Sunday, June 5, 2016

Kremlin has Plenty of Money for Making War but Not for Helping People, Illarionov Says

Paul Goble

            Staunton, June 5 – Russian officials from Dmitry Medvedev on down who say that Moscow does not have enough money to index pensions and provide social welfare to the Russian people are simply lying, Andrey Illarionov says. Their own data show that the Kremlin has plenty of money for war, just not for the Russian people.

            As he often does, the Moscow economist uses Russian government statistics in this case from the finance ministry to show that the Putin regime has enough money to pay for a massive increase in military spending even as it pleads poverty as an excuse not to help ordinary Russians (

                In an Ekho Moskvy post entitled “No Money? Yes There Is!” Illarionov says that the Russian government has launched a remarkably effective campaign to justify the notion that the government doesn’t have the money to pay for welfare problems. “However,” he says, “the Russian government has money” for what it considers more important: war.

            Moreover, it is simply not true, the economist says, that the country’s reserve fund is running out. As of May 27th, it amounted to 389 billion US dollars, 21 billion more than on January 1.  But that is less striking than the rise in military spending that the Russian government openly acknowledges.

            In recent year, military spending as risen from 1.3 to 3.7 trillion rubles and now accounts for 23.8 percent of government expenditures and 4.6 percent of Russia’s GDP. Even adjusted for inflation and exchange rates, Russian military spending has gone up 75 percent over a period when the Russian GDP has risen only 5.4 percent.

            Put in more personal terms, the Russian government is spending “more than 25,000 rubles” on war for every man, woman and child in the country, an amount that if it were even partially redirected could save most social programs, including the promised indexing of pensions against inflation.

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