Tuesday, September 4, 2018

Moscow Extends Classification to Spending on Dual Use Technologies, Further Compromising Published Data

Paul Goble

            Staunton, September 3 – To much fanfare, Rosstat, the Russian government’s statistical arm, has begun to use international accounting rules for defining the country’s GDP; but it has significantly reduced their value by classifying not only military spending but also spending on dual use technologies.

            These two categories of spending currently amount to approximately 4.7 percent of Russia’s GDP, according to RBC journalists Ivan Tkachov and Olga Ageyeva, who come up with that figure by subtracting the total of all public categories from the overall total which is also public (rbc.ru/economics/03/09/2018/5b87cd299a7947da99b885f0?from=newsfeed).

                Using that method, they suggest that Moscow is now spending 4.1 trillion rubles (60 billion US dollars) on defense acquisition and development this year but note that the failure of Rosstat to publish data on these line items reduces the ability of analysts to determine what is going on and means that political figures often give out misleading information.

            The decision not to publish either data set, of course, did not originate with Rosstat, Yevgeny Nadorshin, an economist at PF Capital, says. It came from the defense ministry, and there is no chance now that anyone will be able to reverse it.

            Vasiliy Zatsepin, a specialist on military economics at the Gaidar Institute, says that the failure of the government to publish such data leads to a lack of transparency and ineffective spending. “It is senseless to classify purchases and prices,” he continues. “This only creates major problems in the administration of the defense sector and is counter-productive.”

            According to him, “complete, adequate, and timely statistics and simply a necessity if we want to understand economic processes and take correct decisions and develop the country.”  Unfortunately, the expanded classification of spending “deprives experts of what they need for analysis and means politicians and officials are giving out numbers unconnected with reality.”

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