MOSCOW, July 14 - RIA Novosti. The State Duma at a plenary session on Friday adopted in the second reading a government bill on a new design of the budget rule and on the merger of the National Welfare Fund (NWF) and the Reserve Fund on the basis of the NWF.

budget rule

The cut-off bar for the price of Urals oil in the updated budget rule is set at $40 per barrel. Oil and gas revenues received at a price above this bar will be directed to reserves.

The bill defines the ceiling on federal budget expenditures, which cannot exceed the amount of oil and gas revenues calculated on the basis of the base oil price, the base export price of natural gas and the forecast exchange rate, non-oil and gas revenues, as well as public debt service costs. The base price for Urals oil is set at $40 per barrel in 2017 prices and is subject to annual indexation by 2% starting from 2018.

FNB + Reserve Fund

In the second reading, amendments were made to the draft law on the merger of sovereign funds of the Russian Federation on the basis of the National Welfare Fund. Deputy Finance Minister Vladimir Kolychev explained that such a merger is expected in conditions where the Reserve Fund is predicted to run out against the backdrop of oil prices that have fallen significantly over the past two or three years.

At the same time, the target component of this fund remains the same as the goals of the previous two funds: financing aimed at balancing the insurance pension system, financing the federal budget deficit and co-financing voluntary pension savings. It is supposed to form a joint fund at the expense of additional oil and gas revenues.

If the total amount of funds in the pooled fund exceeds 5% of GDP, it is proposed to limit its use to falling oil and gas revenues, if the total amount of funds is less than 5%, then limit this amount to 1% of GDP.

The amendments provide that the funds of the Reserve Fund are credited to the NWF (combined fund) no later than February 1, 2018. The Ministry of Finance will monthly publish information on the value of the assets of the National Welfare Fund at the beginning of the reporting month, the transfer of funds to the specified fund, their placement and use in the reporting month.

According to the approved amendments, until the amount of the NWF funds placed with the Bank of Russia at the end of the next financial year and (or) the first and (or) second years of the planning period reaches 7% of the forecast volume of GDP, the placement of the NWF funds in other financial assets is not allowed, for except for the financing of self-sustaining infrastructure projects started before January 1, 2018.

MOSCOW, 11 July. /TASS/. The Ministry of Finance of Russia published the parameters of the new budget rule in the "Basic Directions of the Budget, Tax and Customs Tariff Policy". The formula takes into account indicators such as the base price of oil and natural gas, the ruble exchange rate and the volume of non-oil and gas revenues. The document was published on the official website of the State Duma.

According to the new budget rule as amended by the Ministry of Finance, the base price for Urals oil is set at $40 per barrel in 2017 prices and is subject to annual indexation by 2% starting from 2018.

Thus, the ceiling on federal budget expenditures is calculated as the sum of oil and gas revenues (calculated based on the base oil price, the base gas export price, the forecast exchange rate, and the volume of non-oil and gas revenues) and the cost of servicing the public debt. This method of determining marginal spending makes it possible to ensure a deficit-free budget at the primary level with basic parameters, the Ministry of Finance notes.

Replenishment of reserves

Additional oil and gas revenues received as a result of exceeding the actual oil price of the established cut-off level will be directed to the Reserve Fund.

The volume of replenishment or use of the resources of the Reserve Fund is determined as the difference between the received oil and gas revenues and oil and gas revenues calculated at the base price of oil, the base price of exported gas and the actual exchange rate.

According to the Ministry of Finance, the budget rule is the only effective mechanism for minimizing the susceptibility of domestic economic conditions to fluctuations in external conditions that has proven itself for countries with raw materials. Significant fluctuations in oil prices can have a significant impact on economic growth and budget stability, inflation and the well-being of the population, exchange rates and interest rates in the economy.

In the event that the amount of the Reserve Fund's resources as of January 1 of the first year of the planning period falls below the level of 5% of GDP, the maximum amount of use of the Reserve Fund's resources cannot exceed 1% of GDP. Thus, based on this amount, the marginal volume of expenditures and / or other sources of financing the budget deficit are adjusted.

