Tag Archives: Far East

Will Rosneft Boost Russian Naval Construction?

Russian state-controlled oil giant Rosneft is turning Shipbuilding Complex (SSK) Zvezda into the country’s first large tonnage shipyard. TASS recently published a backgrounder that detailed what’s been happening there.

Located in Bolshoy Kamen near Vladivostok, SSK Zvezda is supposed to produce the ships and equipment Rosneft needs to explore and exploit offshore oil and gas. However, it also has potential to boost Russia’s naval ship and submarine construction and repair in the Far East.

Rosneft took over Zvezda in late 2015 in consortium with government holding company Rosneftegaz and Gazprombank. The effort to expand its civilian shipbuilding capacity began in 2009 as a partnership between state-owned United Shipbuilding Corporation (OSK) and South Korea’s Daewoo. The latter quit the project in 2012.

Having displaced OSK, Rosneft became principal holder of Far East Plant (DVZ) Zvezda and some small affiliated shipyards. DVZ Zvezda is the only Russian shipyard in the Far East capable of repairing and modernizing nuclear-powered submarines and ships up to 13,500 tons displacement. It began modernizing two project 949A Oscar II-class nuclear-powered guided missile submarines in 2013.

Zvezda complex in Bolshoy Kamen

Zvezda complex in Bolshoy Kamen

This image shows the naval shipyard at top with its grayish roof, launch basin in front, and a submarine in drydock alongside if you look carefully. The SSK Zvezda facility is pretty much everything else — the reddish roof of the monstrous production building and the whitish buildingway with its yellow cranes visible.

SSK Zvezda will produce a range of medium and large tonnage vessels, up to 350,000-tons displacement, and other sea-going equipment to support offshore hydrocarbon development in the Pacific and Arctic Oceans. It includes LNG carriers, tankers, drilling platforms, and transport, supply, and seismic survey ships.

The shipyard currently has one 1,200-ton gantry crane made in China, two 320-ton gantry cranes, and four 100-ton tower cranes on its open buildingway. In July, the shipyard took delivery of a 40,000-ton transport-transfer dock built by the Qingdao Beihai Shipbuilding Heavy Industry Company. Rosneft expects SSK Zvezda’s development to cost $2.4 billion.

Capture

It reportedly will begin construction of medium-sized ships in 2019 with a workforce of 1,500 employees. By 2024, it expects to have a large-ship drydock and full-cycle fabrication facilities in operation with 7,500 workers. The shipyard’s order book already includes ten 80,000- to 120,000-ton tankers, ten shuttle tankers, and supply vessels. Leveraging DVZ Zvezda’s nuclear expertise, SSK Zvezda will also build three Lider-class nuclear-powered icebreakers, according to a September 14 announcement by Russian Deputy Prime Minister Yury Borisov.

President Vladimir Putin visited the shipyard on September 10 to lay the keel of a tanker. In 2017, he inaugurated the buildingway and transfer dock for medium-sized ships and participated in the keel-laying for four multipurpose ice-class supply ships. The Russian president personally commissioned a module production building in 2016.

The development of SSK Zvezda may increase Russia’s capabilities for naval ship and submarine construction and repair in the Far East. DVZ Zvezda has struggled for years without modernization funding. However, it may be able to leverage the flow of Rosneft investment and Chinese shipbuilding technology, equipment, and experience into SSK Zvezda to improve its own production capabilities. A steady stream of large civilian projects next door may increase of quantity and quality of personnel available to DVZ Zvezda, and moderate the boom or bust cycle of shipbuilding that makes it difficult for Russian workers to stay in the Far East.

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Dollar’s Inevitable Collapse Threatens Russia

Segodnia.ru recently publicized a report entitled Armed Forces:  Year 2010, prepared by the Center for Strategic Assessments and Forecasts (TsSOiP or ЦСОиП).  It interviewed one of the report’s authors – retired Colonel and Doctor of Technical Sciences, Aleksandr Fomin – about the state of Russia’s military and threats to Russia.

