Category Archives: Military Budget

Putin Launches GPV 2016-2025

Posted on September 20, 2014 | 3 comments
Putin Addresses Session on GPV 2016-2025 (photo: Kremlin.ru)

Putin Addresses Session on GPV 2016-2025 (photo: Kremlin.ru)

On 10 September, Kremlin.ru posted President Putin’s opening remarks to a session on developing the draft State Program of Armaments (GPV) 2016-2025.

Putin’s speech can be divided into several themes:  financing, the arms race, threats, particular weapons systems, and other tidbits.

A critical question is how will funding for a new GPV compare with the approximately 20 trillion rubles laid out or earmarked for GPV 2011-2020. But Putin took pains to stress only that financing for the new GPV will be based on the government’s macroeconomic forecasts.  He noted:

“The government has prepared two variants [not good and possibly worse?] of such a preliminary macroeconomic development forecast, and today, we will hear about it in a meeting with the government, and talk more about this.  We will proceed exclusively from realities, from our possibilities, and we will not inflate our military expenditures.”

“I ask you to choose and present the most balanced variant of resource support for the new state program of armaments before the end of October 2014.  It must fully account for missions in the area of military organizational development and still be realistic, and proceed, as I already said, from the country’s financial-economic possibilities.  But I am sure we can find a variant acceptable both according to financial support and to the quality of those weapons systems which we will discuss more today.”

This seems consonant with his statement last December that the OPK and military should not expect future procurement budgets to match what was laid out in recent years.

In this September 10 session, Putin eschewed interest in a new arms race, but stressed that Moscow has no choice but to take “countermeasures” against U.S. and NATO threats.  A few examples:

“[modernizing the armed forces and defense industry] is not connected to any kind of arms race . . . .”

“And we already many times said and warned that we will be forced — exactly forced — to take adequate countermeasures to guarantee our security.”

“We have spoken many times, and very much hope that there will not be excessive hysteria [from the U.S. and NATO?] when these decisions [about the GPV?] are finally made and begin to be realized.  I want to note that everything we are doing are only countermeasures.”

“Sometimes the impression is created, I just talked about this, that someone wants to launch a new arms race.  We will not, of course, be dragged into this race, it is simply absolutely excluded . . . .”

The Russian president also laid out at length his view of the threats requiring countermeasures:

  • U.S. missile defense;
  • U.S. Prompt Global Strike;
  • Militarization of space [?];
  • Conventional strategic weapons;
  • Prospective build-up of NATO forces in Eastern Europe.

He restated the official Kremlin narrative explaining why that alleged NATO build-up will happen:

“The crisis in Ukraine, which was actually provoked and created by some of our Western partners, is now being used to reanimate this military bloc.”

A regime that wants to prevent a Maydan on Red Square pretty much has to declare that the revolutionary impetus came from outside.  It also has to overlook that it was the seizure of Crimea and the start of Moscow’s war in eastern Ukraine that awakened NATO.

Look for a more detailed exposition of Moscow’s new threat assessment when the updated Military Doctrine appears in December.

What did Putin say about what will be purchased under the new GPV?  In short, not too much new:

“. . . our fundamental systems:  both of a defensive nature and strike systems have simply already reached or are reaching the end of their service lives.  And if we need to replace them, then replace them, of course, with prospective, modern ones having a future of long use.”

“I note that for the draft GPV-2025 there is already a unified system of preliminary data which confirmed the basic directions of arms and equipment development for the period to 2030 and formed a list of types determining the future profile of weapons systems.”

“Most of all we are talking about the creation of a rational list of strike means, including the guaranteed resolution of nuclear deterrence missions, about rearming strategic and long-range aviation, and continuing formation of an aerospace defense [VKO] system.”

“Further.  In coming years, it is already essential to support the breakthrough development of all components of precision weapons, to create unified types of general purpose arms and equipment, and for the Navy — new ship projects, standardized in armament, command and control systems, and communications.”

Overall, continuing the course and priorities — such as they are — of the current GPV.

Now, the tidbits . . . .

Putin seemed to say the 2015 goal of more than 30 percent modern arms and equipment has already been reached.

According to the president, more than 3,600 items of “fundamental weapons” (68% of the contracted quantity) have already reached the troops this year, along with 241,000 other items [presumably procurement not part of a major weapons system].

Putin gave only the briefest acknowledgement that, with looming sanctions, defense industry must be ready to manufacture its own critically important equipment, components, and materials.  Industry, he said, should also be looking to produce important civilian machinery in the future.

