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Russia’s federal dudget in deficit again

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Russia’s federal budget has returned to a deficit in 2024 due to increased spending, with the deficit reaching 389 billion roubles in October.

The Russian Finance Ministry announced that the federal budget returned to deficit in the first ten months of 2024, with expenditures exceeding revenues by 220 billion roubles—or 0.1% of gross domestic product (GDP).

According to preliminary data from the ministry, the budget showed a surplus of 169 billion roubles from January to September. Thus, the October budget deficit may have reached 389 billion roubles.

Despite the current deficit, this year’s budget deficit remains lower than in the same period last year, when it reached 1.05 trillion roubles (0.6% of GDP) due to a decline in Russia’s energy revenues following Western sanctions imposed in response to Moscow’s military intervention in Ukraine.

Last month, budget revenues rose by around 4% compared with September, reaching levels similar to October 2023. Ten-month revenues increased 28.4% year-on-year, totaling 29.67 trillion roubles.

Non-oil and gas revenues grew 26.6% year-on-year to 20.13 trillion roubles, while oil and gas revenues climbed 32.3% year-on-year to 9.54 trillion roubles.

The monthly expenditure also continued its upward trend. According to the Ministry of Finance, spending in October increased 23.3% month-on-month and 26.8% year-on-year.

From January to October, the Finance Ministry spent 29.89 trillion roubles, a 23.7% rise from 24.16 trillion roubles spent in the same period last year.

This autumn, authorities approved an increase in spending above the planned 2024 budget rule from 1.3 trillion roubles to 1.5 trillion roubles.

Consequently, the Finance Ministry now forecasts total budget spending for 2024 to reach 39.41 trillion roubles—7.5% higher than initially planned and 21.8% more than last year.

If this forecast holds, an additional 9.52 trillion roubles will be spent in the remaining two months of the year, comprising nearly a quarter of the annual target.

Following this extra spending, the Russian budget is projected to close 2024 with a deficit of 3 trillion roubles or 2% of GDP, marking the third consecutive year in deficit.

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INTERVIEW

Russian expert: “Kremlin looks forward to Trump’s return to the White House”

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We asked 6 questions to Eduard Galimullin, an expert at the Centre for Comprehensive European and International Studies (CCEIS) at the HSE (Higher School of Economics) University, one of Russia’s most prestigious educational institutions. In our interview on the impact of the Trump administration on the war in Ukraine, Galimullin drew attention to ‘Trump’s unpredictability’. Galimullin believes that the Kremlin is cautiously optimistic and emphasised that the Kremlin has not yet given a definitive response to actions that violate Russia’s red lines.

The US and the UK have authorised Ukraine to use weapons capable of delivering deep strikes against Russia. This step came on the eve of the change of power in the United States. How do you think this step will affect the course of the war?

I think the temptation to wait for the switch of the U.S. leadership is quite strong. Although the Kremlin says that the U.S. course of containing Russia will remain unchanged no matter who is occupying the White House, I think there is still some hope for Trump’s return. Especially given the intentions to end the conflict that he has publicly voiced.

Therefore, I expect that the Western countries’ authorization for Kyiv to use missiles to strike Russian territory will not fundamentally affect the course of the war. As we can see, Moscow still has various options for a non-nuclear response. The situation on the battlefield will also not change significantly for such a short time.

However, a dramatic escalation is possible if, for example, the use of Western long-range missiles leads to mass civilian casualties. But I don’t think Kiev will be keen to do as much damage to Russia as possible in the shortest possible time. Yes, so far it seems that Trump is rather unlucky for Ukraine. But the paradox is that both Moscow and Kyiv have certain hopes for him. This is because he is unpredictable.

The US and NATO in general are constantly eroding Russia’s ‘red lines’ in Ukraine. How far do you think Russia will show ‘strategic patience’?

Russia has so far taken a rather responsible approach to the issue of using nuclear weapons, unwilling to allow the escalation of the crisis into a conflict between Russia and NATO. However, the U.S. and many European countries interpret this as a weakness, continuing to push the Kremlin to escalate. Yet it should be obvious to an outside observer that military provocations against a nuclear power are extremely dangerous. Diplomatic measures to resolve the conflict are necessary. One can jest at Russia’s “red lines,” but the fact is that when a decisive response is forthcoming, there will be no reason for joking.

We can say that the Ukrainian army is a continuation of the Soviet military tradition. Do you think the process of adapting this army to NATO systems is complete? Or are these modern Western systems being used directly by Western military experts and personnel. Does the Russian side have any precise information or intelligence on this? What is your opinion?

Unfortunately, since I am not a military expert, I cannot provide precise information on this matter. However, the media have already repeatedly leaked information that the Ukrainian army is once again returning to the Soviet military tradition in terms of battlefield planning. I think that this is true. As for Western weapons, it is at least known that Ukrainian soldiers are trained to operate them in Western countries. However, practice has shown that these weapons so far have not had any significant effect on the course of the conflict.

Do you see a risk of the conflict in Ukraine turning into an inter-state war in Europe? ‘We believe that we have the right to use our weapons against the military targets of countries that allow their weapons to be used against our facilities,’ Putin said. Can this be directly interpreted as meaning that Western states could also be targets of Russia?

I think that’s the way it is. The question of to what extent are Western countries involved in the conflict has been raised almost from the very beginning of the conflict. Starting at what point is it possible to claim that the U.S. and Europe are directly involved in the war with Russia? Of course, the most obvious answer is to send ground troops to Ukraine. But so far that has not happened.

