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.

 

Problems of Post-Communism, November 2012 Table of Contents

Volume 59 Number 6 / November-December 2012 of Problems of Post-Communism is now available on the ME Sharpe web site at http://mesharpe.metapress.com.

This issue contains:

The 2012 Political Reform in Russia: The Interplay of Liberalizing Concessions and Authoritarian Corrections	p. 3
Grigorii V. Golosov
Modernization and Historical Memory in Russia: Two Sides of the Same Coin	p. 15
Miguel Vázquez Liñán
Reforming Post-Communist Welfare States: Family Policy in Poland, Hungary, and Romania Since 2000	p. 27
Tomasz Inglot, Dorottya Szikra, Cristina Raţ
Civil Society with Chinese Characteristics?: An Examination of China’s Urban Homeowners’ Committees and Movements	p. 50
Ngeow Chow Bing
A Salute to Ronald Linden, Outgoing Associate Editor of Problems of Post-Communism and a Welcome to Sherrill Stroschein, Incoming Associate Editor of Problems of Post-Communism	p. 64
Dmitry Gorenburg, Editor

Reviving the Russian Air Force

The Russian Air Force appears to have turned a corner on procurement, having received 40 new airplanes and 127 new helicopters in the last year. For the first time, the entire aviation procurement plan appears to have been fulfilled. The winged aircraft include 10 Su-34s, 6 Su-35s, 2 Su-30SMs, and over 20 Yak-130s. There’s no detailed breakdown of helicopters, though the bulk are probably Mi-28N and Ka-52s. This is an improvement on 2011, when 31 fixed-wing aircraft and over 50 helicopters were procured. Given that in 2010, the numbers were 23 and 37, respectively, we are seeing a positive trend in procurement of military aviation. It will probably still be tricky for the aircraft industry to reach the stated State Armament Program goal of delivering 1,120 helicopters and 600 fixed-wing aircraft by 2020, but reaching 70 percent of that target by 2020 seems quite doable, with the rest arriving by 2025 at the latest.

Ilya Kramnik has recently analyzed what the recent success in procurement means for the Russian air force. He notes that with the new aircraft, the Russian air force will have greater range, both because of the characteristics of the aircraft themselves and because they will all have the capacity for in-flight refueling. The new aircraft will also increase the air force’s ability to attack targets on the ground, as they will all be capable of using high precision weapons against ground targets. This capability will be augmented by an increase in the procurement of precision-guided munitions in coming years. Kramnik also notes the modernization of education and training for air force pilots, including the acquisition of modern flight simulators and an increase in average flight time to 100 hours per year.

Kramnik notes some remaining problems, including the need to improve infrastructure at air bases and the modernization of critical capabilities for supporting combat aircraft, including refueling, reconnaissance, AWACS, and electronic warfare aircraft. Without such aircraft, even the most modern combat aircraft cannot function effectively. In conclusion, Kramnik advocates the conversion of existing commercial aircraft (such as Il-62 and Il-86 jets currently in storage) into tankers, a process that could be done more quickly than building a sufficient number of new refueling aircraft and could give the air force 30-40 additional tankers by the end of the current decade. He argues that without this type of conversion program, this quantity of tankers could only be reached by the late 2020s, and even then only at the expense of a number of transport and AWACS aircraft. Such a program would allow each air base to have its own detachment of tankers.

All in all, Russia’s military aviation  industry is in pretty good shape. Russian strike aircraft are already of fairly high quality, with the main problems revolving around the age of the air frames rather than their capabilities. Sukhoi and Irkut have already shown themselves capable of producing new aircraft in a relatively timely manner. There are some questions concerning the feasibility of the development timelines for the T-50 fifth-generation fighter plane and the extent to which the plane will be equipped with true fifth-generation components, but every country that has sought to develop a fifth-generation fighter plane has run into delays. The essential point that the Russian military will have a fifth-generation strike fighter in serial production sometime in the next decade is beyond doubt. There are, however, questions about the future of MiG, which did not provide any new planes for the Russian air force last year or the year before.

