Budget Sees Boosts For Arms, Housing

The State Duma gave preliminary backing Friday to a federal budget for next year that would boost defense spending by more than one-quarter, an increase overshadowed by those for housing maintenance and health care.

Lawmakers are expected, however, to allocate additional funds for the armed forces -- a consequence of Russia's recent military campaign against Georgia -- when they return to the budget next month.

In Friday's session, the Duma overwhelmingly approved in a first reading the 2009 budget with defense spending of 1.3 trillion rubles ($50 billion), a hike of 26 percent from this year. The figure represents 14 percent of the overall budget, the same proportion as this year.

Projected spending on housing maintenance would surge 68 percent, while expenses on health care would rise 59 percent. Investment to improve the national economy would increase 35 percent under the proposed budget.

But Duma Speaker Boris Gryzlov and Finance Minister Alexei Kudrin announced after a meeting last week that they had agreed to amend the budget in its second reading by allocating additional money to buy new weapons. That reading is scheduled for Oct. 17.

Defense Ministry officials and military experts have said Russia's war with Georgia last month exposed vulnerabilities, including a lack of high-precision weapons, drones and other intelligence equipment.

Part of the additional defense expenditures will pay for the construction and deployment of spy satellites to permanently monitor areas of interest, a Defense Ministry official said. More detailed breakdowns of defense spending are classified.

Despite the increase, the Defense Ministry's spending would still be a fraction of the Pentagon's budget, which was $480 billion this year.

Lawmakers voted 351-85 to give preliminary approval to the budget, which projects revenues of 10.9 trillion rubles ($429 billion) and spending of 9 trillion rubles ($354 billion), with inflation dropping to 8.5 percent.

United Russia and the nationalist Liberal Democratic Party supported the bill, but it drew protests from the Communists and A Just Russia, which attacked Kudrin for hindering the country's development.

Gennady Zyuganov, chairman of the Communist Party, said the government takes too much tax for the federal budget, depriving municipalities of sufficient income, according to a copy of his speech on the party's web site. He said support for agriculture and industry was inadequate, while inflation, which is set to top 12 percent this year, would limit any spending increases.

"Mr. Kudrin, you and your ministry have turned out to be the main barrier for the development of Russia," Zyuganov said, adding that Kudrin has been a darling of the foreign press for his fiscal policies. "They apparently like you. But we don't like your budget."

Nikolai Levichev, deputy head of A Just Russia's faction, said Thursday that the proposed budget would not do enough to fight poverty and fail to foster a high-tech economy.