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I am looking into the Military Expenditure Data provided by SIPRI.

Interestingly through 1998-1999 Russian Federation's Military Expenditure was cut down to 14,000 almost half of 1997 which was 23,540 (million dollars, 2015 constant).

What happened?

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In 1998, the "twin deficits" in Russia (trade and budget) forced the country to default on its debt. Two other results were a devaluation of the ruble of approximately 35%, and a 5% negative GDP growth.

Assuming that defense expenditures remained constant in rubles, a 35% devaiuation against the dollar would have reduced defense spending from $23,500 millions to $15,500 millions. The 5% contraction in the economy would have taken the amount down further to $14,500 millions. These two effects explain nearly all of the drop to $14,000 millions.

  • Seems like the 35% devaluation of the Ruble could have done the job all on its own, considering the poster's numbers were in dollars. – T.E.D. Sep 1 '17 at 1:03
  • @T.E.D.: True, fair enough. But the 5% GDP decline was almost certainly a contributing factor. – Tom Au Sep 1 '17 at 1:05

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