How does one characterize Colonel Fomin?  In this interview, his thoughts range from a little far right to far left / neo-Marxist.  Yet he sounds like President Medvedev in 2009 calling for a new world financial order to break the dollar’s hold on the international economy.  But that resemblance disappears once he starts excoriating Russia’s elite — co-conspirator in U.S. domination of Russia.

He generally argues the dollar’s inevitable collapse will lead to conflict or war, for which Russia is poorly prepared.  His arguments will appeal to some, but they represent a somewhat simplistic view of international economics and finance.  The rest is a short geopolitical treatise we’ve heard many times about how Russia arrived in its current condition.

Take heart, however, the analytical report is more interesting and original, but it’s 40-odd pages, so some patience on your part will be required.

By way of foretaste, on with Fomin’s interview . . .

Asked simply what’s going on in the Russian Army, Fomin answers:

“There’s a myth that the incredible militarization of the country and rebirth of its military might almost to the level of the Soviet Union has happened in recent years.  This doesn’t correspond to reality – in reality, as the analysis shows, the Russian Armed Forces have degraded.”  

“If we look at the trend of general financing of the Armed Forces for the last 10 years , adjusted for inflation, then we get as a true expression of the financing volume are 4% increases per annum on average.  At such a growth rate, it’s possible only to offset depreciation, but not guarantee the development of the armaments system.  Now recall corruption, and you find that in reality the Armed Forces didn’t develop, but degraded.”

“Today, in the spirit of political correctness, it’s believed that Russia’s main military enemy is international terrorism. They’re ashamed to identify the U.S., NATO, and China as the real potential enemies.  But if we call things by their names, then today Russia is inferior to these probable enemies in the size of its Armed Forces by 20 times in the West and 35 times in the East.”

We’ll have to read his full report to figure out how he came up with these numbers. 

Fomin goes on to say that Russia’s nuclear weapons won’t save it either, since Moscow’s elite keep its money, and educates its children, in the West.  He concludes flatly:

“It is very probable that Russian nuclear weapons will never be employed.”

Next Fomin constructs his scenarios for future wars and threats to Russia:

“In the coming decades, and possibly, years the U.S. and EU’s problems with China will inevitably sharpen, the cause of them is the struggle for energy resources.  Iran, Pakistan and . . . Russia will be drawn into this confrontation.  They will start to use our country as a buffer in the military resolution of the China problem.”

The interviewer asks Fomin what threatens Russia externally, what geopolitical positions has it lost, which ones does it still hold?

“The main threat not just to Russia, but also the world as a whole comes from the virtual world financial system, based on the American dollar, which for a long time already hasn’t been supported by real assets and is held up only by U.S. military might, the potential of which allows them to oppose everyone else in the world.  But sooner or later this system will collapse, for internal reasons.  But however the collapse occurs, its agony (possibly the current financial crisis is the beginning of this agony) could plunge the world into the Third World War.”

“As already said above, today Russia is practically undefended.  Its political leadership, like the appanage princes of Rus in the 12th -13th centuries, are trying to hold off threats  by means of multibillion tribute payments allegedly into international reserves.  However, in Russia the easily accessible oil, could soon be gone:  according to expert evaluations, 30% of wells are already unprofitable.  Then Russia will simply be of no interest to the rest of the world . . . .”

“If we talk about Russia’s lost geopolitical positions, then of course – this is NATO’s expansion to the East, the reinforced U.S. role to Russia’s south (Afghanistan, Iran, Pakistan, Georgia).  It’s possible to add the real threat of losing the Far East and Siberia to this.  They [NATO and U.S.] managed to spoil [Russia’s] relations with Ukraine, Belorussia, and Iran.”

Asked about the threat that Russia is becoming ensnared in U.S. “anti-Iran” policy, Fomin responds:

“. . . the U.S., economy of which is based on proliferating the dollar throughout the world and managing oil prices, has a very painful relationship to [Iran’s] nuclear energy development – to oil’s energy competitiveness.  Especially in the Near East.  In its relationship with Iran, Russia turns out to be hostage to its own financial system:  if the country holds its reserves in other countries’ hard currency, then it can’t oppose them on their main positions in the military-political sphere.  Some disagreements are possible, but there can’t be a lengthy tendency toward the complication of relations – in the case of a sharp worsening it would be easy to block hard currency accounts.”

