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Section Institutional Issues allocated budget) is to procure foreign warships like Mistral in France. However the need to include the four procured warships in the Pacific Fleet looks doubtful 1.

The forecast of delivery of the 2012 state order by the shipbuilders is not very optimistic:

when allocations for the 2012 draft federal budget were prepared in July-August 2011, there was no information on the prices for the sector products. The 2011 contracts under the state military order for nuclear submarines that were to be built and tested in the White Sea were signed by the Defense Ministry and USC on November 9, 2011 in the presence of Prime Minister Vladimir Putin: actually two weeks before the established date of the product delivery.

After the contracts were signed, USC continued to resist disclosing the information on the price structure for their products, which may be understandable in the context of price fluctuations in the shipbuilding sector reflected in Russian statistics of the national accounts in the previous years.

On the other hand, the efforts of the Ministry of Defense in 2011 aimed to implement the resolutions of the RF President of November 25, 2010, Order No. Pr-3443, proved to be successful by the year-end. According to Joint Staff Commander, General of the Army N. Makarov2 the contract prices on diesel submarines were reduced by 34%, on corvettes by 15% and on frigates by 26%.

The behavior of certain military and fleet commanders considerably aggregates the situation with the implementation of the military and technical policy and the state arms program.

For example, the Navy Chief Commander Admiral V. Vysotsky, obviously violating the line of authority and contradicting the statements of the state first persons not to build aircraft carriers3, continues advocating the plan of their building starting from 20154. Note that the full protection of information about the state arms program allows such behavior.

Unfortunately, a similar situation with the equipment is observed in the Air Force:

- SU-34, a bomber aircraft, bought back in 2008, was officially passed into service by the state commission in September 2011;

- a fighter aircraft SU-35M that was bought earlier still undergoes testing;

- a surface-to-air missile system C-400 Triumph was made operational in 2007, but up to now it has not been equipped with 400 km distance missiles though it was given the index 400 according to this type of missile; the development of the missile is to be completed this year, though federal funds for construction of two plants for the C-400 serial production have been released since 2010.

In 2011, the Air Force did not receive a new bomber aircraft Su-34, a fighter aircraft SU-35M, three Su-27SM, two helicopters Ansat-U. Besides, a strategic bomber aircraft TU-95MS and an airborne interceptor MiG-31B remained under repair.

Given the absence of advance models ready for manufacturing, the Leaders of the Ground Forces and the Airborne Forces almost stopped procurements of armored vehicles and focused on modernization. The purchases of missile and artillery materials have been insignificant due to the same reason. On the whole, for 2011, the Russian defense industry did not ful The Fleet: priorities and prospects // Red Star. 2012. February 1521 (No. 26).

The military reform as it is. Speech by N. Makarov, Russian Joint Staff Commander, at the Public Chamber.

M. November 17, 2011. http://www.oprf.ru/files/Prezentaciya_mioboroni.ppt.

e.g..: So far we do not have this in our plans (V. Putin). // Short-hand notes of the meeting in Sarov on February 24, 2012 at http://premier.gov.ru/events/news/18248/.

The Fleet: priorities and prospects//Red Starr. 2012. February 1521 (No. 26).

RUSSIAN ECONOMY IN trends and outlooks fill the state order under 84 contracts for Rb 42bn1, i.e. the 2011 state military order was delivered at under 94%.

The results of the multi-year policy of building up budget spend for the state military order by the Ministry of Defense in the situation of full secrecy is shown on Fig 36 (an expenditure deflator for the final consumption of the state services is used).

721,in current prices in constant prices as of 626,580,389,302,236,186,147,71,120,0 110,107,71,9 108,79,82,3 67,8 69,6 76,66,62,47,3 52,63,2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Years Source: Rosstat.

