Financial problems of the Armed Forces become a topic of discussion during debate on the budget for 2001. Many politicians who are participating in these debates are optimistic in their statements about the sums to be allocated for defense next year. For example, Vitaly Shuba, Chair of the Budget Subcommittee of the Budget and Taxes Committee, cited increased defense spending in the 2001 budget as a big success achieved through the efforts of members of parliament.

Shuba presents the following figures. In 1999, 93 billion rubles were assigned for defense, in 2000, 140 billion rubles, and in 2001, 206 billion rubles is allocated before taking additional revenues into account. After the second reading of the bill on the budget for 2001 defense spending was increased by 12.6 billion rubles, to 218.924 billion rubles.

But the overall sum of defense spending amounts only to 2.8% of the GDP, which is much lower than the level called for by presidential decrees (according to which the military budget should not be lower than 3.5% of the GDP).

According to Shuba, during preparation of the draft budget for the third reading parliament members need to define priorities for spending the 12.5 billion rubles available for additional allocations. Shuba adds that this sum may be spent on new weapons, repayment of the debt for state defense orders, or on current maintenance of the Armed Forces.

Meanwhile, according to Duma Deputy Yury Maslukov, the military proposes spending additional allocations on purchase of fuel and lubricants and current expenditures. It seems that the Federation Council supports the military. In an October 25 statement the council advocated increasing monetary allowances for servicemen and retired servicemen. Citing the fact that their incomes are far below average for the country as a whole, and do not provide for a normal standard of living, the upper house has requested the President to gradually adjust the money allowances of servicemen to equal the wages of federal state employees between 2001 and 2002.

Andrei Nikolaev, Chair of the Duma Defense Committee, also speaks about the problems of raising servicemen’s wages. According to him, the draft budget for 2001 already allocates 6 billion rubles for a 20% increase of servicemen’s monetary allowances beginning October 1, 2001. However, according to General Nikolaev it is also possible to allocate approximately 10 billion rubles more from additional incomes to raise the money allowances of servicemen by 40%.

The government promises to make the money allowances of servicemen equal to the wages of state employees. The new version of the law “On minimum wages” does state that beginning June 2001 servicemen will be given raises in accordance with the procedure and time schedule established for federal state employees. However, according to former Defense Minister Duma Deputy Igor Rodionov, this clause is fair if wages are being adjusted from the same starting point. At present monetary allowances for servicemen are more than 50% lower than wages of federal state employees, and the increases in pay for servicemen as they are promoted up the ranks are 33.33% smaller than bonuses added to wages of the federal state employees when their qualification grade is raised. If the monetary allowances of servicemen and wages of federal state employees are raised simultaneously in similar proportions, the actual difference between them will grow.

Despite the low level of monetary allowances for professional servicemen the government is attempting to take some benefits from them. According to Nezavisimoe Voennoe Obozrenie No. 40, during debate of the federal budget in the third reading the federal government needs to make specific proposals to implement mechanisms to compensate for the new income tax for military personnel, as well as financial compensations for new housing, public utilities and transport costs.

Although October is already over, such mechanisms have not been implemented yet. Nezavisimoe Voennoe Obozrenie writes that the Defense, Finance, Labor and Social Development Ministries all take totally different approaches. Officials of the Labor and Social Development Ministry propose raising monetary allowances for servicemen by 15% to compensate for the income tax they need to pay, and say that it is necessary “to forget about the benefit.” It might seem that this proposal would be beneficial for the servicemen, because it looks like they benefit 2%. However, according to military economists, this is a one-time benefit, because within six months or a year inflation will simply “eat” this benefit. The government has not made a final decision about the compensation for the income tax yet.

The situation with other benefits is similar. Civil officials propose conversion of all benefits into monetary form. For instance, officials of the Labor and Social Development Ministry say that servicemen may use public transportation free of charge only during business hours, which violates the law “On status of servicemen.”

According to Nezavisimoe Voennoe Obozrenie, the draft budget for 2001 assigns 8 billion rubles to compensate for cancelled benefits. Both military economists and officials of the Finance Ministry agree that this sum is insufficient. However, nobody knows how much is actually needed, although there is a total figure representing the value of benefits for all citizens of the country, that is, about 300 billion rubles. The military accounts for over 50% of this sum.

Thus, Nezavisimoe Voennoe Obozrenie concludes that it is already obvious that no matter what mechanism is chosen to convert benefits into monetary form, the government will infringe on the social rights of servicemen. The government will infringe on these rights on a large scale, even though practically all officers live below the poverty line.

If the government does not give up its plans to cancel benefits for the Armed Forces, and the living standard of the servicemen falls, a social explosion in the troops is inevitable. According to Nezavisimoe Voennoe Obozrenie, military sociologists have predicted such an outcome. Hence, the country’s leadership will probably revise its plans regarding the social guarantees for servicemen. President Putin at least has made public statements about this issue frequently.