Ukraine “Quadruples” Its Defence Expenditure

According to the Ukrainian Ministry of Defence, the budgetary defence expenditure in 2016 will be four times higher, in comparison with the year 2014. Currently, the Ukrainians intensively modernize and expand the capabilities of the Armed Forces. Relevant reforms of the defence sector are also being implemented. According to the original assumptions, the restructuring process is going to be completed until the year 2020, allowing the Army to carry out the tasks of defending the Ukrainian territorial integrity within a fuller scope.

According to the estimates and analyses made by the Stockholm International Peace Research Institute, the expenditure related to the army was to be increased up to the level of UAH 40 billion in 2015 (1.47 billion US Dollars), comparing it to the UAH 15 billion defence budget of 2014. Moreover, the National Guard expenditure has been increased from 1.5 up to UAH 7 billion, while the funds allocated to the defence industry guarantees constitute an amount of UAH 6 billion. Generally speaking, the defence budget, including the military pensions, or the border guard funds, is defined by an estimated amount of UAH 86 billion. Back in 2014 the defence expenditure was to be covered by an amount of UAH 37 billion.

This means that it was last year, when doubling of the defence spending was planned, even if the high inflation rate is taken into account. According to the Euromaidanpress outlet, “defence and security” spending is going to be increased up to UAH 113 billion – 5% of the total Ukrainian GDP. We do know that the expenditure has been significantly expanded, when compared to the preceding year, however methodological differences may arise in comparison with the SIPRI data.

The Ukrainian government has been making some decisive steps to increase the country’s defence capabilities. This contributes to increased readiness of the army and makes it possible to implement limited modernization programmes, involving the domestic industry. The process of restoring the readiness of the existing military equipment is equally important. It is worth to remember though, that such increase of the defence expenditure will, without any doubt, cause strain on the public finances, burdened by the losses resulting from the armed conflict, including the annexation of Crimea, loss of a part of Donbas, or from the fact that several industrial facilities are no longer operating under the jurisdiction of the government.

Thus maintaining the state of danger by Russia, forcing Kiev to expand and modernize its Army and combat-deploy the relevant forces in the area of the Counter-Terrorist Operation, may be interpreted as a tool for inflicting pressure, the aim of which would be to destabilize the region. Gradual increase of the defence expenditure may limit the availability of the public services or support for other market segments, which may result in social unrest. In the light of the above, the West shall increase the assistance for Kiev (not necessarily in a form of supply of lethal weapons) and cooperate with the Ukrainian industry, in order to mitigate the effects of the Russian pressure imposed on Ukraine. Taking such steps would also raise the level of security in the Central-Eastern Europe.