Fig. 36. State Military order of the Russias Ministry of Defense in 2000The confidence of the Russias leadership in that the state guarantees a minimal productivity at 20% in the industrial and defense sector which will ensure the transition to its innovatory development and the required output2 actually has no basis and is a result of promotion efforts by the Russian military-industrial lobby who is interested in re-distribution of the oil rent income. According to PwC (former PriceWaterhouseCoopers)3, the average profitability in 100 leading western airspace and defense companies was 7.8% and 9.0% in 2010 and respectively, and such indicators enabled their development based on innovations, to step up their production and pay out dividends to their shareholders.

6.7.3. Improvement of the legal and regulatory framework of the Armed Forces operation This stage of transformations of the RF Armed Forces required the improvement of the legal and regulatory framework. First, to review the set of program and regulation documents was required that regulated the procedures and the rules of modern military actions with account of their types and administration of troops and forces. Secondly, a lot of efforts were taken to revise the documents regulating the functions of the Armed Forces in peaceful times, V. Litovkin. Bottleneck in the state military order // Independent Military Review. 2012. February 3(No. 3).

We assume that the profitability of the enterprises should be at least 1315%, even let it be 20% (V. Putin) // Short-hand notes of the meeting at Komsomolsk-on-Amur, February 20, 2012 http://premier.

gov.ru/events/news/18194/.

Aerospace & Defence 2010 year in review and 2011 forecast. PwC, 2011. http://www.pwc.com/aerospaceanddefence/.

Billion Rubles Section Institutional Issues including the regulations/manuals (Internal Service Regulations, Combat Manual, Disciplinary regulations) and various instructions. The participation of the Defense Ministry specialists in the development of draft laws on money allowances (MA) for servicemen and on retirement pays became a most important area of activity. The IEP experts also took part in this effort1.

The main comments to the MA draft law developed by the Ministry of Finance and Ministry of Defense were as follows: the new MA system will deepen the gap between military and civil officers, and between the military officers who serve in different departments inside the power block. The MA is not linked to the average national wage and to the budget process, if done, this could align the MA indexation. Corruption-biased wordings are used in certain law provisions. The key thing is that for lower ranks of the servicemen the MA level is inappropriate, and this would make the army recruitment even more difficult.

There are numerous comments to the provisions setting retirement pays. These provisions are very unfair in treating the old age pensioners, and may cause a lot of complaints immediately after the new pensions are paid.

Unfortunately, the justified comments caused no reaction, and the drawbacks in the draft laws have been incorporated in the laws.

6.7.4. Changes in the military staffing policy Early 2011, the first theoretical and practical conference of the Ministry of Defense was arranged on the topic The formation of the innovative educational environment in the system of educational institutions of the RF Ministry of Defense. As per the established tradition, that meant training of the officers only with simultaneous reduction of the number of academies and colleges, and this approach caused strong dissatisfaction among the servicemen.

Nevertheless, the changes have been implemented as planned. Now in the RF Armed Forces there are three scientific and training centers, 11 military academies under the Joint Chief Academy, and two universities (Military University and Military Aviation Engineering University). The Academies train staff for such troops as missile strategic forces, army signals, army troops, NBC defense troops, engineering troops, artillery troops, battlefield air defense troops, military space troops, combined service forces. The focus was also made on the training of troops in advanced combat training centers where in addition to individual training, units will be trained.

However, the attention to training of ranks and files and junior command personnel was not appropriate. The major part of the military personnel continues to be conscripted. The Armed Forces Commanders, namely the Commanders of the ground troops acknowledged that the current practice of a five-month training of the called-up specialists does not meet the modern requirements. Note that the reduction of the service term to one year was provided in the federal Government Regulations adopted back in 2003, and the respective amendments were made in the legal framework in 2007. However, the tests of the new training program See, e.g. V. Tsymbal, A. Privetkin. A failure of the strategy for social development at the financial front // Independent Military Review. 2011. June 39 (No. 20); V. Tsymbal, A. Privetkin. The servicemen are promised a worthy pension in a quarter of a century. Independent Military Review 2011. June 1016 (No. 21); E. Trofimova Certain achievements and issues of the social development of the RF Armed Forces//Economic and political situation in Russia, 2011. No. 2; A. Privetkin, E. Trofimova. On the fund of money allowance of the RF servicemen// Economic and political situation in Russia, 2011. No. 7.

