Russia's defense minister remains top newsmaker without single interview

At his initiative Russian tax service is setting up a specialized inter-regional inspection for the defense enterprises. It is aimed at solving specific tax problems and creating a control mechanism independent of the Ministry of Defense. The new structure will become the tenths specialized branch of the tax authorities. Most likely the new office will be located in St.Petersburg. The head of it is still to be appointed. Military-industrial directors face large-scale comprehensive check up. However, the new initiative is not just about order. It can be viewed also from a point of view of the state policy aimed at preventing the bankruptcy of the defense companies. For example, strange, as it may seem, but the state tax authorities are regarded as the biggest danger for the state strategic companies, which operate at the brink of bankruptcy. Another positive angle of this initiative is that it is to facilitate the compensation of the VAT to the defense companies, a problem often referred to by the top military managers. Also the military directors hope that the new structure will support them in the disputes with the tax service over the R&D related accountancy, now often in favor of everybody but the defense industry.

At the same time the MoD itself is facing reforms. The new minister created a working group which is to get rid of the duplicated financial and economic functions of the MoD’s depts dealing with the defense order. The group is to provide the recommendations which will be used as a basis for the reforms inside the ministry. Final result will be attributing all distribution functions to the Agency on the Deliveries of Arms, Military, Special Hardware and Materials civil (FAMP). This became known after the first-since-USSR meeting of the management of the council of financial and economic service of the Armed Forces held these days in St.-Petersburg.

In Serdyukov’s own wording his initiative is aimed at «creating more transparent system of rational and target oriented use of the budget funds in the Armed Forces». Army, Air Force and the Navy are subject to inventory. He does not exclude new appointments. The new working group consists of the managers that came to the MoD from the Tax Service together with the Minister himself and the top people of the General Staff.

Yuri Seleznyov

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Author`s name Dmitry Sudakov