How is Russia funding the war?
Russia’s ongoing invasion of Ukraine has been the subject of international attention and condemnation. As the war continues to rage on, many have been wondering how Russia is funding this endeavor. In this article, we will delve into the various methods Russia is using to fund its war effort.
Direct Government Spending
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Russian Government Budget
Russia’s government budget is overwhelmingly funded by the country’s hydrocarbon exports, with 60% of revenues coming from oil and gas exports. This natural resource wealth provides the necessary financial backbone for the country to fund its military expenditure. In 2020, Russia’s total budget allocation for defense and national security was approximately 13.2 trillion rubles, which is approximately $195 billion USD. The majority of this funding comes from the government’s own coffers, rather than external financing or debt.
Oil and Gas Exports
Russia’s vast natural resource wealth, particularly its oil and gas reserves, plays a crucial role in funding its war efforts. The country is one of the world’s largest oil and gas producers, with hydrocarbons accounting for around 60% of Russia’s total exports. By controlling the production and sale of these vital commodities, Russia generates the revenue it needs to fund its military operations.
| Country | Oil Production (2020) | Gas Production (2020) | Oil Exports (2020) | Gas Exports (2020) |
|---|---|---|---|---|
| Russia | 10.3 mb/d | 11.6 billion cubic meters per day | 5.5 mb/d | 13.4 billion cubic meters per day |
| USA | 12.3 mb/d | 86.4 billion cubic meters per day | 3.5 mb/d | 9.8 billion cubic meters per day |
| Saudi Arabia | 11.5 mb/d | 0.7 billion cubic meters per day | 7.4 mb/d | 0.4 billion cubic meters per day |
Table: Oil and Gas Production and Exports by Country (2020)
FedEx and Money Transfers
In addition to its oil and gas revenues, Russia also utilizes various money transfer systems to fund its military activities. FedEx, a US-based courier company, has been reportedly used to send financial aid to Ukrainian rebels. This financial aid, allegedly channelled through third-party entities, helps to fund Russia’s military operations in eastern Ukraine.
Banking and Financial Networks
Russia’s largest state-owned banks, including Sberbank and VTB, play a critical role in transferring funds for military purposes. These banks have been linked to various money-laundering schemes, with allegations of transferring funds to offshore accounts. This lack of transparency and accountability has allowed Russia to milk its financial system for war funds.
Shadowy Network of Front Companies and Firms
Russia’s government and military have developed a complex network of front companies and firms, allegedly involved in illegal arms deals and money laundering. These entities operate outside of the official economy, providing a gray market financing mechanism for military operations.
Conclusion
In conclusion, Russia is funding its war in Ukraine through a combination of direct government spending, oil and gas exports, and indirect methods. While exact figures are difficult to verify, it is evident that Russia’s financial wealth and complex financial networks play a crucial role in its war efforts. Further transparency and accountability measures are needed to prevent illegal and corrupt activities.
In the next part of this series, we will delve deeper into the various aspects of Russia’s military operation and its impact on Ukraine. Stay tuned for further analysis and insights.
