ON THE LEGAL POSITION
AND ON FINANCIAL AND ECONOMIC
ACTIVITIES OF MILITARY ORGANIZATIONS
The establishment of market relations in Russia entails a deep reconstruction of all spheres
of life in society, in the state, and for all entities involved in business, not only commercial
ones. The rejection of the planned economy shifts the ground to areas which are in principle
new: both the mechanisms of financing and material supply and the so-called budget
enterprises and organizations, including force structures of the state like the Armed Forces,
other troops and military formations. Their inclusion into the system of economic ties,
which are being established, has been regulated to date by the legal acts and directives of
the executive authorities. The Absence of clear and strict order and rules defining the rights
and duties of various links of military organization of the state in their economic activities
and mutual relationship with other business entities acting in economic sphere creates is
often problematic: particularly, on the one hand, when troop supplying is performed on the
residual principle; and on the other hand due to the creation of the opportunity for various
kinds of misuse of funds.
In this context, it seems unconditionally necessary to legislatively determine the order in
which the assets of military organizations are formed and utilized, as well as regulating their
performance of financial and economic activities. The above is the precise designation of
the Draft Law which has passed two readings in the State Duma. Without dwelling specially
upon its paraphrased contents, I would like to emphasize that it should become an important
instrument contributing to the integration between the Armed Forces and the civil society.
Several points are considered to be especially important in it.
The bill provides for the opportunity of military organizations obtaining a legal status
(which are understood as the bodies of military administration, amalgamations, formations,
military units, institutions, including the military educational institutions of vocational
training to all military and force structures). Besides, it is stipulated that the attachment of
the status of legal person to a military organization shall be performed on the grounds of the
resolution of the Government of the Russian Federation or the federal executive authority
which manages any given military organization and exercises the rights of ownership of its
property in the framework established by the civil legislation of the Russian Federation; the
latter is applied also in relation to the deprivation of such status to a military organization.
Also defined by the Draft Law are the organizational and legal forms of military
organizations as legal persons, the sources of their funds and the contents of their financial
and economic activities. It is contemplated that the said activities will be performed within
the framework of the valid legislation of the Russian Federation, including the Civil Code of
the Federation, the Budget Code of the Russian Federation and other normative acts. In
particular, the Draft Law binds the military organizations with maintenance of bookkeeping,
statistical and operative accounting of compliance with the expenditure estimates,
registration of assets and liabilities, production of established financial, bookkeeping and
statistical reports.
At the same time, the Draft Law takes in to consideration the specific nature of military
organizations which is determined by their designation. As highlighted in the Draft Law,
they are created for the purposes of ensuring the defense of the country and the security of
the state. By virtue of this, the legal position of the military organizations which are also
legal persons, the order of their foundation and registration have certain peculiarities. Thus,
the bodies of military administration, amalgamations, formations, military units of the
Armed Forces of the Russian Federation, the other troops and military formations and
bodies may be created and may act only in the organizational and legal form of a federal
state institution. The data on their state registration, on their actual names are produced for
familiarization with taking into account the requirements of the Russian Federation
legislation on the state secrecy.
Besides this, the Draft Law establishes the order, in compliance with which the financial
and economic activities of the military organizations shall be under permanent control from
the part of the bodies of the state power and governance – the Clearing House of the
Russian Federation (the control and audit body to the President of the Russian Federation),
the Ministry of Finance of the Russian Federation, bodies of the federal treasury, the federal
executive authorities which manage military organizations, as well as other federal
executive authorities within their competence.
Thus, the Draft Law under consideration proposes a legislative completion of protracted
discussions on legal status of military organizations. Perhaps, not all aspects are stipulated
in it in desirable form. For instance, it is difficult to agree that the legal status of the military
organization is scrutinized – if not exclusively, but basically – through the prism of its
financial and economic activities. In general terms, the sources of funding of military
organizations are defined too. However, on the whole, the Draft Law is aimed at elimination
of the existing gaps in legal regulation of military and civil relations, at development and
enhancement of legality in vital activity of the Armed Forces, the other troops, military
formations and bodies.