THE BELL WEEKLY: Russia’s unprecedented secret spending

Hello! This week we analyze Russia’s official spending plans for 2025 — the most classified budget proposal in history with record-high defense spending that neither the government nor business press are talking about. We also look at Vladimir Putin’s latest set of nuclear threats to the West.

Secret spending hits record level

The Russian government on Monday sent its 2025-2027 budget to the State Duma, outlining plans that will see defense spending hit a post-Soviet record at 6.3% of GDP. We wrote about the plans for another ramp-up in Russia’s military spending in Friday’s newsletter. The publication of the full budget has revealed two things just as interesting for Russia-watchers: the extent the government has gone to downplay how militarized government spending has become, as well as the massive increase in classified expenditure. 

• For 2025, the finance ministry has classified more than 13 trillion rubles ($140 billion) of its overall 41.5-trillion ruble budget — or 31.6% according to The Bell’s analysis. This is spending that is not attributed to a detailed budget line. The bulk of the secret spending falls under the “national defense” category. It is the third consecutive major rise in the proportion of Russia’s budget that the finance ministry has classified. In 2023, 22.6% of federal expenditure was secret, with that set to rise to 26.8% this year. At almost a third, the 2025 budget will become the most secret in Russian history.
• Aside from spending that is actually classified, the government has also mounted an information campaign to try to obfuscate just how much money is being directed towards the military. More than 40% of the entire budget is allocated to national defense and domestic security. Just like with last year’s budget, the first reports of what would be in the 2025 plans were reported by Bloomberg. In short, instead of keeping their promise to start cutting military expenditure, costs on defense have risen by a quarter year-on-year, and more than 59% compared to original plans for 2025. Outlays on social spending, by contrast, will fall 16%.
• But none of Russia’s leading economic media outlets opted to publish these figures after Bloomberg broke the story — an outlet Russian media has historically been quick to cite and run stories from. Speaking to The Bell, an editor at one major publication recalled what happened last year when Kommersant reported on Russia’s record military budget, using the figures leaked to Bloomberg. The article was removed from the website following a phone call from Prime Minister Mikhail Mishustin’s press secretary. Another editor told The Bell that his outlet could not publish stories relying on Bloomberg without being able to confirm the information independently — something that was impossible because this year the government clamped down on leaks, with no Russian journalist obtaining the budget documents before they were submitted to the Duma.
• But Russian media’s claims they couldn’t report on another massive increase in military spending due to sourcing concerns fell apart on Monday, when the full budget proposals were officially published. Even then, Vedomosti was the only one of Russia’s three leading economic publications to write a separate story about defense spending. And even they only provided raw figures for 2025 with no comparison to previous years and no mention that it would set a new post-Soviet record. RBC briefly mentioned defense spending at the end of a long article about what it called the “first structurally balanced budget in five years,” while Kommersant noted that defense spending accounted for 32.5% of Russia’s planned expenditure, but only in the penultimate paragraph of an article titled “the budget is getting stronger.”
• In downplaying the ramp-up in defense spending, Russian media followed the government’s lead. After the figures were already in the public domain, the finance ministry on Monday issued a big press release about the draft budget. Each section was discussed in a separate chapter on a page containing detailed figures. That is every section, except for “national defense”, the single largest category. That was dismissed in a single paragraph with no figures, instead merely stating that “the draft budget provides significant funds to strengthen the country’s defense capabilities to achieve the aims of the Special Military Operation.”

Why the world should care

Censorship in Russia is developing fast. Two years ago it was almost unimaginable that Russia’s leading economic media would simply ignore a major story from Bloomberg on Moscow’s own government spending plans. And just a year ago it was hard to imagine that none of the major economic papers would write about record military spending even after the figures were officially published by the finance ministry. All of which begs the question: What will Russia’s media landscape look like another year from now? Russia’s business press remains an important source of some information — but it is far from complete and reading between the lines is a must. For the full picture, independent media is essential (and, if you’ll allow us a little plug, first and foremost for English readers, The Bell’s dedicated economic newsletter, out every Friday).