The history of the budget rule in the Russian Federation

In Russia, the budget rule was initially introduced in 2004, after which it was modified twice: in 2008 and with the end of the suspension period (2009-2012) in 2013. While positively contributing to the stability of the budgetary system, the design of fiscal rules prior to the suspension for 2016 did not adequately address the negative impact of oil price volatility on economic predictability and fiscal sustainability, the Finance Ministry acknowledges.

According to the agency, the increased volatility of the structure of relative prices (the real effective exchange rate of the ruble) over the past 15 years in Russia and in comparison with the dynamics of the currencies of commodity countries with an effective mechanism of budget rules is a clear illustration of the shortcomings of previous structures.

Transition period

The practical problem for the implementation of fiscal rules is that Russia has entered the declining phase of a long-term commodity supercycle with a minimum amount of reserve funds in sovereign funds, the Ministry of Finance notes. Thus, bringing budget expenditures to the level corresponding to the budget rules, on the one hand, cannot be carried out within a short period of time, and on the other hand, the volume of accumulated reserves is not enough to stretch the consolidation for a long period.

In this regard, the general mechanism of the new budget rules is supplemented by a period providing for a smooth transition to the new spending ceilings. At the same time, the duration of such a transition period is determined by the need to maintain a minimum safe level of reserve funds in sovereign funds.

Based on this limitation, the adjustment of budget expenditures to the level corresponding to the budget rules should be completed by 2019.

The transitional provisions of the new design of the budget rules began to be implemented already in 2017. At the end of January 2017, a decision was made to maintain additional oil and gas revenues when oil prices exceed $40 per barrel and conduct operations to buy/sell foreign currency on the open market. As a result, since February 2017, there has been a noticeable decrease in the correlation between the dynamics of the exchange rate and oil prices, a reduction in the risk premium for Russian assets, which means a decrease in the required return and equilibrium real interest rates in the economy, emphasize the Ministry of Finance.

During the adoption by the government of items of expenditure and income for 2013 and the planning period of 2014-2015. the so-called budgetary rules were actively discussed. It was a long-term program to use oil and gas revenues. The need for it is due to the high dependence on profit from resources.

The essence of the budget rule

The logic behind the introduction of the program is that the volume of existing government obligations, expenditures, and long-term investment projects should be less tied to the current oil price than in previous years. Fiscal rules are in fact an advance agreement on financial limits, aimed at preserving funds in the face of price fluctuations.

Relevance of the issue

Russia has different fiscal budgetary rules. These are, for example, the rates of certain types of taxes. They are set for regions and municipalities. There are also limits on public debt, the deficit of public funds, and so on. New fiscal rules relating to oil pricing in 2012 caused a lot of discussion. The fact is that the state fund was in a strong and rather dangerous dependence on oil and gas income. The adoption of the new order is considered a landmark decision for the Russian financial system and the economy as a whole. Fiscal rules were the way in which the annual uncertainty was supposed to be eliminated, which often led to erroneous conclusions about the price of oil in the coming year. The need for the program is due to the fact that the income of the federal financial fund is half dependent on the cost of this raw material.

Specificity

For 2013, the strategic objectives were laid as the basis and planning period for the next two years. They were formulated in the Decrees of the President, the Concept of the long-term socio-economic development of the country until 2020. In addition, the main provisions fixed in the Budget Address of the head of state became the basis. It was planned that in 2013-2015 tasks for socio-economic development will be addressed in the context of the priority of ensuring macroeconomic stability, sustainability and long-term balance of the financial system. It was supposed to reduce dependence on foreign economic conditions.

Basic goals

The main tasks that will be solved using the rule are:

General characteristics of the provisions

Strengthening of macroeconomic stability and financial stability budgetary rules are fixed by law. This will allow:

• Reduce the system's dependence on price volatility in the global energy market.
• Increase the accuracy of forecasting in the long term.
• Form the necessary amount of sovereign funds of the Russian Federation.