He only slightly criticized work on past GPVs, saying:

“It goes without saying we must carefully analyze the experience of realizing the previous programs, including the problems and oversights which led to delays in placing and fulfilling orders, and at times even to tasks not being completed.”

However, Putin also took the chairmanship of the Military-Industrial Commission (VPK) on himself, indicating that he thinks the GPV could use some “manual control.”

That’s about 950 words describing what Putin said in roughly 1,200.  One hopes his speech has been deconstructed and reconstructed in such a way that it illuminates more than the original.

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Posted in Defense Industry, Force Modernization, Military Budget

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Overfulfilling the Plan

Posted on February 23, 2014 | 1 comment

News on the Russian military of late carries a distinctly positive tone.  The army is always receiving new weapons systems, completing major training evolutions, and signing up thousands of new contractees.

A contrast from years past when there was either no news or bad news about the military’s development (or lack thereof).  Probably neither editorial line accurately reflects, or reflected, reality.  Things are never as good, or bad, as they’re presented.

Ever an honest contrarian on the widest range of issues, Nezavisimaya gazeta now asks, somewhat obliquely, whether the frenetic activity of Russia’s Ministry of Defense is outrunning its financial support.

In an editorial last Thursday, NG wonders if the MOD can accelerate completion of many tasks without additional financing.

It isn’t the first time financial flags have been raised.  Several times over the last year, reputable media sources asserted that Sergey Shoygu’s MOD would face sequestration soon.  It hasn’t happened yet.  Maybe the possibility is more pregnant given that Russia’s economy is flatlined right now.  In some ways, worse than flatlined (e.g. the ruble exchange rate).

But we digress . . . .

NG reports that Shoygu, at last week’s collegium, reiterated the impermissibility of falling off a single task in the MOD’s “Action Plan 2020.”  The reports of MOD officials said there have been no failures, only many impressive figures about the “thoroughly dynamic process of perfecting the state’s defense system.”

General Staff Chief, Army General Valeriy Gerasimov reported the facts to the assembled generals and high-ranking civilian officials.

To wit, by year’s end, 580 modern bunkers and storage facilities will be built in 15 arms depots as well as 160 facilities for RVSN ground-based strategic nuclear weapons, Ground Troops missile brigades, pre-fab radar stations, Borey and Yasen submarine bases, and new airfields.

NG concludes:

“The fact is the scale of construction is grandiose, fully speaking for those amounts of financing the state is directing at the needs of the Armed Forces.”

The paper gives examples of hardware being acquired . . . 27 BTR-82As for the Western MD in January alone, 12 Su-35S fighters for the Eastern MD in February, 220 aircraft, 8 ships and submarines, 14 SAMs, 50 air defense radars, and more than 200 armored vehicles in 2014.

Meanwhile, the MOD’s capital construction chief Roman Filimonov reported a decision to move deployment of a pre-fab radar in the east up a year to 2014, outfitting of five VDV military towns up two years to 2014-2015, and quicker completion of a host of other projects planned for the more distant future.

Again NG concludes:

“The intentions, of course, are good.  It just pays to remember that last December the parameters of the military budget for 2014-2016 were specified. And no one promised the army any additional money.  And without it hastening fulfillment of plans appears highly problematic.”

An NG news story the following day added:

“We recall that the Minfin came out categorically against any increase in the military budget.  More than this it insisted on moving ‘to the right’ the terms for implementing several defense projects.  It seems in the Armed Forces they agreed with the financiers’ demands.  In the event that directors of central organs of the military command, in whose interests recalculation measures are planned, don’t know how to find sources of financing for new work, they’ve been promised a forced redistribution of resources from facilities already in the plan to facilities appearing with the changes introduced.  The collegium agreed to proposals voiced by Filimonov.”

So what do we take from this?

There’s no imminent threat to funding a rejuvenated Russian military.  The current pace of development, achieved in 2012, will continue while Russia’s economic and political system can bear it.

But the NG articles may foreshadow even tighter budgets.  Independent media are debating how to lift a stagnating economy still based on hydrocarbon rents.  The Sochi Olympic hangover may have just begun.  Government (and military) budget parameters are set, but they never really feel firm.  The MOD  just focuses on the money it has now.

In Soviet central planning, overfulfillment usually meant sacrificing quality to meet quantitative targets and time schedules, to make careers, and to earn bonuses.  Today it means more demand, less supply, tighter markets, and rising prices.  And even in the post-Serdyukov MOD, it means more opportunities for corrupt scheming.

