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. Last Updated: 07/27/2016

Government Will Pay for Army Reform

The refusal of the State Duma to approve the budget last Friday came as no surprise to the government. The parliamentarians are simply obliged to be dissatisfied with the budget. Otherwise, the government and voters would cease taking them into account.

The government has announced its readiness to collaborate fully with the deputies in carrying out the draft budget for 1997. In the first place, it simply has no other choice. But it is not only a question of the necessity of working with the Duma, without whose ratification there can be no budget. Its willingness to collaborate with the Duma is also tied to the fact that the government has come up with some new ideas these past few weeks that will be reflected in the budget.

One such idea involves a somewhat different view of defense expenditures. The new approach was put forward at a recent meeting of the Defense Council. It was decided that expenditures in the budget on military reform should be counted separately from outlays on defense in general.

The draft budget envisions spending 100.8 trillion rubles ($18.6 billion) on defense. Added to these outlays are expenditures on law-enforcement activities and government security, which amount to 49.5 trillion rubles.

Given that all expenditures for next year come to 524 trillion rubles, the share that will go to toward defense and national security account for more than 28 percent of the budget. The government nevertheless intends to increase defense expenditures. And this increase should go toward military reform.

Deputy Economics Minister, Yakov Urinson, considers that military reform, like any other reform, will require money.

Indeed, reducing the army will be expensive. As Defense Minister Igor Rodionov pointed out, reducing the military by only 100,000 men will require some 4 trillion rubles. And the army plans to reduce its numbers from 1.5 million to 1.2 million men.

In all, besides the army, the armed forces number between 3.8 million and 3.9 million men. There are also the numerous border troops and the armed part of the Emergency Situations Ministry.

Urinson believes that one of the main tasks will be to change the structure of military expenditures. Too much money -- almost half of the entire military budget of 48 trillion rubles -- is being spent on maintaining the army and on military technology. Only 6.4 trillion rubles is being spent on research and development, which could also be used for civilian purposes.

But it is not so much a question of restructuring military spending as spending more on defense in general and reform in particular.

Where will the money come from given that the government has no intention of increasing the budget deficit? Prime Minister Viktor Chernomyrdin has already spoken of the possibility of introducing special taxes for the financing of the armed forces. True, the Duma could turn down such a proposal. The other real source might involve decreasing the ineffective subsidies to the agricultural sector and the regions. This would make sense from an economic point of view but would be very difficult to achieve politically.

In any case, the government intends to begin the new fiscal year with a new idea of increasing military expenditures.

Mikhail Berger is economics editor for Izvestia.