“Instead of butter, they make guns”: what's happening to the Russian economy

“Instead of butter, they make guns”: what's happening with the Russian economy Natalia Belzetskaya

In 2025, spending on national defense and internal security in Russia will amount to 40% of the aggressor country's total budget. This is significantly more than spending on education, health care, and the social sphere combined.

This is a very heavy burden for the Russian economy. Economist Maxim Blant expressed this opinion to Channel 24, adding that one only needs to look at the map to understand how big the front is and how much money the occupiers are demanding for it.

Who in Russia will feel the changes in the economy

The greatest burden fell on those people who actually produce something for the domestic and foreign markets. Interestingly, the number of Russians who worked in such areas has significantly decreased. Some left, some went to fight or went to work at defense enterprises.

Previously, the defense sector was a way to obtain export funds for Russia. But with the start of a full-scale war, everything happened the other way around. Now this industry itself needs investment. In addition, we are talking not only about the army, but about various security agencies belonging to the Ministry of Defense.

There are fewer goods, but more and more money. The figure of 40% for defense is only a preliminary figure, but for me it is not a surprise. After the increase in the army’s size, one shouldn’t even expect anything else,” noted Maxim Blunt.

It is enough to look at what is happening at the front to understand that Russia is forced to allocate a lot of money there. Even if the Ministry of Defense has some strategic or tactical plans for the next year, it is unlikely that they shared them with the Ministry of Finance.

In 2023, when the budget was being drawn up, Russian officials thought that the war would be over by 2024-2025. Therefore, they provided for a reduction in defense spending. But the concept has changed.

Now Russians will have to remember the slogans of World War II about tightening their belts and “guns instead of butter.” This is exactly what is happening in the Russian economy now. People who made butter switched to making guns because they pay more there, the economist said.

Why there is a shortage of security forces in Russia

Members of the security forces prefer to go fight in Ukraine because they can earn more there. This applies not only to the police, but to any sector of the economy, because war really does pay more.

If the police fought less against illegal migrants, then perhaps the situation on the labor market would be a little different. Since the government itself is “shooting itself in the knees” from this side, we have an acute shortage of personnel, – emphasized Maxim Blunt.

There is no one to work, and if there was no war, then we would not have to pay so much money for signing contracts. But no one wants to fight in another way, so we have to pay. This affects the entire system: inflation increases, price growth outpaces wage growth. The more funds the government allocates, the faster prices grow and wages have to be raised.

“Otherwise, if people are not paid, a very bad situation may result. This trap is already starting to work,” – the economist summed up.