Tag Archives: ОПК

Declining Defense Orders

Smaller military budgets and delays in putting GPV 2018-2025 into place will apparently trickle down into reduced orders for Russia’s defense-industrial complex (OPK) in coming years.

According to TASS on June 15, Deputy Chief of the Main Armaments Directorate Boris Nakonechnyy said the MOD can’t fully “load” OPK enterprises with orders during the next GPV.  “As the primary customer for weapons and military equipment, the Defense Ministry can’t fully support the work of enterprises,” he told the news agency.

There may be some reduction in defense orders during the new arms program, Nakonechnyy said.  But he indicated the MOD would still support the scientific work (presumably the RDT&E) of Russian defense-industrial enterprises.

Nakonechnyy said the MOD doesn’t expect global military threats to decline, but it’s not possible to increase substantially the funding needed to counter them.  At the same time, he emphasized it’s important for Russia not to lose the current tempo of development in its OPK, and not to allow itself to lag behind world leaders in military technology.

Welding parts for BMP-3 at Kurganmashzavod

Welding parts for BMP-3 at Kurganmashzavod

TASS provided no context for Nakonechnyy’s comments.  Other media outlets ran the TASS story as is.  Utro.ru, however, provided its own interpretation of his remarks.

While perhaps somewhat alarmist, Utro writer Andrey Sherykhanov puts Nakonechnyy’s statements in the context of the continuing battle between the defense and finance ministries over future military spending.

Sherykhanov recalls the recent Vedomosti report putting likely appropriations for GPV 2018-2025 at 17 trillion rubles, three times less than the original MOD request.  The peak of defense orders, he concludes, is already past.  The military will have no orders for production enterprises, which will close and send their workers on indefinite furlough as they did in the 1990s, he writes.

But maybe, Sherykhanov opines, this won’t be necessary since President Putin has said the OPK’s potential should be harnessed to the needs of cutting-edge, science-intensive sectors like medicine, energy, aviation, space, and information technology.  Last year the Supreme CINC himself said 30 percent of OPK production has to be for the civilian market by 2025, and 50 percent by 2030.  Massive state defense-industrial holding company Rostekh has already announced that half of its output will be civilian by 2025.

Sherykhanov writes that there’s no real concern about this new program of conversion to civilian production at present:

“In the upper echelons of power, they spoke about it just a year and a half ago. There’s a gathering sense that the leaders of Russian defense enterprises aren’t beating their heads with this, concentrating as they are completely on military orders which OPK enterprises are provided until 2020.  That is, they act according to this scheme:  we’ll handle this, and then we’ll see.”

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The Foggy Goal of the GPV (Part II)

Sovershenno sekretno’s Vladimir Spasibo describes the early post-Cold War process of mergers and consolidations in the Western defense industries, and then asks:

“And how are our integration processes going?  By altogether different schemes.  Mainly by creating industrial ‘kolkhozy.’”

His example is the United Aircraft Corporation (UAC or OAK) which conglomerated most Russian aircraft designers and producers.

Spasibo says this consolidation should have eliminated problems with skilled personnel shortages, technology losses, obsolete production lines, low labor productivity, product quality, duplicative development, and excess capacity.  But it didn’t.

Spasibo examines the labor force in the OPK’s aircraft industry.  He claims with VVS purchases of 380 billion rubles per year, and productivity of 6 million rubles per worker (three times less than Boeing’s rate), there should be 66,000 workers in Russia’s industry, but its 6 lead plants have more than 100,000 workers, and the aviation industry overall has more than half a million.

He looks then at the labor force for the entire OPK.  With purchases totaling 19 trillion rubles, with modest productivity of 3 million rubles per worker over ten years, the OPK should have 630,000 workers, but Rostekhnologii General Director Sergey Chemezov says there are now 1.2 million.  And Spasibo concludes good specialists won’t work for what companies are able to pay as a result.

Chemezov has pointed out that only 36 percent of Russia’s “strategic enterprises” are financially stable; at the same time, 30 percent show all the signs of bankruptcy.  The situation is particularly bad in the munitions and special chemicals sector, where nearly 50 percent of companies look like potential bankruptcies.

Spasibo adds that only 15 percent of the OPK’s technologies meet world standards, 70 percent of basic production assets are outdated, and the equipment renewal rate is only 3-4 percent.  He says:

“To count on these companies being able to produce the weapons required is laughable.  But they will absorb the money they receive.  Naturally, without any particular result for the reforming Armed Forces.”

