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Budget RUR 2007 RUR N Sections and subsections 08 mln. / mln/growth, % Versus Versus GDP Same in 2007 budget prices 1 Total direct military expenses 1 433 694 73 903 20,77 3,1 263 167 5,85 2,57 0,2 Total direct and indirect military 1 588 068 17 801 23,01 4,expenses, related to the current and 1 399 179 1,27 1,86 0,former military actions 3 Total expenditures for National 1 799 740 71 781 26,08 4,Defense and National Security 1 585 674 4,53 2,90 0,and Law-Enforcement Activities Total amount of non-disclosed budget allocations in 2008 account to RUR 810 bln 139 mln (2.08 per cent of GDP or 11.7 per cent of the federal budget) RUR 453 bln 337 mln of which are indicated under section 0200 "National defense", RUR 259 bln 577 mln under section 0300 "National security and law enforcement". As we have noted earlier in the August 2007 report, the new budget structure, the 2008 budget is made completely non-transparent at the level of its sub-sections, which goes in direct contradiction with the fundamental principles of the RF budget system of Russia and does not provide complete understanding of expenditures purpose 40.

A curious consequence of such non-transparency was watched by the Russian and international TV audience of the "First Channel" during a parliamentary debate in November 2007 on the defense issues between G. Simigin and V. Zhirinovsky, when the first of them, acting Deputy of the State Duma, has accused the the LDPR leader, Vice-Speaker of the State Duma, in failure to prevent reduction of defense expenditures in the budget for next year from RUR 822 to RUR 590 bln. And though an outrageous incompetence of the discussion participants was unnoticed even by themselves, there is no guarantee that at the achieved level of nontransparency of the basic national financial document other government officials will be more competent and able to make adequate decisions.

Despite the fact that the analysis of non-disclosed expenditures dynamics (Table 4) confirms the sustainability of long-term security barriers, a number of some new positive issues is worth mentioning as well.

Thus, the drafters of the federal budget have finally recognized an obvious fact, that the funds under subsection 02 " Preparation of and participation in ensuring collective security and peacekeeping activity " can not be confidential as a matter of fact. The share of non-disclosed expenditures under the section 0706 Retraining and advanced training has been reduced from 17.2 per cent in 2007 to 15 per cent in 2008. Therefore, one can see that even without any amendments to the federal law "On National Security Information" transparency of the federal budget can be enhanced.

Nevertheless, the basic trend remains in force. For example, all new subsections of the budget expenditures under line 9 ("Healthcare") are non-disclosed, and the top secret among them, accounting to 16.4 per cent is "Health resort services" subsection. Apparently, this is the key issue in national security and defense.

Moreover, the share of non-disclosed expenditures in funding of Physical training and sports (section 0908) happened to be twice more than a year ago. The official motivation is, naturally, not declared, but we think it would be interesting to follow-up on this subsection in view of preparation to the Winter Olympics in Sochi.

How does the secrecy of budget funding affects common people life On the one hand, the sustainability of national security information, ideally should serve to the safety of each individual. On the other hand, secrecy can be regarded as negative factor in the individual unhappy fate of General-Colonel V. Vlasov.

Certainly, we are not aware of any direct link, but whereas the funding under section 0501 "Housing and public utilities" (see Table. 2) in the 2008 budget is doubled for housing construction for military service members, the share of non-disclosed expenditures in this subsection is increased three-fold (the "nondisclosed" amount exceeds RUR 8.5 billion), it means that a continuous trend in applying "the law of large figures", or rather large confidential figures, stays in effect against the will of the budget authors, as well as of all those who voted for and approved it41.

Fortunately, the law of small confidential numbers is also in effect. The drafters of the 2008 federal budget decided to allocate RUR 15 million for non-disclosed expenditures share in subsection 1003, "Social security", which makes 0.01 per cent of the total funding under "Social policy" budget line. It might look as a trifle, but it enables not only to conceal RUR 15 million, allocated for some particularly delicate form of social support, but also to introduce a legitimate way to make surplus payments to federal government officials, engaged in national security in one more government authority, RF Ministry for Healthcare and Social Development. Therefore, the effect of the law of small figures will always be a mystery in a bureaucratic sense. Here is one more innovative approach: though everyone is aware there cant be any confidentiality in funding for social policy, the Russian reality used to discredit even stronger arguments.

