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. Last Updated: 07/27/2016

Putin Spends $262M To Restore Chechnya

The government decided Thursday to spend 7.5 billion rubles ($262 million) this year on rebuilding Chechnya, but none of the money is to go toward reconstruction of Grozny, which was left in ruins, or of villages in the south where rebels still run free.

The decision, made at a Cabinet meeting presided over by President-elect Vladimir Putin, was announced by Nikolai Koshman, the presidential representative in Chechnya, news agencies reported.

Koshman said the money will be spent on immediate measures to provide for the "viability of the republic," including the restoration of gas and electricity and the rebuilding of hospitals, schools and train stations. Of this money, 680 million rubles has already been spent on pensions, salaries and welfare payments, he said.

First Deputy Prime Minister Mikhail Kasyanov, who is also finance minister, said money for rebuilding Chechnya's economy will become available only next year. "There is no talk about reconstructing the economy in Chechnya," Kasyanov said in remarks reported by Itar-Tass.

The money earmarked Thursday for Chechnya equals the amount of money the federal government spent on fighting in the breakaway republic in the first three months of the year, according to Kasyanov. As another comparison, it is three times the 2.23 billion rubles ($78 million) recently allocated for the Russia-Belarus council.

Kasyanov said Chechnya may also get back any taxes paid to the federal budget. The republic will be financed through the federal treasury in the republic's second-largest city, Gudermes, until it creates its own new government, he said.

In an attempt to avoid embezzlement of state funds, the government will create an office in Moscow that will automatically register all federal money sent to the republic, Kasyanov said.

Millions of dollars in state funds earmarked for the restoration of the republic after the 1994-96 war in Chechnya were embezzled.

According to a Radio Free Europe/Radio Liberty report, the Audit Chamber found that $4.4 billion in state funds intended, although not officially budgeted, for restoration projects in the republic and funneled through commercial banks in 1996 was stolen and wound up with government officials.

At the same time, high-ranking Grozny officials - including the former mayor and now Koshman's deputy, Bislan Gantamirov - were arrested on charges of embezzling millions of dollars in federal funds.

Gantamirov was sentenced in 1996 to six years in prison but was pardoned by President Boris Yeltsin last fall. Upon his release, Gantamirov formed a pro-Moscow Chechen militia that helped federal soldiers conquer Grozny and is now regularly used to guard military convoys. He is among those now eyeing the post of Chechen president.

At a press conference Thursday, Kasyanov said the government must not repeat its "old mistakes" when financing Chechnya's reconstruction.

The government has not yet come up with a plan for the most problematic project - the restoration of Grozny, Chechnya's capital, which was all but destroyed in weeks of airstrikes.

In a report aired on RTR television Wednesday, Rudolf Zargaryan, the head of the State Institute for City Planning, which had planned reconstruction of Grozny in 1995 and which today is working on a new reconstruction plan for the city, called the 1995 attempt "a failure."

"A lot of money disappeared," Zargaryan said. "I don't know if this will be the case this time." He said it would take 12 to 15 years to restore the city.

Koshman's press secretary, Yury Mikhailov, said in a telephone interview Thursday that the first step is determining the degree of damage to Grozny.

A state commission charged with estimating the damage is currently working in Grozny. Speaking on RTR Wednesday, commission chairman Albert Marshev said the reconstruction will be extremely expensive but nonetheless cheaper than building a new capital in a different location - an idea being thrown around in the media.

Although the government has not yet allocated money for Grozny, some reconstruction work appears to have begun. Koshman acknowledged as much Thursday by saying that Grozny's hospitals and train station are already being restored.

Itogi magazine reported this week that the train station is being rebuilt by volunteers who use construction materials they find in the ruins.