Ben Aris in Moscow -

"If we do not take measures in the near future, the Russian Army will turn into the Pope's guard, which looks nice but is not actually dangerous. Do we want to turn into the Pope's guard?"

Yury Baluyevsky, deputy secretary of the Russian Security Council, put his finger on a problem in April that has irked the Kremlin for most of the last two decades: how can Russia return to superpower status unless it has the military muscle to back it up?

While Russia has agreed to cut its nuclear arsenal following the landmark Start II deal signed between Russian President Dmitry Medvedev and US President Barack Obama in Prague on April 8, it has launched a RUB13 trillion ($430bn) programme to complete re-equip its conventional forces between now and 2020. To put that into perspective: the Kremlin is proposing to spend 13 times more on its army than it will spend over the same period to rebuild the crumbling Soviet-era infrastructure.

The need to reform the army has become increasingly obvious. The government got a shock during the first Chechen war when the fabled Russian army was expelled from the republic by a few separatist rebels armed with little more than AK-47 rifles and grenade launchers. In the second Chechen war starting in 1999, the army didn't even bother to engage the rebels, preferring to park itself outside towns, which were then pounded to dust with heavy artillery.

The final ignominy was the poor showing the army put in during the eight-day Russo-Georgia war in August 2008. While the Russian army crushed the Georgian army by sheer weight of numbers, the Georgian forces still managed to bring down several advanced Russian fighter jets and put up more of a resistance on the ground than the Russian high command had anticipated.

Independent defence analyst Pavel Felgenhauer says reform is vital because the Russian army is in crisis, and faces a very different world from the one that the Soviet army on which it's based was built to deal with. "Russia is finding agreement with the West, but it needs a strong army to be taken seriously and to exert its influence in the CIS," he says.

Blueprint

The reform effort has been building slowly in recent years. The standing army was cut from 1.3m to 1m in 2008 and more recently the number of NCOs is being reduced by pensioning off those willing to go. On the flip side, those who stay will enjoy a big pay rise and new housing starting in 2012. But the changes really got going this February when Medvedev signed off on a new military doctrine to cover the next decade. The new blueprint marks a more assertive strategy: previously the military doctrine listed the main threats to Russia, but the new one also lists the "dangers" Russia faces.

"The listed dangers were specific and referred mainly to the West. First of all, the doctrine stated the danger that Nato posed, in particular by globalizing its endeavours and attempting to expand its military infrastructure closer to Russian borders, among others ways, by welcoming new members," wrote Marcel de Haas in a recent paper for the Russian Analytical Digest. "Clearly, this section referred to plans to include Georgia and-until the 2010 Presidential elections-Ukraine into the alliance."

This represents a new more aggressive military doctrine. Prime Minister Vladimir Putin went out of his way to point out in a speech in Munich in February 2007 that Nato had promised not to expand its forces towards Russian borders following the collapse of the Soviet Union and had broken that promise. "I think it is obvious that Nato expansion does not have any relation with the modernisation of the Alliance itself or with ensuring security in Europe. On the contrary, it represents a serious provocation that reduces the level of mutual trust," Putin told the delegates. "And we have the right to ask: against whom is this expansion intended? And what happened to the assurances our western partners made after the dissolution of the Warsaw Pact? Where are those declarations today? No one even remembers them."

Russia has not reacted to this expansion, but clearly the Kremlin's patience has run out. Russian President Dmitry Medvedev followed up in an interview with Izvestia in May saying, "another war on the scale of World War II is possible in the future."

The main thrust of the change is to completely re-equip all the armed forces and bring it back up to strength. Starting from this year, 10% of redundant arms will be replaced, rising to 70% by 2020. In terms of money, Putin said at the start of this year the government will spend $38.5bn on new planes, guns and tanks, which is a bit more than the state spent on upgrading the rail system last year - the arteries that carry goods around the country and at the centre of the infrastructure investment programme.

Still, Russia's military expenditures cannot be compared with those of Nato countries, Baluyevsky said. The US alone spends over $700bn a year on its armed forces. "The US accounts for 47% [for the global arms spend] and the other Nato countries for 21% of global military expenditures, which makes about 70% in aggregate, and Russia's military expenditures are incomparable with these," Baluyevsky said.

Shopping list

The government has drawn up a long shopping list for the next few years. This year alone it will order 27 jets, more than 50 helicopters, 40-50 new submarines, as well as a fleet of T-90 tanks and possibly the new Tiger-class T-95 "super tanks." According to Putin, over the next 10 years more than 1,500 new aircraft and helicopters will be delivered to the air force, along with a slew of other material that will set Russia's dilapidated military-industrial complex humming.

The end result should be a more effective fighting force. As the military has barely been touched since the fall of the Soviet Union, Vice Admiral Oleg Burtsev, first deputy chief of staff of the Russian Navy, told radio show Ekho Moskvy that the upgrade can skip over several generations of weapons and go straight to the most modern.

The goal of Russia's military spending is not just to upgrade its firepower; the investments are also an integral part of the president's modernisation programme. Russia remains a world leader in the production of high-tech military weapons, but the Kremlin has dropped a long-standing aversion to shopping abroad and recently has started buying weapons from its erstwhile enemies - not just because these weapons are better than Russia's (they are), but also because it wants to lift the technology to improve its own weapon systems.

