World

Russia plans to doubles 2023 defense spending, costs of war rocket

Russia has doubled its 2023 defense spending target to more than $100 billion – a third of all public expenditure – a government document reviewed by Reuters showed, as the costs of the war in Ukraine spiral and place growing strain on Moscow’s finances.

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The figures shed light on Russia’s spending on the conflict at a time when sector-specific budget expenditure data is no longer published.

They show that in the first half of 2023 alone, Russia spent 12 percent, or 600 billion roubles, more on defense than the $54 billion (4.98 trillion roubles) it had originally targeted for 2023.

Defense spending in the first six months of 2023 amounted to 5.59 trillion roubles, 37.3 percent of a total 14.97 trillion roubles spent in the period, the document showed. Russia’s budget plan envisages 17.1 percent of total funds spent on “National Defense.”

Russia’s government and finance ministry did not respond to requests for comment on the numbers.

Rising war costs are supporting Russia’s modest economic recovery this year with higher industrial production, but have already pushed budget finances to a deficit of around $28 billion – a figure compounded by falling export revenues.

Higher spending on defense, as Moscow prosecutes what it calls a “special military operation” in Ukraine, could widen the deficit further, while the boost in output could cannibalize other sectors and crowd out private investment.

Reuters calculations based on the document showed that Russia had spent 19.2 percent on defense in the first six months of all initially planned budget expenditure for 2023 as a whole.

The last publicly available data showed Moscow had spent 2 trillion roubles on the military in January and February. In the first half of this year, budget expenditure was 2.44 trillion roubles higher than the same period of 2022. Based on the document, 97.1 percent of that extra sum was directed to the defense sector.

The document provided a new estimate for annual defense spending of 9.7 trillion roubles, one third of the total spending target of 29.05 trillion roubles, which would be the highest share in at least the last decade.

Between 2011 and 2022, Russia spent a minimum of 13.9 percent and a maximum 23 percent of its budget on defense.

Russia has already spent 57.4 percent of its new annual defense budget, the document showed.

Full capacity?

Military production has driven a strong recovery in industrial output, and analysts say that state defense contracts have been a key driver in Russia’s economic recovery to GDP growth so far this year from a 2.1 percent contraction in 2022.

Specific defense funding falls under closed expenditures, but some data, though no longer public, is circulated. For example, the document shows that Russia spent almost 1 trillion roubles on military salaries in the first half, 543 billion roubles more than in the same period last year.

Deputy Prime Minister Denis Manturov said in July that the defense industry was now producing more munitions each month than it did in the whole of 2022.

Funding for schools, hospitals and roads was already being squeezed this year in favor of defense and security, but as the share of defense spending grows, other areas could face cuts.
“The military industrial complex is enabling industrial growth, ‘civilian’ industries are slowing down again,” said Dmitry Polevoy, head of investment at Locko-Invest, after last week's industrial output data for June.

That showed a 6.5 percent year-on-year increase, largely thanks to last year’s low base effect. When excluding seasonal production, growth stopped altogether.

CentroCreditBank economist Yevgeny Suvorov said the military industry was running at full capacity.

“We don’t know what the potential for a further increase in the output of tanks and missiles is,” Suvorov said on his MMI Telegram channel. “But we know that increasing this output even further is possible only at the expense of hemorrhaging more staff from other sectors of the economy.”

Net exporter Russia typically posts budget surpluses, but will post a deficit for the second year running, with the value of energy exports down 47 percent year-on-year in the first half.

Higher budget spending adds to inflation risks. The central bank hiked rates to 8.5 percent in July and analysts expect the cost of borrowing to rise further.

The Bank of Russia forecasts GDP growth at 1.5 percent -2.5 percent this year, in line with analysts polled by Reuters last week. The International Monetary Fund in April forecast 0.7 percent growth this year, but with global isolation to dampen Russia’s prospects for years to come.

“Abundant fiscal ‘steroids’ are helping fairly well for now, but are hardly improving the economy’s medium- or long-term position,” said Polevoy. “As soon as fiscal consolidation becomes unavoidable, there will be a rapid economic slowdown.”

Ukraine, US begin talks on security guarantees: Official

Zelenskyy says frontline combat is ‘tough’, but Ukraine is ‘dominating’ Russia

World

Crown Prince of Abu Dhabi meets with CEOs of leading Norwegian companies

H.H. Sheikh Khaled bin Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, has met with a group of CEOs from leading Norwegian companies, as part of their participation in the UAE-Norway Investment Forum, held alongside his official visit to the Kingdom of Norway.

During the meeting, H.H. Sheikh Khaled bin Mohamed bin Zayed underscored the UAE leadership’s commitment to strengthening economic cooperation with its international partners.

He highlighted that investment in innovation and knowledge is a cornerstone for achieving sustainable development, noting that enhancing collaboration with Norwegian companies across key sectors will open new avenues for mutual economic growth between the two countries.

The UAE-Norway Investment Forum, taking place in Oslo, aimed to highlight available investment opportunities and strengthen trade relations between the UAE and Norway, fostering shared interests and supporting innovation and knowledge-based economic visions.

