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Wed, 06/25/2008 - 14:32
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Moscow gives huge funds to Chechnya, but will control spending By Lyudmila

MOSCOW, June 25 (Itar-Tass)- Moscow is giving Chechnya money for postwar reconstruction with a generous hand, but at the same time warns that control of the way it is spent will be strict.

The once rebel republic in the North Caucasus, devastated by two wars, is to get less than it had asked for, but it looks contented anyway.

Federal subsidies for Chechnya's reconstruction and social and
economic development in 2008-2011 will total 120.6 billion rubles, the
presidium of the Russian Cabinet declared on Monday.

In order to prevent the funds from being wasted or misspent the
authorities have devised a new mechanism of the regional authorities'
financial responsibility. If budget money disbursed during the year for a certain purpose is used irrationally, or if the expected result has not been achieved, next year Moscow may decide to give nothing.

Prime Minister Vladimir Putin said this new federal program was
fundamentally different from the previous one.

"Then, in the past, everything had to be started from scratch again and again. Now the situation is different," the prime minister said. "Now we are shifting to the republic's systematic, comprehensive development.

Over the four years to come tens of thousands of jobs are to be created in the region and industrial output is to be doubled."

Also, as Putin said, over the same period the social and transport
infrastructures are to be 'pulled up', the buildings of the Chechen State University, Grozny Oil Institute, Chechen Teachers Training College, some vocational schools, district hospitals, television and radio broadcasting facilities, a print-shop and Severny Airport repaired or built anew.

Before, the Ministry of Economic Development was commissioned to
coordinate and control the program's implementation. How, this mission has been handed over to the Ministry of Regional Development, led by efficient Dmitry Kozak, a man with vast experience of struggle for financial discipline in the North Caucasus.

"The government is in no mood of letting money go down the drain
again," Kozak said.

"First and foremost the program implies greater responsibility of
federal bodies of executive power - the customers representing the state, and of the bodies of state power in the constituent territories of Russia, in this particular case, of the Chechen Republic - for achieving specific results," Nezavisimaya Gazeta quotes Kozak as saying.

In case of failure to comply with the terms on which the subsidies
were extended, if the funds are misspent or produce no expected results, a special mechanism of financial responsibility will be set in motion.

"Subsidies for a specific purpose may simply be denied the next year," Kozak said.

He expects that the Chechen budget's need for subsidies is to be eased considerably over years.

"The Chechen Republic's tax revenues are to go up 110 percent or more, and subsidies, reduced by 25 percent," Kozak said, adding that now federal subsidies accounted for 95 percent of Chechnya's budget.
The daily Vremya Novostei recalls that the experience of restoring
Chechnya after the first war (1994-1996) was not a very successful one.

The daily recalls that construction work and bombardments then
continued simultaneously, so it was extremely difficult to find out
whether this or that building of industrial plant was destroyed before or after multi-million federal funds were injected into its repairs.

Moreover, there were several authorized banks responsible for money
transfers to Chechnya - all quite capable of inventing a way of how to
make the funds disappear without a trace and 'without much ado'.

The legend has it in Grozny there existed whole phantom neighborhoods - residential areas allegedly restored, blown up and rebuilt again and then again - although none of them ever existed in reality.

Naturally, during the second military campaign the federal government did its utmost to minimize the risks of losses and embezzlement, so it was very cautious in giving money for repair work. It was not before 2004 that Chechnya started receiving about 30 billion rubles a year for repairing itself.

The Chechen government, for its part, criticized the federal
authorities more than once for giving two little money, and two slowly. If the funding proceeds at the current rate, the effects of the war will take half a century to repair, Grozny said. The Chechen authorities have repeatedly mentioned tremendous sums of money Russia is obliged - in their opinion - to invest in the republic.

However, by the autumn of 2006 Grozny presented a draft reconstruction budget the Kremlin found quite realistic. The four-year social and economic development plan was estimated at 180 billion rubles, of which amount 38 billion rubles was to be earned by Chechnya on its own.

In a word, after the program's approval Grozny will get less than it would like to, but far more than it has been getting so far.

Today's Chechnya, according to eyewitness accounts, is no longer the eyesore it was a mere three-four years ago. Bullet and shrapnel-riddled perimeter fences adorned with 'Don't Shoot! People at Work Here' warnings have been replaced by encouraging sights of construction boom.

No more phantom neighborhoods built on quick sand. Grozny is re-emerging from the ruins and it is already taking quite an impressive shape, says the daily Vremya Novostei.

"Even these face-lifting repairs, say most observers, would be hardly possible, if Chechnya's President Ramzan Kadyrov did not spend part of Chechnya's own funds, and kept waiting for federal donations," the daily says.

As he spoke at the opening ceremony of the Noah's Arc film festival earlier this month, Ramzan Kadyrov said his favorite movie was the rebirth of Chechnya's economy, social sphere and culture.

"I can say with certainty that I can spend day and night watching the grandiose processes of revival afoot in Chechnya. I was a witness to the horrors and tragedies of the republic's yesterday. Today is a different time. This is the film I like the most," Kadyrov said.