MER and SP Doubt GOZ Prospects

Andrey Klepach

Yesterday the Ministry of Economic Development (MER) and the Audit Chamber (SP) expressed serious doubt about the government’s ability to fulfill the state defense order in 2011 and 2012.  Speaking to a Duma hearing on the draft budget for 2012-2014 covered by RIA Novosti, Deputy Minister Andrey Klepach said:

“Our Gosoboronzakaz won’t be substantially fulfilled this year and it’s highly probable it won’t be fulfilled next year.”

Deputy SP Chairman Valeriy Goreglyad also told the parliamentarians that expenditures on the army and national defense are:

“. . . not only the least transparent, but also the least effective from the point of view of using state resources, particularly those connected with the Gosoboronzakaz.”

“Therefore, in the first place, a different system of contracting is needed in this area, like in no other [area], a transfer to a federal contracting system where the entire technological cycle [planning to contract fulfillment] is supported.”

Other media outlets largely repeated RIA Novosti while adding a little background.  They reviewed President Medvedev’s comments on the failure of GOZ-2010, and on GOZ problems this spring, as well as repeated government and industry failure to meet Prime Minister Putin’s deadlines for completing all GOZ-2011 contracts.

These outlets also mishandled Defense Minister Serdyukov’s statement from last week about having only 20 billion of 581 billion rubles in GOZ-2011 funds remaining to obligate.  Several news sources inaccurately called it GOZ-2012 money.  As ARMS-TASS reports, the government’s Military-Industrial Commission won’t start reviewing the draft GOZ-2012 until mid-November, and no contracts for next year have been negotiated or placed.

To make things just a bit worse for the government, ex-Finance Minister Aleksey Kudrin repeated his budget priorities to a U.N. Millennium Development Goals conference yesterday in Moscow.  According to Utro.ru, Kudrin said:

“I already expressed my position that the increase in military expenditures in Russia is creating a threat to increasing and supporting programs in the area of health and education.  I would give less of an increase in money now for military needs than for health.”

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