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The growth in the national economy in 2000has also embraced the military security area. This sector is understood as the system consuming a certain part of the federal budget and delivering to citizens, society and the state such a service as the provision of military security. The economic measurement of such a service is not evident, though it is understood in its extreme points: for example, the excessive militarization of the USSR that had put an unbearable burden onto the Soviet economy and constituted one of the reasons for its breakup, while on the opposite pole there is a clear insufficiency of attention to security that leads to the ‘not wishing to feed up your army, you will have to feed the alien one situation.

In addition to the military security service, the related sectors of the national economy deliver a number of other services that can be measured more distinctly in economic terms, such as prevention of illegal catch of seafood in our territorial water and illegal importation of material values across the border (border guards), protection of the government communication and information network (FAPSI), the state security service. It is also known that some components of the military organization participate in economic activities, such as, for instance, contribution to the construction and maintenance of security of federal highways, or cargo transportation by means of military aircraft. Another, less evident, though rather significant in terms of economic effect of the Russian MIC’s operations and activities of the military structure organizing its work is HI-TEC, providing both military and double-use technologies, as well as competitive export weapons. In 2000, the revenues form this kind of operations exceeded USD 3.7bln. At the same time the transfer of the public company Rosoboronexport under the general control of the Defense Ministry demonstrated the importance of the national military structure in ensuring the economic success. In addition, such kinds of activity as the transfer of some technologies from the military sphere to the civic one, sales and utilization of dismissed military equipment, etc. appear considerable in terms of the volume of their economic contributions.

That is why, while evaluating the information on military expenditure of RF, one should bear in mind that with a robust setting of economic relations, the noted expenditure is not just a mere ’subtraction’ from the public revenue, as it might seem at the first glance.

The data below is borrowed from the 2001federal budget (FB-2001) and structured by recipients of budget funds, including, first, components of the military structure of RF (The Defense Ministry and the Armed Forces (AF) that the Ministry controls), other armed forces, military structures and agencies, and non-military agencies.

The tables below provide structured enlarged data and estimates of general expenditure, and (with respect to Defense Ministry) some data on allocation of the respective funds. In addition to plain military expenditure, there is also the data on the expenditure that is related to the country’s past military activities, such as, for instance, pensions to the former military personnel and members of their families that, though not being military expenditure, anyway, are channeled through financial agencies of the national military structure in the course of execution of the budget.

The military and related expenditure of RF in 2001

Item

Code*

Amount, as Rb.mln.

Proportion in FB, as %

Proportion in GDP, as %

Information source

1

Expenditure on the military structure within the composition of the the national defense outlay

Overall spending on ‘national defense’, including:

0400

214 688

18,0

2,77

Annex 8 FB

1.1

Construction and maintenance of the Armed Forces

0401

203 061

17,0

2,62

Annex 8 FB

1.2

Provision of the mobilization and out-of- the camp training

0403

2 278

0,19

0,03

Annex 8 FB

1.3

Preparation of and contribution to collective security and peace-protection

0404

2 716

0,23

0,04

Annex 8 FB

2

Expenditure on the military structure within the composition of the law enforcement and provision of security of the state outlay

Overall spending on law enforcement

, :

0500

131 621

11,0

1,70

Annex 6 FB

2.1

Board guard agencies and board guards forces

0506

11 943

1.00

0,15

Annex 8 FB

2.2

Armed Forces of the Interior Ministry

0502

10157

0,85

0,13

Annex 8 FB

2.3

State Security Agencies*

0505

21191

1,78

0,27

Annex 8 FB

3

Other expenditures on the military structure

3.1

Maintenance and equipping of the forces of the Ministry for Emergency Situations

1302

12455

1,04

0,16

Annex 1 FB

3.2

The federal service of railway forces

0403

1882

0,16

0.02

Annex 1 FB

3.3

Federal Service for Special Construction

0707

502

0,04

Annex 1 FB

4

Additional spending on the national defense, law enforcement activities and provision of state security

4.1

Provided in compliance with Art. 79 of FB-2001 received by the Defense Ministry and allocated for the financial provision of operations of the Armed Forces of RF**

N/a

Art. 79 of FB

4.2

Provided in compliance with Art.78 of FB- 2001 revenues of the Interior Ministry and the Ministry for Emergency Situations allocated for the material and technical provision and solution of social problems of military personnel ***

N/a

Art. 78 of FB

Notes:

*Presumably, the amount provided in p.2.3 comprises the expenditure on maintenance of the Federal Security Service, Foreign Intelligence Service, and other structures that provide the state security of RF

**Art. 79 of FB-2001 stipulates that the funding for the noted purposes is provided at the expense of revenue generated by organizations controlled by the RF Defense Ministry that are financed on the basis of revenue and expenditure estimate, from the provision of services on contract base, from sales of weapons, military equipment and property available from the RF Defense Ministry’s stock in the course of implementation of military and technical cooperation, fees charged for the training of foreign military specialists, and from the income from commercial operations permitted under the RF law.

***Art.78 of FB-2001 stipulates the funding for the noted purposes is provided at the expense of the income from sales of weapons and special equipment and other movables from the military and technical cooperation, fees charged for the training of foreign military specialists, and from the income from contract-based services delivered by the Interior Ministry and the Ministry for Emergency Situations.

In addition, let us note that the expenditures in p.4 were not stipulated in the budget - that is why they are attributed to extra-budgetary expenditure. It is likely, though, that such a name has discontinued to be correct.

Military expenditure beyond the military structure

Item

Code*

Amount, as Rb.mln.

Proportion in FB, as %

Proportion in GDP, as %

Information source

From the Section national Defense of FB (see p.1 of the first table)

4.1

Military program of the Ministry for Nuclear Power

0402

6330

0,53

0,08

Annex 8 to FB

4.2

Provision of operations of the sectors for the national defense

0407

303

0,03

Annex 8 to FB

4.3

The Russian Defense Sports and Technical organization (ROSTO)

0403

33

-

Annex 1 to FB

From other Sections and Sub-sections of FB

4.4

Mobilization arrangements of the economy

2300

500

0,04

-

Annex 8 to FB

4.5

Civil Defense

1303

22

0,002

-

Annex 1 to FB

4.6

Subsidies and subventions to ZATO=s

210

10 149

0,85

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