From the “better late than never” file…
On January 11, Aleksey Nikolskiy published an article on the next GPV for Vedomosti. He laid out the state of the battle over state armaments program 2018-2025.
What Will They Spend?
According to Nikolskiy, the new GPV will be only half of what Russia’s Defense Ministry wants, if the Finance Ministry gets its way.
The GPV covers ten years, but the Russian government adopts one every five years. So the new program was due to be adopted and implemented last year.
The next GPV was being prepared in 2014-2015. But with the poor economic forecast, Western sanctions, and the need for import substitution, the Kremlin elected to delay launching the new arms program until the first half of 2017, a former MOD official told Nikolskiy.
The new arms program is also late because industry’s initial promises on import substitution for Western as well as for Ukrainian products turned out to be too rosy, CAST director Ruslan Pukhov tells Nikolskiy. But, he adds, it’s impossible to drag this out longer because industry needs to know the fiscal parameters of its work in the long-term.
The current program for 2011-2020 was approved in late 2010. It contained 19.1 trillion rubles for the MOD. That was more than $630 billion at the exchange rate of the day. But, according to Nikolskiy, not more than 40 percent of this amount had been spent by the start of 2017.
Forty percent is 7.6 trillion, or roughly 1.3 trillion per year for the first six years of a ten-year program. Leaving so much backloaded implies that Russian defense industry was unable to absorb and use more money, at least without massive graft and waste. So the new arms program might continue a similar annual rate of investment in acquisition.
Nikolskiy notes that every arms program the Defense Ministry requests is several times more than the Finance Ministry believes it can allocate. In 2015, the former reportedly reduced its initial request for 2018-2025 from 55 to 30 trillion rubles while the latter was ready to agree to an amount not greater than 12 trillion.
Kommersant’s Ivan Safronov reported that Defense Minister Sergey Shoygu and Finance Minister Anton Siluanov spoke in “elevated tones” during a September 9 Kremlin meeting on the GPV. With President Vladimir Putin chairing the session, the ministers reportedly argued over the necessity and feasibility of 22 vs. 12 trillion rubles for arms procurement.
This is the customary kabuki. In 2010, the MOD came in similarly high — 36 trillion. The Finance Ministry responded with 13 trillion. Ultimately, they compromised at a figure closer to the latter’s preference — 19.1 trillion rubles. In retrospect, it wasn’t surprising given that even Putin expressed his qualms at spending so much.
What Will They Buy?
According to a defense industry manager who spoke with Nikolskiy, armaments tsar Deputy Defense Minister Borisov already announced the emphasis in the near term will be placed to a greater degree on the purchase of well-assimilated systems – for example, Su-30SM fighters or Improved Kilo-class (proyekt 636) submarines – and on modernized equipment which is significantly cheaper than new.
Meanwhile, the acceptance of fundamentally new types of armaments is passing into the more distant future. They include important platforms like the T-14 / Armata tank and T-50 / PAK FA fighter, and even some strategic weapons, writes Nikolskiy.
This would represent some retrenchment from Moscow’s ambitions in comparison with what it originally wanted from the current arms program.
U.S. defense acquisition is still probably three times the $50 billion or less Russia might spend on an annual basis. Russian procurement of arms attracts more attention and causes more concern than its volume alone warrants.
What Russia actually receives for the money it spends makes an interesting comparison with China. Beijing clearly lags Moscow in high-tech weapons, but it seems to get greater industrial bang for its buck when bending metal.
For example, Chinese shipbuilding. In ten years, China put 22 Type 054A frigates to sea. The Russian Navy received three or four frigates during the same years. China is set to build its third aircraft carrier. Russia’s lone Kuznetsov carrier will soon enter the shipyard to begin a three-year (probably longer) modernization effort.
Perhaps China hands will tell us if naval construction is a happy aberration for Beijing or if it enjoys the same kind of productivity in ground and air systems.
Rearmament is something that has gone Moscow’s way in recent years. It has restored Russia’s image as a formidable power. Rearming — even over-arming — has created and fueled a siege mentality at home. That mentality keeps the Russian Federation distant from the Western community of nations, and its people remote from the kinds of socioeconomic demands Westerners place on their political leaders. So the arms program has been part of Putin’s strategy for that reason if no other.
Moscow will want to maintain the momentum rearmament has generated since 2011. Too much of a break in funding would slow defense industry, which had difficulty finding traction.
But Russia’s economic situation is harder now than 2010.
Best Guess: GPV 2018-2025 will be announced with a nominal budget between 15 and 17 trillion rubles.
The Ministry of Finance will still groan at this amount, but will be secretly pleased at having kept arms spending at a reasonable level.
What money is actually disbursed, as we’ve seen, will be less than the full amount as the years go by.