ON THE CURRENT FINANCIAL PROBLEMS OF THE RUSSIAN ARMED FORCES

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Objective reports of the Defense Ministry indicate that the Armed Forces have not been sufficiently financed for some years already. Defense Ministry says that the Finance Ministry neglects the Kremlin’s demands concerning stability of finances made available to the Defense Ministry.

The Concept of the State Policy of the Russian Federation in Military Construction for the Period until 2005 endorsed by the president (PR-1068) on June 30, 1998, set the minimal allocations of the federal budget for national defense at 3.5% of the GDP. All plans of development and construction of the Armed Forces were made on the assumption that the 3.5% of the GDP are guaranteed. Presidential annual addresses to the Federal Assembly inevitably call national defense a priority.

And what do we have in practice? The tendency towards a decrease of the sums made available for national defense has been evident since 1994. The defense expenditures went down from 6.2% in 1994 to 2.3% in 1999. These expenditures are cut down faster than the average tempos of reduction of the GDP.

Even legislators specify in the budget the sums that do not exceed 60% of what the Armed Forces really need. Unfortunately, what is specified by the laws on the federal budget is all too frequently neglected in life. In 1997, only 70% of the specified sums were spent on national defense and less than 80% in 1998. Moreover, most credits are usually allocated to the Defense Ministry in the fourth quarter of the year, the nuance which drastically reduces their effectiveness. In comparable prices, the national defense expenditures went down five times since 1992.

In late September Colonel General Georgy Oleinik, Director of the Main Directorate of Military Budget and Finances, called a press conference and announced that the situation with finances in 1999 improved a bit but remained complicated all the same. So far, the Defense Ministry received less than 63% it was supposed to receive throughout the year. Particularly meager sums are set aside for acquisition, research, and capital construction.Note: just over 25% of the sums set aside for acquisition in 1997 were actually made available to the Armed Forces, about 50% in 1998, and 45% during the first nine months of 1999. The same figures apply to capital construction in 1997 – 98 and over the first nine months of 1999 only 50% of the sums that were supposed to be made available for the purpose actually materialized. Figures for research and design: 34%, 20%, and 50% respectively. On September 1, 1999, the Defense Ministry owed almost 52 billion rubles.

Situation with salaries is no less tricky. Despite the decisions to raise salaries to servicemen, their pay frequently remains unforgivably low, much lower in fact than salaries of other state officials. Moreover, in some cases salaries of officers are below the subsistence minimum of their families. Specifically, a monthly pay of a contract serviceman (private) amounts to 881 ruble, platoon commander (lieutenant) is paid 1,354 rubles, and battalion commander (colonel) 2,135 rubles. Subsistence minimum of a family varies between 2,600 and 4,500 rubles depending on the region.Note: Acting on the presidential instruction (July 5, 1999), the Defense Ministry prepared a draft governmental resolution which was supposed to equalize salaries of servicemen with salaries of other categories of state officials, but the Finance Ministry did not include any money for the purpose into the draft federal law “On 2000 Federal Budget”.

There are delays with resolution of the problem of debts to enterprises involved in implementation of the state defense order in 1997 – 98 despite specific requirements of Article 115 of the federal law “On 1999 Federal Budget.” As a result, no work is financed.

The Defense Ministry, Finance Ministry, and Economy Ministry are trying to find ways and means of repaying the debts but this is not a task that can be handled by ministries anymore. Moreover, available sums are limited because national defense cannot be financed by sponsors by the acting legislation and can be financed only by the federal budget.

At the same time, the Defense Ministry says that the Russian Federation succeeds in making some finances available to priorities like nuclear deterrent, individual protection of servicemen participating in local conflicts, purchase of medicines, and so on.

In the meantime, the danger of even further deterioration of social state of servicemen remains acute. Draft federal law “On 2000 Federal Budget” stipulates suspension of some articles of the federal law “On the Status of Servicemen.”

Article 76 abbreviates the contingent of servicemen entitled to free food allotments and sets the financial compensation instead of the food allotment at 20 rubles (the figure the Finance Ministry used drafting the budget) and not at 28.71 ruble it really costs; Article 77 cuts down the pensions to servicemen (1.5 salaries instead of 3)…

Pressed for money, the Defense Ministry is forced to define priorities and promptly adapt to the changing situation. Save for salaries, the priorities include: food, transportation of materiel to the northern and distant garrisons, and preparations to the winter.

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