Russia 11
Memorandum from the
Foreign and Commonwealth Office
INTRODUCTION
1. This memorandum is provided
by the Foreign and Commonwealth Office as written evidence for the House of
Commons Defence Committee Inquiry: Russia: A New Confrontation? It outlines the
Government's assessment of the UK and NATO's relationships with Russia, both in
general terms and more specifically in relation to the events of August 2008 in
Georgia. This Memorandum also seeks to answer four questions raised by the
Committee (Annex A). There is
additional information for questions 1 and 2. This is classified SECRET and is provided
separately.
2. Russia has an important role
to play in European security and this impacts upon UK security. For much of the last twenty years the West has
sought partnership with Russia and this remains the UK Government's aim. Partnership can only be built through
respecting the values and principles of our international system, including
treaty commitments both Russia and the UK have signed.
3. The UK continues to pursue a
multilayered approach towards Russia, engaging where it is in our interests to
do so. The UK and Russia face many
common challenges, and share many common interests. We need to work together on tackling climate change, enhancing the
strong trade relationship and on shared foreign policy objectives including
Afghanistan, promoting peace in the Middle East and combating the threat of a
nuclear Iran. We have increasingly
regular high-level contacts. Deputy
Prime Minister Kudrin visited London in February and President Medvedev is
expected here for the G20 Summit in April.
4. Dialogue
and negotiation remain an effective way for the UK to pursue
its EU objectives with Russia. As
a result the Government has supported the restart of the negotiations
to replace the existing EU Partnership and Co-operation Agreement with Russia.
It is in both the UK and the EU's interests to have a rules-based relationship
with Russia. The mandate for this negotiation will range across the
spectrum of EU/Russia relations, including justice and home affairs as well as
trade and investment issues. We hope that the negotiations
themselves will bind Russia into a robust agreement: requiring them to
conform to international norms while serving EU interests on important issues
such as human rights, climate change and energy security and will not be
unconditional reflecting the review of EU-Russia relations and by ongoing
Russian actions in Georgia and elsewhere.
5. In recent years, Russia has
been pursuing a more assertive foreign policy in defence of its national
interests, particularly in its 'near abroad', the independent republics of the
former Soviet Union. Though any direct
Russian security threat to the UK is very low, it is inevitable that this has
raised questions as to whether that represents a greater threat to European
security more broadly. The likelihood
of further military action in this manner in Europe, particularly NATO
territory, is low and it remains more likely that Russia will seek to use its
diplomatic, political and economic influence to further its goals.
The Current and Future NATO-Russia relationship
6. NATO continues to play an
important role in our relationship with Russia. Evidence of the positive nature
of the relationship between NATO and Russia was the signing of the NATO-Russia
Founding Act on Mutual Relations in 1997 and the eventual formation of the
NATO-Russia Council (NRC) in 2002.
These represent a significant development, moving the relationship away
from Cold War thinking and towards a more open dialogue on important issues of
mutual concern including arms control, non-proliferation and
counter-terrorism. However, it is
undeniable that the history of the Cold War left a legacy of mistrust between
the Alliance and Russia that has yet to be fully overcome.
7. It remains the Government's
goal to build up further trust between NATO and Russia in order to enhance all
our security. The NATO-Russia Council
has been an important tool in building that trust. The UK was instrumental in setting up the body in which Russia
and the individual NATO Allies work as equal partners to tackle security issues
of common concern. This has included
important work on counter-terrorism, non-proliferation, missile defence,
defence reform among other areas. In
2004, for example, the NRC Action Plan on Terrorism was adopted and Russia has
contributed to Operation Active Endeavour, a NATO maritime counter-terrorism
operation. In Afghanistan too Russia
shares many of our objectives and has provided important support. It is clear that many of the issues of
primary security concern to NATO are of equal concern to Russia and it is right
that Allies and Russia seek to work together to combat these threats.
8. However, the NRC has not so
far fully lived up to its potential.
Even prior to the Georgia crisis, see below, the Council was not without
difficulties. Russia remained
suspicious of NATO motives, particularly over enlargement and this hindered
deeper co-operation. For example,
Russia has contributed little to NATO operations since early on in the Kosovo
operation. Russia suspended its
participation in the Conventional Forces in Europe (CFE) Treaty. Events in
Georgia in August 2008 placed a more substantial block in the path of
NATO-Russia co-operation.
