Russia to boost 2005 military spending 17 Jun 2004 15:36:40 GMT
(Recasts, adds defence official's call to raise spending)
By Maria Golovnina
MOSCOW, June 17 (Reuters) - Russia will boost domestic arms spending by a third to $6 billion in 2005, industry sources and media said on Thursday, but a top defence official called for more cash to help the sector recover from a post-Soviet crisis.
The arms industry -- the core of the Soviet economy during the Cold War -- shrank in the 1990s. Production picked up under President Vladimir Putin but still remains below Soviet levels.
Frequent military accidents such as the sinking of the Kursk submarine in 2000, as well as the army's inability to end a military conflict in rebel Chechnya, have underscored the need for urgent reform of Russia's shoe-string military machine.
Defence spending, including security and emergencies, will rise 146 billion roubles to 894 billion roubles ($30.8 billion) in 2005 -- or about five percent of the economy, according to a draft 2005 budget obtained by Reuters.
Industry players also confirmed a newspaper report the budget was likely to allocate more than $6 billion to state purchases of hardware -- about 30 percent more than in 2004.
The rise is in line with Putin's plan to bolster military capability by reforming the ill-equipped army, reorganising the nuclear sector and boosting defence exports to Asia to offset lower sales to eastern Europe.
But key defence players were still disappointed by the draft, which was discussed by ministers on Thursday and is subject to revision.
"I call on you to clarify the 2005 budget from the point of view of national security and defence," the chief of Russia's military staff, Anatoly Kvashnin, told a cabinet meeting.
"The draft budget does not give grounds to suppose it would be possible to boost national security and lead the armed forces out of crisis."
Hardware producers were also sceptical as they said the state seemed divided over which defence sectors to favour.
"The good thing is that for the first time in many years, state spending has reached the level of annual arms exports: about $5-6 billion," said a high-ranking official in a big state-owned defence company. "But there is a long way to go because in the West this number is many times higher."
Defence officials have hinted the government wants to concentrate on researching next-generation technology, especially for the strategic rocket forces, rather than purchasing modified versions of existing stocks.
Aviation, growing at double-digit rates due to rising exports, hopes to get the largest slice. Jet sales form the backbone of Russian arms exports and insiders say the government could give it priority due to the industry's high profitability.
Very important, if Russia and China mean what they say this is a significant turn of events.
If the sovereignty and territorial integrity of either Russia or China is threatened the other comes to the rescue. Therefore if Taiwan pursues its desire to become independent of China which would be a blow to China’s territorial integrity Russia will support China.
Consequently if the autonomous region of South Ossetia, where nearly the entire population holds Russian passports or are ‘citizens of Russia’, is granted its request to become part of the Russian Federation China then will support Russia against Georgia.
And so forth.
This rescue or support includes a military-technological partnership.
-Am
Putin happy with Russia, China in intense contact 19:31 2004-06-17 The Shanghai Cooperation Organisation finished summitry in the Uzbek capital today, upon which Presidents Vladimir Putin of Russia and Hu Jingtao of China met on their own.
President Putin has an official visit to China appointed for October next, he announced during the bilateral conference. Sino-Russian contacts have an extremely close schedule for this year-symbolically, as it is a 55th anniversary of bilateral diplomatic relations established, he added.
The two presidents will also meet during an APEC forum in Santiago de Chile, said Mr. Putin, who is enthusiastic about the present state of Russian-Chinese relations. They could not have taken a better turn, what with sufficient mutual confidence in politics, military-technological partnership and, last but not least, economic ties-suffice it to mention the trade turnover for January-April, which increased by 37 per cent, as against last year's initial four months.
President Hu is sure Sino-Russian relations will spectacularly gain while the Russian leader is on his second presidential term.
He highlighted the many current international problems and changes. The involved situation demands an ever closer strategic partnership of his country with Russia. China is looking forward to President Putin's visit, and is sure it will be a success.
China has contacts with Russia among its top political priorities. The two countries are supporting each other on essential matters that concern either's sovereignty and territorial integrity, said Mr. Hu.
The bilateral trade turnover made four billion US dollars for the first quarter-year, and the partners have made twenty billion their target for the entire year, he pointed out.
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