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Today's paper. Last Updated: 06/02/2012

Duma Rebuffs Military, Passes Budget

In a last minute about-face, the State Duma on Wednesday rebuffed heavy lobbying to boost defense spending, instead approving a tight budget supported by the government. The deputies, many contradicting pledges they had made only moments before, voted 227 to 40, with 32 abstentions, to approve the draft budget for 1994 on its second reading. The Duma abandoned plans to consider nearly 300 amendments, mostly to boost spending, instead giving blanket approval to a few changes recommended by the government that maintain the budget deficit at almost 70 trillion rubles ($36 billion), just under 10 percent of gross domestic product. Spending stands at 193.3 trillion rubles, revenues at 124.4 trillion rubles. The draft budget will face a third vote in the Duma, considered a formality, before it is submitted to the Federation Council, the upper chamber of parliament, which last week voted to support the defense spending increase. The Duma vote is a victory for tight spenders in the government but a rebuff to Russia's once-mighty military, which lobbied furiously for a 17 trillion ruble raise to 55 trillion rubles. President Boris Yeltsin, in debt to the military after it saved him in last October's uprising, on Tuesday called for an increase in defense spending to offset inflation, but he left politicians guessing how much spending he wanted. There was no comment from the president's office on the vote. It was unclear on Wednesday why so many deputies changed their minds. Once they realized their bid for more military spending was doomed, some appeared to fall back to putting the responsibility for the tight budget -- and its consequences -- solely on the government. The Duma last month approved the budget on its first reading, setting limits on spending, revenues and the deficit, but many deputies later said they planned to retract this vote. "It's very surprising," said a source in the Defense Ministry, responding to the vote on condition of anonymity. "Of course we don't like it." The 55 trillion rubles requested by Grachev, he added, "was the absolute possible minimum." Grachev, in a newspaper interview published Tuesday, complained that Russia's once mighty army was kept on "starvation rations." But the government offered only 3.5 trillion rubles extra to defense, arguing that it could not pay for more. First Deputy Finance Minister Vladimir Petrov told the Duma that the government supported only the amendments proposed by the budget committee. Aside from the 3.5 trillion rubles for defense purchases, the amendments included 4 trillion rubles more on social welfare, culture, education and police. But the increases were matched by cuts elsewhere by delaying internal and foreign debt payments, while reducing spending on the government bureaucracy. Members of the Communist Party, the Liberal Democratic Party of ultranationalist Vladimir Zhirinovsky and several centrist factions interviewed shortly before the vote pledged adamantly that they would insist on a 55 trillion ruble defense budget. Shortly thereafter, most of them voted for the budget without the increases. Looking grim and blushing, Communist Party leader Gennady Zyuganov refused to acknowledge that he had changed his mind when he left the Duma, maintaining that the military "will receive as much as is necessary." Zyuganov said he had approved the budget largely because of a compromise proposal that would set aside any unplanned revenues from privatization for additional defense spending. Earlier, Zyuganov had supported a seven-fold increase in expected revenues from privatization, ignoring warnings from officials who said that the government did not expect any increase. Yegor Gaidar, leader of the Russia's Choice faction, called the compromise proposal "an obvious hoax," but added that he supported it. But Gaidar, the architect of Russia's economic reforms when he was acting prime minister, abstained on the budget vote, only hours after telling other factions he would vote for the draft. "It could undoubtedly have been a lot worse," said Gaidar, "but the budget has one weakness. It is clearly unrealistic." While his party was happy to see the defense spending increase rejected, it found government estimates of revenues far too optimistic, Gaidar said. This mixed praise led Russia's Choice deputies to sharply diverge in voting, with most voting either against or, like Gaidar, abstaining. For similar reasons, the Yabloko and Liberal Democratic Union factions announced they would vote down the budget -- but most members voted to abstain or did not even vote. Even Mikhail Zadornov, a Yabloko member and chairman of the committee that submitted the budget, abstained.




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