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Document on Power Ministries (Update)

The Funding of the Power Agencies of the Russian State: An Update, 2005 to 2014 and Beyond

Julian Cooper

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Countries :

Russia

Research Fields :

Economy
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  • 1 J. Cooper, "The Funding of the Power Agencies of the Russian State", Journal of Power Institutions (...)
  • 2 For a detailed discussion of the analysis of expenditure on the largest claimant of power agency, t (...)

1In a previous work published by the Journal of Power Institutions in Post-Soviet Societies the author presented an analysis of the funding of the power agencies of the Russian Federation in the years 1999 to 20061. The present article updates the analysis to cover the years since 2005 to examine trends in funding and prospects for the future. It adopts the same approach as the previous work, which establishes the background in terms of the agencies covered and the sources of data employed2.

2Sources

3For the years 2005 to 2013 the data shown are those presented in annual laws on the implementation of the federal budget. These are available (in Russian only) on the presidential website but for the period covered a more readily accessed source is the website of the Federal Treasury3. For 2014, the data shown are those of the law on the federal budget as of the end of May 2014, as published by the Federal Treasury4. In accordance with current practice, the law on the federal budget for 2014, adopted in early December 2013, included provisional allocations for the years 2015 and 2016. Unfortunately, in recent years there has been a reduction in the level of transparency of the Russian federal budget and now open publication is restricted to non-classified spending only. Given that a large proportion of spending on national defence and almost all spending on the security services is classified, the law itself cannot be used to establish spending intentions. However, in the budgetary process, as the draft law passes through the State Duma, more information is made available on spending intentions and this provides a first approximation to the final version of the budget. The data presented here for 2015 and 2016 are those presented in the draft budget before amendment by the Duma5. Usually, such amendment tends to be of a marginal character. Finally, the annual GDP data are those of the Federal Service of State Statistics (Rosstat). GDP statistics tend to undergo amendment: the figures shown here are the latest available at the time of writing6. Having established the sources of data, the table that follow present the evidence.

Table 1 - The funding of power agencies, 2005 to 2009 (million roubles, current prices)

2005

2006

2007

2008

2009l

Security servicesa

Border service

66,000

35,908

91,539

48,798

116,836

53,787

147,709

64,921

179,302

78,809

Total security

101,908

140,337

170,623

212,630

258,111

MVDb

MVD ITc

Penal system

Procuracy

Justice

FSKONd

Courier service

147,805

26,987

61,494

20,734

19,599

9,064

1,347

166,029

38,382

78,369

27,332

28,015

11,250

1,560

189,781

46,791

93,505

34,475

39,527

13,040

1,786

243,089

54,740

119,633

39,996

50,445

16,513

2 232

270,318

57,912

140,775

49,508

38,728

19,028

2,440

Total public order

287,030

350,937

418,905

526,416

578,709

MChSe

GUSPf

9,527

12,543

11,220

18,503

20,920

21,459

24 735

25 188

29,362

29,395

Total emergencies

23,070

29,723

42,379

49,923

58,757

"National defence"

581,144

681,821

831,875

1,040 840

1,188,174

All power agencies

993,152

1,202,818

1,463,782

1,829,809

2,083,751

Total budget exp.

3,514,348

4,284,803

5,986,562

7,566,639

9,660,061

P.a. as % total exp.

inc security

public order

emergencies

national defence

28.26

2.90

8.17

0.66

16.54

28.07

3.28

8.19

0.69

15.91

24.45

2.85

7.00

0.71

13.90

24.18

2.81

6.96

0.66

13.75

21.57

2.67

5.99

0.61

12.30

GDP

21,609,766

26,917,201

33,247,513

41,276,849

38,807,219

P.a. as % GDP

inc security

public order

emergencies

national defence

4.60

0.47

1.33

0.11

2.69

4.47

0.52

1.30

0.11

2.54

4.40

0.51

1.26

0.13

2.50

4.43

0.51

1.28

0.12

2.52

5.37

0.67

1.49

0.15

3.06

Source: as above, p.1.

4Notes:

a. Federal Security Service (FSB), External Intelligence Service (SVR), Federal Guard Service

(FSO), Federal Committee for Technical and Export Control (FSTEK)

b. Ministry of the Interior

c. Internal Troops of Ministry of the Interior

d. Federal Service for

e. Ministry for Civil Defence, Emergencies and Liquidation of the Consequences of Disasters

  • 7 On GUSP, see: "The Funding of the Power Agencies of the Russian State", The Journal of Power Instit (...)

f. Main Administration for Special Programmes7

Table 2 - The funding of power agencies, 2010 to 2013 (million roubles, current prices)

2010

2011

2012

2013

Security services

Border service

FSTEK

192,708

78,974

27

237,698

84 ,42

35

259,174

85,515

34

309,225

132,912

36

Total security

271 709

322,475

344,723

442,173

MVD

MVD IT

Penal system

Procuracy & inv com

Justice

FSKON

Courier service

288,816

64,319

149,118

51,171

39,071

19,448

2,510

340,016

75,628

166,272

58,978

48,804

21,326

2,616

766,142

122,347

206,325

63,436

52,808

23,393

2,816

763,130

128,544

263,267

77,905

56,721

31,333

3,732

Total public order

614,453

713,640

1,237,267

1,324,632

MChS

GUSP2

32,845

30,958

42,560

34,642

49,834

37,118

53,769

35,137

Total emergencies

63,803

77,202

86,952

88,906

"National defence"

1,276,514

1,515,959

1,812,386

2,103,579

All power agencies

2,226,479

2,629,276

3,481,328

3,959,290

Total budget exp.