North Korean troops are alleged to have participated in the war in favour of Russia. Is it too early to say that the polarisation created by the Ukraine war has triggered a global military bloc? Or is such a trend gaining strength?

I do not think that the Russian-Ukrainian conflict, even if its hot stage lasts for a few more years, will divide the world into opposing blocs. We see that even within European countries there is no unity on the issue of confrontation with Russia. On the other hand, it is unlikely that India or Latin American countries will take sides.  In my opinion, the technological rivalry between Washington and Beijing will probably polarize the world into two opposing blocs.

Are there any expectations in Russia from the next Trump administration? Have the conditions put forward by Russia for the start of the dialogue and peace process been met?

I think that definitely, the Kremlin looks forward to Trump’s return to the White House, although it has little hope for a shift in U.S. policy. Trump’s figure is extremely contradictory. On the one hand, he intends to end the conflict as soon as possible. On the other hand, he is unpredictable, and facing the first difficulties in organizing the negotiation process, he may take tough measures to accelerate escalation.

Regarding the conditions for dialogue, Russia’s demands, such as recognition of annexed territories and lifting sanctions, have not been met. These remain major sticking points that complicate any prospect of meaningful negotiations under the current geopolitical climate.

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RUSSIA

What does Russia’s update of its nuclear doctrine mean?

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Russia has updated its nuclear deterrence policy, defining threats to the security of Belarus as a potential justification for the use of nuclear weapons. While experts argue that these changes are largely declaratory, they also suggest that the timing of this update may be linked to U.S. missile support for Ukraine.

Russian President Vladimir Putin approved the amendments to the doctrinal document entitled Fundamentals of the State Policy of the Russian Federation in the Field of Nuclear Deterrence. The announcement was made during a meeting on 25 September 2024, where Putin revealed the changes to Russia’s nuclear doctrine.

In June 2024, Deputy Foreign Minister Sergei Ryabkov hinted at the need for an update, citing lessons learned from military operations. The new text, in line with Putin’s directives, introduces significant changes to the conditions under which nuclear weapons can be used:

Nuclear retaliation is now justified in cases where critical threats arise to the security of not only Russia but also Belarus.

The updated doctrine expands the scope of threats to include cruise missiles, unmanned aerial vehicles (UAVs), hypersonic weapons, and other aerospace attack systems. Previously, the scope was limited to ballistic missile attacks.

The doctrine highlights the importance of continuous updates to adapt to evolving security conditions.

When asked whether the publication of this doctrine was connected to the U.S. decision to send ATACMS missiles to Ukraine, Kremlin spokesperson Dmitry Peskov dismissed the idea of coincidence, stating that the document was published “on time.”

Peskov emphasized a critical new provision: If a non-nuclear state attacks Russia with the backing of a nuclear-armed state, it will be treated as a joint nuclear attack. This underscores Russia’s heightened sensitivity to Western support for Ukraine, especially in light of escalating tensions with NATO.

Several experts have weighed in on the implications of the updated nuclear doctrine:

Alexander Yermakov, a specialist at the Russian International Affairs Council (RIAC), noted that the changes largely clarify existing provisions. For instance, the scope of retaliation has expanded to include drones and cruise missiles, whereas previous documents only referred to ballistic missile attacks.

According to Yermakov, the timing of the doctrine could be a strategic response to recent U.S. military aid to Ukraine: “These changes were announced earlier. However, in light of recent developments, they were published to remind of the risks of possible escalation.”

Dmitry Stefanovic, an expert from the Centre for International Security at the Institute of World Economy and International Relations, highlighted that the new doctrine reflects global nuclear trends.

Stefanovic noted that some countries have increased their arsenals, new nuclear-weapon states have emerged, and the importance of the nuclear factor has increased in recent years.

The expert added that the doctrine contains elements that strengthen nuclear cooperation with Belarus.

“The updated document further clarifies the issue of the ‘nuclear threshold’ – the necessary conditions for the use of nuclear weapons. This is no cause for relief, either for Russia or its rivals. If the risk of direct confrontation with the US and NATO remains, a scenario of rapid nuclear escalation is always possible,” Stefanovic said.

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RUSSIA

U.S. rehearses nuclear strike on Russian border

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NATO’s Joint Air Forces Command has announced that the United States’ B-52H Stratofortress strategic bombers recently conducted a training bombing mission at the Cudgel range near Kaliningrad Oblast.

The exercise was coordinated with Italian and German fighter jets, demonstrating NATO’s operational cooperation. It involved dropping laser-guided bombs from an altitude of six kilometers as part of the Vanguard Merlin exercise, a tactical program organized by U.S. rotational units in Europe.

The deployment of B-52 bombers to Europe is described by NATO as a routine measure aimed at “protecting allies and deterring potential threats.”

In early November, the U.S. Air Force stationed four B-52 aircraft at Mildenhall Air Base in the UK. Since their arrival, the bombers have flown over Finland, Sweden, the North Sea, and Lithuania, expanding NATO’s aerial presence in the region.

On 15 November, The Wall Street Journal (WSJ) reported, citing sources within President Joe Biden’s administration, that the United States plans to increase its deployed nuclear warheads in response to growing threats from Russia, China, and North Korea.

The report revealed that the White House had previously drafted a classified directive to prepare for potential simultaneous conflicts with Moscow, Beijing, and Pyongyang. While the strategy emphasizes the development of non-nuclear deterrence, it also considers enhancing nuclear capabilities.

These proposals are currently under evaluation by the Pentagon, with final decisions expected from the incoming administration of President-elect Donald Trump.

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