How does Russia's military spending compare to Europe?

How big a military power is Russia actually? The IISS and the Financial Times recently claimed that Russia's military spending is bigger than all of Europe's combined. Others say that Russia is a mediocre power with an economic potential comparable to Italy. Which is true?

I dissect the numbers and explain the significance of purchasing power when comparing defense spending. On one hand, the IISS numbers are problematic, but on the other hand, Europe is still in deep trouble and needs to increase defense spending dramatically.