Limited Productive Capacity, High Demand for Arms and Equipment

Surprisingly little attention, beyond routine press service reports, went to last Tuesday’s (16 February) government conference on the State Armaments Program, 2011-2020 (GPV-2020).  RIAN and older media reporting indicates the GPV-2020 will be adopted next month.

Prime Minister Putin told the attendees, “We are talking about the time frames and kinds of weapons systems we need to provide to our army and fleet, that have to be put into the arms inventory.”  Noting that nuclear deterrence forces, space, and air defense would be emphasized, Putin also said:

“We have to satisfy, as I already said, the troops’ need for modern communications, command and control, reconnaissance and, of course, complete the fifth generation aircraft, new combatant designs for the Navy.”

He reiterated earlier declarations that modern armaments in the forces must be 30 percent by 2015, and 70 percent by 2020.

Other Putin sound bytes:

“We have to provide essential financial resources for this task.  The Finance Ministry, the Economic Development Ministry have made the necessary calculations, and today we’ll need to analyze them.  Right off I want to note that we can’t allow any inflated estimates, ineffective expenditures.”

“The State Armaments Program has to give long-term guidance for developing the defense-industrial complex itself.  This must enable our enterprises to embark on a corresponding modernization.”

“We’ve conducted a whole series of meetings on these issues, but the Defense Ministry must provide the corresponding technical parameters.  We have to support the technological equipping of our defense-industrial complex exactly under these parameters.”

Finally, Putin indicated defense orders will go to enterprises that will be in a condition to produce truly competitive systems in terms of combat power, range, and protection.

Participants in the conference also reportedly discussed a new draft Federal Targeted Program (FTP or ФЦП) on the Development of the OPK.

On 15 February, Putin met with Industry Minister Khristenko and Director of the Federal Service for Military-Technical Cooperation (FSMTС or ФСВТС) Mikhail Dmitriyev.  Khristenko told Putin last year OPK enterprises received 148 billion rubles in state support (6 billion in credits, 60 billion in capital injections, 76 billion in state-guaranteed credits, and 6 billion in subsidized interest rates on export credits).  According to Khristenko, this support allowed the OPK to increase its production 10 percent.

Unnamed Defense Ministry sources said the 76 billion rubles in state-guaranteed credits are difficult to use, and not all were used.  The 60 billion rubles in capital injections were basically a direct budgetary grant, and, according to one aviation plant manager, 20 billion of it went (get this!) to compensate RSK MiG and other producers for the fiasco with their 34 faulty MiG-29s sold to, and returned by, Algeria.

FSMTC Director Dmitriyev told Putin the volume of Russia’s current arms export contracts is $34 billion, and exports will be $9-10 billion over the next two years.

Aleksey Nikolskiy writing for Vedomosti indicated Dmitriyev said several enterprises have orders for some systems scheduled out to 2017, and some foreign customers have raised the issue of quicker deliveries.  He argued that additional production capacity is needed, but Putin proposed only to review the issue of synchronizing domestic and export orders for arms.  He said, “We have to understand in what time frame we can and have to produce for ourselves and our foreign partners.”

A source close to Rosoboroneksport said the issue concerned limitations in production capacity for the S-300PMU2 and S-400 air defense systems, the Su-35 fighter, and surface-to-surface missiles that don’t allow for simultaneously meeting the demands of foreign customers and the Russian Armed Forces.  Vedomosti noted that VVS CINC Zelin already complained about limited productive capacity for the S-400.  A similar jam exists with the Su-35, which is supposed to enter the VVS and some foreign air forces by the end of 2011.  A Defense Ministry source said there’s a proposal to build two new factories for air defense systems, and to enlarge existing enterprises producing critical equipment, and the government might soon adopt the proposal.

Konstantin Makiyenko of CAST (ЦАСТ) told Vedomosti, for the past 2 years, Rosoboroneksport has received more orders than what it has supplied abroad, and the lack of sufficient productive capacity has become the main limiting factor on the growth of arms exports.  He says either increase the capacity or the army will have to wait for arms it doesn’t need too much, but air defense systems and fighters don’t fall into the category of things not urgently needed.

As Mikhail Rastopshin and others have been so kind to note, there have been a raft of OPK development and armaments programs over the years, but they don’t seem to get completed, each melding into the next albeit under a longer deadline.   In early 2009, Dmitriy Litovkin estimated no more than 20 percent of any arms program has ever been accomplished, even during the years of high oil revenues.

And you can’t do an armaments program without OPK development, and Russia’s defense-industrial base has been increasingly poorly positioned to support the arms program in recent years, according to Rastopshin and others.  And don’t forget about declining RDT&E.  Hard times for research institutes and design bureaus could mean that, rather than modern or futuristic weapons based on ‘new physical principles,’ new units of obsolete designs could be produced under an armaments program.

Here’s a telling reminder.  The  much-vaunted 2003 Urgent Tasks of the Development of the Russian Armed Forces document called for modern weapons at the level of 35 percent in 2010, 40-45 percent in 2015, and 100 percent by 2020-2025.  And now Moscow’s talking 30 percent by 2015 and only 70 percent by 2020.

As recently as 2006, the Russian military claimed 20 percent of its weapons inventory was modern.  But in March 2009, Defense Minister Serdyukov admitted the starting point was actually lower:

“. . . the bulk of [arms and equipment] are physically and morally obsolete. Natural loss is not being compensated by procurement.  As a result, the proportion of modern arms and military equipment is around 10 percent.”

This was when President Medvedev said large-scale rearmament would begin in 2011.

Nevertheless, in his November 2009 address to the Federal Assembly, Medvedev said:

“One of the most difficult yet fundamental tasks is reequipping the troops with new systems and models of armaments and military hardware.  There is no need to discuss some abstract notions here: one needs to obtain these weapons.  Next year, more than 30 land and sea-based ballistic missiles, five Iskander missile systems, about 300 modern armored vehicles, 30 helicopters, 28 warplanes, three nuclear submarines, and one corvette-class combatant must be delivered to the troops, as well as 11 spacecraft.  All this has to be done.”

A pretty daunting list when foreign customers are asking for their weapons too.

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