Impact of the Georgia Crisis
9. NATO-Russia relations were
put under severe strain by Russia's disproportionate actions in Georgia. In an important show of unity, NATO was
quick to condemn Russian military actions in Georgia and call for a withdrawal
of Russian troops. All Allies agreed that there could be no business as usual
with Russia and formal meetings of the NRC were suspended. For its part Russia suspended military
co-operation with NATO. Though suspension of formal dialogue led to increased
anti-NATO rhetoric from Moscow, it was important to make clear to Russia that its
actions undermined the values of the NATO-Russia relationship and put into
question its commitment to stability and security in Europe. The subsequent
Russian recognition of South Ossetia and Abkhazia deepened the divide.
10. The Government's response both
as the UK and through NATO has been to uphold Georgian sovereignty and
territorial integrity, to deter Russia (or others) from similar actions
elsewhere and to protect the international legal system. We have done so by supporting peace efforts
that end hostilities without entrenching Russia's military gains. However, we have not sought to isolate Russia
and channels of dialogue have remained open.
We judge it vital that we maintain hard-headed engagement with Russia
where serious messages can be relayed.
11. Consistent with this approach
it is important that we maintain a dialogue with Russia in the EU, as well as
NATO. We supported the decision of the
Presidency and Commission in November 2008 to resume negotiations with Russia
on a successor to the Partnership and Co-operation Agreement and, at NATO in
December 2008, to resume informal meetings of the NRC. It is important that we co-operate in areas
where our interests overlap. We should
also use this engagement to encourage Russia to be a responsible member of the
international community and abide by its rules and obligations.
12. While the Georgia crisis posed
no direct security threat to the UK, some NATO members bordering Russia,
particularly those with significant Russian minorities, are increasingly
concerned about Russian intentions.
There has been renewed focus by many Allies on the importance of NATO's
Article 5 commitment to collective defence.
We believe it right that NATO underline its commitment to defend its
members and continue to plan and prepare for this. This is consistent with a readiness to focus on those areas where
it is in our interest to work with Russia.
Key areas for dialogue
NATO Enlargement
13. Russia interprets NATO enlargement as a
threat to its national security. This
has been particularly evident with regards to Georgia and Ukraine. Russia rhetoric on enlargement to both
countries has been aggressive and the Georgia crisis can been seen partially in
this light. Russia sought to influence
the Alliance's position on Georgia and Ukraine in order to restrict their
progress towards membership. The UK's
policy has been to make clear to Moscow that the membership aspirations of
these two countries do not pose any threat to Russia. Indeed, we believe that enlargement has been an historic success
in building stability and security in aspirant countries and so support NATO's
open-door policy on enlargement. The
strict criteria which aspirant members must meet help to entrench democratic
and defence reform within these countries.
We believe that having stable, well-governed countries on its borders
(delivered by the reforms which NATO membership demands) is also in Russia's
interest. Our policy has been to support
a deepening NATO relationship with both Georgia and Ukraine in order to build
up these reforms.
14. At the NATO 2008 Summit in
Bucharest, Heads of State decided that Ukraine and Georgia will one day be NATO
Members. Their progress on the path towards membership was assessed by Foreign
Ministers at their meeting in December 2008.
At that point there was discussion amongst Allies as to whether either
was ready for the next stage in the process, a Membership Action Plan
(MAP). Russia made clear that it was
deeply opposed to Georgia and Ukraine being granted MAP. The UK helped broker a compromise package
that focussed on delivery of the reforms required for eventual membership
through agreement to Annual National Programmes with both countries. This outcome will help Georgia and Ukraine
deliver the reforms required for eventual membership and makes clear that NATO
is not stepping back from the Bucharest commitment. We must be clear to Russia
that there can be no third party veto on enlargement and it is the sovereign
right of independent countries to choose their own alliances.
Afghanistan
15. NATO and Russia share many of
the same objectives for peace and security in Afghanistan. Russia also recognises that a stable
Afghanistan is important to ensuring the stability of Central Asia and its
south-eastern flank, and in addressing the considerable flow of narcotics
north. Even during the most strained
period of relations in the immediate aftermath of the Georgia crisis, Russia
made clear its willingness to continue to co-operate on Afghanistan.
