Last Monday, the government debated the draft budget of the country for 2005. Its parameters are impressive. Revenues are planned at a level of 3326.08 billion rubles and expenditures are planned at 3047.97 billion rubles (2659 billion rubles in the budget for 2004), that is 9.1% bigger taking into account inflation. Along with this, it is necessary to note that the overall defense expenditures in the budget will grow by 26.7 % to 528 billion rubles. Expenditures on national defense and law enforcement activities are planned at 398.4 billion rubles (the growth amounted to 26%). Observers already dubbed the financial plan of the country for 2005 military-police one. In the version of the budget presented on Monday the aggregate expenditures of security agencies will amount to about 34%. Commenting on the draft budget, Duma Speaker Boris Gryzlov did not hide his satisfaction, “I have frequently spoken about the need to make such decision because efficiency of operations of security agencies directly depends on the state expenditures on these needs.”

Defense Minister Sergei Ivanov provided a totally different comment on the planned expenditures. Speaking at a government meeting, he said that should the growth in prices of products of natural monopolies exceed the planned level in 2005, there would not be enough money for modernization of the Armed Forces.

The Defense Minister emphasized, “The allocations in the budget for 2005 allow meeting of the needs of the Armed Forces on the minimal necessary level but there is one “if” – if prices of services and products of natural monopolies do not grow bigger than the planned level, which incidentally happens year in and year out.” Ivanov added, “In these circumstances it is impossible to speak about modernization of the Armed Forces.”

According to the Defense Minister, the ministry also lacks money for housing provision to servicemen, both who serve now and are resigned. Ivanov stressed, “The sum that is lacked for 2005 is 3 billion rubles.”

In the post-Soviet history the Defense Ministry has always demonstrated discontent with the planned military expenditures. This time it looks as though the ministry has nothing to complain about. Military expenditures in 2005 will grow much faster than the national economy. It is clear that after breakup of the Soviet Union money has been spent on the military needs according to the residual principle. Many problems have been accumulated and it is necessary to solve these problems. Hence, significant sums of money are allocated for this purpose.

According to Finance Minister, the state defense order for 2005 will be increased by 40% in comparison to 2003. According to him, money allowances to servicemen will also be increased. In 2005, the government plans to supplement the existing money allowances to servicemen with the compensations for abolishment of the free use of public transportation, adjustment for inflation and related growth in consumer prices.

Kudrin stated, “Increase of the additional salary for special conditions of the military service from 50% to 120% will include the abolishment of the free use of public transportation and will take into account the growth in the index of consumer prices. Thus, the additional salary for the Armed Forces and other security agencies in general will amount to about 700 rubles. Due to the fact that living costs in different regions are different the form of the additional salary will enable the ministers and commanders of military districts to differentiate such supplement in various regions. Thus, in different regions it will vary from 350 rubles to 1,500 rubles.”

Of course, this additional salary is not big, if we bear in mind that a one-month ticket in Moscow costs 700 rubles and officer in a rank of colonel earns about 10,000 rubles a month. It is very difficult to live in a city on such wages. In any case, senior officers (those who joined the Armed Forces until 1998) are guaranteed free housing at the end of the military service and they will definitely serve until their housing problems are solved. Junior officers are just another matter. However, the budget plans incentives for them too. The first 30,000 officers who have already served for three years and 25,000 warrant officers will receive money to their personal accounts in the framework of accumulation of the first contribution for inclusion into the mortgage system.

The government will also finance the federal targeted program for transfer of the Armed Forces to the professional basis. In 2005, two divisions with overall strength of 25,000-27,000 servicemen will be transferred to the new principle of manning in the Armed Forces alone. The government plans to allocate 17 billion rubles for this purpose. This is a big sum. However, judging by the attitude of civilians it is possible to say that very few of them wish to become professional servicemen. The Defense Ministry already has problems with recruiting of the most decent specialists. Along with this, the Defense Ministry plans to significantly reduce the number of female contract servicemen. From 2005, contract soldiers will earn about 7,000 rubles a month. It will be necessary to recruit about 54,000 servicemen. This is a big sum if we bear in mind that soldiers to the 76th experimental division have been recruited for almost two years and already after signing of the contract 19% of them have been fired.

Thus, the defense expenditures will be increased significantly, but even this increase will not solve all the problems of the Russian Armed Forces. That is why the Defense Minister asks further increase of the military expenditures.