Putin edges up the nuclear escalation ladder

While Volodymyr Zelensky was busy meeting Ukraine’s Western allies in the United States to push for fresh military aid, from halfway round the world in Moscow, Vladimir Putin was doing everything he could to make himself the elephant in the room. On the eve of Zelensky’s meeting with Joe Biden, Putin promised to update Russia’s nuclear weapons doctrine to make it easier to carry out strikes against the West and its non-nuclear allies — all in a demonstratively choreographed special televised meeting. 

• Last Thursday, the day before Zelensky met Biden, Putin convened a televised meeting of the “Permanent Committee on Nuclear Deterrence,” attached to the Russian Security Council. Despite being a “permanent committee,” it was the first declared public meeting of the group. The Kremlin leader outlined a stream of proposed changes that would technically see a dramatic lowering in the threshold for which Russia can use nuclear weapons.
• First, the new rules would permit Russia to launch nuclear strikes against non-nuclear states if they commit “aggression with the participation or support of a nuclear state.” Putin did not mention Ukraine specifically, though it is clear Kyiv was the “non-nuclear state” with Western backing that he had in mind. Second, Putin specified the conditions by which Russia would respond with a nuclear strike even if it was only attacked with conventional weapons. He said Russia could launch nuclear weapons upon receiving “reliable information about the massive launch of air and space weapons and their crossing our border.” Such an attack does need to be with intercontinental missiles, Putin said, but “cruise missiles, drones, hypersonic and other aircraft” would also make the cut. Another basic condition for the circumstances in which Russia would launch a nuclear response to non-nuclear aggression is set to remain the same — “a threat to the very existence of the country,” he said. Third, Putin promised that Russia would be ready to use nuclear weapons not only in response to attacks on itself, but also on its ally Belarus.
• In practice, the changes that Putin announced will change little in Moscow’s nuclear posturing. Just like at the moment, there is much scope for interpretation. For instance, at what point does a threat to Russia’s existence arise? As before, Putin is the one that will be personally making that call. As for the inclusion of Belarus under Russia’s nuclear umbrella, experts say the idea of an attack on Belarus is so far from reality that it looks like an example of the Kremlin dreaming up a proposed change to boost the appearance of large-scale reforms without any practical difference. After all, the main purpose of the televised meeting and proposed amendments is to send a “signal” (as Kremlin spokesman Dmitry Peskov called it the next day) to the West that Russia is not afraid to move in a nuclear direction. 
• Unfortunately for Moscow, that signal appears to be coming in weak. Especially after two years of nuclear rhetoric from Putin and his henchmen. Putin hinted last year that Moscow could hold its first nuclear missile test since the break-up of the Soviet Union — something that really would be a strong signal — but there have been no genuine preparations for a test nuclear detonation.
• Predictably, Russian state TV lapped up Putin’s comments. “Ten men. These are the people who can practically guarantee the delivery of a nuclear strike,” said Dmitry Kiselyov, Russia’s top TV propagandist, talking about the line-up of the men Putin assembled into his “permanent committee.” They were: Defense Minister Andrei Belousov; Deputy PM with responsibility for the defense industry Denis Manturov; Finance Minister Anton Siluanov; FSB Director Alexander Bortnikov; foreign intelligence chief Sergei Naryshkin; Rosatom boss Alexei Likhachev; Roscosmos chief Yury Borisov; and deputy chair of the security council Dmitry Medvedev. Notably, Security Council secretary Sergei Shoigu was not present, even though he had no other official duties that day.
• The meeting was dedicated to the top slot on Kiselyov’s flagship “Weekly News” show, though he too did not talk of resuming nuclear tests. He instead stuck to his own familiar raft of nuclear threats against Britain, which has long been target Number One for Russian propaganda. There was no repeat of earlier promises to “destroy [Britain] with a single strike” or “plunge it into the depths of the sea,” but he did talk about the possibility of using tactical nuclear weapons with “a microscopic nuclear warhead.”

Why the world should care

Nuclear threats are Moscow’s biggest weapon in its stand-off with the West and in its attempts to limit US support to Kyiv. Putin is playing a familiar hand, trying to inch up the nuclear escalation ladder while leaving himself plenty of room for future maneuver. So far it seems to be working. Bloomberg reportedthat there’s a substantial camp in the West calling for negotiations with Russia, fearful of the nuclear risks.