The accepted rules for drawing up a budget request suggest deducting excess oil and gas revenues from an increase in the base cost of raw materials. The direction of funds was proposed to be carried out until the standard indicator of 7% of GDP is reached. If the forecast oil price becomes lower than the base one, then the income arising from the decrease in income will be covered from the reserve fund. After its volume reaches the normative value, it is planned to transfer additional income from the oil and gas industry to the National Wealth Fund. Part of these funds may be used to finance infrastructure and other priority programs that do not cause obligations of the Russian Federation.

Implementation Features

The budget rules provide for a number of mandatory provisions. In particular:

Mechanism of action

If the average annual price of oil over the past 3 years, including the current one, has settled at a level that does not exceed the base price, the latter is calculated based on the average annual price for the specified three-year period when forming the budget. The advantage of this scheme, among other things, is that it forms protection against the likely pressure of the main indicator (as during the period, the balance of the Reserve Fund at the end of 2008 was 9.8% of GDP, by the end of next year - 4.7%, for 2010 - 1.7%. Expenditures of which amounted to about 3 trillion rubles in 2009. During the entire period of the existence of the Reserve Fund, there were noticeable fluctuations in percentage of GDP in the conditions of the last crisis.

Repeal of the budget rule

A number of experts are in favor of abandoning the adopted program. As an argument, it is suggested that if the marginal budget deficit increases, funds in the amount of this excess can be directed to investments in the country's economy. According to the Ministry of Economic Development, the growth rate will be significantly increased if the deficit in 2015 jumps from 1% to 1.5 of GDP (by 400 billion rubles). In 2014, the figure without applying the rule could have been 1.1% instead of the expected 0.5%. The introduced austerity regime has a negative impact not only on the investment development of the national economy, but also on the formation of the social sphere of the state. Some analysts believe that the transfer of natural resources into financial terms (the accumulation of funds as debt paper obligations of foreign countries in sovereign funds) is not optimal. Expenses for the development of one's own infrastructure, investment in production assets (the formation of material reserves) form a different system of the national economy.

In times of crisis, a number of experts believe that an improved and diversified domestic economic system is more important than foreign debt and may require much fewer resources to maintain.

Arguments in favor of the program

One of the most important advantages of the fiscal rule is to ensure preparedness for a prolonged drop in oil prices. The program should make it possible to automatically adjust the financial policy for a period of reduction or slowdown in the increase in the cost of raw materials. One of the main goals of its implementation is to ensure macroeconomic stability, and its revision may be a negative sign for investors. At the very beginning of the promulgation of the program, many decided that they were accepted by a budgetary institution. However, the program has nothing to do with them.

A fiscal rule is an economic policy that sets a ceiling on government spending based on the price of oil. Following this strategy makes it possible to avoid a state budget deficit in the event of sharp fluctuations in the oil and gas market.

 

The budget rule is an economic strategy in which the planned expenditure includes the marginal cost of oil and gas resources, which determines the amount of government spending. Funds received by the treasury in excess of this amount are directed to reserve funds. Accordingly, if hydrocarbon prices do not reach the planned value, the budget is subject to cuts to achieve a deficit of no more than 1 percent of GDP.

In 2004, against the backdrop of a sharp rise in prices for hydrocarbons, it was decided to prevent a possible pumping of the state budget with petrodollars. For this purpose, the Reserve Fund and the so-called "cut-off price" were formed. If the cost of a barrel of oil reached $20 (in 2006 - $27), the excess profits automatically went into savings, which made it possible to provide a "safety cushion" in the event of a crisis: and it came already in 2008

The meaning of economic strategy

Budget rule - what is it and what is its main essence? With a sharp rise in hydrocarbon prices, politicians are tempted to solve the country's social problems and engage in populism at the expense of the rain of petrodollars that have spilled onto the fertile ground of social tension. But, as practice shows, investments in health care, education, housing, infrastructure do not bring immediate returns, while long-term projects require rhythmic and long-term investments.