10,087,945

10,935,222

12,894,987

13,342,922

P.a. as % total exp.

inc security

public order

emergencies

national defence

22.07

2.69

6.09

0.63

12.66

24.04

2.95

6.53

0.70

13.86

27.00

2.67

9.60

0.67

14.06

29.67

3.31

9.93

0.67

15.76

GDP

46,308,541

55,644,000

62,218,400

66,755,300

P.a. as % GDP

inc security

public order

emergencies

national defence

4.81

0.59

1.33

0.14

2.75

4.72

0.58

1.28

0.14

2.72

5.59

0.55

1.99

0.14

2.91

5.93

0.66

1.99

0.13

3.15

Source: as above, p.1.

5Tables 1 and 2 show actual spending. It can be seen that between 2005 and 2008 budget shares of spending on power agencies and also the GDP shares were fairly constant. In 2009, the year of greatest impact on the Russian economy of the global financial-economic crisis, the government endeavoured to maintain budget spending notwithstanding a sharp drop in the GDP. This led to increased GDP shares for spending on the power agencies although shares of total spending tended to fall as priority was granted to forms of budget spending that would counter the crisis and reduce its social impact. After 2010, with a gradual recovery of the economy, some new trends emerged. Budget and GDP shares of spending on defence increased, partly because of increased pay for officers, but mainly because of the implementation of the ambitious state armaments programme to 2020 for re-equipping the armed forces, signed into law at the end of 2010. At the same time, budget and GDP shares of spending on the security services and public order also increased, mainly under the impact of increased rates of pay. Since 2013 some new trends have emerged, as show in Table 3.

Table 3 - The funding of power agencies according to the budget, 2014 to 2016 (million roubles, current prices)

2014 budget law

2015 draft budget

2016 draft budget

Security services

Border service

FSTEK

310,371

141,255

36

329,689

139,892

34

336,691

130,476

34

Total security

451,662

469,615

467,201

MVD

MVD IT

Penal system

Procuracy

Justice

FSKON

Courier service

758,619

127,244

215,067

93,357

54,964

31,489

3,650

757,531

129,708

225,860

92,793

49,848

31,041

3,786

766,164

128,999

224,626

93,084

50,197

31,263

3,723

Total public order

1,284,390

1,290,719

1,298,056

MChS

GUSP

54,832

34,910

61,347

34,414

59,725

34,249

Total emergencies

89,742

95,761

93,974

‘National defence’

2,491,462

3,026,948

3,378,040

All power agencies

4,317,256

4,883,043

5,237,271

Total budget exp.

14,020,343

15,361,541

16,392,213

P.a. as % total exp.

inc security

public order

emergencies

national defence

30.80

3.32

9.16

0.64

17.78

31.79

3.06

8.40

0.62

19.71

31.95

2.85

7.92

0.57

20.61

GDP

71,493,000

76,077,000

82,303,000

P.a. as % GDP

inc security

public order

emergencies

national defence

6.04

0.63

1.80

0.13

3.48

6.42

0.62

1.69

0.13

3.98

6.36

0.57

1.58

0.11

4.10

Source: as above, p.1.

6As can be seen, a rapid increase in the share of spending on defence is envisaged, both in terms of total budget spending and GDP. This will arise because the implementation of the armaments programme will see significant year-to-year growth in the volume of deliveries to the armed forces of new armaments and other military equipment. But in order to limit the overall share of budget expenditure devoted to power agencies, the rate of growth of spending on other power agencies will be moderated, leading to reduced budget and GDP shares for the security services, public order and provision for emergencies. These trends over time are shown in Tables 4 and 5, which show data for an extended period, 2000 to 2016.

Table 4 - Shares of total funding of power agencies, 2000-2016 (per cent)

Per cent share of total funding of power agencies

Security

services

Public

order

Emergency

provision

National

defence

2016DB

2015DB

2014B

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

8.9

9.6

10.5

11.2

9.9

12.3

12.2

12.4

11.6

11.7

11.7

10.3

11.1

12.1

11.3

9.2

8.3

24.8

26.4

29.7

34.4

35.5

27.1

27.6

27.8

28.8

28.6

29.2

28.9

29.3

26.6

25.0

22.8

24.2

1.8

2.0

2.1

2.3

2.5

2.9

2.9

2.8

2.7

2.9

2.4

2.3

2.1

2.1

1.8

1.7

1.7

64.5

62.0

57.7

53.1

52.1

57.7

57.3

57.0

56.9

56.8

56.7

58.5

57.5

59.2

61.9

66.3

65.8

Table 5 - GDP shares of spending on power agencies, 2000 to 2016 (per cent)

