MOSCOW: Most Russians want new oil money spent on social projects, a new survey shows. The economy of Russia, the second largest exporter of oil after Saudi Arabia, is riding high on a boom in oil prices. Oil and gas add up to more than half of all Russian exports, and taxes on sales account for more than a third of government revenue.

Soaring oil prices have helped Russia out of a particularly steep downturn in the late 90s. New revenues are helping feed a stabilisation fund set up by the government to finance social and development policies through the ups and downs of the switch to the market economy after the fall of communism in 1990.

But disputes have arisen within Russia where this new money should be spent. In a poll of about 1,600 adults conducted by polling agency VTsIOM, about 88 per cent of respondents said the state should spend the money on social needs such as education, housing and healthcare.

About a third of respondents wanted the money spent on healthcare, and 28 per cent on pension hikes. Another 27 per cent wanted it spent on agricultural subsidies, and 26 per cent on raising salaries for civil servants (several respondents gave more than one option).

Post-communist Russia is still confronted with social and economic problems resulting in rapidly declining living standards. The majority of Russia’s 104 million people live below subsistence levels.

The stabilization fund was set up last year to check this decline and to smoothen budget spending. By July 1, the fund was down to 21.6 billion dollars after the government spent about 15 billion dollars from it for early repayment of debt to the Paris Club, the name given to a group of Western creditor nations.

Disputes are growing whether the stabilisation fund should be used for such macro-economic management or on social projects. President Vladimir Putin warned cabinet ministers, regional governors and lawmakers at a meeting in the Kremlin (the seat of Russian government) this week against using oil revenues flooding Russia’s budget coffers to finance populist projects and so push inflation even higher.

Putin said the 2006 budget should be “a budget of social and economic development, not of squandering”, and the national economic programme should aim to lift living standards.

State projects have often turned into black holes for budget cash, and Putin criticized the huge number of unfinished construction projects from the 1990s. He said the bulk of budget spending will go into increased wages, and provision of social facilities and infrastructure.

While some of Putin’s reassurances are in line with popular demands expressed in the survey, the allocation of substantial money from the stabilisation fund for meeting the budget deficit has raised concern just how much money will be made available to back Putin’s promises.

Putin has succeeded, however, in diverting large amounts of oil revenue to the state budget away from the private profits of such companies as Yukos and Sibneft. (Former Yukos boss Mikhail Khodorkovsky was jailed for nine years recently after being convicted for financial fraud, in a disputed ruling).

Sibneft boss Roman Abramovich, 38, who is also governor of oil-rich Chukotka regiona has faced criticism for diverting oil profits into ventures such as buying the London football club Chelsea.. He has spent close to half a billion dollars on players since he bought over the club in 2003. Deputies from the state duma (parliament) have been calling for a thorough probe into the financial accounts of the district.

The government is meanwhile counting on oil prices rising even further next year to feed increased spending. That is despite the fact that the oil price has also gone through some dips recently.

Deputy prime minister Alexander Zhukov has said the government will spend more than planned in 2006 given an anticipated rise in oil prices. “The government plans to increase spending on large investment and social projects,” he said in a statement posted on the Kremlin website.

But disputes fester within government over what constitutes social spending. “We are concerned about the decisions and initiatives being made at the regional levels of administrations which do not directly benefit the majority of the people, or contribute to the development of their society,” duma deputy Vladimir Vasileyev told IPS.

He also blames the government for failing to support the “real” economic sector and to supervise the regional patterns of expenditures.

“The existing policy of state support for regions is ineffective, and has not helped solve the main task of equal social and economic development of regions. There must be an initiative to develop the social sectors in the regions to bridge the widening development gap,” he said. —Dawn/The InterPress News Service.