In order to tie the hands of populists and secure a reserve for the future, in countries that are overly dependent on the oil and gas market, a special rule is introduced to fill the budget. A "base price" of hydrocarbon resources is set, on the basis of which the maximum amount of government spending is planned. The deficit can be only a certain value of the planned income (in the Russian Federation - 3.7% of GDP).

This rule provides a number of advantages:

1. The emergence of wealth funds due to excess profits and unplanned income from the growth of exports of raw materials;
2. Smooth and gradual implementation of socio-economic projects;
3. Rapid adaptation of the country's spending to the price environment;
4. Formation of monetary reserves, designed to ensure the fulfillment of government obligations in the event of a crisis.

Due to a sharp drop in oil prices, the BP was canceled in 2016. Instead of filling the Reserve Fund, the state began to drain it intensively. Thus, by August 1, 2016, Russia's "stash" amounted to only $38.18 billion, against $91 billion available as of September 1, 2014. According to calculations, a barrel of oil under the current policy should have been about $80, which is far from reality.

Principles of operation of the budget rule in Russia:

1. The limiting value of the budget deficit is 1% of GDP;
2. Hydrocarbon prices are calculated based on objective economic indicators, not forecasts;
3. The maximum amount of oil and gas revenues that can be used to cover the needs of the state budget is 3.7% of GDP.

Budget rule in Russia in 2017-2018

Since its recent appearance, the considered economic principle has undergone significant changes once, and in 2016 it was completely frozen. In 2017, the BP can again be used to accumulate the Stabilization Fund. This prospect was publicly voiced by A. Siluanov, Minister of Finance of the Russian Federation. Profits generated when the price of a barrel of oil exceeds $50 will be transferred to reserves - if there is "public support" for that.

The updated principle is intended not only to “untie” the economy from oil dependence, but also to save the Russian ruble from sharp fluctuations. Its exchange rate against world currencies will receive a tougher "ceiling", above which it will not be allowed to rise. This measure can hardly be called popular, since it does not contribute to lower prices for imported goods as the Russian ruble strengthens.

Criticism of the restriction policy

Many analysts believe that the formation of reserves at the expense of excess profits is an idea that has no future, since resources are actually frozen. Instead of being channeled to lucrative projects, the money remains in limbo for years. When the turn of the crisis comes, the funds are used to pay off social tensions and again do not provide GDP growth.

In other words, the budgetary rule of filling the revenue part of the state budget does not lead to a radical restructuring of the economy, but to the accumulation and freezing of problems. To feel this fully, you can look at the example of Venezuela. High hydrocarbon prices, it was thought, allowed the country to cure many “chronic diseases” in a 10-year period: employment, overcrowding of cities, inaccessibility of education.

But a two-year decline in the price of oil has caused old difficulties to flare up again. Due to the deep dependence of the population on state subsidies, all social achievements collapsed within a few months. It should be noted that the economic policy in the Russian Federation turned out to be much more balanced, and instead of total impoverishment, the country faced only a significant correction of income. But without deep reforms in the financial and economic policy, Russia may also suffer the fate of Venezuela.

The rule is used as follows:

According to the official position of the Ministry of Finance, the budget rule reduces the dependence of the federal budget on the state of world markets, and also provides a "safety cushion" in case of a crisis similar to the 2008 crisis.

History of the rule

The principle embodied in the budget rule has actually been in effect since 2004, when the Stabilization Fund was formed. For this fund, the following formation procedure was in effect: oil and gas revenues over cut-off prices, which was $20 per barrel of oil in 2004, $27 in 2006. At the same time, the dynamics of oil prices significantly outstripped the growth of the cut-off price. According to experts, the Stabilization Fund received up to ¾ of additional income from a favorable external environment.

