Tag Archives: Uralvagonzavod

OPK Write-Off

Posted on February 8, 2020 | 2 comments

President Vladimir Putin has apparently agreed to a major write-off of Russian defense industry debt. It’s a significant story not receiving much attention.

Putin with VTB chief Kostin in August 2019

Putin with VTB chief Kostin in August 2019

The decision came in a secret presidential ukaz at the end of 2019. VTB chief Andrey Kostin broke the news in a late January interview with Rossiya 24 television at the World Economic Forum in Davos. The most coherent rendering of what Kostin said came from Interfaks-AVN:

Everything’s decided. At the end of last year the President met with all interested parties, the President’s ukaz was received, it’s true it’s secret, therefore I wouldn’t begin to comment on it. [But then he does, at least generally.]

But on the whole the problem’s solved, there is active participation of the [federal] budget and preferential restructuring on the part of leading banks is also provided, but it is so feasible, it is reasonable, it really takes into account, of course, that risk the banks took, therefore on the whole we’re satisfied with this decision. I think the government is too. So the program is being effected. I believe we won’t return to this issue again.

According to Interfaks-AVN in late December, Deputy PM and arms tsar Yuriy Borisov said measures to improve the financial state of key OPK enterprises were worked out and there would be a clearing of loans amounting to 700 billion rubles [$11 billion]. The main troubles, he indicated, were at OAK, OSK, ODK, and Roskosmos.

In early December, Borisov proposed writing off 400-450 billion of the debt and restructuring the remaining 300-350 billion for 15 years with a five-year initial payment holiday and a preferential two percent interest rate, according to a report in Rbc.ru.

Borisov and Russian bankers other than Kostin haven’t commented.

Borisov’s proposal may be the plan contained in Putin’s ukaz, but we don’t know since it’s secret. And it’s most likely secret to keep normally docile Russian citizens from learning that the government is bailing out weapons makers, not them. Russian household debt has increased steadily in recent years with little or no economic growth.

In July, Borisov said Russian defense industry’s large debt load was forcing it to “live hand to mouth, servicing financial institutions that don’t produce anything,” Interfaks-AVN reported. He indicated then that 90 percent of the debt belonged to OAK, OSK, Uralvagonzavod, Almaz-Antey, and Precision Systems (Высокоточные комплексы).

He called for writing off all or part of the debt at that time. But the biggest OPK creditors Sberbank and VTB opposed it.

Yuriy Borisov

Yuriy Borisov

In September, Putin directed then PM Dmitriy Medvedev to investigate problems with the profitability of defense enterprises. This came after the Military-Industrial Commission session in Izhevsk at which Putin blamed “unused capacity during a reduction in order volumes and the requirement to finance development work, the costs of which aren’t included in planning documents.” The president didn’t say anything about contract prices being too low or funding lost to waste or corruption. 

Novaya gazeta reported in July that 700 billion rubles represents non-performing defense industry loans. Total OPK indebtedness, however, is 2.3 trillion rubles ($36 billion). A write-off of 700 billion rubles (or part of this amount) would be a significant hit to the working capital of major Russian banks (and OPK creditors).

Borisov said corporations and enterprises were making only interest payments on the most troubled loans, according to Novgaz. Experts told the paper that more than half of the OPK’s profits are going to debt service leaving most producers with net profits of only 3-4 percent or even losses. Defense enterprises say they are frequently paying 22-23 percent on loans accumulated over many years. Meanwhile, the Russian banking sector is earning record profits.

Based on the recent history of OPK debts, Novgaz concluded the most likely scenario is partial write-off, partial restructuring, and recapitalization of affected banks by the Finance Ministry. Promsvyazbank (PSB) — bankrupt and nationalized in early 2018 — is also being turned into a specialized bank for handling state defense orders and problem loans to the OPK. PSB might insulate healthy parts of the Russian banking sector from bad OPK debt, and possibly from U.S. economic sanctions.

