The Battle of the Budgets

Sunday, 20 November 2022 — The van says…

Each of those (very accurate) ATACMS missiles costs over $1m apiece. That’s great if you’re an arms manufacturer or a shareholder. Not so good if you happen to be the government paying for them.


War is without doubt the greatest drain on any government’s budget, yet in stark contrast to the great conflicts of the past, both the war in the Ukraine and any potential European hostilities in the future would be approached in a very different manner. This article will look at the mechanisms behind this and examine the effects that may result.

The State of Russia

Despite moving towards more market-oriented economic models since the fall of the Soviet Union, Moscow has kept an immense number of businesses and manufacturing facilities related to military production under direct state control. This has meant that whilst some (and remarkably little) of the entrepreneurship seen in the West is absent, these companies are in absolute lockstep with the government, they serving Moscow’s needs absolutely. This is especially important in the military sector, the government controlling those who make the tools with which Moscow, if necessary, can wage war.

The State of the Deep State

In contrast to Russia, the Western world today has a myriad of private companies and contractors, these nominally serving the government, yet their primary focus is on profits and shareholders. This has meant that whilst a number of smaller companies have been able to serve specialist niches, large corporations have largely carried out the same functions as their Russian counterparts, yet with far fewer budgetary constraints.

On Balance

One is the state serving the state whilst the other is private industry at the service of the state, and herein lies a gulf of difference between the two. When Russia’s military fires a gun, it is effectively Moscow paying Moscow to replace the munitions expended, whereas the Western system has a government paying a private supplier who in turn has to turn a profit as well as lining the pockets of its shareholders.

Technological Tricks

The last few decades have seen the armed forces of the world move towards ever-more advanced weaponry, computers and communications coming into increasing play. This can be seen in anything from the cameras now fitted on tanks to the aviation projects whose development has cost hundreds of billions to realize. In real terms, it is tech-heavy systems that have necessitated an immense increase in defense expenditure, the tech now costing nearly as much as the tackle.

Budgets, but no Bankruptcies

One only has to look at the checkered history of the F-35 project to see underperforming products going way over budget, yet in spite of the stars of the Western military turning into financial black holes, the companies that gobble up the taxpayers’ money never even approach insolvency. Administrations may have shelled out billions for private companies to design their next generation of weapons, yet without the government actually having its hand on the helm, budgets and performance have gone way off course. Notwithstanding the fortunes that have been lost in numerous projects, money (and lots of it) has still found its way into corporate pockets. In short, the development and improvement of expensive and advanced weapons systems has proved very profitable for arms manufacturers in the private sector, this changing the course of defense expenditure.

Holding the Purse Strings

When one government department is funding another, direct accountability is necessary, both in price as well as performance. This means in Russia’s case, should obstacles be encountered, remedial action be taken, but if incompetence or inability are found to be the cause, those at fault can be replaced without question. This may mean that industry does not have a free hand to do as it wishes elsewhere, but that free hand is not picking the pocket of government finances.

Wasted Wealth

The F-35 is the epitome of finance paying for failure, yet with innumerable other projects either lacking or late, if budget carryovers are allowed to carry on, the cumulative effect of these deficiencies adds up on the overall balance sheet. This is all well and good when an administration can continue to pull seemingly limitless amounts of money out of the air, yet just as with any dream, the time comes when you must wake up and then smell the coffee.

The Bottom Line

The bottom line is that if a government has everything in black and white, the bottom line will add up; should individuals and industry be put in charge however, affairs turn into a very gray area, the bottom line simply not adding up and public finances going into the red. With political decisions keeping arms contractors in business and campaign funding from weapons corporations keeping lawmakers in office, it now becomes clearer why advanced and very expensive weaponry has come to dominate western purchasing policy. There are clouds on the horizon however. Whilst the Western arms industry may be serving the politicians more than political reality, the Russians are thinking out of the box.

Multiplication and Division

Many of the weapons that the Western MIC (Military Industrial Complex) have foisted upon their buyers are claimed to be force multipliers, yet in most cases, the only exponential gains have been in cost. When we look at the ongoing Ukrainian conflict however, we see that the Russians are multiplying their effectiveness through dividing costs. This may seem outlandish at first glance, yet both Moscow and manufacturing have worked together in order to achieve success.

Big Bang, Cutting Costs

The current conflict is absolutely a proxy war, NATO members supplying and guiding the Ukrainians in their efforts to defeat Russia. The weapons that have come to typify Russian operations are the Grad, artillery and drones. The first two systems are nominally considered to be imprecise in their effects, yet an increases use of laser-guided projectiles is addressing this issue. The matter of drones however is causing a critical situation for the Ukrainians, the Russians now effectively having air cover against armored assets wherever they have boots on the ground. Moreover, the use of Geran-2 drones against Kiev’s infrastructure is now making everyday life near-impossible for millions.

Bang for Your Buck

The one matter which brings these three weapons systems together is the fact that in comparison to either equivalent Western systems or their countermeasures, they are very cheap indeed. As mentioned, the entire ethos around Western weapons design and manufacturing has been to keep costs and therefore earnings high whereas in the East, costs are kept under tighter control. With the use of clever foresight as well as mass-produced technological advances, drones used in conjunction with artillery effectively become a force multiplier whilst dividing costs considerably.

A Dime for a Dollar

In relation to the much-vaunted countermeasures fielded by the West, we see missiles costing hundreds of thousands of dollars being fired at drones which are worth only a tenth of this, and with no guarantee of a hit. Not only that, we see the now famous HIMARS missiles being downed by far cheaper Russian rockets, the art of war becoming more expensive by the day. With so much invested in Western Wunderwaffe and the industry having so much to gain through colossal losses, we can hardly expect a U-turn any time soon.

Cheap and Nasty

Therein lies the crux of the whole matter. Artillery and older rocket systems are now proving to be more cost effective than more modern equipment. Drones however, are doing today what only manned aircraft could do a couple of decades ago, yet with much lower purchase prices, negligible maintenance and being piloted by an ordinary soldier. With them being as portable as they are, they are also far more likely to be in the thick of operations, immediately available for use rather troops having to call for air support. This means that they can act as spotters, zeroing unguided weaponry onto an objective, even in the middle of a barrage.


Although the war itself has not yet reached a turning point, that point has been reached by the Russians who are going into battle with different equipment and an alternative plan. At the end of the day, it is Russian troops who are doing the actual fighting, they needing weapons and not companies that pay them dividends.

The wonder weapons the West has today are only as capable as politicians and business have allowed them to be, and it is this mindset which governs the course of their military equipment today.

Look to Russia however, and we see older equipment that is still used to great effect. The employing of drones has meant than rather than spending billions attempting to keep up with the West, UAVs, be they kamikaze drones or not, have maintained Moscow’s military strength without causing financial weakness.

In everything from campaigning to combat, tactics are everything. The West may for now be able to fund exotic equipment by pulling money out of thin air, yet as we see in the Ukraine, Moscow’s assets on the ground are achieving because of what Russia has put in the air…

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