Year

Security

services

Public order

Emergency

provision

National defence

All power

agencies

2016DB

2015DB

2014B

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

0.57

0.62

0.63

0.66

0.55

0.58

0.59

0.67

0.51

0.51

0.52

0.47

0.49

0.55

0.50

0.43

0.33

1.58

1.69

1.80

1.99

1.99

1.28

1.33

1.49

1.28

1.26

1.30

1.33

1.29

1.21

1.10

1.07

0.97

0.11

0.13

0.13

0.13

0.14

0.14

0.14

0.15

0.12

0.13

0.11

0.11

0.90

0.10

0.08

0.08

0.07

4.10

3.98

3.48

3.15

2.91

2.72

2.75

3.06

2.52

2.50

2.54

2.69

2.68

2.73

2.77

2.62

2.40

6.36

6.42

6.04

5.93

5.59

4.72

4.81

5.37

4.43

4.40

4.47

4.60

4.40

4.54

4.41

4.35

3.99

7Note, in both tables shares for 2000-2004 as The Journal of Power Institutions in Post-Soviet Societies, # 6/7, 2007, as f.n.1.

  • 8 See Russian Military Expenditure: Data, Analysis and Issues, pp. 41-43.

8To gain a better understanding of trends over time it is necessary to assess changes in the volume of funding in real terms. As the author has argued elsewhere, this is best done by using the GDP deflator rather than the retail price index8. Chart 1 shows the change in spending in real terms for the years 2000-2009 and the possible change for the years 2010 to 2016 if current, provisional, budget projections are realised. Funding of emergency provision has been omitted because of its relatively modest scale.

Chart 1 - Change in spending on power agencies of Russia, 2000-2010 and 2010-2016, and change of GDP during the same periods (per cent)

Chart 1 - Change in spending on power agencies of Russia, 2000-2010 and 2010-2016, and change of GDP during the same periods (per cent)

Source: Calculated by the author using the annual GDP deflator of Rosstat.

9It can be seen that the priorities of spending have undergone a fundamental change. Whereas the security services received the most generous funding during the initial period to 2009, in the main the years of Vladimir Putin's first two terms of office, the armed forces of the Ministry of Defence were kept on meagre rations, with spending growing on average at approximately the same rate as GDP. Since 2010 the priorities have been reversed. It is the military that has received top priority while the security services have been funded at an average rate similar to that of the growth of GDP.

10It remains to be seen whether the provisional spending intentions for 2014-2016 will be realised. With faltering economic growth a scaling down of spending plans may prove unavoidable, although this need not lead to any change in priorities. But it can be speculated that these changed priorities may not find favour in the security services, habituated under President Putin's rule to favourable budget outcomes. In these circumstances there must be a potential for new tensions within the ranks of the power agencies of the Russian state.

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Notes

1 J. Cooper, "The Funding of the Power Agencies of the Russian State", Journal of Power Institutions in Post-Soviet Societies, # 6/7, 2007, http://pipss.revues.org/562.

2 For a detailed discussion of the analysis of expenditure on the largest claimant of power agency, the Ministry of Defence, see the author's paper, Russian Military Expenditure: Data, Analysis and Issues, FOI Report, FOI-R-3688-SE, September 2013, Swedish Defence Research Agency, http://www.foi.se/en/Search/Abstract/?rNo=FOI-R--3688--SE.

3 Federal Treasury of Russia: http://www.roskazna.ru/federalnogo-byudzheta-rf/yi/; Presidential Administration, documents: http://www.kremlin.ru/acts.

4 http://www.roskazna.ru/federalnogo-byudzheta-rf/fb/, report, 1 June 2014.

5 As presented on the Duma website of draft legislation: http://asozd2.duma.gov.ru/main.nsf/(Spravka)?OpenAgent&RN=348499-6 (Federal law for 2014 and planned period 2015 and 2016).

6 http://www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/ru/statistics/accounts/#, accessed 2 July 2014.

7 On GUSP, see: "The Funding of the Power Agencies of the Russian State", The Journal of Power Institutions in Post-Soviet Societies, # 6/7, 2007, para. 19, http://pipss.revues.org/562.

8 See Russian Military Expenditure: Data, Analysis and Issues, pp. 41-43.

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List of illustrations

Title Chart 1 - Change in spending on power agencies of Russia, 2000-2010 and 2010-2016, and change of GDP during the same periods (per cent)
Caption Source: Calculated by the author using the annual GDP deflator of Rosstat.
URL http://pipss.revues.org/docannexe/image/4063/img-1.png
File image/png, 22k
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References

Electronic reference

Julian Cooper, « The Funding of the Power Agencies of the Russian State: An Update, 2005 to 2014 and Beyond  », The Journal of Power Institutions in Post-Soviet Societies [Online], Issue 16 | 2014, Online since 19 August 2014, connection on 23 June 2017. URL : http://pipss.revues.org/4063

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About the author

Julian Cooper

Centre for Russian and East European Studies, University of Birmingham, United Kingdom and Chatham House, London

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Copyright

CC BY-NC-ND 2.0

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