#14 - RW 265
Vremya Novostei
July 15, 2003
DEFENSE BUDGET SOLITAIRE
Defense spending to be raised by 12% in 2004
Author: Nikolai Poroskov
[from WPS Monitoring Agency, www.wps.ru/e_index.html]

ACCORDING TO THE FINANCE MINISTRY, DEFENSE SPENDING IN THE 2004 DRAFT BUDGET WILL BE INCREASED BY 46.94 BILLION RUBLES: TO A TOTAL OF 391 BILLION RUBLES OR 2.6% OF THE GDP. IT DOESN'T LOOK LIKE ANYTHING IS TO BE DONE ABOUT THE EXISTING IMBALANCE IN THE MAINTENANCE/REARMAMENT RATIO.

According to the Finance Ministry, defense spending in the 2004 draft budget will be increased by 46.94 billion rubles: to a total of 391 billion rubles or 2.6% of the GDP. The ratio remains unchanged from 2003, but the growth of the budget itself accounts for additional funding for national defense. A source in the Finance Ministry says that the planned increase concurs with the decisions of the Security Council meeting on August 11, 2000, but special emphasis will have to be made on the social sphere.

Military wages in 2005 are supposed to be 40% higher than in 2000. The process is underway. Salaries are to be increased by 11% in 2004. Parameters of the military budget are supposed to make the planned pay-rise possible.

It doesn't look like anything is to be done about the existing imbalance in the maintenance/rearmament ratio in 2004. Maintenance of the Armed Forces will consume 60% of the military budget, and the remaining 40% will be spent on everything else. This situation is attributed to several reasons. According to Senior Deputy Chief of the General Staff Yuri Baluyevsky, the process of reduction of the Armed Forces was completed this summer. This means a reduction in the sums saved by disbanding units and reduction of the Army and Navy. Along with that, more money has to be spent on numerous allocations for redundant servicemen as the law requires.

The Military Reforms article of the military budget will receive 17.3 billion rubles (more than in the 2003 budget). Of the whole sum, 8.6 billion rubles is to be spent on the federal program of transition to service by contract.

Alexander Piskunov of the Auditing Commission: Finances for the state program of armaments may become a problem, I believe. The government promised to compensate for the improper funding of the program this year in the 2004 military budget. I do not think it will be able to keep its promise in full. It will therefore require a revision of priorities and target dates. Reorganization of the military-industrial complex is not making the problem any easier to handle.

We have to make the financial sources related to arms exports and the use of intellectual property more effective. We have to introduce new methods of budgeting and contract allocation. According to the Economic Development Ministry, their use will make the whole system 30% more efficient. Sales of old military hardware are another source. It is possible to order new weapons and military hardware with the money thus obtained.

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