USD 2.55 bln. vs. 3.34 bln. reported in November In December 2001 the volume of the trade and 5.34 bln.- in December 2000. The trade balance between Russian and the CIS states accounted for reported in December 2001 appeared minimal since USD 2.46 bln. Specifically, the volume of Russia’s June 1999. So, Russia’s 2001 trade balance made export stood at the level of USD 1.39 bln. and up USD 49.69 bln. vs. 61.71 bln. reported over showed just an insignificant decline compared with 2000. the prior year- at 3.3%, while the drop in import Russia’s foreign trade indicators still remain supplies accounted for 21% vs. the noted period and strongly dependent on the situation in the world totaled USD 1.07 bln. It was deep-frozen meat, grain markets for minerals and change following world crops, fuel and energy sources, and steel pipes that price fluctuations, mostly those of prices for energy suffered the most notable fall. On February 22, 2002, sources. In December 2001 the world market for oil the RF Customs Committee hosted the 15th Session of the Council of Heads if customs agencies under aimed at solving the problem of unification of the Integration Committee of the Eurasian Economic national customs tariffs within the Integration Community that unites Russia, Belarus, Kasakhstan, Committee and at developing a single approach to Kyrgyzia, and Tadjikistan. In 2001, Russia trade exercising of customs control. By today the turnover with the above nations reached USD 14.3 participants have already decided on unification of bln. and accounted for 55% of the country’s overall procedures of customs clearance of transit goods, trade turnover with the Commonwealth states. The customs accompanying, and transportation of goods main efforts of the participants in the Session were by customs agents.
Fig.1 Main indices of Russia’s foreign trade (as USD bln.) -1997 ã. 1998 ã. 1999 ã. 2000 ã. 2001 ã.
Balance Export Import Source: Goskomstat of RF Table 1. The average world prices in November of the respective year 1996 1997 1998 1999 2000 Oil (Brent), USD/barrel 22,8 17,8 11,5 24,1 25,6 19,Gasoline, USD/gallon 3,093 2,393 2,251 2,558 8,713 2,Copper, USD/t 0,6691 0,5648 0,3739 0,6986 0,7649 0,Aluminum, USD/t 2273,3 1834,7 1601,6 1748,1 1914,4 1528,Nickel, USD/t 1459,9 1535,45 1305 1470,7 1562,5 1346,Oil (Brent), USD/barrel 6920 6099 4202 7984,2 7315,4 5219,Sources: London Metal Exchange; International Oil Exchange (London).
In the course of the Session the parties agreed on a External Borders of the Customs Union; a Draft gradual transition to common measures on ensuring Charter on the Union of Heads of Customs Agencies payments of customs duties that still are different of the nations- members of the Union; a Draft due to substantial differences in national forex and Standard Bilateral Agreement between central tax regulation procedures. It was the problem of customs bodies of the participants in the Union “On control over the customs value of transported goods organization of information exchange on that formed the hottest issue to debate on. In order to transportation of goods in the mutual trade”.
preclude an unjustified lowering of customs value of Because of the deteriorating state of affairs in the goods, the participants in the Session agreed that it world markets, the RF Government has had to work would be expedient to form a single price on lowering and cancellation of export duties.
information system between the countries- Specifically, effective as of February 5, 2002, the participants in the “Union of Five”. government set export customs duty rates for light As for other documents considered and approved and medium distillates and diesel fuel at the level of at the Session, it is worth noting such important ones Euro 25 per 1000 kg. (earlier the rate was Euro 39).
as: the Action Plan on the reference data and In compliance with RF Government Resolution of software unification to ensure implementation of the January 14, 2002, # 17 “On non-exercising export Procedures of Declaration of Goods Transported via customs duty rates to some goods’, starting from Sep Sep Sep Sep Sep Jule Jule Jule Jule Jule May May May May May Jan.
March March March March March February 19, the customs authorities have not Russian metal exports falling under the quotas is levied duties in the course of importation of some equal to the half volume off Russian steel export to goods made from birch (until February 18 the the European market, though it was envisaged respective rate was 5% of their customs value); initially that the quotas would be equal to the actual paper and cardboard with the upper layer from or export volume.
laminated with plastic, exclusive of adhesive According to a new agreement in 2002 Russia substances (the previous rate was 10%), gold (5%); should increase its steel export to the EU at 28% piezoelectric quartz (6.5%). Since February 1, 002 compared with the prior year, while in 003 and oil and oil products from... substances have become the quotas on Russian steel supplies would be subject to export rate of USD 8 per 1000 kg. (until increased annually by another 2.5% vs. the prior January 31, 2002 the rate was Euro 23.4/1000 kg). year.