Decree of the Government of the Russian Federation of March 4, 2013 No. 293-r of the state program “Public Financial Management” provides for the possibility of subsequent extension of automatic stabilizers to other elements and levels of the budget system, among other things, in terms of the debt policy of the constituent entities of the Russian Federation and municipalities. Employees of the Ministry of Finance do not deny the possibility of applying the budget rule in the future for the budgets of regions and municipalities.

Opinions of economists and statesmen

The budget rule performs two main functions: it determines the algorithm for distributing oil and gas revenues in terms of sovereign funds and sets limits on the expenditure side of the budget. In connection with the latter function, there is a discussion in the expert community about the advisability of establishing such a rule.

There are two main views on the problem:

• it is necessary to soften the budget rule in terms of restrictions on government spending;
• it is necessary to maintain a strict rule limiting public spending.

Aide to the President of Russia Andrey Belousov, who proposed lowering the threshold of the Reserve Fund from 7 to 5% of GDP, in order to direct the released funds to the construction of roads, the state of which hinders the growth of the country's economy, as well as Deputy Minister of Economic Development Andrey Klepach, consistently advocates softening the budget rule.

This position is supported by the Minister of Economic Development Aleksey Ulyukaev, who said that the budget rule should be "sensitive to the investment cycle or vary depending on the investment situation." According to Deputy Prime Minister Olga Golodets, the rule has a negative impact on the economic and social development of the country - not only social, but also investment costs are in question.

The Ministry of Finance of the Russian Federation, represented by Minister Anton Siluanov, is in favor of maintaining a strict budget rule. The introduction of the budget rule was welcomed by the International Monetary Fund, represented by the head of the IMF mission in Russia, adviser to the European management, Antonio Spilimbergo.

Arguments for relaxing the rule

Arguments for keeping the rule

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Notes

Links

• Yakovenko Dmitry.(Russian). "Expert" No. 18-19 (897) (April 28, 2014). Retrieved May 3, 2014.
• Alexander Aivazov.. IA REGNUM (April 28, 2013). Retrieved May 3, 2014.
• . Budget.ru (March 29, 2013). Retrieved May 3, 2014.