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Posted in Force Modernization, Military Budget, Shoygu's Reforms

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A Swedish Defense Debate

Posted on September 1, 2013 | 4 comments

Two Swedish observers recently engaged in an exchange of opinion pieces regarding the connection between a supposedly more muscular and threatening Russia on the one hand, and an allegedly feckless Swedish defense policy on the other.

Here we are, of course, more interested in their divergent views of Russian military power rather than in (as they are principally and rightly concerned) its affect on Sweden’s defense.

Stefan Hedlund

Stefan Hedlund

Uppsala University professor Stefan Hedlund wrote first.  His article appeared originally in Svenska Dagbladet.

Hedlund concludes the Swedish legislature is radically changing its long-held view of Russia as relatively benign to one of Moscow as a growing threat to Sweden’s national security.  Proponents of this view, he says, point most often to Russia’s militarization and its increasingly autocratic political system.

However, he says President Vladimir Putin himself basically admitted the government’s 20-trillion-ruble State Armaments Program is failing.  Failing because the OPK, on the whole, cannot produce weapons and equipment of requisite quality, in necessary quantities, according to specified deadlines.

He cites the Bulava and Yuriy Dolgorukiy.

Just one good example among many he could have picked.

Then Hedlund concludes:

“Perhaps it was simply naive to think that the Russian military industry could pick up where it left off two decades ago, after standing at a virtual standstill, and all of a sudden produce weapons system [sic] at high international standards.”

He turns to politics, and the fragmentation of the Russian political elite just beneath Putin.

He sees it this way:

“These political developments don’t add up to the picture of an every [sic] more strong-fisted leader [Putin] who hasn’t ruled out waging war on his neighbours.  It is much more probable that Russia will be paralyzed by infighting for a long time to come, and an ever degrading economic outlook will mean the government may have to retrace it steps on promises to keep up salary developments and shore up pensions.  There might simply not be money left for the military.”

Hedlund hits key elements of the problem with Russia’s alleged militarization:  the OPK’s inability to deliver arms and a clearly evident Finance Ministry rearguard action to rein in military procurement spending.

Finally, Hedlund concludes it’s essential to discuss Sweden’s defense policy problems “without muddling it up with incorrect perceptions about the development [sic] in Russia.”

Political science PhD candidate Annelie Gregor responded to Hedlund with this essay.  Ms. Gregor neglected to add that she is, apparently, an employee of the Swedish Armed Forces.

Annelie Gregor

Annelie Gregor

Gregor argues Hedlund claims Russia is not in the midst of a military build-up and is turning away from authoritarian rule.

This is not at all what Hedlund said. 

Hedlund maintains Russia’s militarization isn’t effective and Putin’s autocratic style masks concerns about domestic politics that are more important to him than building up the armed forces or attacking a non-contiguous Nordic country.

Gregor’s first point about the recent surprise readiness evaluation in the Far East simply has to be ignored.  Not because of her primarily, but because of how others have futzed it up. 

She says it “involved” 160,000 troops.  Others have said Russia “mobilized” or “deployed” this number.  The entire manpower contingent of the Far East Military District (probably some 160,000 men) certainly wasn’t “involved” in those exercises, and those troops certainly weren’t “mobilized” or “deployed.”  They already actively serve in the region where the exercise took place. 

It is true to say recent Russian exercises have featured some re-deployments and equipment movements from other districts, but they are limited to what Russia’s strategic mobility resources can manage.

Difficult as it is to believe, Gregor cites Russia’s performance in the five-day war with Georgia as evidence of a threat to Sweden.

The same Russian Armed Forces that were caught off guard, and initially acquitted themselves so poorly that a major military reform program started immediately afterwards to improve their readiness and capabilities.

As more evidence, Gregor recalls this spring when “two Tu-22M3 Backfire heavy bombers simulated a large scale aerial bombing on Sweden.”

Two Backfires with nuclear-armed cruise missiles would be more than enough to ruin Sweden’s day.  But one notes they are not “heavy bombers” nor do two constitute anything “large scale.”  The incident was, perhaps, more about flying time and asserting Moscow’s right to use international airspace.

Gregor then argues with Hedlund about whether revenues from oil, gas, and arms sales will be adequate to support Russia’s “militarization” in the future.

This part of Hedlund’s article was, unfortunately, not translated.