At the same time, some export duties are Should Russia cancel export duties on scrap regulative and levied to restrict exportation of some (currently accounting for 15%), then the quotas goods. Specifically, prohibitive rate have been set on would be raised by another 12%. The RF Ministry of export of leather, sunflower seeds, ferrous and non- Economic Development and Trade has developed a ferrous scrap. Such duties my not be lowered. proposal on lowering the noted duties, however, they In February 2002 Russia attempted to develop a will not be canceled at all.
new agreement on trade with steel with the EU. The In addition, the agreement provides that in document is to be signed shortly and should be the supplies of born-alloyed steel should account for effective over three years after that or until Russia’s 90 Thos. t., they also should be subject to the above accession to WTO. 2.5% annual increase. In 2001, when alloyed steel The term of the previous agreement expired on was not included in the above Agreement, according December 31, 2001, and since January 1, 2002 the to different estimates, Russian producers supplied to steel trade between Russia and EU is based upon EU countries 200 to 300 Thos. t. of this product.
N. Volovik, N. Leonova.
autonomous quotas the EC had introduced for the period of 6 months. Notably, the volume of the Military Expenditures of Russia in The results of the analysis of Russia’s military – military security. There are no grounds to expenditures offered here continue the consider that the situation related to the provision informational and analytical activities in this field of this service could be rid of problems. The the IET experts began a year ago. It shall be counter-terrorist operation in Chechnya is far from reminded that military-related economic problems being completed. The preparedness of the were not subject of monthly IET publications until considerable part of troops (forces) can not be year 2001. regarded even as satisfactory. The social status of On the whole, it shall be noted that the servicemen continues to fall. The process of justification of the amount and distribution of recruitment in the military organization faces Russia’s military expenditures for year 2002 was considerable problems, while its provision with mainly based on the successful administration of weapon systems meeting the standards of the 21st the preceding year 2001. The target military century is postponed for an indefinite future.
expenditures were practically financed in full. Other results of the military related economic There was liquidated a considerable portion of the activities in the RF also do not provide grounds of state debts to the military organization accumulated optimism. Considerable revenues derived from over preceding years. At the same time, a number export sales of military equipment, technologies, of promises given by the RF governments was not and services, traditionally calculated in terms of met, including those related to the increase in “currency proceeds” still is not compared with the military salaries. production costs related to these goods, moreover, However, in case we review not only the these revenues are “split up” among middlemen and financial side, but also the results of expenditures non-state joint stock companies belonging to MIC.
and the general efficiency of the economy related to Even auditors of the Accounting Chamber fail to the military security, it remains low. We understand identified the budgetary revenues related to these this “branch” of economy as a system, which, proceeds. The rendering of a number of other utilizing a part of the budget, renders to the public, services (with the exception of military security), the society, and the state the most important service which may be clearly measured in economic terms, is organized slower than it would be desirable. utilization of surplus military equipment, etc. also Mass media noted some negative facts related to failed to bring expected results in terms of fishery violations in the Russia’s territorial waters economic effectiveness.
and unlawful exports (jurisdiction of the Border The definition of military expenditures for year Guards), national communications and 2002 analyzed below remains the same:
informational security (Federal Agency for 1. Expenditures related to the national military Government Communications and Information - preparations, in general corresponding to the FAGCI). There were also detected violations standard UN accounting.
committed with the participation of the military Expenditures, sometimes defined as indirect components in economic activities, for instance, expenditures, which are related to previous military with regard to the construction and guarding of activities of the state (military pensions, conversion federal roads, freight of non-military cargoes of defense enterprises, utilization and liquidation of carried out by the military transport aviation. Such armaments, outlays for the military reform, etc.).