As Kramnik highlights, what’s most needed is the revitalization of less glamorous parts of the aviation industry, especially transport and refueling aircraft. These are areas in which the air force has struggled to maintain capabilities in the post-Soviet period. The construction of new production lines for these types of aircraft will go a long way toward the MOD’s stated goals of making the Russian military more mobile and extending the range of its attack aircraft through aerial refueling. The MOD seems to be cognizant of this need and is going forward with projects to build these types of support aircraft.

 

Should we panic about Russian naval modernization?

The commissioning of the Yuri Dolgoruky Borei-class SSBN this week, which follows closely on the heels of the launching of the Vladimir Monomakh SSBN at the end of December, has made a number of commentators focus on prospects for Russian naval modernization. I’d like to introduce a note of caution about these prospects into the debate.

The first of these articles, by Brian Slattery of the Heritage Foundation, is just the usual panic-mongering about how the US Navy is not what it used to be in the good old Reagan days. The information about a coming 14-year period during which the US Navy will fall below the 12 sub legal requirement for SSBN numbers doesn’t make sense to me. We currently have 14 Ohio-class SSBNs, which is the limit under existing arms control treaties. The first of the Ohio-class subs is expected to retire by 2029. Construction of the replacement submarine was scheduled to begin in 2019 for commissioning in 2029, but  is reportedly two years behind schedule has been pushed back by two years. But the US Navy can retire two SSBNs without replacement and still meet the 12 sub requirement. Even if there are further delays in construction, there could be a 2-3 year period in the 2030s where we are down to 10 or 11 SSBNs, rather than 12. Given that Russia plans to have 8 SSBNs going forward, this does not seem like a grave threat to US national security.

Slattery also does not make clear why the United States needs a 600-ship navy given that the Russian navy has no more than 25 major surface combat ships and less than 50 submarines of all types. We can add the 15-20 landing ships and throw in a few tugboats and oilers and come up with a rough estimate of no more than 100 ocean-going ships and submarines in the Russian navy, of which 10-20 are either still on the books but not actually seaworthy or are in the midst of being overhauled at any given time. Of course, if we wanted to sow panic among the uninformed, we could include the 70+ corvettes, 30+ minesweepers, and assorted other ships to come up with 200+ combat ships of all kinds. We could even add the various auxiliary ships. That would get us to almost 500 ships currently listed as serving in the Russian navy. Clearly a formidable force, especially the 30-odd degaussing vessels and 50 or so hydrographic ships. But if we want to be serious, we have to recognize that the Russian navy as currently constituted has a very small number of ships that are actually able to deploy out of area for any length of time.

And this is not likely to change substantially in the short term. The shipbuilding program currently in place is significant. Galrahn is right to note that the Russian government has allocated $132 billion for shipbuilding through 2020. This is not quite the $16.5 billion per year that he mentions, simply because the total amount is for the naval component of the full 10-year State Armament Program for 2011-2020 (SAP-2020). So we should divide by 10 rather than 8, getting $13.2 billion. That’s still a lot of money. But the vast bulk of that funding will be going to build new SSBNs and attack submarines, with not that much left over for surface combatants. Other than the two Mistrals being purchased from France, ocean-going surface ships will be limited to 8 Admiral Gorshkov class and 6 Krivak class frigates. These are nice ships, but not the kind of ship that would indicate a massive Russian naval revival is underway. Plus, the first Admiral Gorshkov-class ship has been repeatedly delayed. This is quite common in the construction of a new ship class in any country, but it does lead to some serious questions about whether the navy will get all eight by the 2020 target date.  Plans for new destroyers are still on the drawing board and discussion of building an aircraft carrier is likely to remain purely theoretical for at least the rest of this decade.

Furthermore, much of the funding is very much uncertain. There have been various reports about reductions in military procurement spending and even potentially a three-year delay in fulfilling the armaments program. The most recent information I have is that $22.5 billion has been cut from total military procurement for the 2013-15 period, though it’s not clear how much of that affects naval procurement. Funding for the SAP is very much backloaded, with 69 percent of the funding allocated for the 2016-2020 period. By that point, of course, there will be a new State Armaments Program and, if necessary, the inflated figures from the current one can be quietly forgotten.