16. At the Bucharest Summit in
April 2008, Russia offered ISAF overflight and land transit routes for Lines of
Communication, albeit with some caveats on transport of weapons. In order, to
do so separate agreements are required with the Central Asian countries which
the convoys would also transit, and Kazakhstan and Uzbekistan have still to
sign agreements. Constructive negotiations between NATO, Russia and the Central
Asian Republics continue.
17. Russia has expressed an
interest in making a contribution to security sector reform, signing a defence
co-operation agreement with the Government of Afghanistan in March 2008, and
training some Afghans in counter-narcotics techniques at its Domodedovo centre
near Moscow. The Government of Afghanistan has not yet taken up more recent
Russian offers of bilateral assistance, including further police training at
Domodedovo. Russia has also put Afghanistan high up the agenda during their
current chairmanship of the Shanghai Co-operation Organisation (SCO).
Russian Proposals on European Security Architecture
18. President Medvedev first
raised his idea for a new European security architecture in a speech in June
2008. The Russian government has said
that it feels uncomfortable with the current European security arrangements.
They have proposed a broad security debate that would look towards agreeing a
new European Security Treaty. We, and
others in the EU and NATO, have made clear that we believe existing
institutions (the EU, NATO and the OSCE), currently do a good job of providing
security in the transatlantic region, and that any new proposals should not
undermine them.
19. As the Foreign Secretary has
said, there is a clear deficit of trust on European security that we must work
together to overcome. So we are open to President Medvedev's call for a
discussion about the future of European Security. In taking this debate
forward, agreed principles, including those enshrined in the UN Charter, the
Helsinki Final Act and the Charter of Paris, must be respected. These include:
· State
sovereignty, territorial integrity and the inviolability of borders;
· peaceful
settlement of conflicts and restraint from the use of force;
· the
right for all states to freely choose Alliances and security arrangements;
· respect
for the human dimension of Euro-Atlantic security including human rights,
democracy, rule of law and good governance.
20. For discussions towards and commitments to any
new security architecture to have credibility among participants and our publics,
it is clear that parties cannot at the same time be failing to comply
with existing commitments, or failing to abide by the principles which
would underpin any new regime. Russia's
actions in Georgia again fall short of those criteria.
21. So far the Russian proposals
lack detail. It is important that
discussions take place within existing institutions and Ministers agreed at the
OSCE Ministerial in December 2008 that discussions should take place at that body. These should not be rushed. It will be important that EU and NATO
partners reach common understanding of how to take forward talks. Such discussions must include all
transatlantic partners as our North American allies have a vital role to play
in European security.
Ballistic Missile Defence
22. In 2008, the US signed
separate agreements with Poland and the Czech Republic to co-operate on
Ballistic Missile Defence (BMD).
Specifically, Poland agreed to base 10 missile interceptors on its
territory and the Czechs agreed to deploy a radar system which will provide a
long-range ballistic missile tracking capability. Meanwhile, NATO agreed at the April 2008 Bucharest Summit to
explore how the US BMD capability could be linked into NATO's missile defence
efforts. This work has begun and it is
anticipated that recommendations will be presented at the 2009 Summit in
Strasbourg.
23. The US has been clear that BMD
is aimed at a limited threat posed by states of concern - specifically
Iran. However, Russia has reacted
strongly to Polish and Czech participation in the BMD system, claiming it
presents a threat to Russian security.
President Medvedev's suggestion in November 2008 that Moscow would
deploy Iskander missiles in Kaliningrad was a direct challenge to US plans.
24. The new US administration has outlined
a more cautious approach, saying it will develop missile defences provided the
technology is proven to work and is cost effective. There is likely to be a review of the programme in the near
future. The US has also emphasised that
it will move forward in consultation with NATO allies and Russia. Russia has
responded to this shift in emphasis and stepped back from suggestions that it
might deploy missiles in Kaliningrad.
There is renewed optimism that senior figures
in both the incoming American administration and Russia are committed to engage
on this issue and that progress can be made on negotiating a successor to START which is currently due to expire in December 2009.
25. UK participation in BMD is
limited to an upgrade of the early warning radar at RAF Fylingdales (agreed
following Parliamentary and public debate in 2003) and the passing of permitted
satellite early warning data to be passed through RAF Menwith Hill into the US
system. We remain supportive of a
system which counters the growing threat from states of concern. Going forward it will be important for
Russia and the US to work together in this area and for NATO to remain engaged.
