Russia's huge military upgrade hits another snag - and Putin is not happy

By Alex Lockie

Despite suffering economic sanctions and the falling price of oil, Vladimir Putin has pushed forwarded with an estimated 20 trillion ruble ($351 billion USD) program to modernize and overhaul the military by 2020.

But the Russian defence sector is struggling to meet its goals.

"The objective reasons for the failure to meet state defence procurement orders include restrictions on the supply of imported parts and materials in connection with sanctions, discontinuation of production and the loss of an array of technologies, insufficient production facilities," Deputy defence Minister Yuri Borisov said in video conference with Putin on Thursday, according to The Moscow Times.

Borisov said that Navy guard ships, 200 amphibious aircraft, anti-tank missiles, radio equipment for surface-to-air missiles, launchers for Tupolev-160 bombers are behind schedule.

Putin was not happy.

"I will especially emphasize that those who are delaying production and supplies of military technologies, who are letting down related industries, must within a short term ... correct the situation," Putin reportedly said.

"And if that does not happen, the appropriate conclusions need to be made, including, if necessary, technological, organizational and personnel (changes)," Putin added.

The extravagant plans for military spending were drawn up before the ruble crashed and oil prices bottomed out, back when the government was expecting 6 per cent GDP growth annually.

Nevertheless, Russia has continued with their hike in military spending, which is estimated to reach $29.5 billion in 2015, with around $4.4 to $4.7 billion going towards research and development alone.

Putin has looked to defence spending to bolster employment, investment, and technological development.

As he said on his call-in show in March, "without a doubt, this program will be fulfilled," adding that, "Our goal is to make sure that by that time, by 2020, the amount of new weapons and military technologies in our armed forces reached no less than 70 per cent."

Given that Russia's troubles will likely continue - sanctions will likely remain as fighting in eastern Ukraine continues and oil may drop as Iranian oil hits the market - Putin's big push may meet reality sooner than later.

"Russia has already spent more than half of its total military budget for 2015," Russian economist and former rector of the New Economic School in Moscow Sergei Guriev wrote in May. "At this rate, its reserve fund will be emptied before the end of the year."

On Thursday, Deputy defence Minister Borisov said that 38 per cent of Moscow's defence purchases planned for this year have been completed.