Sustaining the Soviet empire control of the satellite states, establishment of strategic party with the USA, military assistance for the Third World required an economic model which was not viable in the long term and which substantially contributed to the collapse of the former system. In view of the foreign policy doctrines outlined, a question arises which has almost been completely ignored, can the country's economy shoulder the renewed burden which might result from the realisation of these doctrines?

One aspect which deserves closer attention is the fact that, from a Soviet and Russian point of view, military spending and the associated arms industry do not only rank as negative for the development of the economy. The military-industrial complex (MIC) was and is, not without pride, regarded as the economy's progressive core. This perception was part of the self-concept during the period of Soviet socialism up to and including the Brezhnev era. It was gradually exposed to public criticism under Gorbachev; the willingness to reduce the level of armed forces was also influenced by the realisation that the lag of the Soviet economy vis-a-vis the West was caused inter alia by the excessive militarisation of the economy. Nevertheless, circles close to the MIC still assign a central role for economic reconstruction to the armament industry; it is even attributed a locomotive function for economic development. The notion that the Russian economy could get going or renewed through armament contracts, however, can be countered by several arguments which were already expressed as criticism of the MIC during the Soviet period. If armament goods are produced by domestic monopolies, as was common practice under the conditions of the USSR and as is still to be expected in the no more than semi- reformed Russian maker economy, the familiar deficiencies will surface that are associated with the absence of competition; the products are comparatively expensive, have quality defects, and there is disproportionately high wastage of resources during their production. Above all, however, technical progress is inhibited by the withdrawal effects a large armaments sector can have on the economy; it absorbs the best natural and personnel resources without its products providing positive stimuli for the further development of the civilian economy.

In connection with the Russian economy there is often talk of the country's vast resources and its high-tech potentials, which, it is claimed, only need to be properly utilised to turn Russia once more into a great economic power. This, however, overlooks the fact that the economic greatness of the past was based on a combination of a special model of an economy and of a society with a partially still unexploited resource base. A repetition of this experiment is destined to failure because the easily accessible resources have since been exhausted and the coercive mechanism required to put value added directly in the service of armament and foreign policy no longer exists.

The creation of a strong armament sector only has a few economic benefits. These include the export potential for weapons and military utilizeable high technology and a certain demand effect which is passed on to the economy as a whole. A negative aspect is the fact that investments in civilian fields are more difficult to finance because the state either confiscates the scarce resources in this case or keeps the interest rates on the capital market high by borrowing. The development of domestic consumer and investment goods industries is made more difficult, the export potential is reduced, and the domestic market exposed to foreign competition. Only the raw materials sector, which is favourably influenced by foreign investments, would experience further expansion. At the same time, the weak points in the Soviet and Russian economy would be compounded in future. In the final analysis, less rather than more national greatness and stability would be achieved.

The price of Russian foreign policy can be quantified: if a misguided orientation to the armament industry were to reduce the long-term growth rate of Russian national product from an achievable 3 per cent to 1 per cent then the GDP, which amounted to US-$ 600 billion in 1996 (in 1993 prices), would not increase over a period of ten years by 34 percent to US-$ 800 billion, but only by 10 per cent. Working on the basis of a GDP figure of US-$ 600 billion, for the year 1996, the accumulated difference over the ten-year period amounts to US-$ 745 billion (in 1993 prices), i.e. Russia would sacrifice an average annual amount of national product in this reference period.

An economic upswing could materialise during the initial phase of armament, but this would be no more than a flash in the pan. State purchasing of armament goods in Russia would not lead to a fundamental stimulation of the economy, since free capacities (not only in the arms industry in the more narrow sense, but also in the upstream stages of production such as metallurgy, chemicals and electrical engineering) which could be put to profitable use are not available. The greater burden on the national product resulting from arms spending, therefore, would merely displace appropriation alternatives (of investments in civilian fields and in consumption) elsewhere. In other words: the economic conditions of the late Brezhnev era would recur under the conditions of the market economy.

Ways out of the Dilemma

Russia is involuntarily tempted to think in geopolitical dimensions due to the fact that there are enough states along its 20,000 km borders which it could perceive as a threat. It must bear in mind, however, that the resources which can be activated at present and in the medium term cannot suffice by far to create and sustain a corresponding military potential to avert all conceivable risks and at the same time finance an economic development. In view of the overall economic parameters a financially sustainable army could consist at most of three quarters of a million men and cost no more than US $-50 billion per annum (at current prices). This would be 6 per cent of a GDP to be expected in the medium term of US-$ 800 billion, which would correspond to the arms expenditure ratio of the USA.

An army of this size and the corresponding expenditure, however, could neither establish and operate a sufficient deterrence potential, for example, against a conventional attack by Chinese troops in Siberia nor an air force prepared for all eventualities. Furthermore, such a reduced military power could not guarantee the regulation of all conceivable conflicts in the southern CIS states. The search for alliance partners would probably also be unsuccessful, since some of the countries in question - India or Iraq - are hardly able to cope with their own conflicts and will not be keen on involvement in foreign policy adventures for the sake of Russian interests, whereas others - such as China - have regional interests of their own, which, in part, run contrary to those of Russia.

Russia is apparently unable, whether on the basis its own resources or through alliances with other individual countries, to achieve security against external threats. A way out of this security dilemma could be provided by collective arrangements, which, however, would have to extend far beyond the area of the CIS, the sphere of Russia's current activities in this respect.

In this context, Russia's relations with China are of key importance. Corresponding efforts would also have to be made, however, in western direction. For its part, the West should, in the light of its own interest in a Russia which prospers in the long run, take the (albeit imagined) Russian security dilemma seriously and work towards its solution by integrating Russian in one way or another into its security system. The significance of the style of the Western approach should not be underrated here.

A Russia, on the other hand, which tries to rely on its own resources with respect to its security and which, for the reasons outlined, pays the price of economic stagnation and, in the foreseeable future, asks for support from the West which it then uses indirectly to strengthen its military position would not be a pleasant vision for the future, but an all too familiar picture from the past.