Wednesday, September 24, 2008

Window on Eurasia: Another Casualty of the Georgian War – Social Programs in Russia

Paul Goble

Vienna, September 24 – For the last three months, rumors have been circulating in Moscow that the Russian government of Vladimir Putin wants to cut back on the amount of money allocated for social programs over the next several years but has been nervous about a possible adverse reaction of the populace to such a move at a time of increasing inflation.
But now, according to one Moscow analyst, the five-day war in Georgia has “solved” Moscow’s problem in this regard, providing it with an apparently unanswerable justification for shifting money out from social programs to help build up the Russian armed forces in the name of boosting the country’s armed forces.
Unfortunately, Sergey Baymukhametov argues, the lack of transparency in the military sector is so complete that no one can be sure where that money is in fact going, thus creating a situation in which both the people and the military will have less than they need while the Russian elite may pocket huge sums (
That the Russian government hoped to cut social spending even before the Georgian war began was signaled most clearly, the “Russkiy bazaar” journalist says, by Federation Council speaker Sergey Mironov, who expressed “surprise” that the government intended to “reduce social spending” in the 2009-2011 budget.
Those cuts, Mironov said, would effectively end programs to support housing and invalids, and if these were ended, he asked, “what mechanisms of support” for these groups did the Russian government plan to introduce? Or were these people simply to be turned loose to the mercies of the market?
Until Georgia, Baymukhametov says, it was “difficult to answer these questions.” But “now it has become easier,” because the war with Georgia provides justifications both direct – the cost of military operations is always high – and indirect – there has been massive capital flight from Russia – that few in the Russian political system are as yet prepared to question.
President Dmitry Medvedev has called for a massive increase in defense spending to ensure that Russian forces will be better equipped and better prepared the next time around and thus by their very strength act to constrain any other leader who might be tempted to act as Georgia’s Mikhail Saakashvili did.
But this massive increase in defense spending, Baymukhametov continues, may do nothing to help the Russian military, noting that between 2000 and 2008, defense spending went up 500 percent but as the fighting in Georgia showed, the Russian armed forces are getting fewer up-to-date weapons systems than they got during “the impoverished Yeltsin years.”
Part of the reason for this, of course, is inflation; another, the increasing cost of modern weapons; and still a third, the costs involved in moving from a largely conscript force to a professional reason, the “Russkiy bazaar” investigative journalist says, but even taken together, these factors do not explain the current poor state of Russia’s military.
“Our main problem is not a small military budget – it is at the level of countries like France and Great Britain where soldiers are well dressed, shod and provided with the latest military technology,” Aleksandr Shuvalov, the director of the Moscow Institute of Military-Political Analysis, told Baymukhametov.
Instead, Shuvalov continued, it lies with “the ineffectiveness of expenditures which is made possible by the closed nature of its budget. To check expenditures is impossible because they are a military secret,” something that prevents even the members of the Duma and Federation Council from keeping track of what is going on.
And he added, “over the last four years, an estimated one billion U.S. dollars the Russian parliament has appropriated for the defense ministry has simply “disappeared” into thin air. Despite that and despite efforts to determine how this has happened, “NO ONE has been punished.”
Another specialist on military affairs, Ruslan Pukhov said that the “simplest way of spending government funds and not being responsible for [doing so] is to conduct research and development work.” In that sector, he said, it is easily possible for the powers that be to skim off as much as two-thirds of the nominally appropriated funds without being caught.
Such skimming means that the figures the Kremlin announced for defense spending do not in fact go for defense spending, something that likely to be especially critical now that Moscow has decided to put the country on a semi-militarized course in order to stand up to or even challenge the West.
As it does so, Baymukhametov points, it will have to deal with three other problems that the Kremlin so far has been unwilling to address. First, Russia does not have the resources the Soviet Union had with its many republics and its various satellites. Second, it has largely lost the skills and infrastructure of the Soviet military industrial complex.
And three, the current Russian leadership has shown no understanding for the historical fact that one of the major reasons for the collapse of the USSR was the Soviet leadership’s extraordinarily large and ultimately unsustainable military expenditures and the distortions those caused in the economy and polity of that country.

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