-wam

World

At the Indonesia International Book Fair 2024, TRENDS inaugurates 10th global office, releases four books

As part of its Asian research tour, partnership with Aletihad News Center, and
primary sponsorship of the Indonesia International Book Fair 2024, TRENDS
Research & Advisory inaugurated its office in Jakarta, marking its 10th location
worldwide. It also released four books in Indonesian.
The inauguration event was attended by ambassadors of the UAE, Bahrain, and
Jordan to Indonesia, chairpersons of the UAE and Indonesian Publishers’
Associations, the Director of TRENDS’ Jakarta office, and a group of researchers
and academics.
Speaking at the event, Dr. Mohammed Abdullah Al-Ali, CEO of TRENDS
Research & Advisory, stated that TRENDS’ international offices—set to reach 15
by the end of 2024—aim to enhance the Center’s research efforts and deepen its
role in disseminating knowledge, thus serving as a global knowledge bridge.
He emphasized, “At TRENDS, we believe in the importance of cooperation
between think tanks and prioritize this endeavor. We believe the TRENDS office in
Jakarta will enhance the exchange of knowledge and ideas between think tanks in
Asia and the Middle East, opening new horizons for collaboration in various
fields.”

Four books in Indonesian
As part of the Jakarta office’s inaugural activities, four books were released in
Indonesian, including the 11th and 12th books of the Muslim Brotherhood
Encyclopedia and Global Trends in AI and Automation and the Future of
Competition between Man and Machine: An Analytical Forward-looking Vision.

Hostility to Arab states
The 11th book of the Muslim Brotherhood Encyclopedia, The Concept of the State
According to the Muslim Brotherhood, highlights its hostile stance toward Arab
states since its inception. The group views them as an obstacle to its ascent to
power. It opposed the modern principles upon which these states were built,
considering them incompatible with the group’s unique interpretation of Islam,
which it claimed to embody exclusively.

Exclusion of nonconformists
The 12th book, The Muslim Brotherhood: Rejection of Tolerance and Exclusion of
Nonconformists, examines the Muslim Brotherhood’s stance towards
nonconformists, individuals, and entities. The book reveals the group’s binary view
of the world, categorizing others as allies or adversaries. It ties these relationships
to the Brotherhood’s internal power struggles and self-serving interests.

Global Trends in AI
The third book, Global Trends in AI, explores significant developments in AI and
its impact on various aspects of life, including the economy, society, and
governance. It also offers a comprehensive analysis of technological advancements
in AI, its applications across sectors, the ethical and social challenges it presents,
and its future trajectory.

Automation

The fourth book, Automation and the Future of Competition between Man and
Machine: An Analytical Forward-looking Vision, addresses the growing challenges
faced by the human workforce in the face of widespread automation and AI
applications. The book concludes that while automation presents a significant
challenge to the labor market, it simultaneously creates new opportunities. It
emphasizes the importance of preparing for this shift through skills development,
continuous education, and adopting economic and social policies that support the
workforce.

Prominent pavilion and active presence
The TRENDS’ pavilion at the Indonesia International Book Fair has attracted
numerous visitors, including academic researchers and officials, such as the
ambassadors of the UAE, Bahrain, Qatar, Jordan, and Turkey. Additionally,
chairpersons of Arab and Indonesian publishers’ associations, authors, publishers,
and students visited the pavilion. All were impressed with and praised TRENDS’ diverse, valuable publications. They also commended TRENDS’ active
international presence and ability to address global developments with rigorous
analytical research.
Dr. Mohammed Abdullah Al-Ali honored the esteemed guests, including
ambassadors of the UAE and Bahrain to Indonesia, Wedha Startesti Yudha,
Chairperson of the Indonesia International Book Fair Committee, Arys Hilman
Nugraha, Chairman of the Indonesian Publishers Association, and others,
presenting them with TRENDS’ publications and commemorative shields.
Additionally, he awarded TRENDS’ Research Medal to Ni Made Ayu Martini
Indonesian Deputy Minister of Marketing, Tourism and Creative Economy
It is worth noting that during its current Asian research tour, TRENDS announced
the launch of the TRENDS Research Medal, awarded to individuals who make
significant contributions to the development of scientific research and promote collaboration with TRENDS in strengthening a culture of research across various fields.

World

US determined to prevent full-scale war in Middle East, Joe Biden tells UNGA79

US President Joe Biden highlighted the US Administration’s determination to prevent a wider war that engulfs the entire Middle East region, noting that a diplomatic solution “remains the only path to lasting security to allow the residents from both countries to return to their homes on the border safely”.

In remarks he made today before the 79th Session of the United Nations General Assembly (UNGA79), the US President said, “Full-scale war is not in anyone’s interest,” adding that a diplomatic solution is still possible.

He also touched on “the rise of violence against innocent Palestinians on the West Bank”, and the need to “set the conditions for a better future”, which he said featured “a two-state solution, where the world — where Israel enjoys security and peace and full recognition and normalised relations with all its neighbours, where Palestinians live in security, dignity, and self-determination in a state of their own”.

President Biden underscored the ceasefire and hostage deal put forth by Qatar and Egypt, which the UN Security Council endorsed. He said, “Now is the time for the parties to finalise its terms, bring the hostages home,” adding that this would help ease the suffering in Gaza, and end the war.

-WAM