#13 - RW 270
Nezavisimaya Gazeta
August 20, 2003
FINANCIAL MILITARISM
Draft budget for 2004 gives priority to security structures
[from WPS Monitoring Agency, www.wps.ru/e_index.html]

MIKHAIL ZADORNOV ANNOUNCED ON AUGUST 19: "THE PRIORITIES OF THE DRAFT 2004 BUDGET ARE IN FAVOR OF SECURITY STRUCTURES, TO THE DETRIMENT OF THE SOCIAL SPHERE." HOWEVER, HE DOES NOT THINK THIS FACT WILL CONSIDERABLY AFFECT THE SITUATION IN RUSSIA NEXT YEAR.

Deputy Chairman of the Duma Budget Committee Mikhail Mikhailovich Zadornov announced on August 19, "The priorities of the draft 2004 budget are in favor of security structures, to the detriment of the social sphere." He reported that spending on national defense in 2004 will be increased from 345 billion rubles to 412 billion rubles. The share of "security" items in the budget will increase from 25% to 27.2%. Zadornov told us about the consequences this sort of budget policy will have.

Question: Which items in the military budget have actually increased?

Mikhail Zadornov: It is too early to discuss military spending in detail now, since later we'll get the statement of the secret part of the budget that determines defense spending in more detail. Then we'll be able to talk about the structure of the defense budget. And now we can handle only general figures.

Mikhail Zadornov: Which items have suffered most of all because of the shift of the draft budget in favor of defense?

Mikhail Zadornov: First of all, it is the social sector in general that has suffered. Spending on this sector has been reduced by five billion rubles compared to the government's plans in July. Besides, the draft budget proposes less spending than the 2003 budget on such items as investment, industry in general, development of rural areas, transportation, telecommunications, support of media, the military reforms, and destruction of weapons, although some corrections are still possible until August 25.

Question: How will it affect the situation in the country if the security slant remains in the budget?

Mikhail Zadornov: There will be no serious outcomes within one year.

Question: And what if it becomes a trend?

Mikhail Zadornov: It is too early to talk about a trend. But it is clear that the basic social transfers will keep unchanged in the near future. Thus, children's allowances will still be at the level of 70 rubles per month, although there have been proposals at least to increase allowances for the second child in the family. Student scholarships will be increased up to 400 rubles beginning from September 1, but they will not change next year. There will be indexation of pensions, but, according to calculations of the Pension Fund, it won't be more than 5-7% larger than the tempo of inflation. Thus, security structures are the priority of the government for 2004. However, education is another priority, and I support this priority as a deputy.

Question: Do you think the draft budget will be adopted in its current edition?

Mikhail Zadornov: A budget is a political document. It is known that last week, not only the government but also the president invited leaders of the centrist factions, the so-called "four", for consultations, and the latter promised to support the budget.

Question: Does it mean that the draft budget will be adopted in any edition?

Mikhail Zadornov: So far, only positions of the four centrist factions are known. It is clear that their support provides the support of the Duma majority, since they comprise almost 260 votes. However, not everything is clear about these factions too. For instance, such factions as Russian Regions and People's Deputy are included in these four as well, and these factions, in turn, comprise single-mandate deputies. I know for sure that about ten regions will seriously suffer from changes of the tax system next year. Their losses are connected with cancellation of the sales tax, centralization of the tax on extraction of natural resources, and alteration of the tax on property of enterprises. I think when deputies see calculations on concrete regions (and they are sure to see them in the third reading), positions of a number of deputies from these factions will hardly coincide with that of their leaders, since they will un in elections in their specific regions. If a region stands to lose from the budget being passed in its present edition, this will be the main motive for a single-mandate deputy voting for or against this document. Of course, there is a fund for compensation to regions that will suffer from the changes in the tax laws, containing 22 billion rubles. However, first of all, this money is not enough, second, there are some dubious items in tax proportions that will be discussed before the first reading. In other words, there is a general political impulse for adoption of the draft budget, but not even all members of the centrist factions will support this document.

(Translated by Kirill Frolov)

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