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Wednesday, July 12, 2006

The Cost of the War in Chechnya

Sean Guillory has a counter on his blog which tracks how much the U.S. government is spending on the war in Iraq. Bravo to Sean, since it's important for all Americans to clearly understand they choices they are making in a democratic society.

But it begs a question: Sean's blog is about Russia, not America. So, shouldn't he (at least) also have a counter to track the second-by-second expenditures of the Kremlin on Chechnya, especially given the fact that Russia is an impoverished country by the standards of the U.S., with an average wage roughly 10 times smaller than that in America, making each dollar spent on Chechnya much harder for Rusisans to bear?

And that in turn begs another question: Can a blogger track down a handy-dandy counter for Chechnya, like the one Sean has for America? Or is it Americaphobia that makes such counters available only for the war in Iraq and not for Chechnya? Or is it simply that America is interested in reform and improvement, while everyone knows Russia isn't, and that Russian people couldn't care less what the Russian government does or how it spends their money. How is it possible that in a country with an average monthly income of $300 nobody cares how much the government is spending in Chechnya (to say nothing of the loss of life). Will Russians ever learn that their own passivity and cowardice is far more dangerous to their nation than any foreign enemy ever dreamed of being?

According to the Carnegie Center, in 2000 the war in Chechnya was costing Russia at least 100 million rubles per day, or roughly $5 million per day or $83,000 per minute or $1,400 per second. One widely published summary appears below. The conclusions? First, that Russia lies brazenly about the Chechnya expenses, while America documents them down to the penny in full public view. So we can only guess about the cost of the war in Chechnya, a fact which is about as horrifying as the killings, especially as Russians stand passively by and allow this duplicity to persist so soon after the same type of conduct destroyed the USSR. Second,Carnegie is right, the cost is at least around $150 million per month or $5 million per day.

America's per capita GDP is ten times that of Russia, but America has twice as many people as Russia does, so pound-for-pound America is "only" five times wealthier than Russia. This means that every dollar spent by Russia hits the Russian people at least five times harder than it would hit an American, so Russia spending $1,400 per second in Chechnya is like America spending $7,000 per second in Iraq. If you judge by average wages ($30,000 for an American, $3,600 for a Russian) instead of per capita GDP then the disparity is a factor of ten and a Russian spending $1,400 per second is like an American spending $14,000 per second.

In fact, however, Sean's Iraq counter only increases by $3,000 per second, so it appears that in terms of financial burden Chechnya is at least twice as costly for Russians than Iraq is for America, up to five times more costly. This is to say nothing about the human cost, of course. As the article below indicates, something like ten times as many Russians have been killed fighting in Chechnya as Americans in Iraq.

According to the article below, as of the beginning of 2002 Russia had spent at least $8 billion on the war to date. If it went on spending $5 million per day, that's $1.8 billion per year in 2002, 2003, 2004 and 2005, for a total of $7.2 billion or about $15 billion as of the beginning of this year. If it spent $150 million per month in the first six months of this year, by July 1 the total was roughly $16 billion. And at $5 million per day since then, that makes total spending on Chechnya as of today $16.085 billion, and rising at $1,400 per second or $35 million per week.

So where are the counters? To work, geek minions of the Internet, to work! La Russophobe is looking to be among the first to post such a counter on her blog. Meanwhile, not being a programming geek herself, La Russophobe pledges to post every Monday from now on a running total of the current cost of the war in Chechnya until such time as a proper counter becomes available.

Chechnya War: Economic Cost to Russia
By Sam Vaknin, Ph.D.

One hundred and eighteen hostages and 50 of their captors died in the heavy handed storming of the theatre occupied by Chechen terrorists three years ago. Then, two years later, hundreds of children and teachers were massacred together with their captors in a school in Beslan. This has been only the latest in a series of escalating costs in a war officially terminated in 1997. On August 22, 2002 alone a helicopter carrying 115 Russian servicemen and unauthorized civilians went down in flames.The Russian military is stretched to its limits. Munitions and spare parts are in short supply. The defense industry shrunk violently following the implosion of the USSR. Restarting production of small-ticket items is prohibitively expensive. Even bigger weapon systems are antiquated. A committee appointed by the Duma, Russia's lower house of parliament, found that the average age of the army's helicopters is 20. Russia lost dozens of them hitherto and does not have the wherewithal to replace them.The Russian command acknowledges 3000 fatalities and 8000 wounded but the numbers are probably way higher.