One contends, however, that if Hedlund said the Russian defense budget will decline as its oil earnings decline, he’s right.  In fact, one could go further and say the budget is irrelevant.  What does matter is what Moscow actually buys or gets for it.  

The Russians are getting more training (because they can buy more fuel), but they aren’t getting new weapons on the schedule they originally laid down.  

And corruption remains a huge tax on the budget, just check on the criminal cases against former Defense Minister Serdyukov’s former deputies. 

And it’s obvious to serious observers that arms sale profits don’t go to the big white building on the Arbat.  They go to Rosoboroneksport which is connected more to high-level political infighting than to the Defense Ministry.

Hedlund never said Russia is turning from authoritarian rule as Gregor alleges.  Hers is a classic “straw man” fallacy.

Hedlund responded to Gregor’s response.

He argues Moscow’s “increasingly bellicose [anti-Western and anti-NATO] rhetoric is for domestic consumption” and its “aggressive actions, such as simulated nuclear strikes on Warsaw, indicate weakness and a desperate clamoring for attention.”

Anti-U.S. and anti-NATO speech will probably always be popular in Russia.  Simulated nuclear strikes are warnings to Europeans of the consequences of cooperation with the U.S. in missile defense (or anything else for that matter).

Hedlund says he’s done anything but argue that Russia is turning from authoritarian rule.  He concludes:

“What I have argued is that there is a very large difference between present-day Russia and a truly militarized authoritarian regime that would constitute a true danger.”

Eloquently put.  Putin’s regime is a clumsy, capricious, and ineffective brand of authoritarianism.  It recalls the late years of the Tsars more than Hitler’s Germany or Stalin’s USSR.  Dangerous to a degree, but not an existential danger.

Perhaps there’ll be yet another installment in this debate.

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Posted in Defense Industry, Force Modernization, Military Budget, Training and Exercises

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Clean Slate

Posted on April 1, 2013 | 1 comment

It took a brave man to tell the State Duma what department chief Aleksandr Piskunov said in the Audit Chamber’s annual legislative report in February.  Voyenno-promyshlennyy kuryer published excerpts of his remarks.

Piskunov’s a government official.  Not a powerful voice, but an authoritative one in his specialty.

Auditor Aleksandr Piskunov

Auditor Aleksandr Piskunov

To say he’s well-equipped for his work is an understatement. 

Sixty-one or 62 years old, Piskunov graduated from the RVSN’s Dzherzhinskiy Military Academy with a radio engineering degree.  He served on active duty to the rank of general-major, spending many years at the Plesetsk cosmodrome.  He later trained in the RF Government’s Financial Academy and a business school in London.  He has a PhD in economics.

Piskunov served in both the RSFSR Supreme Soviet and State Duma in the early 1990s, and was deputy chairman of the Defense Committee for each body.  He also chaired the Defense Ministry’s Military-Technical Policy Committee.  In the mid-1990s, he moved to the staff (apparat) of the RF Government and was deputy chairman of its Committee on Military-Industrial Issues.

He returned to the Duma briefly in 1999, and became deputy chairman of its “Regions of Russia” faction.

He went to the Audit Chamber in 2001, and is currently in his third term of service.

Piskunov thinks Russia can’t produce new, better, or more weapons and military equipment without modernizing its badly neglected defense industrial base.  But he has pretty much nothing but scorn for the current management of the state defense order.  And he sees little but failure in the GPV over the last 20 years.  In particular, Piskunov calls for incorporating life cycle costs into the GPV.  Ultimately, however, he says auditors and accountants can’t fix the GOZ or GPV, but lawmakers could.

Enough preamble.  Here’s VPK’s excerpt of Piskunov’s remarks.

“STRICT CONTROL OF FULFILLING THE ARMAMENTS PROGRAM IS NEEDED”

“I represent a department that performs strategic audits in the Audit Chamber.  We’ve done a lot of work in evaluating the condition of practically all 1,350 enterprises of the defense-industrial complex, their financial stability and real contribution to equipping the Armed Forces.”

“We looked at how balanced the program of defense-industrial complex modernization and State Program of Armaments were.  A gap of 700 billion rubles was observed.  At the same time, 1 trillion 200 billion is built into the budget to guarantee compensation to enterprise directors who go to commercial banks for credits.”

“Similar credit practices are leading to the growth of OPK enterprises with an unstable financial situation.  More than 30 percent are like this.  Only 20 percent come close to world standards in technical equipping.  More than half are in a condition where their restoration is already senseless — it would be better to build from a clean slate.”