Defense producers say price formation — agreement with the MOD on contract prices — remains a substantial problem, according to the Novgaz report. Its source said:

Everyone is right — both the customer can’t pay a lot, and the contractor can’t operate at a loss. But there’s no arbiter for a compromise, and the customer is always stronger.

This OPK debt write-off is pretty much like earlier ones. It may take care of the most immediate and acute symptoms but it won’t cure the causes of the ailment, including price formation, theft, and cumbersome rules about handling GOZ funds.

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Posted in Defense Industry, Force Modernization, Military Budget

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Tanks a Lot

Posted on October 1, 2016 | 1 comment
gabtu-chief-general-lieutenant-shevchenko

GABTU Chief General-Lieutenant Shevchenko

Some data on Russia’s armor programs appearing in the media prior to Tank Troops’ Day (11 September) didn’t get too much notice.

RIA Novosti interviewed the chief of the MOD’s Main Automotive and Armor Directorate (GABTU), General-Lieutenant Aleksandr Shevchenko on 9 September.

General-Lieutenant Shevchenko noted that the MOD plans to “modernize” new Tigr armored vehicles, and not just by mounting a 30-mm gun.  They will, not surprisingly, go by the name Tigr-2.  But no other details.

Shevchenko confirmed Uralvagonzavod’s announcement that it has delivered more than 1,000 T-72B3 tanks.  He also indicated that the MOD will receive 300 improved T-72B3. The improved T-72B3, he says, will have a better engine and better defensive and targeting systems.

Some number of Russian T-90 tanks nearing the end of their service lives will be modernized under the “Proryv-3” program, according to the GABTU chief.  The resulting tank is supposed to be superior to the original T-90.

Regarding the Armata armored vehicle family, Shevchenko reported that the “experimental” lot of T-14 tanks will conclude initial field trials in 2016 and move into state testing.  This will be completed in 2017 and followed by formal state acceptance of the T-14.

t-14-tanks-enroute-to-red-square-photo-ria-novosti-yevgeniy-biyatov

T-14 tanks en route to Red Square (photo: RIA Novosti / Yevgeniy Biyatov)

Shevchenko added that the Armata BMP (T-15) and BREM, or armored recovery vehicle (T-16) also remain in preliminary testing and will finish state testing next year.

Similarly, the Kurganets family — BMP, BTR, and BREM — from Kurganmashzavod as well as the wheeled Bumerang BTR from Arzamasmashzavod are on the same schedule.

kurganets-bmp

Kurganets BMP

Asked about the impact of Russia’s difficult economic situation and “corrections” in the GOZ on these programs, the GABTU chief said:

“Testing of ‘Armata,’ ‘Kurganets’ and ‘Bumerang’ is fully financed, and we will give it priority because they are the base for the future.”

Of course, paying for testing is one thing.  Ordering a production run is another.  The Russian Army will eventually have to make some choices between these new armored vehicles.  It won’t be able to afford all of them.

Shevchenko added that these vehicles are being tested in arctic, mountain, and desert conditions.  Other army systems (artillery, air defense, etc.) will be mounted on the same chassis.  Robotic armored vehicles are in the works.  He said the MOD doesn’t have a requirement for a wheeled tank.

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Tough Times at UVZ

Posted on August 15, 2016 | 1 comment

Maybe Russia’s economy is muddling through its downturn.  But for some major enterprises, the situation seems somewhat worse.  Tank and railcar maker Uralvagonzavod (UVZ) is a case in point.

Uralvagonzavod

Uralvagonzavod

In early August, RBK reported that Gazprombank is prepared to refinance UVZ’s 200-billion-ruble ($3 billion) debt.  The Russian government may kick in nearly 15 billion rubles ($230 million) of loan guarantees.

The 100-percent state-owned UVZ would use state guarantees to refinance part (most, all?) of 21 billion rubles ($325 million) in bank credits due this year.  Alfa-Bank, Sberbank, Gazprombank, and Svyaz-Bank are its primary creditors.

