Wednesday, March 27, 2019

Kremlin Economizing on Everything but Security (to Defend Itself) and Giant Projects (to Feed Its Wealthy Allies), Shelin Says

Paul Goble

            Staunton, March 26 – Preparing for even greater isolation, Russian powers that be are “now economizing on almost everything and particularly on programs” that are for ordinary Russians, Sergey Shelin says. But they are not reducing spending on security because that is about self-defense or on giant projects, the easiest way to give money to their rich allies. 

            Spending on social services will continue to fall, while funds for the military and security services will continue to rise but at a slower rate than over the last seven or eight years. The exception to this pattern will be the continued use of giant projects of one kind of another so that the Kremlin can give money to its friends (

            That reflects a careful calculation of its needs and threats, Shelin continues.  The moneyed friends of Putin need to be kept happy to prevent them from opposing the Kremlin leader; but the population as a whole can continue to see its taxes and fees go up while its benefits are continually and, in some cases, dramatically cut. 

            “It is often said,” he observes, “that the simplest way to find money for social needs is to stop spending it on foreign friends from Bashar to Maduro. Of course, it would be good and correct to do that. But neither the Syrian war [nor the spending on Venezuela] plays a decisive role in Russian financial balances.”

            “For the last several years, approximately ten or so billion dollars have been spent on these things – an amount somewhere on the level of the planned estimates of the 80-kilometer road from Tuaps to Sochi.”  In sum, not enough to solve the problem. And ignore reports that the government is spending more on social needs. They aren’t true.

            The amount supposedly diverted to social needs is far less than any one of the giant projects that the regime is involved with.  That has been obscured by a propaganda campaign consisting of three elements: the announcement of a large number of relatively small shifts, the suppression of statistics showing how bad things are for the population, and deceptive plans about retirement savings that will take money from the population but not give it back at least anytime soon.

            Instead that money and much else is being diverted to 12 or 14 “national projects,” giant spending programs. A few of these may tangentially benefit the population; but that isn’t the primary goal. Instead, such giant projects are useful to the regime because they allow it to pass tax moneys into the hands of its friends.

            Not only do all of these projects carry a price tag far in excess of what they will actually cost, thus allowing the wealthy friends of the Kremlin to get even wealthier via government subsidies, Shelin says; but they are not scheduled for completion until years from now, an arrangement that may mean they will get the money but the country won’t get the results.

            From the point of view of the Kremlin and its allies, that is a wonderful arrangement; from the point of view of the Russian people, it is a disaster.

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