Russia’s full-scale invasion of Ukraine, which began in 2022, has already cost the Kremlin over $200 billion. This staggering figure has drawn attention from analysts and government officials alike, as the costs continue to mount with no clear resolution in sight. U.S. Defense Secretary Lloyd Austin’s statement on December 7, 2024, has only highlighted the scale of the economic and human toll of the war, which has also resulted in at least 700,000 casualties.
Russia’s defense spending has surged to its highest levels since the Cold War era. In 2022, the Kremlin allocated $86.4 billion for defense, a 31% increase from 2021, accounting for 4.4% of the country’s GDP. In 2023, that figure rose to $109.5 billion, with a further increase in 2024 to $112 billion. The Russian government has projected a staggering $142 billion for military expenditures in 2025, comprising 32.5% of government spending.
Russia’s Defense Budget: 2022-2025
| Year | Defense Budget (USD) | Percentage of GDP |
|---|---|---|
| 2022 | $86.4 billion | 4.4% |
| 2023 | $109.5 billion | 4.6% |
| 2024 | $112 billion | 5% |
| 2025 | $142 billion | 6% (projected) |
Russia’s defense priorities have placed military spending ahead of social programs, signaling a wartime economy. While NATO members are required to allocate 2% of their GDP to defense, countries like Poland, Lithuania, and the U.S. spend closer to 4%. Russia, on the other hand, is committing 6% of its GDP to defense, reflecting the ongoing conflict in Ukraine.
Recruitment and military salaries have also seen a sharp increase. Enlistment payments are now as high as $20,000, and monthly salaries for Russian soldiers range between $2,000 and $5,000. The ongoing cost of sustaining 580,000 soldiers in the field has been a significant strain on Russia’s budget. In the first half of 2023 alone, military salaries amounted to $13.42 billion, more than double the expenditure in the same period in 2022.
Casualty compensation has added another layer of financial pressure. By mid-2024, Russia had allocated $23 billion for military death and injury payouts, representing around 6% of the national budget. The ongoing expenses, combined with the cost of military equipment losses, have further escalated the financial burden.
According to Ukrainian military intelligence, Russian forces have lost substantial amounts of equipment on the battlefield. The total value of destroyed Russian military hardware has surpassed $79 billion, as reported by the Ukrainian Ministry of Defence. Meanwhile, the cost of replacing and repairing military equipment continues to soar. The Russian Ministry of Defence is spending roughly one-third of its defense budget on repairing, manufacturing, and procuring weapons. With supplies dwindling and old equipment breaking down, Russia has been forced to ramp up production.
The cost of high-precision missiles, such as the Kalibrs, Iskanders, and Kinzhals, averages between $3 million and $10 million per unit. Artillery shells, a staple in the war effort, cost $1,000 to $3,000 each, with Russia producing around 250,000 shells per month—approximately 3 million rounds annually. NATO estimates that the cost of ammunition alone accounts for a substantial portion of Russia’s military budget.
The sanctions imposed on Russia have made it difficult for the country to access critical components for weapons production. As a result, Russia has turned to North Korea for ammunition and Iran for military equipment, including licenses to produce Shahed drones. These financial and logistical challenges are compounded by the fact that Russia’s defense industry has struggled to attract private investment.
Russia’s economy is heavily reliant on oil and gas revenues, which are expected to make up 5% of GDP in 2025. The Russian government is banking on oil prices remaining around $70 per barrel to maintain its financial stability. However, should global oil prices drop, financing the military expenditures will become increasingly difficult.