In June, Alfa-Bank went to court to have the tank producer declared bankrupt over 9 billion ($140 million) of a 16-billion-ruble debt.  The case was to be heard on 8 August, but UVZ needed to stop the bankruptcy case – by reaching agreement with Alfa-Bank – to receive the state loan guarantees.  With the guarantees, Gazprombank decided to refinance UVZ’s debts on 9 June.

Now Alfa-Bank denies it ever filed a bankruptcy suit against UVZ.  But a Minpromtorg official told RBK that the bank and tank maker reached “certain agreements,” and the former will soon lift its case against the latter.

According to RBK, UVZ reported record losses in 2015, mainly due to reduced sales of railcars and higher interest rates.  The corporation indicated that 58 percent of earnings came from military sales and 15 percent from civilian sales, with the balance from freight handling operations.

UVZ Deputy General Director Aleksey Zharich said the state cut the advance payment for its GOZ deliveries, forcing the company to turn to the banks.  It also needed to import equipment which doubled in price thanks to the weak ruble.

Overall, the Minpromtorg official said, “Indicators like these [for UVZ] haven’t been seen since the 1990s, the economic crisis has brought a fall in the volume of rail transport.”  But UVZ is hopeful for improved results in 2016.

The New York Times covered UVZ’s situation in February when it reported that the plant’s railcar workers had their wages cut by one-third while its military side was still “humming” on full pay.  One employee said then that workers on the civilian side had been showing up, getting paid, but actually doing little work for a year.  In June, RBK reported that UVZ furloughed 3,000 workers from railcar production.

What does UVZ’s situation mean for Russian defense?

In the short run, it means the T-14 Armata tank is likely to come out of UVZ slowly.  UVZ sent 20 tanks to the army for “troop testing” in the spring.  General Director Oleg Siyenko said in June that UVZ will deliver 100 tanks to the MOD in 2017 and 2018.  That’s a far cry from the 2,300 Armata tanks expected under GPV 2011-2020.

T-14 Armata

T-14 Armata

Meanwhile, Siyenko has been asking the Russian government for much larger loan guarantees – 60 billion rubles ($940 million) – to repay bank credits coming due in 2017 and 2018, according to RBK.  Some portion of this may be needed to retool the lines for serial Armata production.

It’s entirely possible UVZ might require a full-scale Kremlin-ordered bailout to be in position to produce Armata tanks by the hundreds.

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Posted in Defense Industry, Force Modernization, Ground Troops

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More on the Inspection

Posted on February 27, 2013 | 2 comments
Inspection Report Delivered in Central Command Post

Inspection Report Delivered in Central Command Post

More reaction to the results of the inspection . . .

Nezavisimoye voyennoye obozreniye editor Viktor Litovkin expressed surprise at “the military’s absolute openness” in allowing journalists to attend General Staff Chief Valeriy Gerasimov’s report on the results of the exercise.

Litovkin noted the 98th Air-Assault Division’s 227th Parachute-Assault Regiment participated in the exercise.  Su-25 and Su-24 aircraft flew from 4th Air and Air Defense Command bases at Primorsko-Akhtarsk, Morozovsk, and Marinovka.

201st Military Base Commander, Colonel Sergey Ryumshin attributed his problems in communicating to the Russian military in Tajikistan using old local phone lines, which are often out of order.  Gerasimov ordered the chief of the Main (?!) Directorate of Communications to sort out the problems.

Litovkin added that part and system malfunctions kept five Mi-8 and Mi-24 helicopters from the 2nd Air and Air Defense Command’s 565th Aviation Base from joining the exercise.  Su-25 ground attack aircraft from the 4th Command’s 6972nd Aviation Base returned home without dropping ordnance. 

Two Msta-S artillery systems were out of order in the Central MD’s 28th Motorized Rifle Brigade.  Oleg Sidenko [sic] was there to answer for this.  He said there are defects in 900 Msta-S systems.  Siyenko, you’ll recall, is General Director of Uralvagonzavod, owner of Uraltransmash.  The latter has a contract to maintain the Msta-S, but needs to buy new components from sub-contractors.  Siyenko indicated he wants his enterprise to take over Oboronservis affiliate Spetsremont, currently responsible for Defense Ministry armored vehicles.  He said UVZ can’t constantly make repairs “on the fly.”