“In preparing the law on the state defense order we tried to correct this situation.”

“From my point of view, our system of administering the state defense order is uncompetitive.  The adopted law preserved the situation under which  management amounts to a lag in the state defense order.”

“The deputy prime minister, responsible for the defense-industrial complex, reported that the state defense order was fulfilled by 99 percent as in past years.  But almost one hundred percent fulfillment of state defense orders over the last 20 years has not prevented the failure of all arms programs or fulfilling them at 30, 40, 50 percent.”

“Dmitriy Rogozin himself noted that fulfillment happened because of the appearance of realization.  During the execution of the arms program 7,200 changes were introduced into it, that is the real result is being slanted to agree with this fact.”

“Meanwhile Rogozin recognized that the arms program has gotten old.  The task of preparing a new State Program of Armaments stands before him.  So the problem of forming a legislative basis and management of the State Program of Armaments is more acute than ever.”

“Our opponents in government, having considered it inexpedient to include the management of the acquisition program life cycle in the GOZ law, said it was necessary to include this management in the law on the State Program of Armaments.”

“To me it seems necessary in this instance to hold them to their word — to propose that the government prepare a draft law on the State Program of Armaments.  It’s possible this will allow us to compensate for not realizing it in the GOZ law, and meet the president’s demand to create essential management of the life cycle of weapons systems.  But today the state of affairs is seriously complicated by the fact that the life cycle is really torn into several parts in the Defense Ministry itself.”

“Those who’ve served understand:  you can’t modernize armaments without the experience of using them.  Who really tracks all this life cycle?  It would be logical if Rosoboronpostavka were occupied with this, but it is located at the junction of the functional orderer — a service of the Armed Forces and a contracting firm.  It would be more appropriate to subordinate this department to the government.  It’s perfectly clear that the main risks are connected not to corruption, but to the low qualifications of the orderer.  Someone needs to “hang” over the orderer from the point of view of its responsibility for how both the program and the contract as a unitary whole are being executed.  Juridical responsibility is not rebuilt only through the contract.”

“The level of project management in our ‘defense sector,’ unfortunately, is also very low, especially the quality management system.  We are all witness to what is happening now in space.”

“It’s frightening that it’s impossible to create new equipment without metrics.  We lost the project management culture and stopped training specialists in military academies and schools.  The very best on this plane is OOO ‘KB Sukhoy’ and it used the American experience-plan for metrics on developmental aircraft.  The Americans seized and simply closed the issue — this project is no longer being supported.  To rewrite project documentation now in some kind of domestic variant is complex, therefore the development of these systems is essential.”

“The participation of commercial banks in providing credit for the state defense order is an important question.  Now in the government they are discussing how these 23 trillion will go — through commercial banks, for free or for money?  It’s understood that banks simply don’t work that way.  There is a precedent — the government resolution on the Mariinka, the Bolshoy [theaters], the M-4 [highway].  If you calculate it, then 20 percent received from 23 trillion over these years, it’s necessary to take an additional amount from the taxpayers or cut the defense order by this sum.”

“Not less sensitive is the issue of intermediaries.  If the Defense Ministry and government don’t put transactions under the strictest control, then there are all the calculations on the defense order, life cycle and cooperation levels, we will mess up this program of armaments also.  This, undoubtedly, is one of the most dangerous questions for the Defense Ministry — too large lobbyist forces participating, too large sums going.”

“Questions of managing the life cycle and control of finances are the most fundamental.  The treasury is incapable of resolving this task.”

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Defense News

Posted on April 19, 2012 | 1 comment

Some Russian defense news from April 17-18, 2012 . . .

Militaryparitet.com provided a link to an interesting Livejournal site.  The latter’s apparently been scouring government tender offers, and located one worth 600 million rubles for work to upgrade Votkinsk for Yars ICBM production.

According to RIA Novosti, a Rosoboroneksport official says talks with China about selling the Su-35 are frozen because the PRC wants to buy only a limited number of the new fighters.

Interesting that France, Italy, etc. don’t use the same logic when Moscow talks about purchasing samples.

Vzglyad.ru covered the release of SIPRI’s global military expenditure report for 2011.  The U.S. spent 41 percent of the world’s total, China 8, Russia 4.

Deputy Defense Minister Nikolay Pankov talked to the Federation Council about military housing.  He told Senators 60,000 permanent and service apartments were ready to be occupied at the beginning of this year.  See TV Zvezda coverage.

At least for the camera, Pankov didn’t offer an explanation why such a large number were waiting to be occupied.