26. At the Munich security conference in early
February, US Vice President Biden spoke of pressing the "reset
button" on US-Russian relations. Both sides are interested in
getting the relationship onto a more positive footing. But both
are working out what this will mean in practice. On the
one hand, Russia has expressed willingness to engage on the
disarmament agenda and welcomed new US tones on missile
defence. On the other, Russia
appears to be actively pressing its interests in the "near abroad" through
further militarisation of Abkhazia and South Ossetia, an aggressive approach to
the gas dispute with Ukraine and prioritising an agreement with
Kyrgyzstan which appears linked to ending US tenure on a
strategically-significant airbase. For their part, the US too are still
gauging their approach.
Conventional Armed Forces in
Europe (CFE) Treaty
27. NATO allies and the Russian
Federation have been at loggerheads over the CFE regime for most of the last 10
years. In essence, despite political
agreement by President Yeltsin to do so in 1999 (the Istanbul Commitments),
Russian forces have neither fully withdrawn from Georgia and Moldova, nor
obtained host nation consent to remain.
NATO allies have therefore refused to ratify the 1999 Adapted CFE
Treaty, which modernises the 1990 CFE Treaty to take account of post Cold-War
geographical realities. In the meantime, the existing CFE Treaty has continued
to function, but Russia has gradually expressed more and more dissatisfaction
with the regime over time. During
President Putin's second term the intensity and tempo of Russian complaints
grew sharply. Most centred on blaming
the Allies for not ratifying the Adapted CFE Treaty even though from Moscow's
perspective Russia had either fulfilled, or had done all it could to fulfil,
the Istanbul Commitments.
28. In 2006 and 2007, Russia set
out a number of further specific complaints.
The key ones were that the Treaty's system of bloc-based limitations on
military equipment had become unbalanced as former Warsaw Pact countries joined
NATO; that the Baltic States were now in NATO but not in the CFE regime -
creating an arms control black hole on Russia's border; and above all that the
CFE flank regime was discriminatory against Russia. President Putin threatened to suspend Russian participation in
the CFE Treaty unless NATO countries ratified the Adapted Treaty and addressed
these specific complaints.
29. The United States, with the full support
of all NATO Allies put proposals for parallel action to Russia in the second
half of 2007 which offered practical solutions to resolving the outstanding
elements of the Istanbul Commitments, without compromising host nation consent,
which would enable Allies to ratify the Adapted CFE. Allies believe that entry
into force of the Adapted CFE Treaty, followed by a review process as the
Adapted CFE Treaty is already 10 years old, would meet the security concerns
expressed by Russia. Despite Russia carrying out its threat and suspending CFE
participation in December 2007, and despite the Russian military action in
Georgia in 2008, these US-Russia discussions continue.
17 February 2009
ANNEX A
ANSWERS TO THE COMMITTEE'S SPECIFIC
QUESTIONS
1. RUSSIA'S CURRENT AND FUTURE MILITARY CAPABILITY
AND READINESS, INCLUDING ITS REARMAMENT PLANS, ITS USE OF PEACEKEEPERS, AND THE
RESTORATION OF RUSSIA'S PRACTICE OF KEEPING A FLEET OF STRATEGIC BOMBERS
PERMANENTLY AIRBORNE
2. THE MILITARY
THREAT POSED BY RUSSIA TOWARDS NATO COUNTRIES, INCLUDING AN ASSESSMENT OF
RUSSIA'S MILITARY TACTICS SUCH AS THE PROBING OF NATO COUNTRY'S AIR AND WATER
SPACE
i) Russia's current military capabilities lie in its armed
forces of some 1.1 million troops. But
Russia's conventional forces face considerable challenges. Increased levels of defence spending have
yet to translate into commensurate improvements to either the operational
capability or weapons inventories of the Russian armed forces. Moscow will continue to rely on its nuclear
forces to counter perceived major threats.
It maintains a substantial nuclear arsenal and significant numbers of
non-strategic nuclear weapons. Russia
does have the capability to threaten states on its periphery. Russia views the Georgian operation in
August 2008 as militarily successful.
Russian forces deployed more than 20,000 troops with little notice and
these forces proved adequate for the task.
FORCES
Ground
ii) Russian Ground Forces,
together with airborne and naval infantry units, are approximately 390,000
strong. Russia also maintains 170,000
Interior Troops and 160,000 Border Troops.