Litovkin reported 100 R-168-5un radios in the 58th Army are inoperable.  Specialists call these systems from the Yaroslavl Radio Factory unreliable.

However, an earlier NVO article, by Oleg Vladykin, points to the positive; 20 VTA transports were able to operate successfully. 

Vedomosti’s Aleksey Nikolskiy summed the inspection up this way:

“In Soviet times such evaluations were conducted so often that every officer fell into them at least once every two years, says retired Colonel Viktor Murakhovskiy.  Unsatisfactory results after so many years without normal combat training don’t surprise the expert, in his words, such an inspection is very useful and will give the Genshtab a picture of the true condition of combat readiness.  The reason such a large quantity of equipment is out of order is also fully clear — organizational chaos has ruled in the realm of equipment repair in the troops in recent years, the expert says.  Therefore Defense Minister Sergey Shoygu’s decision to return repair sub-units which were liquidated in the course of the transition to outsourcing should be implemented as quickly as possible.”

Yes, it’s not surprising, and the honesty is the first step toward improvement.  But we should remember the civilian side of the Serdyukov-led Defense Ministry really didn’t, and wasn’t supposed to, worry too much about what the troops could do in strictly military terms.  That was properly the responsibility of the General Staff.  Shouldn’t it be criticizing itself too?  Shouldn’t it have come forward about problems earlier?

And one has to wonder, in the relatively short period of time since Serdyukov announced the outsourcing of most army maintenance, how much outsourcing was actually done?  Certainly some, but certainly not all of it.  Nevertheless, Serdyukov’s scheme is certainly bearing the brunt of the blame.  A proper question might be how capable were those repair sub-units before Serdyukov supposedly swept them all away?  Probably not very.

Army General Gerasimov promised surprise inspections and exercises will occur regularly now.  It’ll be interesting to see just how routine they become.

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The Winner Is . . .

Posted on March 9, 2012 | 1 comment

Putin, politics, and industrial policy.

One loser, for sure, defense policy.

Putin got his 63 percent.  He didn’t need fraud to get 50+ percent and avoid a second round, but he (or someone) wasn’t willing to take that chance.  The cheating should have drawn a flag for piling on or unnecessary roughness.  That it happened says something about Putin’s fear of being out of power.  But we digress.

Politics won over policymaking, not least of all in defense policy.

Yes, Russia is not the only place this happens.  It happens in most of the world’s democratic states.  This doesn’t prove Russia’s a democracy; it just proves Russia has politics.  But so did the USSR.  It had fights between industry and the military.

But back to our story.

Promises and populism secured votes for Putin in Russia’s industrial centers where they’ve waited years for serious defense orders.  He’d have won here without writing checks his treasury might not be able to cash.  But the once-and-future Supreme CINC made pledges he may hope factory workers forget before 2018.

If they don’t, working class disgruntlement may mingle with urban, middle class discontent in an increasingly flammable political mixture.

The case in point here is tanks and Uralvagonzavod in Nizhniy Tagil.  Did Putin court anyone, or any defense enterprise, more than the General Director of UVZ Oleg Siyenko?  Did anyone get comparable preelection attention?

The closest we get is Putin’s intervention between the Defense Ministry, OSK, and Sevmash to solve their submarine pricing dispute last fall.  But industry didn’t exactly get everything it wanted in that case.

Siyenko Casts His Ballot

In an election day press-release, this industrial chieftain all but admitted his employees were ordered to vote for Putin.  Most probably never entertained the thought of doing otherwise.  UVZ likely didn’t have to organize “carousels,” but  “corporate voting” might have occurred.

On February 20, Putin declared 2,300 “new generation” tanks will be produced (by UVZ) under GPV 2020.

