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Earnings

Russia plans record $46.5 bln arms spending in 2009

MOSCOW (Reuters) - Russian spending on arms will rise to a record $46.5 billion next year, a senior government official said on Friday, as the Kremlin moves to beef up the armed forces after a conflict in Georgia.

Russian national defence orders will rise to 1.2 trillion roubles ($46.55 billion) in 2009, 70 billion roubles higher than previously planned, Deputy Prime Minister Sergei Ivanov was shown saying on Russian television.

“We have managed to convince the Finance Ministry that the volume of state defence orders in 2009 will be 70 billion higher than previously planned,” Ivanov told Prime Minister Vladimir Putin.

“The overall volume of state defence orders next year are planned at a record level of 1.2 trillion roubles,” Ivanov said.

State defence orders includes spending on arms by all of Russia’s military organizations -- such as the Defence Ministry, Interior Ministry and special services -- as well as repairs and spending on research and development.

Ivanov did not give reasons for the rise but said prices for military goods was rising faster than government inflation forecasts.

President Dmitry Medvedev said on Thursday the five-day conflict in Georgia last month had shown the armed forces needed modernizing and that problems with equipment needed to be resolved.

Russia provoked an outcry from the West when it sent troops deep into Georgia after repelling a Georgian attack on the Moscow-backed rebel enclave of South Ossetia, which is internationally recognized as part of Georgia.

Putin hiked defence spending during his eight year presidency in an attempt to stop the decline of Russia’s once mighty fighting forces.

But domestic critics and former officers say the Russian armed forces are hampered by rampant corruption, poor discipline, faulty equipment and outdated battle plans which still focus on a major land war in Europe.

In Russia’s draft budget, spending on “national defence” is set to rise more than a quarter to 1.28 trillion roubles in 2009 from 1.02 trillion roubles this year. A more detailed breakdown of the spending is classified.

Putin also told Ivanov he had approved increases in spending on space programs and that he had signed a decree ordering an addition 67 billion roubles for the Russian GLONASS satellite navigation system.

Putin said an additional 45 billion roubles would be spent on the Federal Space Program over the next three years.

He said the money would be used to build a new cosmodrome in the Far East, finance the International Space Station and help space research.

Reporting by Guy Faulconbridge, editing by Matthew Jones

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