The speaker of Russia's upper house of parliament vowed Thursday that the Federation Council would veto the government's draft budget because of inadequate spending on defense.Vladimir Shumeiko, chairman of the council, criticized the State Duma for allocating the Defense Ministry too little funding when it adopted the 1994 budget on its second reading Wednesday. The budget approved by the lower house allocated 40.6 trillion rubles ($21 billion), far less than the 55 trillion sought by the military."The Federation Council will naturally not agree with this budget. At least, I personally will absolutely not agree to adopt the budget as it stands," Shumeiko said.Defense Minister Pavel Grachev said the budget would not meet the needs of Russia's armed forces, Interfax reported."There will only be enough to pay the salaries of servicemen and other personnel," Grachev was quoted by the news agency as saying. "There can be no talk of placing orders for new technology and equipment, nor of repairing our ships."Shumeiko and Grachev were supported by angry rallies by defense workers in various parts of the country. Russian Television reported work stoppages and demonstrations in Novosibirsk and Barnaul, two centers of the defense industry.The turmoil over defense spending was accompanied by reports of a major government shakeup that would elevate a major player in the military equation to the post of prime minister. The newspaper Komsomolskaya Pravda reported that President Boris Yeltsin was planning to replace his prime minister, Viktor Chernomyrdin, with Yury Skokov, his former Security Council chief and a key figure in the defense industry.Yeltsin's press secretary, Vyacheslav Kostikov, angrily rejected the reports.Yeltsin originally supported a defense increase, but another spokesman, Anatoly Krasikov, declined to say Thursday what the president thought of the Duma's budget vote.Yeltsin is scheduled to hold a press conference Friday.Krasikov did allow that "the process of approval of the budget is not over yet," a reference to Federation Council's power of veto.If the upper house refuses the budget, the Duma would need a two-thirds majority of the 450 members to override the veto.The Duma voted 227-40, with 32 abstentions, in favor of the budget -- only one vote above the minimum of 226 votes needed for passage.After a third reading, considered a formality, the Duma will submit the draft budget to the upper house. If it approves the draft it will be submitted to the president for approval or veto.But before the budget reaches Yeltsin's desk, it will be the subject of furious lobbying by the Defense Ministry. Ivan Skrylnik, a spokesman for the ministry, said the military would stick to its stance that "55 trillion is the subsistence level."The Duma left the budget deficit intact at just under 10 percent of gross domestic product and stayed within spending limits it approved last month.Just before Wednesday's vote, a majority in the Duma still demanded an additional 17 trillion rubles for defense. They were joined in their stance by Grachev and the Federation Council, which is dominated by leaders of Russia's regions, where the slowdown of the defense industry is seen as a major economic catastrophe.The failure to meet the military budget request is likely to fuel labor unrest in many of Russia's troubled defense industries, which have cut or interrupted production and put workers on half-time or unpaid leave.Sergei Shuklin, chairman of the Russian Union of Defense Industry Workers, said in a telephone interview that more than 1,500 workers from 11 defense contractors protested in Novosibirsk, while rallies in Barnaul, Perm and Penza drew over 1,000 each. No independent confirmations were available on attendance at the rallies which were planned before the Duma vote.Members of the Duma Defense Committee were somber at a press conference Thursday. Marina Dobrovolskaya, a Women of Russia deputy, predicted doom for Russia's defense industry.Dobrovolskaya made the proposal for the 17 trillion rubles in additional defense spending, but ended up voting for the tighter military spending. All the other members of the defense committee either supported the draft or abstained."But it's June, six months have already passed," Dobrovolskaya said, explaining her sudden turnaround. "If we wait till December, trying to convince everyone, we will have no budget for 1995."Alexander Mikhailov, a Communist Party member of the committee, voted for the budget, although he said he thought it was unworkable. But the responsibility for its failure would fall on the government that proposed it, Mikhailov said, adding: "Let them deal with it. It's theirs."