It was just February 15 that Putin had a meeting with Defense Minister Serdyukov and Siyenko.  It was actually more of a beating, for Serdyukov.

Putin With Serdyukov and Siyenko

The Defense Minister had to back down publicly from everything he’s said about tank acquisition over the last couple years.  He acknowledged, as Putin said, there will be a new tank from UVZ in 2013 that will enter series production in 2015.  And, for good measure, Serdyukov said the manufacturer will receive 100 percent advance payment on the GOZ.

As recently as January, the Defense Minister was lamenting huge stocks of old tanks and repeating his willingness to wait for fundamentally new armor rather than “new” T-72 or T-90 models.  In mid-2011, he criticized tank makers (UVZ) for dressing up old ideas, and said the army would just settle for updating its existing armor inventory.

Yes, everything changed sometime between then and now.

It was just prior to this Putin-Serdyukov-Siyenko session that General Staff Chief Nikolay Makarov again criticized the tanks offered to the army and argued for the military’s predominance in weapons procurement decisions.  Deputy PM Dmitriy Rogozin objected fiercely to Makarov’s public airing of dirty linen, and declared himself chief of acquisition.

All official doubts and complaints about Russian tanks heard in 2009, 2010, and 2011 were swept away in a stroke by Putin’s announcement.

It seems the Ground Troops — its supporting industry actually — were feeling left out of the GPV and GOZ.  Tanks were never one of Russia’s  priorities as enumerated by former armaments chief Vladimir Popovkin.

What do 2,300 tanks mean for the world’s largest country?  One that once measured sufficiency in tanks by the tens of thousands?  Is staving off a NATO ground attack really a top concern?  Would Moscow entertain putting most of its new tanks opposite China?  There’s been plenty written (including by Russians) about the end of the tank era.

What do these tanks mean for the GPV?  If they cost 200 million rubles per, the cost of the production run (if it actually happens) will cost close to 500 billion of the GPV’s 19 trillion rubles for procurement.  It’s a lot for one system.  The Putin-brokered sub deal in November was worth only 280 billion rubles.

So to return to the original point of this meandering post, these tanks are about industrial policy, updating the human and technical capital to make them, keeping a significant industrial center quiescent, and retaining the capability to sell tanks abroad.  There are, after all, other armies possibly facing big tank battles in the future.

When politics and defense intersect, the latter yields.  Nothing shocking in that, one admits.

One last thing.

Siyenko’s an interesting character.  The 46-year-old former bike racer and past President of the Russian Cycling Federation spent most of the 2000s as General Director of Gazprom subsidiary Gazeksport (Gazprom Eksport), selling natural gas to the Europeans.  From 2003, he was a deputy chairman of the shady gas intermediary Itera.  Itera Chairman Vladimir Makeyev too is a one-time world-class rider who succeeded Siyenko as the cycling federation’s head.

But suddenly in 2009, Siyenko changed tracks, and went to Sverdlovsk Oblast and UVZ in Nizhniy Tagil.  There must be a story explaining why he’d abandon gas for tanks and railcars.

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Will Serdyukov Go?

Posted on January 13, 2012 | Leave a comment

Pavel Baev

Back to a familiar topic . . . is it possible or likely Defense Minister Anatoliy Serdyukov will resign or be dismissed from his post prior to the March 4 presidential election?  It is, of course, a topic that won’t quit.  At least not for the next two months. 

Pavel Baev discussed this with BFM.ru over the holiday. 
 
We looked at Baev’s view of Serdyukov’s reforms back in the spring.  He was neither sanguine about them nor forgiving of mistakes made.
 
We also looked earlier at a couple considerations of whether Serdyukov might leave or be forced out of the Defense Ministry. 
 
In August, Mikhail Rostovskiy thought Serdyukov’s position pretty secure, and this author postulated, with once-and-future president Vladimir Putin secure in the Kremlin again, Anatoliy Eduardovich might find relief from the defense portfolio in a job both cushier and more to his liking.
 
In April, Aleksey Makarkin also thought Serdyukov was pretty safe.
 