China has been investing heavily in commercial laboratories in an effort to create new technologies, but most of Russia's R&D remains concentrated in the military-industrial complex. The military labs are still churning out world-class technologies like the T-50 fifth-generation fighter jet that made its debut in January, but little happens outside the complex. The idea is to pump money into defence labs and use these as a basis on which to build up technical expertise. To cut spending on military research would be to kill what little high-tech R&D is still happening. The upshot is Russia has swallowed its pride and is buying significant amounts of arms from abroad, most noticeably four Mistral helicopter carriers from France in a deal closed in April. "We have never had ships of this level. We believe that such high-technology hardware can be bought so as first to learn how to use it and then possibly even start manufacturing it on our own territory. We are focusing on this very aspect in holding negotiations with the French," Russian Defense Minister Anatoly Serdyukov said on Rossiya 24 news television channel after the deal was closed.

Russia is also in talks with other countries, cherry picking amongst their arms, such as a controversial deal to buy 1,000 Italian armoured vehicles from Iveco Defence Vehicles, which will put some Russian workers out of work.

Russia is actually already doing pretty well on the development front. The test flight of the new T-50 fifth-generation fighter jet makes Russia the only country in the world, apart from the US, to have an active fifth-generation fighter. Indeed, the T-50 was specifically developed to counter the US F-22 Raptor, which President Obama recently put on ice to cut costs as the government struggles to find money to cover its ballooning budget deficit.

And after the T-95 super tank debuts - probably at an Urals arms show this summer - Russia will be the first country to produce a fifth-generation main battle tank. Both the T-50 plane and the T-95 tanks are packed with sophisticated electronics, stealth capabilities and a lot more firepower. For example, the T-95 reportedly comes with a 152-mm smoothbore gun capable of firing guided missiles with a range of 6,000-7,000 metres that is remotely controlled, which will help protect the three-man crew cocooned in the body of the heavily armoured tank.

The T-50's maiden flight earlier this year showed that, "Russia is still a solid second in terms of defense technology," according to the Center for Analysis of Strategies and Technologies (CAST) defence think-tank.

Economic stimulus

And there is money involved. A lot of money. One of the first things Putin did on taking control in 2000 was to fire the heads of the state-owned arms export agency Rosoboronexport and put it under the direct control of the presidential office. Since then, Putin has become Russia's best arms salesman and exports have soared.

Russia exported about $3bn of arms in 2000, but that rose to over $8bn in 2009 and is comfortably on course to be $10bn this year, according to chief of the Federal Military-Technical Cooperation Service, Mikhail Dmitriyev. A third of this year's deals were already closed by the start of April and the order book is brimming with items. "The company's stock of orders exceeds $34bn, and today there exists preconditions for signing new big contracts in the near future, particularly with our Latin American partners," Rosoborobexport's analytical and planning department chief, Sergei Svechnikov, said in March, adding that air defence aircraft make up the core of Russia's export portfolio.

Arms exports have also become part of Russia's foreign policy; Putin has linked arms deals to energy and sell the two as a package to willing buyers in South America and the Middle East. Russia's two biggest clients remain China and India, and the Kremlin is now roping these partners into joint-venture deals to tie their economies more closely together. For example, India is partnering with Russia to jointly develop the T-50 fifth-generation fighter.

Despite the swelling order book, Russia's standing in the overall global arms trade has actually been falling; CAST says in real terms Russia's exports were flat in recent years and the sector needs to upgrade production if it wants to continue growing.

Still, Russia has moved up to become the second largest purveyor of weapons after the US - which accounts for half of the global arms business. Not bad considering that Russia spends a third of what the US does on arms every year. Yet as Felgenhauer points out, the bulk of Russian weapons exports are low-tech arms - many from former-Soviet stockpiles - which are sold to less-developed countries. At the same time, he notes that, "the export revenue is not being channelled back into R&D sufficiently."

Finally, there is a very pragmatic reason for keeping the army sweet. Russia remains a young democracy and popular dissent remains close to the surface. During the 1993 constitutional crisis when Yeltsin clashed with the communist-dominated Duma, it was General Alexander Lebed's decision to throw his tank division in on the side of the president that determined the outcome of what could have easily deteriorated into a civil war.

Although the army gets little attention, Putin was careful to always throw the armed forces a bone in each of his state of the nation speeches while president. More recently, the defence sector received over RUB93bn ($31bn) of support in 2009 during the global economic crisis, making it one of the largest recipients of state support during the worst of the crisis.

Whilst some may question the wisdom of that, Felgenhauer says that such reform towards a fully professional army plays well with the domestic political audience, which sees its sons called away to serve a year's national service in a military with a poor reputation for treatment of young cadets. "Compulsory service is an issue that affects people's lives very directly," he points out, "whereas the idea of a new battleship costing millions is rather abstract for most."

At the end of the programme, Russia's soldiers should be one of the world's most effective fighting forces, armed with more than the colourful pajamas and fancy penknives the Swiss Guard protecting the pope carry. "No matter how peace-loving we are, we must be ready to defend our country," Medvedev said at the start of May.