I don’t want to give the impression that this is all smoke and mirrors. The Russian military is clearly focused on modernization and the navy in particular will be getting new ships and submarines over the next few years. Its ability to protect its shores will be greatly enhanced by the new ships coming online during this period. However, it will be at least another decade (i.e. 2030 or later) before it will get the kinds of large combat ships that it will need to have any kind of global presence or significant expeditionary capability.

The future of Oboronservis

The most recent issue of Moscow Defense Brief has an interesting article (gated) by Vedomosti journalist Aleksey Nikolsky on the future of Oboronservis after Serdyukov’s ouster. Oboronservis was set up in 2008 as an integrated holding  company that would run the Russian military’s non-core operations, including logistics, repairs, and maintenance. It gradually became a major player in the sale of surplus (or ostensibly surplus) military property, and it was allegations of corruption in this area that launched the scandal that was used as a pretext to fire Serdyukov last fall.

The official purpose of Oboronservis was to allow the MOD to outsource non-critical functions. Nikolsky notes that while many thought that these functions would be contracted out to civilian contractors in a manner similar to models used in Western militaries, the Russian MOD chose instead to transfer its non-critical operations to Oboronservis subsidiaries. These subsidiaries then in turn were authorized to use private contractors for their operations, though the only areas where outsourcing was fully implemented were catering and cleaning. However, even in these areas, the subsidiaries have run up large debts to the contractors, at least in part as a result of the embezzlement of allocated funds by employees of Oboronservis or its subsidiaries. Nikolsky believes that the major subsidiaries will most likely be split off from the company or else the MOD will take over their assets and return to the old system. Opponents of outsourcing have claimed that living conditions in compounds run by the subsidiaries have deteriorated, even as spending on outsourced functions such as catering has increased substantially. Other critics note that outsourcing is problematic because it cannot be relied upon in times of war. Since the military would have to rely on its own mobile support units when troops are in the field, it is difficult to generate efficiencies that could be available if such units could be eliminated. The Oboronservis proposal to solve this problem by making commercial contractors part of the Russian military reserve and mobilizing them in the event of military action does not (to me) seem very realistic, given that most of the cooks and servers that provide the catering are middle-aged women and would not have a particularly easy time fitting into the Russian military structure.

The second (and much less publicized) goal of Oboronservis was to provide the MOD with a channel for importing modern Western weaponry independent from Rosoboronexport and Rostekhnologii. According to Nikolsky, this function was to become gradually more prominent. There are two arms import programs currently being run by Oboronservis. The first is the licensed assembly of 3,000 Iveco LMV M65 armored vehicles in Voronezh at a cost of $1.5 billion. The second program is for Rheinmetall to build an army training center in Mulino, Nizhny Novgorod oblast at a cost of $100 million. Nikolsky believes that while the second program is unlikely to be modified by the new regime, the Iveco contract may be reduced. Two other potential deals — for Israeli UAVs and for helicopters from Eurocopter have not gone forward, in part because of lobbying by opponents in the domestic arms industry. Nikolsky believes that Sergei Shoigu, the new defense minister, is largely supportive of the idea of importing military equipment from abroad. The Emergencies Ministry, which Shoigu headed until last spring, was the first Russian government agency to buy foreign helicopters. Shoigu has repeatedly complained about excessively high prices charged by Russian aircraft manufacturers and has suggested that foreign competition may be a way to force them to lower their prices.

Finally, Nikolsky argues that Oboronservis is likely to keep the former MOD repair plants, which have been consolidated under the Aviaremont and Remvooruzheniye subsidiaries. Just the aircraft repair component provided one quarter of the company’s total revenues in 2011. Shoigu has already indicated that outsourcing of repairs and maintenance is likely to continue, with an emphasis on awarding contracts to the original manufacturers whenever possible.

It seems to me that this article implies that the new regime will make only limited changes to the outsourcing model. While changes in logistics services, and especially catering, may be contemplated, I don’t think the military is particularly eager to bring back conscript cooks and the low quality food they used to produce. Most likely, there will be an effort to limit the company’s ability to sell property, as part of an effort to reduce corruption. As usual, this will  result  in a shift in illicit financial flows, rather than their elimination.