There is an active programme of replacing conscripts with contract
soldiers. At present, over 20% of
500,000 rank and file are on contract service.
However, given a worsening demographic trend, current manning levels are
unsustainable. Military reforms
announced since the Russia/Georgia conflict include substantial reductions in
officer posts and the establishment of a contract-manned NCO corps. Russia intends its total forces should be 1
million strong by 2016.
iii) Russia's Permanently
Ready Forces (PRF), established during the Putin presidency, comprise
high-readiness units capable of responding to immediate threats. These units have attracted the highest
priority for manning, equipping, and training among Russia's non-nuclear
forces.
iv) Training at all levels
has increased each year since 2000 and has included participation in bilateral
and multinational exercises.
Improvements in tactical performance will be uneven. Exercises have been frequently conducted
during periods of tension. The North
Caucasus Military District, together with the Airborne Force, has the main
concentration of PRF units. A brigade
structure will replace the divisional and regimental levels of command. The objective is to create a sufficient
number of fully manned combat-ready units so that up to three "local" or
"regional" conflicts could be engaged concurrently.
Air
v) The Russian Federation
Air Force (RFAF) consists of 1500 tactical aircraft, 180 bombers, 370 transport
aircraft, and about 95 surface-to-air missile (SAM) battalions. Most of the present tactical combat aircraft
are fourth generation. RFAF air defence
units provide Russia with a credible air defence of vital areas. The RFAF would find it difficult to
effectively project tactical air power beyond the CIS borders.
vi) There is likely to be
an overall reduction in the size of the Air Force of approximately 50% by
2030. This should simplify logistics
and improve aircraft availability. The
force will operate fewer, more capable, aircraft: the next-generation
PAK-FA (still in development), modernised Tu-160 BLACKJACK strategic
bomber, Yak-130 MITTEN combat-capable trainer, and the Su-34 FULLBACK
strike-attack aircraft.
Navy
vii) The current order of
battle will see Russian Federation Navy (RFN) fleets operate predominantly in
waters around Russia. Significant
recent out-of-area activity represents their aim to re-establish themselves as
a capable blue water navy, able to operate in certain key regions. In recent years, the tempo of RFN operations
has increased.
viii) New-generation
strategic submarines are being constructed.
The first such submarine, (the BOREY
class), equipped with an as yet unproven missile system (Bulava), will
commence trials next year. Conventional
submarines (SSK) are a relatively inexpensive platform. There is a new fourth-generation ST
PETERSBURG-class SSK in Russia's conventional submarine force. Overall, Russia will seek to build between 8
and 12 of the new class by 2020.
Strategic Nuclear Forces and other WMD Capabilities
ix) Russia retains major
strategic forces, general-purpose forces with non-strategic nuclear weapons and
a significant chemical and biological warfare (CBW) research capability. Strategic nuclear forces are maintained at a
high state of readiness and exercised regularly.
x) The nuclear missile
inventory is undergoing gradual replacement with variants of the modern SS-27
ICBM. Russia faces a continued
reduction in deployed strategic warheads as delivery systems age and are
retired. The size of its deployed
strategic nuclear warhead arsenals currently limited by START and SORT
agreements.
REARMAMENT
xi) Russia
sees the rebuilding of its military capability as a priority. Defence spending has risen by an annual
average of some 7% in real terms since 2001, roughly commensurate with robust
GDP growth over this period. However, lack of resources has meant that procurement
for Russian armed forces has been at a low level for nearly two decades. This has been compounded by high defence
sector inflation, the high costs of developing systems and platforms, and
corruption. The requirement to win and
meet arms export orders and to satisfy foreign partners has reduced the
capacity for production of new weapons for Russia's armed forces. The emphasis in the short to medium term
will remain on upgrades to existing programmes.
xii) Eventually, there will be new
procurement. Better funding has
resulted in limited improvements to military R&D,
concentrating on much needed modernisation of existing equipment and new
programmes. Significant examples of
activity include: updating the Ballistic Missile Defence system, anti-satellite
research, improved systems for new Main Battle Tanks, a next-generation combat
aircraft, new submarines and capable SAM systems. In September
2008, President Medvedev claimed that funds would be allocated to increase the
rate of construction of nuclear missile submarines, alongside existing plans to
build new missile-carrying frigates and corvettes, various types of
mine-clearance, amphibious and hydrographic vessels.
