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. Last Updated: 07/27/2016

A Militarized Economy

After a long debate, the Russian parliament passed the 1994 federal budget package at the end of last month. The most hotly debated part of the budget bill was the matter of how much to allot to defense. The Defense Ministry managed to have the government's original proposal raised by 50 percent to 55 trillion rubles. Even though the Federation Council supported the Defense Ministry's request, it did not pass and the final budget allocated 41 trillion rubles. It seems the government and the Duma were able to limit the military's appetite to only 6 percent of the gross domestic product, which may seem a lot considering that the budget projects a 70 trillion ruble deficit, but is probably a figure Russia could live with. However, if you look more carefully at the budget, the situation is quite different. In addition to the funds allocated directly to the Defense Ministry, various articles of the budget contain hidden military expenditures, assigned to other ministries and agencies such as the Nuclear Power Ministry, the State Defense Production Committee, the space program, the railroad administration, the border guards and others. According to published analyses, the sum of these allocations is about 20 trillion rubles. So, in reality, the military will consume something like 60 trillion rubles this year, which is nearly one half of the 124 trillion rubles in spending contained in the entire budget. In addition to the allocations in the budget, the Defense Ministry also has some significant sources of income from other sources including the sale of weapons and army property and the leasing of airfields, shipping moorage and military land. The total of all sources of income actually comes to something more like 80 trillion rubles. Moreover, there are various types of ruble: the "military ruble" has two to 2 1/2 times the buying power of the "civilian ruble." The military purchases weapons, armaments, equipment and supplies without any direct taxes, tariffs, excises or mark-ups. In all, we can safely say that, as a minimum, military expenses will consume not 6 percent of the gross domestic product, but fully 20 percent -- which corresponds to the fact that, according to my own calculations, roughly 20 percent of the workforce is, either directly or indirectly, engaged in military production. No economy, least of all the Russian economy, can withstand such a burden over the long term. With such military expenses, there is no money left over for investment in the infrastructure, for protecting the environment or for pressing social needs. It is literally a matter of "guns over butter." The excessive taxes and excises that the budget calls for in order to finance the defense industry is a burden on the entire population and is hampering the development of private enterprise. Currently, 30 percent of the population is living below the poverty line. If a quarter of the military budget were distributed among these people, all of them could be lifted out of poverty. The consequences of excessive militarization of society were evident even before the current crisis: Russia was already seriously lagging behind not only the developed countries of the world, but the developing ones as well. Now, the gap is only increasing. Statistics show that about 50 percent of Russia's schoolchildren have health problems. The average lifespan for men is now 59 years -- not even retirement age. In recent years, the mortality rate has surpassed the birth rate. Militarization is also one of theroot causes of the terrible problem of organized crime in Russia. Huge quantities of weapons are being smuggled out of military depots. Businessmen who hide their profits in order to avoid crippling taxes are driven outside the law, making them easy targets for corrupt officials and racketeers. In the face of such a pressing economic and social crisis, why does the country continue to maintain such a high level of militarization? After all, Russia's new military doctrine unambiguously states that Russia does not consider any country its enemy. And of course, staving off regional conflicts and conducting peacekeeping operations do not demand a force of 3 million soldiers, strategic missiles or nuclear submarines. Moreover, President Yeltsin himself recently declared that the country simply cannot afford to maintain its current military force. However, force reductions and the conversion of military production have been seriously slowed down in recent years. Year after year, ratification of the START-II treaty is put off, as is the question of settling our territorial dispute with Japan, a country that could give Russia tremendous economic assistance. Russia has a record number of generals. The Defense Ministry alone has about 2,500, twice as many as the United States. But an even stronger force working against demilitarization and conversion are those "unofficial generals" -- the directors of the enterprises of the military-industrial complex and their lobby in parliament, the government and the regional administrations. Forty years ago, U.S. President Dwight Eisenhower warned of the danger presented by the military-industrial complex. The United States, to some extent, has controlled that danger by limiting military spending to 6 percent of its gross domestic product. In the Soviet Union, military spending was nearly six times as high, making the military-industrial complex practically a government within a government, controlling virtually the entire economy. In Russia today, the military-industrial complex remains a powerful force, and great political will is necessary to overcome it. But first of all, what is needed is broad public acknowledgment of the necessity of immediate demilitarization. Without it, Russia can have no future. Viktor Belkin is a professor of economics and a senior researcher at the Institute of National Economic Forecasting. He contributed this comment to The Moscow Times.