economic activities as transfer of certain military technologies to civilian industries, sales and Table 1. Military Expenditures of the RF Military Organization in Item # Expenditure S(SS)/TEI/T Agency Amount Rub. % of the % of GDP Source of E Codes Code mil RFB information 01 EXPENDITURES FOR “NATIONAL DEFENSE” 0400 284158 14,59 2,6 Sup. 5 FB 1 Military expenditures for the military organization 0400 270697 13,9 2,47 Sum of lines included in the expenditures for “national defense,” 1.1, 1.2, 1.including::
1.1 Development and maintenance of RF AF 0401 263864 13,55 2,1.2 Ensuring of mobilization and extra-military 0403 3270 0,17 0,03 Sup. 5 FB preparations, including the expenditures for:
Federal Railroad Troops Service 029 2395 0,12 0,02 Sup. 6 FB 1.3 Preparation for and participation in collective security 0404 2728 0,14 0,02 Sup. 5 FB and peacekeeping operations 02 EXPENDITURES FOR “LAW ENFORCEMENT 0500 173863 8,93 1,59 Sup. 5 FB AND NATIONAL SECURITY” 2 Military expenditures for the military organization 0500 62972 3,23 0,58 Sum of lines included in the expenditures for “law enforcement and 2.1, 2.2, 2.3) national security” item, Including:
2.1 Troops of RF Interior Ministry 0502 188 13571 0,7 0,12 Sup. 6 FB 2.2 State security agencies* 0505 189 31813 1,63 0,29 Sup. 6 FB 2.3 Border guard service agencies 0506 191 17588 0,9 0,16 Sup. 6 FB 3 Other expenditures for the military organization 4392 0,23 0,04 Sum of lines 3.1, 3.2, 3.3.1 Maintenance of special construction service, including: 0710 654 0,03 0,01 Sup. 5 FB Federal Special Construction Service 279 654 0,03 0,01 Sup. 6 FB 3.2 Maintenance and equipment of MES troops 1302 177 3716 0,19 0,03 Sum of lines Including a – e a Maintenance of personnel of troops (forces) 1302/601 177 1982 0,1 0,02 Sup. 6 FB b Combat training and material and technical 1302/602 177 898 0,05 0,01 Sup. 6 FB maintenance of troops (forces) c Procurement of VVT, PTN, and other stocks 1302/603 177 740 0,04 0,01 Sup. 6 FB d Repairs of VVT, PTN, and other stocks at enterprises 1302/604 177 71 0 0 Sup. 6 FB e Insurance guarantees for servicemen 1302/607 177 25 0 0 Sup. 6 FB 3.3 Civil defense 1303 177 22 0 0 Sup. 6 FB 4 TOTAL: general military expenditures of the RF 338061 17,36 3,09 Sum of lines military organization 1, 2, and Note:
* It is assumed that the amount shown in item 2.2 includes the expenditures for the maintenance of agencies of the Federal Security Service (FSS), Foreign Intelligence Service (FIS), and some other structures ensuring RF national security.
Abbreviations: S – FB section; SS – subsection; TEI – targeted expenditure item; TE – type of expenditure; EFB – general amount of FB expenditures; Sup. – supplements to the law on FB.
Table 2. Military Expenditures outside of the Military Organization Item # S(SS)/TEI/T Agency Amount Rub. % of the % of Source of Expenditure E Codes Code mil RFB GDP information Contained in “National Defense” item (see line 01, Table 1) 1 Military program of Atomic Energy Ministry 0402 13994 0,72 0,13 Sup. 5 FB 2 Russian Defense Sports and Technical Organization 0403 464 40 0 0 Sup. 6 FB (RDSTO) 3 Ensuring of industries’ activities for the national defense: 0407 303 0,02 0 Sup. 6 FB Ministry of Industry, Science, and Technologies Contained in other sections and subsections of FB 4 Mobilization preparedness of the economy 2300 - 500 0,03 0 Sup. 5 FB 5 Grants and subsidies to CATE budgets 2101/485 11 219 0,58 0,1 Sup. 6, 19 FB including: Sum of lines a–c a Grants and subsidies to CATE budgets */*/350 092 10544 0,54 0,1 Sup. 6,19 FB b Grants and subsidies for the maintenance of Baikonur */*/361 092 675 0,03 0,01 Sup. 6,19 FB town infrastructure c Grants for CATE budgets for financing CATE */*/454 092 1000 0,05 0,01 Sup. 6,19 FB development programs 6 TOTAL: general military expenditures outside the RF 15067 0,77 0,14 Sum of lines military organization 1-Note: a part of the expenditures shown in the table may hardly be identified as the military expenditures (for instance, the expenditures for the maintenance of Baikonur’s infrastructure, since the population of the town mainly services commercial and national economy-related launches of cosmic vehicles.