministry of Defense, strongly opposed the Ministry of Finance's proposal, refusing to accept it.
The Russian Ministry of Finance proposed reducing the size of the military by about 10% by cutting non-combat personnel such as medical staff, instructors, public relations departments, finance and legal personnel, and transportation staff within the Russian military. Additionally, plans were reportedly made to extend military service periods, raise retirement ages to reduce new recruitment, and save expenses on military rations.
Earlier in September, rumors began circulating that the military size would be reduced after the Russian government submitted a budget proposal to the parliament that cut next year's defense budget by 5% compared to the previous year. The Russian government had not cut defense spending since the forced annexation of Ukraine's Crimean Peninsula in 2014, but this year, following a drop in oil prices and the economic difficulties exacerbated by the novel coronavirus disease (COVID-19), along with expected fiscal deficits due to tax revenue shortages, a reduction in military spending was considered. This year, the Russian government's fiscal deficit is estimated to be about 4.5% of the gross domestic product (GDP).
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