“And, Russia for 20 years already has been unable to conduct an independent foreign policy, since it is tightly integrated into the world economic system dominated by the U.S.”

“Russia risks losing the remains of its authority among Muslim countries, after abrogating its earlier agreed supply of defensive weapons (in the first place, S-300 surface-to-air missile systems) to Iran.” 

Asked again about threats, Fomin says:

“External threats have been discussed above.  To this it’s possible to add that, as a result of the actions of the financial authorities of the G20 countries, the fundamental bases of the current crisis haven’t been eliminated.  Because of the fact that some paper (toxic assets) has been traded for others (newly printed dollars, euros, and pounds), the situation hasn’t changed principally.  The disease has been driven inside and its symptoms are still appearing to a lesser degree.  But it definitely will crawl outside again.  Therefore, the financial-economic crises will continue further.  Sooner or later the American dollar unsupported by real assets, as a world currency, must collapse.  Several types of dollar exist already now — for internal and external demand.  The Americans are trying to do everything possible meanwhile to ‘save face.’  Provoking situations to create the objective appearance of a reason for the collapse of the dollar are possible:  a terrorist attack on the U.S., war in the Near East, aggravation of the situation in the Far East.  A new world war which will be catastrophic for Russia as an extreme case.”

“Now about internal threats.  For clarity, in every case, we are distinguishing two understandings:  country and state.  It’s possible to love your country while being critical toward the state, which imagines itself as society’s management apparatus.”

“If we talk about the country as a whole, then the main internal threats are well-known:  complex demographic situation, a lopsided well-developed raw materials economy, low labor productivity, conditioned by the low wage level of labor, proliferation of narcotics, brain drain abroad, degradation of science, culture, education, health care, pensions, national defense, law and order, agricultural economy, neglected transportation and ecological problems, corruption.  In the coming decade, the aggravation of energy problems, connected with the exhaustion of easily accessible supplies of Russian oil.”

“But there is still one more serious problem which is the source of all the rest.  This is the multibillion outflow of capital from Russia, including into so-called international reserves (it’s simpler to say into the financial systems of Western countries).  It bleeds the entire economy, and doesn’t allow for moving off a dead stop in solving the majority of urgent problems.  If there were no capital outflow, many internal Russian threats would be eliminated in some time.”

Fomin goes on to argue that current capital outflow (legal and otherwise) is more burdensome and damaging to Russia’s economy than tribute paid to the Mongols centuries ago.  He says international reserves accumulated in 2010 could have plugged the gap in Russia’s pension fund.

Fomin now turns to internal threats to the state.  Number one is the populace’s increased protest activity.  He says the average Russian understands clearly that the state exists not to improve his welfare, but only the quality of life of 1 percent of Russians, without, of course, provoking large-scale protests from the other 99 percent. 

Among other threats, he cites hypertrophic centralization and underdeveloped local government, inflation caused by capital outflow, low wages, and unemployment all leading back to protest activity.

Fomin notes that Russia dropped to 154th (from 146th) on TI’s international corruption index this year.

He observes that the Russian government failed the test of August’s forest fires, causing a mortality spike equal to the number of men lost by the USSR in Afghanistan.  He calls Prime Minister Putin’s web cameras for monitoring the rebuilding of housing a symptom of the level of Russia’s corruption and ungovernability.

Fomin goes on to label major internal problems — education, health care, agriculture, housing, national defense, culture, science, ecology — the first four he notes are ‘national projects.’  Agriculture he puts on the level of military security in importance.  But rather than develop it, the country’s elite chooses to buy food abroad with oil and gas profits.  Agricultural imports support the livelihood of many middlemen in the process.

Fomin has one last assessment of Russia’s current elite class:

“At present, Russian state authorities and the so-called ‘elite’ view the country as a private firm working solely to get profits and the sooner, the better.  Profit is the main goal of the private firm.  It’s not for the realization of long-term goals.  Its main mission:  collect capital, send money abroad, make itself comfortable, and invest the money in a profitable business.” 