Spasibo concludes:

“The ‘estimated expenditures’ of the Defense Ministry obviously demonstrate that we’re again being dragged into a senseless and dangerous arms race which in no way increases our military security.  On the contrary, it increases the risk of creeping into military conflicts.”

“NATO and the U.S. absolutely don’t need a war with Russia.  China doesn’t either.  Even despite periodic rumors that it has territorial claims on us.”

“But it’s impossible to make these claims by military means.  Especially if Russia will have a modern high-tech army.  But once again no one is building it.  And doing this is impossible, scattering resources on strategic arms, VKO, an ocean-going fleet, whose role in the hypothetical case of war is completely incomprehensible.  The situation’s exacerbated by the lack of an entire series of experimental models fit for production and supply to the Armed Forces, an obsolete technological and organizational structure of OPK enterprises which, most likely, will turn the money into dead metal.”

“During perestroyka, we learned that the USSR lost the ‘Cold War’ to the U.S. and that the arms race killed the Soviet economy.  Scholars and commentators talked about this with figures and facts.  In those days, there were many suggestions about what to do with the Armed Forces and VPK.  But all this ended in empty talk.  In fact, they simply killed the VPK.  They practically didn’t invest money in the Armed Forces.  There was neither an army, nor a defense industry to arm the army.”

“And here a time has come when the Kremlin and the White House have decided to modernize the army and, using the financial possibilities that have appeared, to pour 20 trillion rubles into it before 2020.  But won’t we now be stepping on the very same rake as in the eighties, won’t the president and premier be repeating the mistakes of the Politburo, initiating a thoughtless and dangerous arms race?  The key word here is thoughtless.”

“Of course, the draft State Program of Armaments, 2011-2020 is a document under the top secret seal.  Does this mean the public shouldn’t discuss and understand what trillions will be spent for.  Or is it the prerogative of a narrow circle of interested officials — lobbyists for the VPK and the military?”

“The trouble is old and familiar.  Recently deceased  Academician Georgiy Arbatov wrote about it in 1990:  ‘An affair most important for the country and the people — defense, security, fantastically large military spending — was monopolized by a narrow group of generals and general designers from military industry.’  And further:  ‘I think the military shouldn’t be given a monopoly on assessing the threat of war.  Just the same it’s reasonable not to make this assessment without accounting for its opinion.’  It just shouldn’t dominate this.”

Thank you Mr. Spasibo.  A good article.  He has a clear point of view on the issue of the GPV and where the Russian military might or might not be headed.  But where does it leave us?

Just a little commentary . . . Spasibo says Russia aims to match NATO, the U.S., and maybe China too.  This raises the issue of whether it should aim for this and whether it can achieve this.  The answer to both is no.

That is, however, not the same thing as saying the Russian Armed Forces don’t need to modernize.  If they were smart, they’d aim for capabilities to offset the advantages of their stronger potential enemies.

That means difficult picking and choosing, something we haven’t seen much of in the GPV, where it looks like every service is at the table awaiting a full meal.

Russia is definitely not France, but this doesn’t mean Moscow has to defend everywhere.  Perhaps it should prioritize and worry more about Vladivostok and China than about Iturup and Japan.

Spasibo does a good job of pointing out that there are at least as many problems in the VPK, the OPK as in the military itself.  And yet there’s no real effort yet to remedy them.  All of this goes to whether Russia can reach whatever aim it sets for military modernization.  As Spasibo says, they might just be sending good money after bad.  They may be risking a repetition of past mistakes by overspending on arms, but, of course, they may not even get a chance to repeat these mistakes if money isn’t allocated.  Remember that previous GPVs died of financial starvation in their infancy.

One’s not sure about Spasibo’s argument on Moscow’s promotion of an arms race.  Right now, only the Russians need to ‘race’ — and the race is to catch up after years of falling behind.  And it doesn’t necessarily need to catch up to the extent that it duplicates U.S. capabilities.

And yes Spasibo’s right in saying these defense expenditures should be debated and decided more widely and publicly, but unfortunately Russian citizens have even more basic and important political and social issues that need that kind of scrutiny first before they get down the list to military procurement.

Popovkin for Kolmakov

A long-swirling rumor that First Deputy Defense Minister, General-Colonel Aleksandr Kolmakov would be forced into retirement became a fact this week.  Talk of this dated to March.  Defense Minister Serdyukov didn’t want both of his first deputies [Kolmakov and General Staff Chief Makarov] occupied with combat training and readiness, reportedly wanting to end this unnecessary division and competition.  More recently, Aleksandr Golts said Kolmakov’s and Makarov’s activities with operational troops intersected, even though nothing was ever heard about tensions between the two generals. 