The Committee of Soldiers' Mothers pegs the number of casualties at 12-13,000. Unpaid, disgruntled, and under-supplied troops exert pressure on their headquarters to air-strafe Chechnya, to withdraw, or to multiply the money budgeted to support the ill-fated operation.Russia maintains c. 100,000 troops in Chechnya, including 40,000 active soldiers and 60,000 support and logistics personnel. The price tag is sizable though not unsustainable. As early as October 1999, the IMF told Radio Free Europe/Radio Liberty: "Yes, we're concerned that it could undermine the progress in improving (Russia's) public finances."As they did in the first Chechen conflict in 1994-6, both the IMF and the World Bank reluctantly kept lending billions to Russia throughout the current round of devastation. A $4.5 billion arrangement was signed with Russia in July 1999. Though earmarked, funds are fungible.

The IMF has been accused by senior economists, such as Jeffrey Sachs and Marshall Goldman, of financing the Russian war effort against the tiny republic and its 1.5 million destitute or internally displaced citizens. Even the staid Jane's World Armies concurred.No one knows how much the war has cost Russia hitherto. It is mostly financed from off-budget clandestine bank accounts owned and managed by the Kremlin, the military, and the security services. Miriam Lanskoy, Program Manager at the Institute for the Study of Conflict, Ideology and Policy at Boston University, estimated for "NIS Observed" and "The Analyst" that Russia has spent, by November 2001, c. $8 billion on the war, money sorely needed to modernize its army and maintain its presence overseas.Russia was forced to close, post haste, bases in Vietnam and Cuba, two erstwhile pillars of its geopolitical and geostrategic presence. It was too feeble to capitalize on its massive, multi-annual assistance to the Afghan Northern Alliance in both arms and manpower.

The USA effortlessly reaped the fruits of this continuous Russian support and established a presence in central Asia which Russia will find impossible to dislodge.The Christian Science Monitor has pegged the cost of each month in the first three months of offensive against the separatists at $500 million. This guesstimate is supported by the Russians but not by Digby Waller, an economist at the International Institute for Strategic Studies (IISS), a London-based military think tank. He put the real, out-of-pocket expense at $110 million a month. Other experts offer comparable figures - $100-150 million a month.Similarly, Jane's Defense Weekly put the outlay at $40-50 million a day - but most of it in cost-free munitions produced during Soviet times.

A leading Soviet military analyst, Pavel Felgengauer, itemized the expenditures. The largest articles are transport, fuel, reconstruction of areas shattered by warfare, and active duty bonuses to soldiers.The expense of this brawl exceed the previous scuffle's. The first Chechen war is estimated to have cost at most $5.5 billion and probably between $1.3 and $2.6 billion. Russia allocated c. $1 billion to the war in its 2000 budget. Another $263 million were funded partly by Russia's behemoth electricity utility, UES. Still, these figures are misleading underestimates.

According too the Rosbalt News Agency, last year, for instance, Russia was slated to spend c. $516 million on rebuilding Chechnya - but only $158 million of these resources made it to the budget.Russia has been lucky to enjoy a serendipitous confluence of an export-enhancing and import-depressing depreciated currency, tax-augmenting inflation, soaring oil prices, and Western largesse. It is also a major producer and exporter of weapons. Chechnya serves as testing grounds where proud designers and trigger-craving generals can demonstrate the advantages and capabilities of their latest materiel.

Some - like the Institute of Global Issues - say that the war in Chechnya has fully self-financed by reviving the military-industrial complex and adding billions to Russia's exports of armaments. This surely is a wild hyperbole. Chechnya - a potentially oil-rich territory - is razed to dust.Russia is ensnared in an ever-escalating cycle of violence and futile retaliation. Its society is gradually militarized and desensitized to human rights abuses. Corruption is rampant. Russia's Accounting Board disclosed that a whopping 12 percent of the money earmarked to fight the war five years ago has vanished without a trace.About $45 million dollars in salaries never reached their intended recipients - the soldiers in the field. Top brass set up oil drilling operations in the ravaged territory. They are said by Rosbalt and "The Economist" to be extracting up to 2000 tons daily - double the amount the state hauls.Another 7000 tons go up in smoke due to incompetence and faulty equipment. There are 60 oil wells in Grozny alone. Hence the predilection to pursue the war as leisurely - and profitably - as possible.

Often in cahoots with their ostensible oppressors, dispossessed and dislocated Chechens export crime and mayhem to Russia's main cities.The war is a colossal misallocation of scarce economic resources and an opportunity squandered. Russia should have used the windfall to reinvent itself - revamp its dilapidated infrastructure and modernize its institutions. Oil prices are bound to come down one day and when they do Russia will discover the true and most malign cost of war - the opportunity cost.

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