22nd Army Commander, General-Major Sergey Yudin’s traded his command for a staff job.  He’s now the Chief, OMU for the Western MD.  See Mil.ru.

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Not Enough Resources (Addendum)

Posted on March 20, 2012 | Leave a comment

Ruslan Pukhov

In Friday’s NVO, CAST Director Ruslan Pukhov expounded on Konstantin Makiyenko’s thoughts about whether Russia’s current military modernization plan is doable.  And he offered ideas on how to make it more doable.

Pukhov points out that, in addition to 19 trillion rubles for military modernization, the Kremlin is footing bills for higher military pay, better living conditions, and housing as well as intensified combat training.  Liberal critics question whether the government can afford a greater defense burden at a time when it also needs to modernize infrastructure, health care, and education.

The planned military expenditures seem, Pukhov continues, balanced and acceptable, following 15 years of army underfinancing.  They shouldn’t threaten the country’s development.

Still, he says, skeptics have a point.  Vladimir Putin’s plan presupposes a decade of growth in the economy, perhaps not dynamic, but growth.  However, it’s also highly possible we’ll see stagnation or even recession in an economy which, with oil prices over $100, shows meager (for a developing market) growth of four percent.

Then Pukhov really gets to it.

With the slightest decline in hydrocarbon prices, “Putin’s preelection promises, including also in the military sphere, will become unfulfillable.”  And the Finance Ministry is developing plans to trim defense spending by 0.5 percent of GDP.

Pukhov asserts the Defense Ministry can continue transforming the armed forces if it sacrifices quantity for quality and foregoes more “metal” for human capital investments.

First, he says abandon the official but never explained million-man army manning level in favor of 700,000 or 600,000 personnel.

Second, the state should meet all its social obligations to servicemen and continue training by skipping some procurement.  The only “holy cow” would be strategic nuclear deterrence forces.

Third, Pukhov suggests sacrificing some planned naval development.  He offers that, as the world’s fifth or sixth largest economy, Russia simply can’t afford to recreate a global navy.  First on the chopping block, Mistral and renovated Kirov-class CGNs.

But Pukhov doesn’t sound fully convinced himself.  Some points not made need to be noted.

Pukhov should know Moscow has already gone well below one million men, if only semi-officially.  There isn’t much savings in reduced conscript numbers.  Pukhov doesn’t mention the huge “human capital” expense of trying (once again) to recruit professional contract soldiers.  The word corruption — the proverbial elephant in this room — isn’t uttered either.  The state already accepts 20, perhaps 40, percent less military than it pays for.  That’s where real savings are.  Foregoing some “metal” is a good idea, but Pukhov has scarcely begun to sort out what Russia’s acquisition priorities should be.

Mr. Pukhov should be commended for addressing this topic, but his critique is pretty mild.  He may still be attacked for it by some.  A much more radical restructuring of Russia’s military development program than Pukhov’s may eventually be needed to save it.

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Not Enough Resources

Posted on February 27, 2012 | 2 comments

Konstantin Makiyenko (photo: Radio Mayak / Kirill Kurganov)

Still parsing reaction to Prime Minister Putin’s manifesto on the army . . . there are lots of positive reviews and recapitulations.  But commentators who don’t exactly agree with Putin are far more interesting and illuminating.

One particularly fitting this description is Konstantin Makiyenko, who makes succinct, obvious, and bravely ventured points.

Makiyenko, Deputy Director of CAST, is by no means anti-regime.  He is, however, honest.  His observations appeared in Interfaks-AVN, and you can read them courtesy of VPK.name.

He concludes simply that Russia may not have the resources for the plan of major army and defense industry modernization Putin laid out in his campaign article:

“The Russian economic system, which, with oil prices at 100 dollars a barrel, provides only four percent GDP growth, isn’t capable of being the base for realizing the plans outlined.”

AVN says Makiyenko doesn’t exclude that, owing to insufficient budgetary resources, the Finance Ministry will have to work out plans for future cuts in spending on national defense.  But, at the same time, he apparently said Putin’s manifesto on the army wasn’t populist, and he has “no objection” to majority of the Premier’s proposals.

But Makiyenko lays down a sharp, if understated, critique of Putin’s stewardship of Russia’s defenses since 1999.  Agreeing that nuclear deterrence has been the only guarantee of Russia’s security, Makiyenko continues:

“In this relation, the current situation is in no way different from the state of affairs in the 1990s, when, as it’s justly noted in [Putin’s] article, ‘other weighty material arguments didn’t exist.'”