It’s obvious that the aftermath of the December 4 Duma elections changed a lot of things.
 
Now Oslo-based Professor Baev thinks Serdyukov could be sacrificed in the election run-up for nothing other than loyal performance of the tasks Putin set him to in February 2007.
 
Baev says Putin believes his regime faces an old-fashioned Cold War-style political threat.  Various Western “circles” (NATO, NGOs, CIA) think the regime’s exhausted itself.  Any possible replacement would be welcome to them.
 
Then we get to the essence of Baev’s argument — the fact that the Defense Minister has generated great dissatisfaction and irritation among Russia’s defense factory directors.  Without a serious go-between in the Military-Industrial Commission, Serdyukov’s become the focus of their ire.  They blame him and his subordinates for rejecting Russian weapons and equipment, and claim they’ve hurt Russia’s reputation as an arms exporter.
 
His case in point is the complaint from railcar and armor producer Uralvagonzavod during Putin’s December 15 “direct broadcast” Q and A with citizens.  A caller asked Putin to take Serdyukov and General Staff Chief Makarov by the neck, and replace the former with a “clearheaded Defense Minister.”
 

Baev’s interviewer asks whether Serdyukov will keep his current seat under Putin 2.0:

“. . . I think that the Defense Minister will be replaced even before the election.  The Armed Forces and military enterprises are a large and serious part of the electorate.  It was possible to extinguish accumulated irritation with the promise of money since after long promises they raised pay for officers, although not as substantially as was said.  It’s also possible to give money to OPK enterprises and sacrifice an unliked minister.”

But a resignation won’t be enough:

“I don’t think so because the problems have gone too far.  It’s hardly possible to put the protest mood just on one minister.  Everyone understands perfectly that it’s not the minister who started all this and carried all this out, no one suspects Serdyukov of being a confirmed reformer, having a program, or being a man motivated by a sense of his own mission.  He is a manager, an executive, and extremely stubborn, but he didn’t start this, and that’s clear.  And I don’t think Serdyukov will hold onto the minister’s chair.  The problems and conflicts have become so acute that it’s becoming costly to him.  I think they’ve had enough of him.”

Baev concludes that another civilian should take over the Defense Ministry, and continue separating its intertwined military and civilian functions.  He doubts Serdyukov’s replacement will reverse anything, but simply move forward on the problems reforms have created.

Serdyukov’s departure seems like more of a possibility now than before the Duma elections.  As Baev suggests, Putin could sacrifice his Defense Minister to appease his numerous unhappy defense industrial constituents.  Serdyukov’s fate may hinge on how badly Putin needs a boost for March 4. 

The Defense Minister’s 5-year anniversary comes next month and provides an opportunity for a change short of dismissal.  This author gets the impression Serdyukov’s energy for his difficult job has declined lately.

As for Uralvagonzavod, its workers are unlikely to quit sniping at the Defense Minister.  They, along with other military vehicle makers, have reportedly learned their defense order for 2012 has been drastically cut in favor of procurement in 3-5 years.

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Postnikov on the Army and OPK (Part II)

Posted on March 20, 2011 | 1 comment

T-90 on Red Square

Continuing with reaction to Ground Troops CINC, General-Colonel Postnikov last week . . .

Speaking to a RIA Novosti press conference, Director of the Ministry of Industry and Trade’s (Minpromtorg) Defense-Industrial Complex Development Department, Igor Karavayev answered Postnikov this way:

“Unfortunately, we are encountering unwarranted criticism of the tactical-technical characteristics of Russian military equipment lately.  Allegedly, it doesn’t match its international counterparts.  An objective evaluation of the characteristics and tests conducted, but also the pace at which our exports are growing, attest to the contrary.”  

He said more than a few countries buy Russian tanks, and the T-90A got a positive evaluation from testing in difficult climatic conditions, including in Saudi Arabia, India, and Malaysia.  In Saudi Arabia, according to Karavayev, the T-90A was the only tank to destroy more than 60 percent of its targets after a road march.  Karavayev continues:

“The tests conducted in Saudi Arabia as part of an open tender fully and completely contradict the Glavkom’s [Postnikov’s] assertions.”

