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Monday, May 15, 2006

The Neo-Soviet Defense Budget

As reported in the Moscow News, former Kremlin bigwig Andrei Illarionov (pictured) exposes the flagrant disinformation set forth by Vladimir Putin in his state-of-the-union address. Putin is erecting a Neo-Soviet defense budget, spending vastly more of Russia's wealth on guns than countries in the West, just as the USSR used to do -- and that very practice brought the USSR to its knees. Russia has a massive AIDS crisis and a declining population, but it still thinks it has more to fear from foreign enemies than from itself. So it goes in Russia.

Illarionov expressed doubt about Putin’s statement that Russia’s defense expenditure is comparable or even lower than that of other nuclear states. The expert said the purchasing power of the Russian ruble as compared to hard currencies had not been taken into account when making calculations. “Russia’s defense expenditure in 2005 amounted to slightly more than 3% of GDP, whereas in Great Britain the figure was 2.77% and 2.5% of GDP in France. Therefore, the percentage share of Russia’s defense expenditure in GDP exceeds the expenditure of Britain or France. It is not lower, as was said in the presidential address.”

“If we compare Russia’s defense budget with that of the USA, it is true that in absolute figures, taking into account the exchange rates, Russia’s military expenditure is 25 times lower than that of the USA. This only proves that the figures which we are using are absolutely the same figures that were used by the aides who were preparing these figures for the address,” Illarionov went on to say. At the same time, he added that “it would be incorrect to compare GDP and military budgets on the basis of exchange rates”.

“All comparable figures should be given not on the basis of exchange rates but on the basis of the so-called purchasing power parity. The thing is that in various countries different quantities of goods of the same consumer quality, so to speak, can be purchased for the same amount of money exchanged at a bank or a currency exchange bureau,” he went on to say. “Calculations made this way will show that Russia’s defense expenditure in 2005, according to the lowest purchasing power parity figures, amounted to approximately 45bn dollars expressed in prices as at 2002. In France, also in 2005, military expenditure amounted to 36bn dollars, also calculated on the basis of purchasing power parity expressed in prices as at 2002, which is about 20 per cent lower than in the Russian Federation. In Great Britain the figure was about 52bn dollars, expressed in the same units, which is about 15 per cent more than in Russia,” Illarionov said. Taking into account that Russia’s GDP is lower than that in France and Great Britain, it turns out that its defense expenditure is comparable to that of the above two countries. Also, Russia’s defense expenditure per capita exceeds that of France and Great Britain by almost 50 per cent, the former presidential aide said.

Illarionov said the method of calculating Russia’s defence expenditure used by the president’s aides to prepare his state-of-the-nation address did not reflect the true state of affairs. “If they have done this to distort the picture on purpose, this is either stupidity or betrayal because, in my opinion, to provide false information to a state leader is a crime,” he said.

An item from Richard Lourie's recent column in the Moscow Times captures Russian attitudes neatly: "The Moscow History Museum probably does not get many U.S. visitors. The woman running the kiosk had launched into an anti-American tirade: '... buying up everything ... apartments, natural resources ... they want to force us to our knees!' Too bad Dick Cheney wasn't there." While Russians are worrying about foreign enemies, Lourie says, they are still ignoring the fact that they are their own worst enemy by far. He observes: "Russian service still ranges from the desultory to the sullen. At Yeliseyevsky grocery store, after parting with your cash to a cheerless checkout person, you get to bag your own upscale goods. At all but a few of the better restaurants the wait staff seems humiliated by the act of service."

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