The only area, where real success is expected to be achived is the housing construction for military service members. Funding for housing construction, allocated by the Ministry of Defense under section "National defense", has been increased in real terms by 40 per cent as compared with the previous year. Moreover, as noted earlier, allocations for the section "Housing and public utilities" are doubled However, the funds for housing certificates are reduced (by 76 per cent), as well as for mortgage system for military personnel (by 16 per cent).

Articles 32 and 36, RF Budget Code.

In this regard, it would be helpful to review the links of each of the Russian generals, convicted in 2007, to nondisclosed sections of the federal budget 16.

Table Non-disclosed Share of Federal Budget Expenditures over 20032008, % 2003 2004 2005 2006 2007 Undisclosed expenditures, section/subsection 1 2 3 4 5 6 Overall federal budget expenditures 9,73 9,83 11,33 11,80 10,33 11,0100 FEDERAL ISSUES / 42 / 3,67 6,28 5,52 6,0108 International affairs and cooperation 31,88 18,04 0,01 < 0,01 0110 National material reserve 97,73 93,33 82,86 89,23 92,18 90,0111 Fundamental research 2,13 1,22 1,12 1,0115 Other federal issues / / 0,05 0,72 0,28 0,0200 NATIONAL DEFENSE 37,22 38,40 42,06 42,77 45,33 45,0201 Military Forces of the Russian Federation 35,39 36,11 33,07 35,59 37,11 39,0204 Preparation of Economy for Mobilization 100,0 100,0 100,0 100,0 100,0 100,0205 Preparation of and participation n ensuring collective security and peacekeeping activity 100,0 100,0 100,0 0206 Nuclear weapons sector 100,0 100,0 100,0 100,0 100,0 100,0207 Implementation of international obligations in sphere of militarytechnological cooperation 100,0 41,05 45,22 46,90 50,65 100,0208 Applied research in sphere of national defense / / 98,37 93,94 93,69 93,0209 Other issues of national defense / / 2,49 8,79 24,38 23,0300 NATIONAL DEFENSE AND LAW ENFORCEMENT 23,33 20,79 28,52 31,64 31,07 31,0302 Internal security agencies 3,40 3,01 4,76 6,31 5,16 5,0303 Internal military forces 13,21 11,10 11,76 10,31 9,80 10,0306 Internal security agencies 100,00 98,91 97,80 95,49 97,31 99,0308 Frontier service agencies 19,73 22,88 100,00 98,97 97,62 100,0309 Prevention and liquidation of consequences of emergency situations and natural disasters, civil defense 0311 Applied scientific research in sphere of national security and law-enforcement activity 43,69 41,74 59,02 62,39 50,65 51,0312 Applied scientific research in sphere of national defense / / 73,95 66,41 64,43 75,0314 Other issues in sphere of national defense and law enforcement / / 8,26 50,71 39,95 50,0400 NATIONAL ECONOMY / / 0,05 0,02 0,44 1,0411 Applied scientific research in the sphere of national economy / / 5,23 5,0412 Other issues in the sphere of national economy / / 0,12 0,06 < 0,01 1,0500 HOUSING AND PUBLIC UTILITIES SECTOR / / 3,42 0,85 13,0501 Housing sector / / 4,22 5,69 16,0700 EDUCATION 2,76 2,69 2,39 2,0701 Pre-school education 2,03 2,17 2,44 2,0702 General education 1,51 1,91 2,14 1,0704 Secondary vocational education 1,06 1,03 1,02 0,0705 Retraining and advanced training 16,85 15,78 17,22 1,0706 Higher vocational education 3,15 2,93 2,53 3,0709 Other issues in sphere of education 0,30 0,33 0,28 0,0800 CULTURE, CINEMATOGRAPHY AND MASS MEDIA 0,17 0,17 0,21 0,0801 Culture 0,14 0,10 0,16 0,0804 Periodical press and publishing houses 13,46 7,45 2,57 2,0806 Other issues in sphere of culture, cinematography and means 0,02 0,15 0900 HEALTH CARE AND SPORTS 4,30 3,99 2,57 3,0901 In-patient clinics 5,61 4,66 2,94 3,0902 Out-patient clinics / / / / / 12,0905 Health resort services / / / / / 16,0907 Epidemiological welfare / / / / / 2,0908 Sports and physical culture 0,28 0,26 0,24 0,0910 Other issues of healthcare, physical training and sports 1,1000 SOCIAL POLICY 0,1003 Social support 0,1100 INTERBUDGETARY TRANSFERS 0,16 1101 Funding to budgets of other level 0,50 Source: IET estimates based on the indicators of 2003-2008 (indicators for 2003-2007 are presented in accordance with the structure, introduced in January 2008).