This T-90 modification supposedly has a new turret, a 1,000-hp engine, an improved thermal sight, new active defense measures, and a number of other improvements.  Karavayev flatly said neither the German Leopard, French LeClerc, nor American Abrams is equal to the T-90: 

“So to talk about how our tanks are worse than Western equivalents is not completely reliable information.”

“The price Postnikov quoted exceeds by approximately one and a half times the price at which the producer is ready to supply the vehicle [tank] to the troops.  This situation requires additional professional discussion.”

So that’s about 78 million vice 118 million rubles per T-90.

Izvestiya talked to Uralvagonzavod’s chief armor designer, Vladimir Nevolin, who said:

“The main complaints against the T-90 today are connected with its insufficient survivability.  Its deficiency is the placement of people, weapons, and fuel in one compartment.  In any case of armor penetration, the igniting of fuel is unavoidable.  Even with a fire suppression system, such a possibility isn’t excluded.  Therefore, the development of modern armored equipment is going the way of separating people from the fuel and munitions.  Moreover, the employment of remotely-controlled armaments is essential.  These principles were implemented in our future product – “item 195.”  For example, on it, the tank turret no longer had the crew.  But it turns out no one needed such a project.”

Vesti FM asked Igor Korotchenko whether Postnikov’s claim that Russian arms aren’t up to snuff is true.  He said there are objective problems with Russian-designed weapons, and some planned for introduction are really obsolete.  But, according to Korotchenko, the Defense Ministry’s main criticism is that Russian combat vehicles don’t meet survivability requirements.

At the same time, Korotchenko says Russia can’t fall into dependence on the West.  New armor has to be financed and put into serial production.  Limited purchases of Western military technology and licenses for the newest thermal sights and munitions are acceptable in his view, he says Russia’s national technological base for producing major weapons needs to be protected.

Finally, it was Viktor Baranets’ turn in Komsomolskaya pravda.

Baranets noted Postnikov complained quite openly about Russia’s weapons for a military leader of his rank.  And he opined that Moscow is not only competitive, but superior in some military systems.  But Baranets claims the T-90 cost has doubled from 60 million rubles two years ago due to higher electricity and metal prices as well as adding expensive French or Israeli thermal sights.  Nevertheless, says Baranets, Postnikov exaggerated about buying Leopards for the price of a T-90.

Baranets also interviewed Mikhail Barabanov.

Barabanov says the T-90 really is the 17th modification of the T-72, initially called the T-72BU, but T-90 sounded more modern, at least in 1992.  The T-90A has grown old, but could still be updated with a new turret, gun, and weapons control system.  The 118-million-ruble pricetag comes from a small production run, and it’s steep for a tank that’s not the most modern.

Barabanov says for 118 million you could only buy 3 1980s-vintage Leopard-2A4 from the Bundswehr reserve.  And such tanks don’t have any particular advantage over T-90.  A new Leopard-2A6 is more than $4 million, but with service, training, spares and munitions, it can’t be obtained for less than $10 million.

Baranets asks Barabanov if the share of modern ground armaments really be brought up to 70 percent by 2020.  The latter says:

“It’s realistic given fulfillment of the State Program of Armaments.  But its [the GPV’s] fulfillment depends first and foremost on the country’s capacity for high economic growth rates.”

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Postnikov on the Army and OPK (Part I)

Posted on March 17, 2011 | 3 comments

Ground Troops CINC, General-Colonel Aleksandr Postnikov really stirred up the hornet’s nest on Tuesday.  Russia’s defense sector – its OPK or oboronki – feeling offended recently, is abuzz about his comments.  Postnikov told a session of the Federation Council’s Defense and Security Committee:

“Those models of weapons that industry produces, including armor, artillery and infantry weapons, don’t correspond to NATO’s or even China’s models in their characteristics.”

