No more imports?

It seems that the new leadership team at the MOD has decided to stop using the threat of importing armaments from abroad to get Russian defense industry to improve the quality of its products. For a couple of years, this seemed to be a favorite tool for former Defense Minister Serdyukov, especially in his bid to improve the quality of Russian tanks and armored vehicles. I covered the topic on several occasions, in particular here and here. A recent report to the Military Industrial Commission’s Public Chamber also took up the question.

But just in the last week, there have been two indications that the MOD has turned away from imports and will return to the autarkic model of military procurement that has been more traditional for the country’s armed services. First, the commander of Russia’s Ground Forces announced that there will be no further orders of the Italian IVECO LMV65 armored vehicle, known in Russia as the Lynx. Under the previous regime at the MOD, an Oboronservis-owned plant in Voronezh was to produce these vehicles under license while undertaking an effort to use as many Russian components as possible. Just last July, the ministry had asked the government for permission to increase the order from 727 to 3000 vehicles. Now it appears that while existing contracts will be fulfilled, no more orders will be forthcoming and the ground forces will instead be equipped with the Russian-made Tigr vehicle, which is better armed but less well armored than the Lynx.

Just yesterday, Military-Industrial Commission Deputy Head Ivan Kharchenko called the Mistral deal absurd and argued that it has caused significant damage to the state and the Russian shipbuilding industry. Last month, the MOD announced that it is deferring plans to build the third and fourth Mistral ships in Russia, while continuing on with construction of the first two hulls in France. It seems that the only reason Russia has not canceled the contract altogether is that it would then be required to pay huge financial penalties to the French contractor.

All of this indicates that domestic defense industry has won its battle with the MOD over procurement policy. The conflict all along was between the real needs of the military for new equipment and the desire of defense industry to keep the money coming in regardless of whether or not it was able to provide the military with the equipment it needed in a timely manner. Instead, we may be returning to the old ways where the military is given little choice but to buy the equipment that the defense industry is producing, regardless of whether it fits the military’s needs. In some sectors, defense industry is well-positioned to fulfill the military’s needs. In others, imports seem to be the only solution, at least in the short to medium term. In a recent conversation, my colleague Ilya Kramnik noted that the An-26 light transport aircraft is soon to be retired, with no domestic replacements yet available. Neither the An-140T or the Il-112V are currently available, nor are they likely to be ready for serial production by 2016-17. In that case, Kramnik argues that the only possible replacements would be foreign planes such as the Alenia C-27J Spartan or the EADS CASA C-295. So the Russian military will have to consider the question of imports soon enough.

In the meantime, however, the defense industry’s defeat of Serdyukov reduces the likelihood that the military will get the equipment it needs. It will take time for the MOD to amass the political capital to fight back against the industry and its allies. The result will be that the industry will get its money, while the military will be promised new equipment that in many cases will not arrive on schedule. In a few years, the military’s situation will get even worse, while the MOD will have rebuilt some of its lost political capital. At that point the fight over imports versus domestic manufacture will resume  – but that won’t come for 3-4 years.