An excerpt characterizing the Budget Rule

“Well, that’s good,” continued the regimental commander. “People get a glass of vodka from me,” he added, so that the soldiers could hear. – Thank you all! Thank God! - And he, having overtaken a company, drove up to another.
“Well, he really is a good man; You can serve with him,” Timokhin subaltern said to the officer walking beside him.
- One word, red! ... (the regimental commander was nicknamed the red king) - the subaltern officer said, laughing.
The happy mood of the authorities after the review passed to the soldiers. Rota was having fun. Soldiers' voices were talking from all sides.
- How did they say, Kutuzov crooked, about one eye?
- But no! Totally crooked.
- Not ... brother, more big-eyed than you. Boots and collars - looked around everything ...
- How does he, my brother, look at my feet ... well! think…
- And the other is an Austrian, he was with him, as if smeared with chalk. Like flour, white. I'm tea, how they clean ammunition!
- What, Fedeshow! ... he said, perhaps, when the guards begin, did you stand closer? They said everything, Bunaparte himself is standing in Brunov.
- Bunaparte stands! you lie, fool! What does not know! Now the Prussian is in revolt. The Austrian, therefore, pacifies him. As soon as he reconciles, then war will open with Bounaparte. And then, he says, in Brunov, Bunaparte is standing! It's obvious that he's an idiot. You listen more.
“Look, damn tenants! The fifth company, look, is already turning into the village, they will cook porridge, and we will not reach the place yet.
- Give me a cracker, damn it.
“Did you give tobacco yesterday?” That's it, brother. Well, on, God is with you.
- If only they made a halt, otherwise you won’t eat another five miles of proprem.
- It was nice how the Germans gave us strollers. You go, know: it's important!
- And here, brother, the people went completely frantic. There everything seemed to be a Pole, everything was of the Russian crown; and now, brother, a solid German has gone.
- Songwriters ahead! - I heard the cry of the captain.
And twenty people ran out in front of the company from different ranks. The drummer sings turned around to face the songbooks, and, waving his hand, began a drawn-out soldier's song, beginning: "Isn't it dawn, the sun was breaking up ..." and ending with the words: "That, brothers, will be glory to us with Kamensky father ..." in Turkey and was now sung in Austria, only with the change that in place of "Kamensky father" the words were inserted: "Kutuzov's father."
Tearing off these last words like a soldier and waving his arms as if he was throwing something on the ground, the drummer, a dry and handsome soldier of about forty, sternly looked around at the songwriter soldiers and closed his eyes. Then, making sure that all eyes were fixed on him, he seemed to carefully lift with both hands some invisible, precious thing above his head, held it like that for several seconds, and suddenly threw it desperately:
Oh, you, my canopy, my canopy!
“Canopy my new…”, twenty voices picked up, and the spoonman, despite the heaviness of ammunition, briskly jumped forward and walked backwards in front of the company, moving his shoulders and threatening someone with spoons. The soldiers, swinging their arms to the beat of the song, walked with a spacious step, involuntarily hitting the leg. Behind the company came the sounds of wheels, the crunch of springs and the clatter of horses.
Kutuzov with his retinue was returning to the city. The commander-in-chief signaled that the people should continue to walk freely, and his face and all the faces of his retinue expressed pleasure at the sound of the song, at the sight of the dancing soldier and the merrily and briskly marching soldiers of the company. In the second row, from the right flank, from which the carriage overtook the companies, a blue-eyed soldier, Dolokhov, involuntarily caught the eye, who walked especially briskly and gracefully to the beat of the song and looked at the faces of the passers-by with such an expression as if he pitied everyone who did not go at this time with a company. A hussar cornet from Kutuzov's retinue, mimicking the regimental commander, lagged behind the carriage and drove up to Dolokhov.
The hussar cornet Zherkov at one time in St. Petersburg belonged to that violent society led by Dolokhov. Zherkov met Dolokhov abroad as a soldier, but did not consider it necessary to recognize him. Now, after Kutuzov's conversation with the demoted one, he turned to him with the joy of an old friend:
- Dear friend, how are you? - he said at the sound of the song, equalizing the step of his horse with the step of the company.
- I am like? - answered Dolokhov coldly, - as you can see.
The lively song attached particular importance to the tone of cheeky gaiety with which Zherkov spoke, and the deliberate coldness of Dolokhov's answers.
- So, how do you get along with the authorities? Zherkov asked.
Nothing, good people. How did you get into the headquarters?
- Seconded, I'm on duty.
They were silent.
“I let the falcon out of my right sleeve,” said the song, involuntarily arousing a cheerful, cheerful feeling. Their conversation would probably have been different if they had not spoken at the sound of a song.
- What is true, the Austrians were beaten? Dolokhov asked.
“The devil knows, they say.
“I am glad,” Dolokhov answered briefly and clearly, as the song demanded.
- Well, come to us when in the evening, the pharaoh will pawn, - said Zherkov.
Or do you have a lot of money?
- Come.
- It is forbidden. He gave a vow. I don't drink or play until it's done.
Well, before the first thing...
- You'll see it there.
Again they were silent.
“Come in, if you need anything, everyone at headquarters will help…” said Zherkov.
Dolokhov chuckled.
“You better not worry. What I need, I won't ask, I'll take it myself.
"Yeah, well, I'm so...
- Well, so am I.
- Goodbye.
- Be healthy…
... and high and far,
On the home side...
Zherkov touched his horse with his spurs, which three times, getting excited, kicked, not knowing where to start, managed and galloped, overtaking the company and catching up with the carriage, also in time with the song.