Argumenty nedeli indicates Kolmakov more than once firmly, but tactfully, expressed his disagreement with Serdyukov’s reforms, specifically the elimination of warrant officers and the posting of excess officers in sergeant’s duties.

It’s not precisely clear who will benefit from Kolmakov’s departure.  The press largely assumes it’s the Genshtab and the main commands of the armed services and branches, but it’s no longer as easy as that.  Golts linked the Kolmakov change with the move to 4 military districts or operational-strategic commands (OSK or ОСК).  He argues that putting all ground, air, and naval forces under 4 operational commands would weaken all central supervisory organs, including the Genshtab and main commands.  As for Kolmakov’s Main Combat Training Directorate, it might move somewhere else, morph into something else, or simply disband.

Deputy Defense Minister and Armaments Chief Vladimir Popovkin takes his old portfolio and responsibilities to his new post as First Deputy Defense Minister.  So as much of the Russian media has noted, rearmament is an entirely new priority and job description for the First Deputy.  One wonders if Popovkin will even have a successor in his old position. 

All observers seem to agree, however, that the swap of Popovkin for Kolmakov and rearmament for troop training focuses the Defense Ministry on providing the troops what they need and the Genshtab and uniformed commanders on training them.  Read Kommersant and Rossiyskaya gazeta for more on this.

Popovkin himself told Rossiyskaya gazeta

“We decided to divide the Defense Ministry’s administrative and operational functions.  A civilian  channel is being created which will support the troops.  A second channel will conduct combat training, all troop activities connected with the operation and use of armaments and military equipment.  It’s been decided to withdraw purchases of armaments and everything else from the duties of the Chief of Rear Services and the Chief of Armaments and to appoint a responsible person who will order and purchase all this.”

This would all seem to connect in the person of Nadezhda Sinikova, whom Medvedev and Serdyukov recently appointed to head and invigorate Rosoboronpostavka.  Military men will continue to make their own orders and requests, but Sinikova’s organization will deal directly with suppliers.

Here’s what President Dmitriy Medvedev said to Popovkin on 22 June:

“Naturally I wish you success and hope that the sector you will coordinate, – this is, first of all, the armaments sector and military equipment and the resolution of a series of issues connected with the civilian component  in the Defense Ministry, – will develop successfully, and we will be able to realize this state armaments program which we are now coordinating.”

“This is a large-scale program, complex, intense, however, at this time, it is directed at establishing on the current foundation a modern, effective armaments system for our army, to reequip, and fully supply it in the framework of those priorities on which we agreed and which must create the basis for the development of our Armed Forces in the future to 2020 and even to 2030.”

“This is a large, complex task.  I hope we have forever gone away from the situation of patching holes in the Armed Forces, which was characteristic in the 1990s and the beginning of this century, and we have set out on a different basis of work.”

“But here methodical, scrupulous work is needed especially with military equipment suppliers because they are sometimes pampered and don’t provide quality, and very unpleasant price increases appear for us.  Therefore we have to hold everything taut, but at the same time acquire everything our Armed Forces need to be combat capable and well trained.”

Gazeta.ru asked to Deputy Chairman of the Duma Defense Committee Igor Barinov to explain what Medvedev was saying about the Defense Ministry’s suppliers:

“Prices on VPK products are growing out of proportion with the growth of inflation and taxes.  For example, the ‘Topol-M’ increased 2.5 times in 3 years, and a sniper rifle cost less than 30 thousand rubles at the beginning of the 2000s, but now the Defense Ministry buys them for 400 thousand.”

“Enterprises don’t want to reduce defects, they place incomprehensible prices on their own products—some places because of corruption, some places because of a lack of restraint.  It’s impossible to allocate money if a process of systematizing price formation doesn’t occur.”

In Vremya novostey, Pavel Felgengauer describes Popovkin as one of the drivers of the current military reforms:

“Popovkin was the first to begin publicly saying that the problems of the Russian VPK are connected with a large lag behind the West.  And he was first to acknowledge that Russian space system use large amounts of Western components.  Before him no one publicly talked about this.  And in 2008 Popovkin was first to announce that Russia will buy foreign military equipment, and not just components.”

An informed, anonymous source also told Vremya novostey that Popovkin is an “old acquaintance” of Medvedev and Putin.  And he will be the Defense Ministry’s real number two man, pushing Army General Makarov lower in the de facto hierarchy [of course, this overlooks the very good likelihood that Serdyukov maintains his own hierarchy based on his own team of trusties and it probably doesn’t include any ex-generals like Popovkin].

Popovkin’s official bio can be found here.