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Defense spending to grow, education and healthcare to face cuts

July 19, 2012, 14:05 UTC+3

On Wednesday Russia’s Finance Ministry published the main trends of the budget policy for 2013-2015

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MOSCOW, July 19 (Itar-Tass) — On Wednesday Russia’s Finance Ministry published the main trends of the budget policy for 2013-2015. They envision a decline in the spending on education, healthcare, culture, social policy and national economy. At the same time it stipulates an increase in the financing of the defense industry and law enforcement agencies.

The fight of Russia’s main financial watchdog against growing military appetites was lost, the Nezavisimaya Gazeta wrote. The federal budget’s spending on national defense in 2013 will grow by 25.8 percent to 2.345 trillion rubles as against 2012. Moreover, expenditures on law enforcement activities will go up by 9 percent, while most unprotected sectors were among most affected by budget cuts – healthcare will face a decline of 8.7 percent, education – of 2.8 percent and national economy – of 2.9 percent.

The daily wrote that judging by all this the Finance Ministry surrendered under pressure of the authorities’ election pledges that should be fulfilled, no matter how you look at it. The daily reminds that even ex-finance minister Alexei Kudrin failed to cancel the growth of defense spending and many analytical scientists named his disagreement with an increase in defense spending as a reason for his resignation.

Recently a certain trend for increasing defense spending is clearly observed, a leading analyst of UFS Investment Company’s analytics and risk management department, Alexei Kozlov, reminded. “After the collapse of the Soviet Union the situation with technical equipment of the army looks deplorably. The worsening of Russia’s relations with the West as well as an escalation of tensions in the Middle East and the Arab world made it necessary for Russia to make up for lost time and conduct technical re-equipment,” he said. “This is a political issue, therefore it is a prerogative of the president and not the Finance Ministry to resolve it.”

Until the end of 2020 Russia plans to spend round 23 trillion rubles for reequipping the armed forces, the Novye Izvestiya newspaper reported. Experts say the country will be unable to cope with this sum if the oil prices slump, which was proved by the price drop in crude oil last spring. Although now the oil prices remain steadily high, the world economy finds itself in such a condition, when the oil consumption declines, as a result it is necessary to wait for a further drop in the price of the export item, which is strategically important for Russia’s budget. The Finance Ministry even develops a draft anti-crisis budget, if the oil price slumps to 60 dollars per barrel, when the domestic economy will simply start breaking. According to the existing information, this draft envisages drastic cuts in military assignments.

The Moskovsky Komsomolets daily cited Igor Korotchenko, editor-in-chief of the Natsionalnaya Oborona (National Defence) magazine and director of the Centre for Analysis of World Arms Trade, who expressed a negative attitude to the Finance Ministry’s initiative. “There are many budget items that can save funds painlessly, for instance, the funds extended for keeping and servicing senior officials and buying foreign cars for them can be reduced. Our country can and should allow itself such expenditures; otherwise we can find ourselves in an unpleasant situation, when important foreign policy decisions can be taken for us by strong players on the military scene.”

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