Returning from the review, Kutuzov, accompanied by the Austrian general, went to his office and, calling the adjutant, ordered to give himself some papers relating to the state of the incoming troops, and letters received from Archduke Ferdinand, who commanded the forward army. Prince Andrei Bolkonsky with the required papers entered the office of the commander in chief. In front of the plan laid out on the table sat Kutuzov and an Austrian member of the Hofkriegsrat.
“Ah ...” said Kutuzov, looking back at Bolkonsky, as if by this word inviting the adjutant to wait, and continued the conversation begun in French.
“I’m only saying one thing, General,” Kutuzov said with a pleasant grace of expression and intonation, forcing one to listen to every leisurely spoken word. It was evident that Kutuzov listened to himself with pleasure. - I only say one thing, General, that if the matter depended on my personal desire, then the will of His Majesty Emperor Franz would have been fulfilled long ago. I would have joined the Archduke long ago. And believe my honor, that for me personally to transfer the higher command of the army more than I am to a knowledgeable and skillful general, such as Austria is so plentiful, and to lay down all this heavy responsibility for me personally would be a joy. But circumstances are stronger than us, General.
And Kutuzov smiled with an expression as if he were saying: “You have every right not to believe me, and even I don’t care whether you believe me or not, but you have no reason to tell me this. And that's the whole point."
The Austrian general looked dissatisfied, but could not answer Kutuzov in the same tone.
“On the contrary,” he said in a grouchy and angry tone, so contrary to the flattering meaning of the words spoken, “on the contrary, Your Excellency’s participation in the common cause is highly valued by His Majesty; but we believe that a real slowdown deprives the glorious Russian troops and their commanders of those laurels that they are accustomed to reap in battles, ”he finished the apparently prepared phrase.
Kutuzov bowed without changing his smile.
- And I am so convinced and, based on the last letter that His Highness Archduke Ferdinand honored me, I assume that the Austrian troops, under the command of such a skilled assistant as General Mack, have now already won a decisive victory and no longer need our help, - Kutuzov said.
The general frowned. Although there was no positive news about the defeat of the Austrians, there were too many circumstances confirming the general unfavorable rumors; and therefore Kutuzov's assumption about the victory of the Austrians was very similar to a mockery. But Kutuzov smiled meekly, still with the same expression that said that he had the right to assume this. Indeed, the last letter he received from Mack's army informed him of the victory and the most advantageous strategic position of the army.
“Give me this letter here,” said Kutuzov, turning to Prince Andrei. - Here you are, if you want to see it. - And Kutuzov, with a mocking smile on the ends of his lips, read the following passage from the letter of Archduke Ferdinand from the German-Austrian general: “Wir haben vollkommen zusammengehaltene Krafte, nahe an 70,000 Mann, um den Feind, wenn er den Lech passirte, angreifen und schlagen zu konnen. Wir konnen, da wir Meister von Ulm sind, den Vortheil, auch von beiden Uferien der Donau Meister zu bleiben, nicht verlieren; mithin auch jeden Augenblick, wenn der Feind den Lech nicht passirte, die Donau ubersetzen, uns auf seine Communikations Linie werfen, die Donau unterhalb repassiren und dem Feinde, wenn er sich gegen unsere treue Allirte mit ganzer Macht wenden wollte, seine Absicht alabald vereitelien. Wir werden auf solche Weise den Zeitpunkt, wo die Kaiserlich Ruseische Armee ausgerustet sein wird, muthig entgegenharren, und sodann leicht gemeinschaftlich die Moglichkeit finden, dem Feinde das Schicksal zuzubereiten, so er verdient.” [We have a fully concentrated force, about 70,000 people, so that we can attack and defeat the enemy if he crosses the Lech. Since we already own Ulm, we can retain the advantage of commanding both banks of the Danube, therefore, every minute, if the enemy does not cross the Lech, cross the Danube, rush to his communication line, cross the Danube lower and the enemy, if he decides to turn all his strength on our faithful allies, to prevent his intention from being fulfilled. Thus, we will cheerfully await the time when the imperial Russian army is completely ready, and then together we will easily find an opportunity to prepare the enemy for the fate he deserves.