Daily Archives: April 21, 2010

Putin Reports on OPK and Military Housing

Putin Reports to the Duma

Yesterday Prime Minister Vladimir Putin reported on the government’s work over the last year to the State Duma.  His remarks focused on government efforts to handle ‘bread and butter’ economic and social issues during the 2009 crisis.

There was relatively little on military issues, except for some remarks on defense industry and military housing. 

He largely reiterated familiar themes like increasing modern weapons to 70-80 percent of the inventory; he congratulated those working on the fifth generation PAK FA and he emphasized development of a new strategic bomber.  Without being too specific, Putin suggested that OPK enterprises with heavy tax arrears might be getting some relief.

On housing Putin promised almost 52,000 military apartments this year.  But Duma deputies didn’t ask him about press reports that many of the 45,600 built last year remain empty because of construction defects, bureaucratic red tape, and even the fact that some were not really built in the first place.  Putin reiterated an earlier promise to house servicemen who didn’t get apartments in the first post-Soviet decade.  And he noted that privatization of service housing remains a possibility since the deadline has moved back.

First Putin’s description of the economic scene.

Putin said Russia’s GDP fell a record 7.9 percent, and industrial production declined 10.8 percent last year, but the government responded by greatly increasing budget expenditures—27 percent more than in 2008—even though revenue declined almost 21 percent.  Putin said the government used Russia’s accumulated reserves to finance the shortfall.  It spent 5 trillion rubles—1 trillion more than in 2008—on pay, pensions, social benefits, education, health, and housing, according to Putin.  He said 1.65 trillion rubles were invested in ‘developing the economy.’  Putin concluded that most of the government’s anticrisis program, the use of the budget, reserves, Central Bank resources, and state guarantees worked, and prevented the destruction of the real economy and the financial system.

Last year’s State Defense Order (GOZ) was one part of last year’s government spending program to counter the economic crisis.  Putin says the government spent 1.1 trillion rubles—150 billion more than in 2008.  He continued:

“During the crisis we also rendered targeted support to the defense-industrial complex and high-technology enterprises.  Last year’s gloomy forecasts by some politicians on the collapse of the defense-industrial complex were not borne out.”

“I know how many serious problems have accumulated here, we’ve been seriously occupied with this.  If you noticed, I’m always conducting special meetings on distinct sectors, there we deeply immerse ourselves in these problems.  Yet the volume of output of military production in 2009 increased by almost 13 percent—this during a general contraction!  The growth of production in shipbuilding generally was 31.6 percent, in the missile-space industry—16.5 percent, in aviation—9 percent.”

“Tests of fifth generation fighters are going successfully, and I want again to thank everyone who worked on this machine, who now gets it ‘on its wings.’ “

“Of course, we do not limits ourselves to just this.  Following the fighter we need to begin work on the future aviation system long-range aviation [PAK DA], this is new Russian strategic bomber, missile carrier.  We conducted a serious inventory in the defense-industrial complex and are embarking on formation of long-term programs of rearmament in all fundamental combat systems:  in command and control and intelligence systems, armored and naval equipment, highly-accurate weapons.  As a result, the share of modern weapons in the troops should increase to 70-80 percent, and this will indeed be  weapons of a new generation.”

“The question of restructuring the tax arrears of OPK enterprises has come from [Duma] deputies.  Enterprises have such a possibility.”

“In December 2009 the government issued a corresponding decree, calculated for 2010.  It talks about indebtedness which arose before 1 January 2009 (the KPRF raised these questions).”

 On military housing, Putin first addressed war veterans in line since before 2005.  He said 28,000 of these veterans have been housed, and he wants to house any who were left out or joined the queue later.  The government has directed 34.5 billion rubles at this, according to Putin.

Turning to more recent servicemen, Putin says:

“We have also not retreated from another most important task, another priority.  In 2009 the Defense Ministry delivered 45,600 new apartments to servicemen.  You know there has never been such a thing.  In 2010 another 51,900 apartments will be allocated.  That is, over two years—almost  one hundred thousand.  As a result, we will finally end the demand of armed forces servicemen for permanent housing, as we promised.”

“But we have another category of people whom we should not forget.  The question is about those who retired from military service in the 1990s or beginning of the 2000s, without receiving housing.  I remind you, in that time due to the inpossibility of solving this problem at the federal level, they sent them into municipal lines [for housing], where, unfortunately, things are moving slowly.  Or more precisely—practically not moving.”

“Of course, people are not to blame for the fact that at the time the government simply could not afford to meet its obligations to them.  And we were obliged to return to this issue.”

“It was originally planned to complete the provision of housing to such citizens in 2012-2013.  But I think we can do it earlier—to give retired military men housing in 2010-2011.  For this purpose we will ask you [Duma deputies] to direct an additional 34 billion rubles.”

“Incidentally, free housing privatization has been extended until 2013.  Now, veterans and servicemen can calmly arrange ownership of housing.”

Just to complete this picture, Deputy Defense Minister and Chief of Housing and Infrastructure, Grigoriy Naginskiy, recently admitted that only 21,061 of those 45,600 apartments from 2009 are actually occupied because of poor construction and problems formulating ‘social lease contracts.’  But Naginskiy promises that 99 percent of the 45,600 will be occupied before 1 June.  That’s quite a promise.  Viktor Baranets has written recently about builders’ efforts to ‘economize’ and squeeze out extra profits on military apartments.  Olga Bozhyeva has written about servicemen turning to the courts over housing issues, as well as ‘virtual’ Defense Ministry apartments that don’t exist.  The Main Military Prosecutor has actually investigated cases of this in Chekhov.

To round out the economic picture, Putin asserted that signs of recovery include a forecast of 3 percent or more GDP growth for 2010, and industrial production growth of 5.8 percent and real income growth of 7.4 percent for the first quarter of the year.