Published: 8/30/2000

The tragedy of the Kursk will benefit Russia's cash-strapped armed forces according to Russian daily Kommersant by being 'decisive in increasing military spending' from its current levels of 140 billion rubles. According to the daily, the proportion of the 2001 budget taken by defence could potentially rise to 276 billion as it passes through the Duma, despite the draft budget requirement of only 206 billion rubles as the politicians identify the issue of military as being political. For the defence forces the increases in potential spending could mark a turnaround. The armed forces have seen their share of the budget cake fall from 29.2% in 2000 to 26.8% in that proposed for 2001, reflecting the changing emphasis of expenditure away from defence spending, which is the second largest element in the federal budget, towards social spending. A number of Duma factions led by the Communists have made it clear that their support for the budget already approved by Prime Minister Kasyanov, will be the increases in defence spending, with the suggestion from Gennady Seleznyov, the speaker of the Duma, that they will be aiming for a proportion of GDP closer to 3% as opposed to the 2.66% presently outlined in the 2001 budget. President Putin has firmly said however, that the budget should not be changed and that any increases in spending will be covered by increased tax receipts through taxes on windfall profits in the energy sector's new flat rate 13% income tax. The military have been lobbying hard for changes in the budget. Valery Manilov, Deputy Chief of Staff General, argued at a press conference in Moscow recently, that the reductions in spending and overly focusing on strategic weapons and forces over the last ten years have left the armed forces seriously weakened in a number of areas, particularly those where equipment maintenance and acquisition was not seen as a key requirement, such as submarine rescue systems. This argument is finding a good deal of support with a number of the Duma's warhorses such as former Prime Minister Primakov , who has pledged the support of his Fatherland-All Russia faction for 3% of GDP for defence. Putin, in the view of some commentators, will resist the pressure given that increased defence spending remains unpopular with the population at large as demonstrated by a recent poll of Moscovites by the Echo radio station, with 65% of respondents backing the President's tough stance on the budget and only 35% believing that military spending should rise at the expense of social programmes. Within the military themselves the issue of spending and strategy has been at the heart of the arguments that have led to the departure of a number senior officers and the significant structural changes within the country's strategic forces. The debate largely centres on the issue of how does Russia spend its shrunken budget of $5 billion for maximum effect, when it is dwarfed by a US budget 50 times larger? For the last ten years, senior planners such as Colonel General Anatoly Sitnov, who recently resigned as head of the powerful Armaments Directorate, have followed a view that Russian defence spending should broadly mirror that of Soviet armed forces, by devoting its shrinking resources to strategic programmes in missile, nuclear and other high technology areas. Other planners however, have seen this approach as simply not recognising the challenges currently confronting Russia in Chechnya and other low intensity conflicts in which Russia is likely to become involved. The hotspot of this debate was seen in the row between Anatoly Kvashin, Head of the General Staff, and Igor Sergeyev, Minister of Defence Marshal. Kvashin's proposals for the restructuring of the armed forces announced in July, involving heavy cuts in strategic forces over the next three years, have been attacked by Sergeyev as an 'act of madness' amounting to complete disarmament, although it has been reported to be well supported by serving senior officers,. For the aerospace industry starved of orders and payment, the changes currently being discussed must be seen to largely favour them. The planner's focus on conventional warfare and the lessons of Chechnya would suggest that the industry could see orders for both new aircraft, and upgrades of existing systems to meet the needs of current and anticipated conflicts. Any meaningful change however, will require a significantly different approach to what the industry has experienced in the nineties under the direction of Sitnov, where a lack of a strong government impetus has left the industry largely unrestructured, thinly resourced and at best treading water. Success for the industry will only come with the ability to focus limited resources in a few viable programmes to produce world-class products capable of both answering Russia's needs for conventional equipment, while also generating sales in the critical export market.

Article ID: 2030