Not applicable due to amended budget structure.

It is planned to increase twice monetary procurement for military personnel in 2008 by 9 per cent, while allocations for the Ministry of Defense staff in real terms will grow by 17.5 per cent (or by 23 per cent in terms of CPI). However, the target, set forth by the RF President to raise the incomes of military personnel by 1.5 times by the end of 2008, will not be achieved. In the most optimistic projections in terms of inflation (8.5 per cent in 2008), the incomes of military service members will grow only by 30 per cent, even with regard to the mentioned double increase of monetary procurement.

The expenditures for military training operations in 2008 amount to RUR 22 billion 301 million (increased by 14 per cent), whereas the bulk of those funds is allocated for lubricants (RUR 20 billion 745 million). Therefore, expenditures for military training operations are more generous; by the decision of the Minister of Defense, in December they are increased four times, from RUR 244 million to RUR 1 billion million43, but the optimistic picture looks different, if one is aware of the reverse measure, implemented earlier by the Chief Economic Department of the Ministry of Defense.

Expenditures for logistic support will amount to RUR 100 billion 276 million, having reduced by 8 per cent as compared with the preceding year. Therefore, one can see, that continuously over the years petroleum, oil, and lubricant purchases, made by the Ministry of Defense, should not exceed 2.8 million tons.

Even if the Ministry of Defense is able to purchase 3 million 147 thousand tons, planned for 2008, this will not substantially improve military training operations, because in spite of the additional purchase of more than 200 thousand tones of aviation kerosene in 2007, an average flight experience of the RF Air Forces pilots within the year increased only from 40 to 42 hours.

While the year 2008 is declared by the Ministry of Defense as the year of food procurement service, funding for foodstuffs procurement (RUR 21 billion 856 million) in real terms for some reason happened to be by 18 per cent lower than in the last year. A similar trend is observed in regard to clothing procurement, where the reduction makes 23 per cent in real terms, that is, the negative trend in military procurement to provide only 60-70 per cent of required uniforms is sustained.

In this context, it is undoubted, that in the first half of the year the Ministry of Defense will be forced to raise an issue to the government to amend the federal budget with regard to the real demands and dynamics in prices for petroleum, lubricants, as well as for food products.

Results of National Project Health Fulfillment in S. Shishkin Measures taken within the framework of Priority National Project in the Field of Public Health Service (National project Health) improved material and technical equipment of primary health care and contributed into the increase of availability of some kinds of health services to the population. However ineffective use of a part of the means could not be avoided. The influence of the project on the populations health has no reliable evidence so far.

Financing of the National project Health in 2007 was made at the expense of the federal budget and governmental off-budget funds in concordance with the federal laws On the federal budget for 2007 from 19 December 2006 No 238-FZ, On the budget of the Federal Fund of Compulsory Health Insurance for 2007 from 29 December 2006 No 243-FZ, On the budget of the Fund for Social Insurance for 2007 from 19 December 2006 No 234-FZ. RUR 131.1 billion was allocated from these sources to fulfill the projects measures. In addition, the remains of the funds that were not used for measures financing in 2006 at the rate of RUR 12.3 bln were spent in 2007. Thus, real government expenses for the project were equal to RUR 143.6 bln in 2007 (in 2006 78.9 bln).

Making use of the data published by the Ministry for Health Care and Social Development of the Russian Federation44 and Federal Service on Surveillance in Health Care and Social Development of the Russian Federation45, let us analyze the fulfillment of the National project and effectiveness of its components.

Expenses for the project from the federal budget and government off-budget funds were approximately 10% of the total expenses of the government for health care in 2006-2007. This sum is evidently insufficient K. Raschepkin Now we go forward on all fronts //Krasnaya Zvezda, February 5,. 2008 ( 18).


The data of the Federal Service on Surveillance in Health Care and Social Development, cited in the work N. V.

Jurgel, E. L. Nikonov Monitoring of the National priority project in the field of the health care fulfillment // Quality management in the field of health care and social development No 2, 2007, p. 3-7 [Menedgment kachestva v sfere zdravookhraneniya i socialnogo razvitiya, 2, 2007, s. 37] to provide quick and considerable improvements. There are, however, some shifts in regard to availability and increase in quality of the health care.

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