RUSSIAN ECONOMY IN trends and outlooks for junior specialists designed for 3 months in connection with the transition to one year of service began in 2011 only1.

The need to refuse from the call-up principle was hushed up (in autumn 2010, the Joint Staff Commander announced 700,000 positions for conscript servicemen) early this year though full enlisting was clearly impossible. The Border Guards and the Federal Penal Service abandoned the call-up principle long before. Recently, the Interior Ministry Troops being aware of the conscription difficulties have decided to contract the staff and tried to improve the attractiveness of such service2.

By March 2011, the Ministry of Defense had matured to be aware of the true situation with enlisting. The report at the meeting in the RF Academy of Military Sciences can give some evidence to that3. It was said that the number of the conscripted servicemen should be reduced by 1015% of the total membership. And the report also focused on the attractiveness of the contract enlisting. Some NATO country-members, Poland, in particular, were mentioned as an example. It appeared that by 2017 the number of rank and files and junior command officers serving under the contract should be 425,000 instead of current 184,000.

Activities on humanization of the military service have been carried out in the troops: a new plan of the day (with an after-lunch rest) and a five-day service week with possible week-end leaves was introduced; to use rank and files in fatigue duties was limited or even forbidden; the food ration and quality were improved; mobile phones were allowed. The principle of service close to home was implemented where possible. Nevertheless, there is still no contest for the military service, and there are many draft evaders.

The institutions of priests and military police have been promised recently for implementation. However, in 2011, the promises remained unfinished.

The necessity to abandon the call-up enlisting seems obvious, but the top commanders hesitate to acknowledge this though President Dmitry Medvedev did recognize this necessity but for a faraway perspective. There is no political will yet to do this.

6.7.5. Social support to the servicemen and their family members Housing is an obvious example of how the Armed Forces deal with social and economic issues. There is a tremendous burden of such issues in this sector since the national leaders used to put off them for a number of years. Once there was an attempt to re-shift this burden from the federal to the regional authorities. Eventually, the military and political leaders of Russia elected to stop pushing aside this problem. After all the housing needs were registered in 2009 it became clear that 175,600 servicemen and military retirees had to be provided with housing.

Early 2011, the Ministry of Defense while talking about the house provision plans announced their ambitious target to do away with the waiting list of the servicemen in need of housing by 20124. This announcement was very challenging since in that year there was no properly functioning Unified Register of the Servicemen in need of housing accessible via Internet, i.e. the system of recording and control was still in the process of development.

A. Gerasimov. Special courses for junior specialists//Red Star, 2011 February 3, (No. 17).

Interior troops invite//Red Star 2011.February 4 February (No. 18).

N. Makarov. Up to date//Red Star. 2011. March 29 (No. 51).

D. Semenov, V. Mokhov. No waiting lists should remain // Red Star. 2011. January 14 (No. 2).

Section Institutional Issues However, by October 2011, the list reduced down to 63,800 families and by the year end further to 41,600, according to the report of the Joint Staff Commander to the Public Chamber.

Nevertheless, the problems are still there: there are corrupt officials and bribetakers involved, the files of the servicemen on the demand list was lost, the computerized recording and control system does not function properly, apartments are provided in locations where people do not want to reside.

The second important area of solving social issues is the increase of the money allowance from January 2012. Let us talk about the MA amounts. The main MA components, namely the basic salary for the service position (SSP) and for the military rank (SMR) are given in Table 34.

Table Comparison of the military ranks, positions and money allowances of the RF AF servicemen after January 1, Pro- Proposed proApprov. Standard military position Appr.

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