Nagorno-Karabakh War-1 - savunmaanaliz Defense Expenditures
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Nagorno-Karabakh War-1

Azerbaijan-Armenia Military Expenditures

Unlike the proxy wars in the 21st century, the 2020 Nagorno-Karabakh war was fought between two equivalent nation states. It was a conventional and limited war, which lasted 44 days between September 27 and November 10, 2020. From this point of view, the Nagorno-Karabakh war deserves much closer examination. We can analyze it in three parts: crisis phase, war and post-war phase. We will examine military expenditures and procurement country origins of military equipment in this article in order to evaluate the military readiness level of both countries before the war.

Azerbaijan and Armenia Country Information

Map 1 Physical Map of the South Caucasus (Courtesy of the Turkish General Directorate of Mapping)

Azerbaijan and Armenia are two neighboring countries in the South Caucasus, right at the intersection of Western Asia and Eastern Europe. The Caspian Sea borders Azerbaijan in the east, Russia in the north, Georgia in the northwest, Armenia in the west and Iran in the south. Turkey borders Armenia in the west, Georgia in the north, the Lachin Corridor in the east (where Azerbaijan and Russian peacekeepers are located), and the Nakhchivan Autonomous Republic (which is a part of Azerbaijan) and Iran in the south. Armenia’s total border length is 1,570 km. of which 996 km is with Azerbaijan. The population of Azerbaijan is 10,282,283, and the population of Armenia is 3,011,609. The population of Armenia is decreasing by 0.35%. The birth rate is very low, and it emigrates. Unemployment in the 15-24 age group was measured as 32.6% in Armenia and 12.4% in Azerbaijan.

Azerbaijan and Armenia Economy

Armenia has a weak economy since it is a landlocked state in isolation and has few natural resources. It joined the Russian-led Eurasian Economic Union in January 2015. Armenia is almost entirely dependent on Russia. It has limited natural resources and production is low.

The main reason for Azerbaijan’s high economic growth is high energy exports and some non-export sectors. Azerbaijan’s energy resources strengthen the country’s economy. Oil and Natural Gas accounts for 90% of its exports.

The GDP per capita in Armenia is 4,267.5 US dollars, and 4,214.3 US dollars in Azerbaijan, according to World Bank  2020 data. Although the GDP of Azerbaijan is much higher, the per capita income is almost equal between the two countries because of Azerbaijan’s larger population. The GDP per capita change by year is shown in Chart-1. Citizens of both countries are living with an income far below the European average.

Chart-1 1990-2020 GDP per capita (current US$) – Armenia, Azerbaijan.

The GDP of Armenia is 12,645,459.21 US dollars, and the Azerbaijani GDP is 42,607,176.47 US dollars. It is 3.3 times higher. Chart 2 shows the change in GDP of both countries between 1990 and 2020.

Chart-2 1990-2020 GDP (current US$) – Armenia, Azerbaijan.

The Bonn International Center for Conversion (BICC)’s Global Militarization Index presents the relative weight and importance of a country’s military apparatus in relation to its society as a whole every year. According to BICC Index, Armenia was the second most militarized country in the world, after Israel, among 151 countries in 2020. Azerbaijan was 16th on the same list.  

Nagorno-Karabakh region continues to maintain militarization in the South Caucasus at a top level. According to this index, the people of both countries support their country’s budget allocation for military needs by reducing other public expenditures, especially health expenditures, because of the insecurity they are in.

Global Militarization Index
CountryMilitarization ValueRank
Table 1 BICC Militarization Index for 2020.

According to 2018 World Bank data, the number of Armenian military personnel is 48,800 and the number of Azerbaijan military personnel is 81,950. Chart 3 shows the number of military personnel between 1990 and 2018. According to the Military Balance 2020 report of the International Institute for Strategic Studies, there has been a decrease in the number of personnel of both countries. The number of personnel in Armenia has decreased to 44,800 and Azerbaijan’s has decreased to 66,950. Military expenditure per personnel is 230 US dollars in Azerbaijan and 185 US dollars in Armenia.

Chart-3 1990-2018 Change in the Number of Military Personnel in Azerbaijan-Armenia.

I used World Bank data while examining military expenditures for both countries. The ratio of military expenditures to GDP in 2019 was 4.9% for Armenia and 4.0% for Azerbaijan. The world average of this rate is 2.2%. The required military expenditures of NATO countries is  2.0%. It was 1.2% in EU countries in 2019. Both countries spent about twice the world average on military spending. This situation is shown in Chart 4.

Chart-4 1992-2019 Ratio of Military Expenditures to GDP, Azerbaijan-Armenia.

In terms of military expenditure, Armenia spent 673,280,840 US dollars and Azerbaijan 1,854,235,290 US dollars in 2019. Azerbaijan allocated three times more budget for military expenditures than Armenia. Chart-5 shows Azerbaijan and Armenia military expenditures. When Chart-5 is examined, the gap between the two countries in military expenditures started to open in 2000 and peaked by up to nine times between 2011 and 2014. The cumulative effect of this situation was clearly reflected in the force structure of the Azerbaijani Armed Forces and this positive effect was clearly seen in the 2020 Karabakh war.