Old Weapons Good Enough, or Worn Out?

In Tuesday’s Gzt.ru, Denis Telmanov writes that Vostok-2010 features arms and military equipment that is 20, or sometimes 30 years old.  Neither the Defense Ministry nor independent experts see anything terrible about this, though they worry it could become physically worn out.

Telmanov says the exercise relies on old weapons systems like the Mi-24, Tu-22M3, and the Petr Velikiy.  The latter was laid down in 1986, and didn’t join the fleet until 12 years later.  The overwhelming majority of Pacific Fleet ships in the exercise were also laid down in the 1980s, and are at least 20-plus years old.  Even the vaunted Su-34 first flew in 1990, but didn’t go into operational use until 2007.  The remaining arms and equipment were developed in the 1960s and 1970s, and produced at the end of 1980s and early 1990s.

This state of affairs allows the Defense Ministry to show that the Russian military can fight successfully with the equipment it has.  The military’s press service chief wouldn’t comment for Gzt.ru on the age of systems taking part in Vostok-2010, except to say they’re the same as those on combat duty in formations and units in the rest of the Armed Forces.

The spokesman said:

“Today the army uses the equipment that it has.  And one of the missions of the exercise is to show how effectively established missions can be fulfilled in the new TO&E structure with this equipment.  The effectiveness of military equipment really doesn’t depend so much on its age, as on skill in using it and on how it corresponds to the established missions.  The course of the exercise still shows that the equipment is fully combat ready and allows troops to fulfill these missions put before them completely.  But it’s understood that this in no way diminishes the importance of the planned modernization and introduction of new equipment which will enable troops to act even more effectively.”

He cited EW equipment and the Su-34 as new systems being used in Vostok-2010.

Gzt.ru goes on to remind readers that, for over a year, President Medvedev and Defense Minister Serdyukov have taken pains to tell Russians the majority of the country’s armaments are obsolete or worn out.  Serdyukov said the share of modern military equipment in the inventory was only 10 percent.  That’s when he and Medvedev launched the campaign to increase this figure to 30 percent by 2015 and 70 percent by 2020.

CAST Director Ruslan Pukhov says the absence of serious military threats makes the next ten years a good time to do this:

“. . . Russia has a window of opportunity the next 10 years, and it isn’t threatened by war.  It’s necessary to use these 10 years to bring the armed forces into a condition in which they can repulse any threats which arise.”

Pukhov says the Black Sea and Baltic Fleets should be modernized first, Iskanders deployed to deter Georgia, and S-400s in the Far East to counter North Korean missiles [recall General Staff Chief Makarov’s claim last year that S-400s were there?].

Mikhail Barabanov of Moscow Defense Brief says the problem is not age, but physical wear:

“40-year-old ships and 30-year-old tanks are now almost gone.  In reality, the problem of old equipment in our Armed Forces is not so much its age as the amount of equipment wear and tear.  That leads to breakdowns.  For example, in the Vostok-2010 exercise the guided missile cruiser Moskva didn’t succeed in launching its Vulcan [SS-N-27??] anti-ship missiles.  As a result, missile boats with Moskit missiles destroyed the target.”

Nevertheless, Barabanov remains confident that, even with aging weapons, Russia’s military is superior to neighboring armies, including China’s:

“On the whole, the equipment level of Russian units in the Far East is generally adequate to perform defensive missions, although not at the highest level.  It’s another issue that the equipment is badly worn out.”

Barabanov is not against buying new equipment of older designs:

“Even if industry’s existing models can be criticized for deficiencies from the standpoint of modern requirements, the fact remains they will be physically new, with a full service life, and allow for significantly increasing the combat readiness of troops.”

Telmanov ends by reminding readers of President Medvedev’s late 2009 pledge to provide the military 30 land-based  and naval ballistic missiles, 5 Iskander missile systems, nearly 300 pieces of armored equipment, 30 helicopters, 28 aircraft, 3 nuclear submarines, a corvette, and 11 satellite systems in 2010.