Military Spending by Russia's Neighbours

The Mongolian Option & Understanding European and Asian Divergences

Can a landlocked, democratic state sharing a long border with Russia manage its security with a minuscule defence budget? The short answer is yes, it can.

Conventional wisdom in Western countries is that if you are a neighbour of Russia, you need to spend a lot on your military in order to be secure. However, military spending by Russia’s neighbours shows a major dissimilarity between Moscow’s European and Asian neighbours.

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*The chart includes all countries that border Russia except for North Korea (data is not available) and Ukraine, whose military spending is not comparable due to massive foreign support and economic decline.

Major observation: Russia’s Asian neighbours have reduced military spending as a percentage of GDP between 1999 and 2023 while its European neighbours have ramped up spending the most.

This holds true both as a percentage of GDP as well as relative change.

In fact, the closer an Asian country is to Russia, the less it spends on its armed forces.

In the case of the former Soviet republics in Central Asian, the increase in military spending can be easily explained by regional (i.e. non-Russian) tensions as well as their relatively low GDPs. As a news article by Voice of America reports:

Tense relations with neighboring Tajikistan prompted Kyrgyzstan’s government to start paying more attention to the military, with a 2023 Kyrgyz Defense Ministry military doctrine calling the threat level posed by Kyrgyz-Tajik border tension significant.

That tension led to armed conflicts between the countries in April 2021 and September 2022, together causing the deaths of civilians and displacement of thousands of people.

The sudden spike in spending beginning in 2021 in Kyrgyzstan confirms this trend:

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Meanwhile, for NATO’s European members proximity to Russia predicts higher military spending.

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So this raises a question: who is actually less secure, Russia’s European or Asian neighbours?

By most conventional metrics, one would have assumed that the Asian countries are liable to being more insecure.

Yet, there is the Mongolian Option.

The country has a population density of 2 people per square kilometre, is completely surrounded (and landlocked) by China and Russia, the overwhelming majority of its energy needs are met through Russian imports while having the world’s coldest capital city, and the country lacks a military alliance with any foreign state.

Contrast this with Finland, one of Europe’s more sparsely populated countries. Its population density stands at 19 per square kilometre. Meanwhile, Estonia’s is 32 people per square kilometre while Poland stands at 125 people! None are landlocked, instead having land and maritime borders with treaty allies while being essentially entirely non-reliant on Russian energy and having much stronger economies.

Western political leaders have often framed the security challenge in Eastern Europe as being a struggle between “democracy and autocracy.” However, even by this metric Mongolia outperforms several of NATO’s new members. If we rely on the index by the US government-funded organisation Freedom House (hardly a friend of Russia), then we see that Mongolia scored higher in terms of than Albania, Bulgaria, Croatia, Hungary, North Macedonia, Poland, and Romania.

Part of Mongolia’s success can be attributed to its function as a buffer state between Russia and China. Combined with an absence of a foreign military alliance (like NATO) to complicate things, there was a natural decline in threat perception.

Kazakhstan (population density 8 people per square kilometre) spends a mere 0.5% of GDP on its military, which is even lower than Mongolia at 0.6%. Even NATO’s lowest spender, Spain, has expenditures at more than double (1.28%) despite being one of the most militarily secure countries in Eurasia and a relatively big arms producer itself.

Furthermore, Mongolia and Kazakhstan (along with all former Soviet republics in Central Asia) have declared themselves part of a nuclear weapon-free zone despite being surrounded by nuclear-armed states.

The low Kazakh, Mongolian, and even Chinese expenditure levels are even more remarkable when you consider the fact that they are on average poorer on a per capita basis than Western countries, which would lead one to assume that they would have a higher percentage of GDP going to the military. Finland, the Baltic republics, and Poland all spend between 2.41% and 4.12% of GDP while having much higher GDPs per capita.

In fact, the countries with the highest military spending as a percentage of GDP can divided into the following categories:

• Countries at war or recently been at war (e.g. Armenia, Azerbaijan)

• Wealthy Middle Eastern countries (e.g. Saudi Arabia, Qatar, and Kuwait)*

• Military-led states (e.g. Algeria, Myanmar)

• Perennial big spenders (e.g. the United States, Israel, and Greece)

• Poor states, often suffering from conflict or broader regional instability (e.g. South Sudan, Lebanon, and Jordan)

*A lot of the expenditures by Gulf countries go to buying extremely expensive high-tech Western weaponry.

Of course, exceptions exist. Nevertheless, the countries on the list tend to be either very wealthy (i.e. Gulf monarchies) or poor or developing countries.

Many countries that spend between 2% and 3% on their militaries are located in conflict-affected areas that are poverty-stricken or in Eastern Europe (plus the United Kingdom and France).

Russia’s Asian neighbours have managed relations by embracing multilateralism that does not fundamentally seek to shut the world’s largest country out. Some of the organisations include:

• Eurasian Economic Union

• Commonwealth of Independent States

• Shanghai Cooperation Organisation

• BRICS+ (as partner members)

• Belt and Road Initiative

• Collective Security Treaty Organization

This stands in contrast to the ways Russia’s European neighbours have sought to pursue economic and security cooperation, which have primarily (if not entirely) been grounded in organisations like the European Union or NATO, which fundamentally seek to exclude the Russian Federation.

Meanwhile, the European Union has now committed itself to spending 800 billion euros on building up their military forces while also discussing loosening fiscal rules in order to enable even further military spending.

Instead of focusing on military spending and seeking to win an arms race with the Russian Federation (whose military industries have grown significantly in response to Western policies relating to Ukraine), Eastern European leaders should ask themselves if it is possible for them to have better ties with their giant neighbour in the same way that the former Soviet republics in Central Asia have managed.

If a Mongolian Option exists, then in the long run it will provide more security and be a lot cheaper.