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.