Defense Procurement in Decline?

Is the Russian MOD’s procurement declining?  It’s difficult to say, but a quick survey seems to show it hasn’t, at least not yet or by much.

buk-m3

Buk-M3

Although Russian procurement data is far from independent and probably far from complete, what Moscow claims was procured for the military is still useful. Below find a side-by-side comparison of what the MOD says it bought in the third quarter of 2015 and in the third quarter of this year.

The reporting comes from Krasnaya zvezda for 2015 and 2016, and from TASS and Bmpd.

3rd-quarter-comparison

Year-on-year in the third quarter, procurement of aircraft and helicopters appeared down.  Purchases of air-delivered ordnance were higher in 2015 because the MOD needed to replenish stocks of missiles, rockets, and bombs expended in Syria.  Deliveries of ICBMs and ships were lower in the quarter just completed.  But the navy received substantial numbers of new cruise missile systems.

The MOD reported that 62 percent of the state defense order (GOZ) was complete in the third quarter.  It also said the armed forces’ inventory of weapons and equipment is now 48 percent modern.

This week Sergey Chemezov, head of government-owned defense industrial conglomerate Rostekh and friend of Putin, echoed the president’s recent warning to firms to plan for a time without large military orders.  Chemezov said Rostekh believes GOZ procurement will peak in two years and be no more than 50 percent of its total output by 2025.

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3 responses to “Defense Procurement in Decline?

  1. Pingback: MILNEWS.ca Highlights – November 4, 2016 | MILNEWS.ca Blog

  2. P.S. The helmet-mounted targeting systems were apparently made in Ukraine previously, so they represent some import substitution.

  3. Thanks for the post. I’d missed the original reports.

    The funding for the GOZ for 2016 (after the amended 2016 budget), after the inclusion of the RUB c.200bn of state guaranteed credits, was roughly the same as for 2015 in nominal terms. So, a reduction in real terms of, say, 5-7%, would suggest that, all things being equal, total deliveries for the year shouldn’t be too far off 2015 levels.

    Looking at the budget for 2017-19, it appears that the funding allocated to the GOZ will only decline (in nominal terms) very slowly. Of course, a lot can change on oil markets that might result in those figures going up or down, but the fact that the plan as it currently stands preserves spending on re-equipment shows the continued political commitment to rearmament as a broader policy objective.

    That said, I’m still not sure why the likes of Chemezov (as in your previous post) and Rogozin (and Putin) are talking about orders peaking in the next couple of years. The budget suggests otherwise, unless there are plans to supplement open budget spending with some other source of funding.

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