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#11 - JRL 7023
Moscow Times
January 17, 2003
Military Spending Boosted By 33%
By Lyuba Pronina
Staff Writer

The government boosted 2003 military spending by a third Thursday, approving $3.25 billion for arms procurement and the development of new equipment.

While the windfall promises to provide the military with better hardware and the defense industry with more orders, a government proposal to divert arms export proceeds toward the development of next-generation weapons could end up undermining the industry, defense analysts said.

Some 60 percent of the 109.8 billion rubles earmarked for the military this year will go for buying weapons and repairs, Deputy Economic Development and Trade Minister Vladislav Putilin told reporters after the government meeting.

The rest will be spent on researching and developing more than 3,000 projects, he said. More than 200 new weapons units are expected to be completed and ready for military use.

The military budget includes a 30 percent boost in funds for the procurement of equipment for anti-terrorist operations, Putilin said.

The military will buy 11,000 apartments, while financing for food, uniforms and fuel will be kept at minimum levels.

The federal space program will get 7.3 billion rubles ($230 million), of which 1.5 billion rubles will go for the GLONASS global navigation system.

Putilin said the Strategic Nuclear Forces will receive adequate funding but less than the conventional forces.

Some 10.7 billion rubles will be spent on decommissioning military hardware, the Economic Development and Trade Ministry said. Among them may be a chunk of the naval fleet. Navy chief Admiral Vladimir Kuroyedov told the Krasnaya Zvezda newspaper recently that about 20 percent of the fleet will have to be decommissioned for lack of financing.

Putilin said more than 1,000 enterprises will participate in the arms procurement program and contracts will be signed by the Defense Ministry until May.

The program has always been classified, and Putilin would not detail what the military plans to secure this year.

The Interfax-Military News Agency quoted a senior Defense Ministry official last November as saying that the military spent 80 billion rubles on arms, repairs and R&D in 2002.

The unidentified official said the military received six Topol-M intercontinental ballistic missile complexes, four launch vehicles, six spacecraft, a diesel submarine, three anti-submarine ships, 132 self-propelled howitzers and 10 naval aircraft.

In 1985, by comparison, the military received 440 jets, 346 helicopters, 14 ships, six nuclear submarines and 36,000 vehicles.

Marat Kenzhetayev, an analyst with the Center for Arms Control, predicted the military would probably secure more Topol-Ms and S-300 air defense systems this year.

It will also need more helicopters and C4I systems to boost the coordination and combat readiness of units in Chechnya, said Konstantin Makiyenko, deputy head of the Center for Analysis of Strategies and Technologies.

Both analysts agreed that upgrading existing equipment would be vital since financing is nowhere near Soviet levels and an across-the-board rearmament is not expected to start until 2010, as ordered by the state armament program signed by President Vladimir Putin early last year.

Air force chief Colonel-General Vladimir Mikhailov said Wednesday that up to 25 percent of the air force's tactical aviation fleet will be upgraded in 2003-06. This year, about 20 Su-27s will be upgraded to fourth-plus generation multipurpose warplanes, he said. In addition, some Mi-24 helicopters will be upgraded to include all-weather nighttime capabilities.

Development will continue on a fifth-generation fighter for a scheduled maiden flight in 2006. Work on unmanned aerial vehicles, or UAVs, will also be a priority after Defense Minister Sergei Ivanov ordered that more emphasis be placed on the program, Mikhailov said.

Sukhoi chief Mikhail Pogosyan, whose company is working on the next-generation fighter, said last month that Sukhoi intends to step up development of UAVs in 2003.

Meanwhile, the Economic Development and Trade Ministry is putting together a program under which part of the R&D on new equipment will be financed by the profits earned by defense companies on arms exports, ministry officials said. Exports exceeded $4 billion in 2002 and 2001.

Makiyenko said Russia must make R&D a priority to avoid lagging behind the rest of the world but slammed the plan "to confiscate export revenues" from defense enterprises.

"This will kill the industry," he said. "If the government wants to take a slice of somebody's profits, it should be from the oil sector not the defense industry."

"Increasing the budget is a very positive step," said Anatoly Dolgolaptev, president of the League of Assistance to Defense Enterprises. "But it is still not enough to develop next-generation technology."

He cautioned that those working in R&D are rapidly graying and that more money is needed to attract younger blood and lay the ground for innovation. The average R&D worker is between 50 and 60 years old, he said.

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