OPERATIONS
Internal Security
xiii) Although Russia has
not suffered a major terrorist attack since the Beslan school siege in 2004, it
faces insurgencies in some North Caucasus republics, including Chechnya. Russia's Interior Troops (170,000) have been
employed to respond to and contain threats, including the use of mobile reserve
brigades.
Peacekeeping
xiv) Peacekeeping, in
various forms, has been a major aspect of Russian military activity although
most operations have been conducted within the CIS. Russia currently maintains a deployable peacekeeping brigade as
well as a peacekeeping contingent in the Moldovan separatist region of
Transnistria. Prior to the August 2008
conflict, peacekeeping units were based in Abkhazia and South Ossetia. In 2007, the Collective Security Treaty
Organisation (CSTO) - of which Russia is the key member, agreed to set up a
multinational peacekeeping force.
Deployment of these forces abroad would take place only under a UN
mandate.
Out-of-Area Activity
xv) Long-distance
out-of-area flights by Russian strategic bombers will probably continue as a
relatively inexpensive and effective means of demonstrating Russian military
power. Four times during 2008,
strategic bombers circumnavigated Iceland.
Increased funding has enabled additional fuel allocations, spares
purchases and crew training. Recent
pan-fleet naval activity has seen the Russian Federation Navy operate in the
Mediterranean, the Caribbean, the Gulf of Aden and the Arabian Sea. However, such activity does not represent a
qualitative increase in the Russia threat to the West.
3. WHAT ARE THE LIKELY
IMPLICATIONS OF THE GLOBAL ECONOMIC CRISIS ON RUSSIA'S FOREIGN AND MILITARY
POLICY?
xvi) Some analysts have argued that the
financial crisis will encourage Russia to pursue a more moderate, co-operative
foreign policy. This was reflected in Prime Minister Putin's comments at Davos,
where he argued that the economic crisis affected all countries, and demanded a co-ordinated
global response. Putin argued that "mutual interest and mutual dependence are
clearly in place". Putin promised to respect the commitments signed up to by
President Medvedev at the Washington G20 Summit, including restraint from
protectionism.
xvii) This desire for co-operation has been
apparent in preparations for the London Summit. Russia is closely engaged in
G20 efforts to tackle the crisis, participating actively in all the working
groups preparing for the Summit. Arkadiy Dvorkovich (G20 Sherpa) has played a
constructive role in Sherpa discussions on financial stability and reform of
the international financial architecture. The Finance and Deputy Prime Minister
Kudrin visited London for talks with the Chancellor, Secretary of State for
Business and Foreign Secretary on 4 February, as well as addressing an audience
of professionals in the City. President Medvedev is planning to attend the
London Summit on 2 April.
xviii) Russia shares many of our goals for the
reform of the global financial architecture. Officials have told us that they
want institutions to be more accountable and more effective, and channel
greater funds quickly to countries experiencing problems due to the financial
downturn. Russia wants to play a more active role in key international
financial institutions - it is keen to join the Financial Stability Forum, and
Kudrin has expressed a determination to step up efforts to join the WTO.
xix) Russia sees itself as having a leadership
role in the CIS region in responding to the crisis. It discussed preparations
for the London Summit at the meeting of EurAsEc (a trade bloc including Russia
and most of the countries of Central Asia) in Moscow on 5 February. Under the
auspices of EurAsEc, it also intends to establish a $10 billion fund to assist
sectors affected by the crisis.
xx) More broadly, the Russian government has said that
the global economic crisis has created a new geopolitical reality, which
it hopes will lead to greater multilateralism. Foreign Minister Lavrov in
January said the crisis should "spur all of us towards collective actions". He
welcomed the G20's leading role (evolving from the G7/8) and - reflecting
Moscow's vision of a 'multi-vectoral' foreign policy - underlined Russian
commitment to working with a wide range of partners, including with the EU and
in the CIS and BRIC formats. Lavrov has expressed the hope that joint efforts
to rebuild the world financial system will "help to accumulate a critical mass
of trust" to tackle other political differences and to "contribute to
de-ideologising international relations".
xxi) The global financial crisis has led to a
sharp deterioration in Russia's fiscal position. Whereas in 2008 as a whole, Russia ran a fiscal surplus of 4% of
GDP, it recorded a deficit of 21% of GDP ($29 billion) in December. In part, this was due to increased spending
on counter-crisis measures including social measures. In part, it was due to a reduction in profit tax, introduced on 1
December to stimulate economic growth.
