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.

 

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6 thoughts on “No more imports?

  1. Another problem I’ve noticed is that defense contractors are concerned solely with profit, even if it means selling highly sensitive technologies to China (Lada diesel-electric subs, Su-35 – the engines in particular) and seriously damaging national security and potentially sabotaging themselves on the arms market a couple years down the road.

    Regarding Serdyukov, one thing he really should have done was force manufacturers to unify around several key types/platforms (i.e. Su-30/35 instead of a clusterf**k of Su-24M, Su-27SM, Su-30, Su-34, Su-35, Mig-29SMT, Mig-35; Mi-28 and Mi-8 instead of Mi-28N/NM, Mi-35M, Ka-52, Mi-17, Mi-26).

    Both the MoD and MIC need to be smarter about long-term planning going forward which would involve producing larger quantities of a smaller number of platforms. As long as they continue importing modern technologies and setting up joint ventures with Western firms, they should be fine when it comes to procuring the latest know-how.
    That’s my two cents.

  2. While some of the import decisions were logical (e.g. the Mistral, and Israeli drones) a lot of the others were a lot more questionable.

    In particular, the decision to source the Centauro wheeled tank destroyers and the Lynx from Italy at a time when Russia has analogous designs in the works and close to production – the wheeled Boomerang family and the Kurganets-25 tracked armored vehicle – appears particularly bizarre.

    There is a lot of speculation on the Internet that the reason the Italians got the contracts for the armored vehicles was because of backhanders to Serdyukov or his people like Vasilyeva. With the unending stream of new corruption revelations about them I have to say that this is not a possibility that should be dismissed out of hand.

    What do you think of this?

    • Oh, that’s definitely a big part of the reason for the Lynx contract. There’s a reason why Oboronservis had the contract initially, and also why it was handed over to Rostekhnologiia when the Oboronservis scandal started to come out. I’m not someone who thinks that all imports are good imports. But this may be a case of throwing the baby out with the bathwater. The threat of imports was important in pushing domestic defense industry to modernize and improve its products. Without the threat, I fear they’ll just go back to the old ways. Bogdanov’s article makes this point much more eloquently than I could.

  3. Agree wholeheartedly with everything but the last paragraph. There were lots of reasons for Serdyukov’s removal, most of them tied to winning political points (by ‘proving’ that the Kremlin was serious about fighting corruption). I’m not so sure either of the sharp divide between the MoD and the Russian MIC. Perhaps a better analogy is between those hogs who today have their snouts in the trough versus those who were recently removed.

    Should the need arise, I would wager that smart folks within the MoD and FSB will figure out how to acquire high-tech, foreign-made military equipment underneath the radar screen. These latest pronouncements about no more foreign military purchases strike me as political PR. Putin and Co. continue to vigorously wave the Russian flag hoping to distract the multitudes while the plunder continues.

    • I agree about the flag-waving aspect, though I disagree about the reasons for Serdyukov’s removal. I don’t think there are monocausal explanations for either the removal or the pronouncements on foreign military purchases. The Russian leaders are savvy enough to ensure that their actions and statements accomplish multiple ends. I believe that Serdyukov lost out in a battle among groups within the leadership and that one of the groups arrayed against him was people feeding at the defense industry trough, who were threatened by some of his reforms. This doesn’t mean that his removal wasn’t also a PR show against corruption. There’s no reason to waste a good opportunity, after all.

      Similarly, on the pronouncements, of course they are flag-waving. But they are also an effort to ensure that profits continue to flow to the right people, rather than (partially) going abroad. (And the multi-tasking was prominent with the Serdyukov group as well — the foreign contracts were an effort to force domestic defense industry to reform, but also were set up in ways that financially benefited Serdyukov and his entourage.

      As for acquiring foreign equipment underneath the radar screen, I think that is certainly doable for small purchases, but it’s close to impossible for big ticket items or serial production of major systems, which may be what’s needed in some cases.

  4. Pingback: Is Shoigu reversing Serdyukov’s military reform? « Russian Military Reform

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