In addition, when we look at the share of military expenditures in total government expenditures, it was 19.8% in Armenia and 11.3% in Azerbaijan for 2019. The world average of this rate is 6.24% on the same year. The governments of both countries have spent a significant proportion of their resources on military needs. This situation has caused disruptions in other services, especially education and health. The parliament approved a mandatory reduction of central education expenditures in Armenia’s budget negotiations for 2021.

Chart 5 1992-2019 Azerbaijan-Armenia Military Expenditures (US Dollars).

Strategic Partnerships and Defense Acquisitions

Both countries have very close relations with Russia as part of the former USSR. The military technical and logistic infrastructure of both countries is compatible with Russian weapons and systems. Despite this being the case, Armenia’s dependence on Russia is at a much higher level. Russia has a commitment to protect Armenia within the framework of the Collective Security Treaty Organization (CSTO). Azerbaijan is not a member of CSTO.

According to SIPRI data, 95% of Armenia’s arms purchases are from Russia. Some of the other purchases are second-hand Russian systems from other countries. In addition, Russia provides grant aid to Armenia. Details of these purchases are given in the list below.

While a similar situation is valid in Azerbaijan, this situation is transforming. According to SIPRI data, 80% of purchases from Azerbaijan were from Russia between 2009-2013, while this rate decreased to 31% between 2015-2019. Turkey and Israel share Russia’s dwindling share of the pie. Details of the systems supplied by Azerbaijan from these three countries are listed below. While Azerbaijan reduces its dependence on Russia by increasing its resource diversity, Armenia is becoming more dependent.

According to SIPRI commercial records, the weapons and systems that Armenia and Azerbaijan purchased from the supplier countries are as follows. In addition to Russia, Turkey and Israel, other countries like Ukraine, Belarus, France, Spain, USA, South Africa and Bulgaria are also supplier countries to Azerbaijan.

Systems Procured by Armenia from Russia:

2K11 Krug SAM system, 1993-1994, Second-hand; illegal transfer
349 3M8M1 SAM, 1993-1994 , Second-hand; illegal transfer
40 9M33 SAM, 1993-1994, Second-hand; illegal transfer
4 BRDM-2 Tank destroyer, 1995-1996, Second-hand; 9P148 version with 9M14
945 Fagot Anti-tank missile,1993-1996, Second-hand; illegal transfer
84 T-72 Tank ,1994-1996, Second-hand; illegal transfer
8 9P117/Scud-B TEL Mobile SSM launcher, 1995-1996, Second-hand; illegal transfer
18 BM-21 Grad 122mm Self-propelled MRL, 1995-1996, Ex-Russian; illegal transfer
50 BMP-2 IFV, 1995-1996, second-hand; illegal transfer
18 D-1 152mm Towed gun, 1995-1996, Second-hand; illegal transfer
18 D-20 152mm Towed gun, 1995-1996, Second-hand; illegal transfer
36 D-30 122mm Towed gun, 1995-1996, Second-hand; illegal transfer
200 Igla Portable SAM, 1995-1996, Transfer also includes 40 launchers
24 R-17 Elbrus SSM, 1995-1996, Second-hand; illegal transfer
2 Il-76M Transport aircraft, 2004, Probably second-hand; CSTO
144 5V55U SAM, 2009-2010, Second-hand
2 S-300PS SAM system, 2009-2010, Second-hand
10 Tigr APV, 2010-2011, Possibly for police
200 Igla-S Portable SAM, 2012, Designation uncertain
25 9M723 SSM, 2016, For Iskander SSM system
4 9P78 Iskander SSM TEL, 2013-2016
1 T-90S Tank 2014 2016 1 Gift as price for Armenian tank crew 6 BM-9A52 Smerch Self-propelled MRL, 2015- 2016-2017
200 Igla-S Portable SAM, 2015-2016
200 Verba Portable SAM, 2016-2017
100 9M133 Kornet Anti-tank missile, 2017, Kornet-E version
50 9M338 SAM, 2018-2019
2 Tor-M1 Mobile SAM system, 2018-2019, Tor-M2KM version
4 Su-30K FGA aircraft, 2019, $120 m deal; Su-30SM version

Systems Procured by Azerbaijan from Russia:

(62) T-72M1 Tank, 2006-2007, Probably second-hand
(70) BTR-80A IFV, 2007-2010
(100) 9M133 Kornet Anti-tank missile, 2009-2010
(200) 48N6 SAM, 2010-2011, (200) S-300PMU-2 (SA-20B) SAM system
(24) Mi-35M Combat helicopter, 2010, 2011-2014, $360 m deal; Mi-35M version
(66) Mi-8MT/Mi-17 Transport helicopter, 2010-2015, Incl 20 for border guard and 6 for police
(2) S-300PMU2 Favorit SAM system, 2010-2011, $300 m deal
(18) 2S19 MSTA-S 152mm Self-propelled gun, 2012-2014
(18) 2S31 Vena Self-propelled mortar, 2012-2014
(1000) Bastion Anti-tank missile, 2013-2015, For BMP-3 IFV
(18) BM-9A52 Smerch Self-propelled MRL, 2012-2014
(118) BMP-3 IFV, 2013-2015, BMP-3M version
(1000) Igla-S Portable SAM, 2012-2013, Deal incl also 200 launchers
(100) T-90S Tank, 2013-2015 100
(36) TOS-1 Self-propelled MRL, 2013-2017
(100) 9M317 SAM, 2012-2013-2014, For Buk-MB (SA-11 or SA-17) SAM
(100) 9M38/SA-11 SAM, 2012-2013-2014, For Buk-MB (SA-11 or SA-17) SAM
(76) BTR-82A IFV, 2017-2018
(800) 9M123/AT-15 Anti-tank missile, 2017-2018, For 24 Khrizantema-S tank destroyers
(24) Khrizantema Tank destroyer, 2017-2018

Systems Procured by Azerbaijan from Turkey:

(1) AB-25 Patrol craft, 2000, Second-hand
(35) Cobra APV, 2010-2011, Part of $21 m or $30 m deal
(37) Shorland APV, 2010-2011, Part of $21 m or $30 m deal
(30) T-107 107mm Self-propelled MRL, 2011-2013, Part of $244 m deal
(40) T-122/300 Self-propelled MRL, 2012-2014, Part of $244 m deal
(20) T-300 300mm Self-propelled MRL, 2015-2016, Part of $244 m deal
(108) TRG-300 300mm Guided rocket, 2016-2017, For T-300 and or T-122/300 MRL
(10) SOM ASM, 2018-2019, SOM-B1 version
(5) Bayraktar TB-2 Armed UAV, 2020 (5)
(50) MAM-L Guided bomb, 2020, For Bayraktar UAVs

Systems Procured by Azerbaijan from Israel:

(10) Aerostar UAV, 2011-2012, Incl production in Azerbaijan
(6) OPV-62 FAC, 2015-2018
(100) Orbiter-1K Loitering munition, 2016-2020, Assembly in Azerbaijan as Zerba
(50) EXTRA Guided rocket/SSM, 2008-2009, For Lynx MRL
(6) Lynx Self-propelled MRL, 2006, Dolu-1, Leysan and Shimsek
(4) Aerostar UAV, 2007-2008
(5) ATMOS-2000 155mm Self-propelled gun, 2008-2010
(10) CARDOM 120mm Self-propelled mortar, 2010-2011
(10) Hermes-450 UAV, 2011-2013
(100) Spike-MR/LR Anti-tank missile, 2009-2010, Spike-LR version
(10) Sufa APV, 2009-2010
(40) Barak-ER SAM, 2016, For Barak-MX SAM system
(40) Barak-LRAD SAM, 2016, For Barak-MX SAM system
(1) Barak-MX SAM system, 2016, Part of $1.6 b deal
(5) Heron UAV, 2013, Part of $1.6 b deal
(5) Searcher UAV, 2013, Part of $1.6 b deal
(100) LAHAT Anti-tank missile, 2015-2016
(6) Shaldag FAC, 2014-2015, Assembled or produced in Azerbaijan
(250) Spike-NLOS SSM/ASM, 2014-2018, For OPV-62 and Shaldag FAC
(2) EL/M-2288 AD-STAR Air search radar, 2014-2016
(100) Harop Loitering munition, 2015-2018
(100) SandCat APV, 2016-2018
(10) SandCat Spike-LR SSM launcher, 2016
(250) Spike-MR/LR Anti-tank missile, 2016, Spike-LR for SandCar tank destroyers
(10) Orbiter-3 UAV 2016 2016-2017 (10) Orbiter-3 version
(250) SkyStriker Loitering munition, 2018-2020
(2) Hermes-900 UAV, 2017-2018
(50) LORA SSM, 2018
(4) LORA Self-propelled MRL, 2018
(10) Sandcat SPEAR 120mm Self-propelled mortar, 2018
(100) Spike-NLOS SSM/ASM, 2019-2020, Incl for Mi-17 helicopters and SandCat


Since the beginning of 2000s and especially after 2011, Azerbaijan has regularly increased the share it allocates from its budget for military expenditures. This situation peaked in the period of 2011-2014. Azerbaijan has allocated nine times the budget of Armenia for the modernization of the force structure in the same period. As it is clearly seen in the previous section, the modern systems and especially the Armed-UAVs procured from Israel and Turkey, changed the fate of the Nagorno-Karabakh war.

While Armenia supplies most of the systems in its inventory from Russia; Azerbaijan has increased its resource diversity by supplying them mainly from Russia, Turkey and Israel. Looking at the performance in the Nagorno-Karabakh war, it is seen that Azerbaijan has used its budget better and has a more modern force structure.

Both countries lost their military weapons and systems in this war. After the war, we expect that both armies will go to new supplies in order to compensate for their losses and strengthen their weaknesses.

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