The military hadn’t criticized the domestic OPK’s heavy armor and artillery systems to this point.

Insulting Russian tanks is the particular point here.  According to Newsru.com, Postnikov apparently called the much-praised, newest T-90 in actuality just the 17th modification of the Soviet T-72.  And, at the current cost of 118 million rubles per tank, he suggested:

“It would be simpler for us to buy three ‘Leopards’ [German tanks] for this money.”

Newsru.com counters that Rosoboroneksport is proud of the T-90, its sales, and continued interest abroad, but admits it is weak against third generation ATGMs, modern sub-munitions, and “top attack” weapons.  The news outlet also notes that the Russian Defense Ministry has eschewed procurement of the T-95 and BMPT.

In its editorial entitled “Import Generals,” Vedomosti takes Postnikov to task, saying it’s not sure whether he means new or used Leopards, but the German tanks probably come in at $7.5 million a piece at least, against the T-90 at $4 million [i.e. only part of one Leopard for 118 million rubles].  And, says Vedomosti, comparing Russian tanks to Chinese ones is lamer still on Postnikov’s part.

According to the business daily, these criticisms of Russian armaments usually come with calls to buy the same systems abroad.  But the 2008 war with Georgia showed Russia’s deficiencies lay in soldier systems, comms, recce, C2, and some types of infantry weapons rather than in armor.  When Russia doesn’t make something like Mistral or it has inferior technology like UAVs, it’s understandable to buy foreign, but when it’s something like armor, it raises a lot of issues, according to Vedomosti.  Uralvagonzavod certainly needs tank orders.  The idea of large-scale foreign purchases is utopian, says Mikhail Barabanov.  The paper believes thoughts of buying Leopard tanks and Mistral mean Russia’s generalitet has plans beyond local wars.

BFM.ru says Postnikov put the Ground Troops’ modern arms and equipment at only 12 percent of its inventory at present with, again, the goal of 70 percent in 2020.  At the end of this year, the army will get its first brigade complement of the newest automated C2 (ASU) system [i.e. presumably YeSU TZ]:

“In November of this year, we plan to conduct research on the newest  ASU and hand down our verdict.”

According to BFM.ru, he said NATO and China already have analogous systems:

“But for us it is still the future.”

Nezavisimaya gazeta focused on Postnikov’s comments on Ground Troops brigades.  He said he now has 70, but plans for 109 by 2020, including “future type” brigades:

“There will be 42 brigades of the future type, in all there will be 47 military formations of the future type, including military bases abroad which will be built on the same principle.”

The Glavkom didn’t say how the new brigades will be different from the old.

Parsing what he’s talking about is a little tough.  At the end of 2008, the army talked about having 39 combined arms, 21 missile and artillery, 12 signal, 7 air defense, and 2 EW brigades for a total of 81, rather than Postnikov’s current 70.  One might guess a dozen arms storage bases in Siberia and the Far East could be fleshed out into maneuver brigades.  But where does the manpower come from?  Maybe some of the 70,000 officers cut and now being returned to the ranks by Defense Minister Serdyukov. 

Postnikov elaborated some on heavy, medium, and light brigades.  Heavy will have tanks and tracked armor.  NG concludes there won’t be a new tank.  Tanks in storage will get new electronics and Arena active defense systems.  According to Postnikov, medium brigades will get [among other things?] the Bumerang amphibious BTR now in development.  This, says NG, is the first time anyone’s heard Bumerang.  But if it isn’t successfully developed or produced in sufficient numbers by 2020, the army will just buy armored vehicles abroad since there’s already ample precedent for this.

Light brigades will have vehicles like the Tigr or the Italian LMV (Lynx), licensed production of which could begin in Russia this year.  One special Arctic brigade will be created at Pechenga. 

Several media outlets quoted Postnikov to the effect that there’s no plan to change 1-year conscription, but he noted:

“In the transition to one year military service, military men received only a headache.”

There’s lots more reaction to Postnikov’s statements, but it’s too much for one day.

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