Record $47.9Bln Planned for Defense

Spending on arms will rise to a record $47.9 billion next year, Deputy Prime Minister Sergei Ivanov said Friday, as the Kremlin moves to beef up the armed forces after a conflict in Georgia.

National defense orders will rise to 1.2 trillion rubles ($47.9 billion) in 2009, 70 billion rubles higher than previously planned, Ivanov said in televised remarks.

"We have managed to convince the Finance Ministry that the volume of state defense orders in 2009 will be 70 billion rubles higher than previously planned," Ivanov told Prime Minister Vladimir Putin. "The overall volume of state defense orders next year are planned at a record level of 1.2 trillion rubles."

Finance Minister Alexei Kudrin gave a similar figure Thursday, saying spending including arms purchases and pay raises would reach 1.28 trillion rubles next year. The increase was approved before the conflict with Georgia, he said.

State defense orders includes spending on arms by all of the country's military organizations -- such as the Defense Ministry, Interior Ministry and special services -- as well as repairs and spending on research and development.

Kudrin said the new weapons part of the budget would advance 30 percent, though he did not give exact figures because the information is classified.

Ivanov did not give reasons for the rise but said prices for military goods were rising faster than government inflation forecasts.

President Dmitry Medvedev said Thursday that the five-day conflict in Georgia last month had shown that the armed forces needed modernizing and that problems with equipment needed to be resolved.

Putin hiked defense spending during his eight-year presidency in an attempt to stop the decline of the country's once-mighty fighting forces. But domestic critics and former officers say the armed forces are hampered by rampant corruption, poor discipline, faulty equipment and outdated battle plans, which still focus on a major land war in Europe.

In the draft budget, spending on national defense is set to rise more than one-quarter to 1.28 trillion rubles in 2009, from 1.02 trillion rubles this year. A more detailed breakdown of the spending is classified.

Putin told Ivanov that he had approved increases in spending on space programs and that he had signed a decree ordering an additional 67 billion rubles for the Glonass satellite navigation system. Putin said an additional 45 billion rubles would be spent on the federal space program over the next three years. The money, he said, would be used to build a new cosmodrome in the Far East, finance the international space station and help space research.

Reuters, Bloomberg