But it was overwhelmingly due to the collapse in commodity prices since
October - oil accounts for 50% of Russian federal budget revenues.
xxii) Originally, the government prepared a 2009
Federal Budget based on the assumption that the average price of oil would be
$95 per barrel. The Ministry of Finance
is currently recasting this year's budget, with an oil price assumption of $41
per barrel. According to Russian media
reporting, revenues are likely to be half those originally forecast. And although the Ministry of Finance has
made no public announcements, officials have indicated informally to the press
that a reduction in spending will be necessary - even with the country's large
accumulated reserves. The government
has made clear publicly its commitment to certain socially-significant
spending, notably unemployment benefit.
But elsewhere, the signs are that spending will be cut, by up to 15%.
xxiii) Further
ahead, Russia will remain heavily reliant on the oil price, at least in the
medium term. If prices recover towards
$90 per barrel in the final quarter of 2009, Russia may resume an expansionary
fiscal policy - including in the defence sphere. But if oil prices remain below $45 per barrel, Russian economic
performance is likely to remain sluggish, and government spending tight.
xxiv) The defence
establishment is not immune from the impact of Russia's economic slowdown.
Budgetary pressure is likely to force the Russian Ministry of Defence to revise
the implementation timescale for its programme of reform, restructuring and
down-sizing. The Russian media has
reported that the main stages of reorganisation of the army and fleet scheduled
for the beginning of the year are likely be revised, as a direct result of the
current economic and financial realities.
xxv) In parallel with this development, the
government in January announced substantial financial support to the Military
Industrial Complex in order to underpin defence enterprises and, in so doing,
to address socio-economic issues in vulnerable areas of the real economy. (The Military Industrial Complex employs 1.5
million workers in some 1500 companies, many of them in mono-industry
towns). At a conference on 15 January
of ministers, heads of financial institutions and defence enterprises, Prime
Minister Putin announced that the government would invest over Rbl4 trillion
(£80bn) over 3 years to ensure the delivery of the state's defence order. This would see a shift of focus away from
the arms export market to the domestic defence market (Russia was the world's 3rd
largest arms exporter in 2008 with sales worth $7bn).
xxvi) Meanwhile, at Davos Putin warned of
the dangers of states using a build-up of military spending to resolve current
social and economic problems. He argued that despite any short-term benefits,
the huge resources involved should be put to "better and wiser uses". He
expressed the conviction that "reasonable restraint in military spending, especially
coupled with efforts to enhance global stability and security, will certainly
bring significant economic dividends".
4. VIEWS ON THE STATE OF NATO'S CONTINGENCY PLANS TO
RESPOND TO POTENTIAL RUSSIAN ENCROACHMENT INTO THE TERRITORY OF NATO MEMBER
STATES BORDERING RUSSIA.
xxvii) Developing
and adjusting contingency plans is a regular and long-standing activity with
the Alliance. The agreed NATO threat assessment is reviewed on an annual
basis.
xxviii) There
are agreed "Article 5" NATO contingency plans (COPs) for
responding to an armed attack against Allies These COPs address measures
and arrangements for reinforcment, including Alliance political objectives and
desired end-state; the missions ands tasks to be performed; planning
assumptions; SACEUR's intent; the conduct and phasing of operations; force
requirements' C2 arrangements and supporting measures. They are reviewed as
required. In addition, the NATO Response Force has seven
generic contingency plans, one for each of its illustrative missions, which
could be conducted in support of an Article 5 operation. The NATO
Integrated Air Defence System (NATINADS) is also linked to Article 5 and has a
supporting contingency plan.
xxix) Following
the Georgia crisis some Allies, particularly those bordering Russia, asked that
these plans be reviewed. We judge the
likelihood of a Russian attack on NATO territory to be low but there is more
possibility that Russian interference could involve other destabilising
activity (cutting energy supplies, encouraging civil unrest,
cyber-attack). It is important that
NATO refreshes its thinking on what constitutes aggression in the 21st
century, and is prepared for these eventualities. Planning should emphasise and agree the graduated, co-ordinated
response that would be required to this type of aggression. SACEUR has
undertaken to take work forward in this regard and we support those efforts.