“. . . adequately evaluating the situation now, one has to admit that even today other ‘material arguments’ haven’t appeared for Russia during the last 12 years.”

“In this connection, the thought about how one should particularly attentively follow the appearance of new technical means, for example MD systems and long-range, precision non-nuclear means, capable of devaluing Russia’s nuclear deterrence potential, are very important.”

So, conventional weakness drives Russian objections to MD, one supposes.

AVN also indicated Makiyenko is skeptical of Putin’s call for public-private partnerships and more private capital investment in the OPK given that the once-and-future Supreme CINC nationalized first-class companies like Irkut and Saturn.

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Posted in Civil-Military Relations, Defense Industry, Force Modernization, Military Budget, Strategic Deterrence

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Military Medicine Gets an Unsat

Posted on December 15, 2011 | Leave a comment

Valentina Matviyenko

We’ve seen reports of what reforms have done to Russian military medicine, but what follows is the first comprehensive review of its condition.  Cuts and reorganizations are on Defense Minister Serdyukov, but, to be fair, infrastructure deficiencies long predated him.  Military medicine is an area where he deserves some criticism.  But it’s unclear why it was the weak point chosen for an attack on his management, or why Valentina Matviyenko was the one to deliver it.  In any event, with the most recent chief of military medicine now in prison awaiting trial, it’s easy to conclude there are some pretty significant systemic problems.

Nezavisimaya gazeta reported Monday that a Federation Council panel on the social defense of servicemen has, not surprisingly, given military medicine an unsatisfactory evaluation.  It came despite a positive self-assessment from the Main Military-Medical Directorate (GVMU).  NG’s Sergey Konovalov said Federation Council Speaker Valentina Matviyenko, who conducted the session, repeated everything critical about military medicine heard recently from social organizations, parties, and the media.

Responding to the main report given by acting GVMU Chief, Colonel Anatoliy Kalmykov, Matviyenko said:

“You gave a positive assessment, you said that military medicine is coping with its missions.  And at the same time your own slide shows a growth in illnesses among servicemen . . . .  It’s higher than illnesses in the civilian population . . . .   Is it forbidden to evaluate yourself more critically?  Stop with this nonsense, comrade Colonel . . . .”

Konovalov notes for readers that Kalmykov’s only been at his temporary post for three weeks.  He’s taking the spot of General-Major Aleksandr Belevitin who’s in jail awaiting trial on corruption charges as well for an alleged attempt to arrange the murder of a witness.

He continues with Matviyenko’s remarks:

“. . . today we face an imbalance between the state’s obligations in the military medical sphere and the real financial resources allocated for this purpose.  Cuts in military hospitals, polyclinics have created problems in giving medical assistance.  In 17 regions, military-medical departments are lacking, in 30 military units, they are deployed very remotely from them, and the great distance is becoming an insurmountable obstacle to treating military service veterans.”

Matviyenko expressed concern about cutting officers and replacing them with civilian workers in military medicine.

An Audit Chamber auditor told the FC panel more than 1,000 Defense Ministry medical units and departments (38 percent of the total) occupy buildings and spaces which don’t meet technical and sanitary norms.  And 735 medical facilities (27 percent) need capital repair.  New medical equipment the Defense Ministry languishes because there aren’t medical buildings and centers in which it’s possible to treat patients.

The military’s representatives apparently claimed a lack of money.  But the Finance Ministry’s Director of the Department for Budget Policy in Military and Law Enforcement Services and State Defense Order, Aleksey Kaulbars rejected this:

“Just purely for health care, on the order of 39 billion rubles are allocated for the Defense Ministry.   A little more than 60% has been expended according to the situation as of today.  And what kind of grievances that it is insufficiently financed are possible in connection with this?  For health care facility construction, the assimilation is 30%.  Colleagues, what are we talking about?”

First Deputy GVP Andrey Nikulishchin is afraid unfinished construction and other military medical problems are connected with corruption.  He suggests that military medical units get only 20-50 percent of the medicines they require.  He blames elevated prices and “nontransparent” trade in them (presumably in addition to corruption).

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Innovation Locomotive or Brake?

Posted on November 26, 2011 | 1 comment

Maksim Blant

Newsru.com economics commentator Maksim Blant wrote on an interesting subject this week:  is spending on the OPK an engine or drag for Russia’s innovation economy?

Blant has two primary arguments against military Keynesianism in Russia’s context.  First, more money for the OPK will further tighten an already taut market for certain labor.  Second, OPK spending’s multiplier effect will benefit raw materials producers more than consumers.

His article appears against a backdrop of questions about Russia’s ability to meet increasing pension obligations over the next 2-3 years without raising taxes, and former Finance Minister Kudrin’s contention that it could, but for the 20 trillion rubles going to the military’s rearmament program.

The problem, Blant concludes, is not that President Medvedev intends to rearm by depriving pensioners of their last bread crusts.  No, Medvedev defends rearmament as a means of stimulating growth in manufacturing, and turning the defense sector into an innovation development “locomotive.”

Blant allows that a majority of experts are inclined to agree that increased military spending can stimulate economic growth, and large defense industry orders can have a multiplier effect causing expansion in other sectors.  The argument is familiar.  State orders lead to job creation and greater consumer demand.  Defense enterprise orders to suppliers spur the process in other sectors.  The jolt causes the economy to turn around.

Blant says there are cases where military spending has brought an economy out of crisis, but asks will it work in Russia? 

He doubts creating jobs in the defense sector will increase consumer demand.  Even discounting how much procurement money will be stolen in the military or OPK, he says relatively little of the trillions will go for wages.  It would be easier to increase consumer demand by raising pensions.

Blant says this job creation effort will occur in the midst of a demographic crisis — not an excess, but rather a relative shortage of labor.  With state orders in hand, defense enterprises will compete against private businesses for engineers and skilled workers.  Faced with this, civilian producers can either raise wages and lose competitiveness, or “escape” to countries where the labor market isn’t so tight.  This, concludes Blant, makes the OPK not a “locomotive” of innovation development but rather its gravedigger.

Blant turns to the multiplier effect in adjacent sectors.  Yes, OPK money supports them, but raw materials suppliers and processors most of all.  Together the two sectors form a “closed loop,” only weakly connected to other industries.  In the end, he foresees a repeat of the 1980s, where the USSR’s defense sector, heavy machinebuilding, and raw materials producers sucked up the lion’s share of labor and other resources, leaving nothing for the consumer sector.

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Guns and Money (Part II)

Posted on November 18, 2011 | Leave a comment

Returning to KP, Baranets, and Pukhov on Russia’s defense budget . . . Pukhov continues trying to put Moscow’s spending in perspective.

The journalist says readers want to know how it is that the U.S. spends $600-700 billion a year on its army and Russia spends only $40-50 billion.

Pukhov says look at spending per soldier.  The figures work out neatly and they are dramatic.  Per soldier, the U.S. defense budget is $400,000.  Per soldier, Russia’s is $40,000 [probably much, much less in reality].  Pukhov concludes:

 “And it’s completely clear that it’s necessary to reduce this gap to a less dramatic magnitude.  Otherwise our Armed Forces will remain the poor army of a poor country.”

Pukhov tells Baranets and his audience that Russia occupies fifth place in world military expenditures after the U.S., China, U.K., and Japan.  But, Pukhov says Russia isn’t the U.K. or Japan:

“The problem is the defense missions facing Russia are much larger scale . . . .”

He points to Russia’s size and a nuclear arsenal comparable only to the United States.  So, according to him, it’s obvious Moscow’s military spending is insufficient and its army underfinanced.  

Baranets asks, are the condition of Russia’s economy and its defense expenditures properly correlated?  Or has it gone overboard with money for the army?  Pukhov responds:

“Russia’s current military expenditures and plans for increasing them in the next 10 years, including the State Program of Armaments to 2020 (GPV-2020) aren’t excessive, on the other hand, they represent the most essential minimum.  I recall that, according to the Defense Ministry’s own calculations, a minimum of 36 trillion rubles were needed for an optimal technical reequipping of the troops by 2020.  But the adopted GPV-2020 promises a sum smaller by almost half.  This really allows us to patch only the most obvious holes in the army’s technical equipping.”

Baranets finishes up asking if European MD is affecting the military budget.  Pukhov replies that development of Russian strat forces is already in the budget and GPV-2020, and MD doesn’t present a threat to them until after 2020.

Less argument with the end of Pukhov’s interview.  Just a couple points.  Look back here to see what General-Lieutenant Frolov said 36 trillion would do.  “Optimal” must mean complete rearmament.  But others claim they can’t do it for even that amount.  Still, Putin, Medvedev, Serdyukov, and Makarov are consistently saying they are buying 70 percent rearmament by 2020 for 19 trillion.

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