Tag Archives: SDO

Latest on GOZ Woes (Part I)

So much has swirled around the state defense order (Gosoboronzakaz or GOZ) this year that it makes one avoid the topic.  But here’s a shot at making amends for neglecting it. 

Perhaps this information will just precede the next wave of GOZ news, likely to break before the end of August.  The current deadline for putting out GOZ contracts is August 31 (who knows when the weapons and other military equipment being bought will actually be delivered?).

You may recall Prime Minister Vladimir Putin set August 31 as the most recent “last deadline” for placing all GOZ-2011 contracts back in late July.  At that time, Putin pretty much put all blame on the Defense Ministry.  Defense Minister Serdyukov said he would complete the contracting, and report to the President and Prime Minister by the deadline.  The report is supposed to be a joint one reflecting the positions of all players involved in the GOZ.

This very day, BFM.ru reports that Deputy PM Igor Sechin says he’ll be two more weeks negotiating OSK shipbuilding contracts with the Defense Ministry.  He claims three of 13 remaining contracts are being signed today.  Prices for the remaining ten will apparently be specified and agreed over the next 14 days.

According to ITAR-TASS, a VPK source indicated the Defense Ministry still needs to contract with Sevmash for delivery of one Proyekt 885 (Yasen-class) and two Proyekt 955 (Borey-class) submarines this year.  The source said work continues despite the lack of a signed contract.

ARMS-TASS, however, provided the best insight into the current state of play on the GOZ.  The news agency cited Deputy Finance Minister Anton Siluanov on a Putin-led government conference on the GOZ early this week.  Siluanov concluded the Defense Ministry will soon sign its contracts and send out advance payments.  Additionally, he criticized the delays for “breaking budgetary discipline,” and added that defense contracts are being signed on credit schemes and state guarantee mechanisms [i.e. not cash].

ARMS-TASS also quoted Putin at length:

“Naturally, the priority in buying equipment, armaments is, of course, domestic equipment, but it should still be modern, wanted, promising and acceptable to the customer, to the Defense Ministry, but taking account of prices for the state.”

“An unprecedented amount of monetary resources — 750 billion rubles — has been allocated for the purchase and modernization of equipment and armaments, for RDT&E on defense subjects.”

“In modern Russia such money has never been allocated so that in a year there’s 750 billion rubles — this is not some kind of percentage, this is half again as much as in 2010.”

“The government is counting on all this enormous money being effectively used to improve the quality of the work of defense industry and state customers.”

“Meanwhile, according to data which I have, more than 30 percent of the total volume of the GOZ still doesn’t have contracts.”

There’s quite a lot in those statements.  Probably as much substantive as Putin’s said publicly about GOZ problems.

Tomorrow we’ll do Part II on the latest woes.  Then maybe we’ll look at 2011 — the year of the GOZ.  And possibly even a look at the GOZ since 2000 or so.

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New SAM for Troop Air Defense?

Last Thursday, a Ground Troops’ spokesman told ARMS-TASS the army is testing a new portable surface-to-air missile system (PZRK):

“Tests are being conducted at the 726th Training Center on a new portable surface-to-air missile system, the tactical-technical characteristics of which surpass those of other types in the armament of formations and units.”

The spokesman said it’s planned to complete experimental-design work (OKR) on the new system this year, and procure up to 250 of them under this year’s state defense order.  He said the systems will go into the SAM batteries of air defense battalions of independent motorized rifle and SAM brigades.  The new SAM will be deployed on mobile platforms that support automated remote launches.

The army representative also said:

“All together in the framework of the state defense order for 2011, it’s planned to buy more than 400 pieces of missile-artillery armament for Troop PVO units and to conduct capital repair with modernization of nearly 100 pieces of equipment.”

In his estimation, as a result of this, an increase in the combat capabilities of PVO troop groupings of up to 40 percent, according to a number of indicators, is expected.

Pavel Baev on Politics and the Military

Last week BFM.ru interviewed Pavel Baev of Peace Research Institute Oslo about Russia’s military reforms.  Baev’s view of the reality of ongoing reforms is captured in one word — catastrophic. 

Now Baev doesn’t get everything exactly.  Some military policy changes — like the one-year draft and a new, higher military pay system — were made some time ago, not necessarily for the 2012 presidential election. 

But he’s right about lots of other things.  Some decisions made in Defense Minister Serdyukov’s reforms haven’t meshed, or even been antithetical.  Decisions like higher pay have become, like it or not, part of the electoral picture, and the leadership has to follow through.

Baev believes the army might not be combat capable due to personnel cuts.  He allows for the possibility that Serdyukov might be sacrificed by his political masters.  The Kremlin and White House are using pay and apartments to keep serving officers politically quiescent.  But Baev thinks these aren’t enough; at some point, the army will insist on having its combat capability restored.  He hints later that the state and inclinations of the army were factors in the recent Arab revolutions that overturned long-time rulers.

The interviewer asks Baev to reconcile Prime Minister Putin’s Duma session last week in which he emphasized using the defense budget at home to create good, high technology jobs in Russia with President Medvedev’s [and Putin’s] statements about the failure of the state defense order:

“It seems to me that on the whole in the realm of military reform, and the Gosoboronzakaz in particular, there are very many concealed problems which Putin generally didn’t talk about.  The speech [Putin’s Duma speech], in large measure, on the whole was very unproblematic.  Somehow everything was more about achievements, future developments, very little about problems.  In the military arena, many problems have accumulated, and in the course of military reform not a few new ones were created.  The situation is very complicated, and attempts to correct the situation somehow largely lead to problems becoming even more acute, particularly problems with personnel.”

Baev went on to say that the Gosoboronzakaz and the problems of buying new military equipment have reached a critical point because of the aging of current weapons systems.  There is, he says, an undercover battle over what to buy and, especially, what should be bought abroad.  The situation around Mistral has become so complicated and political that it’s now more a “special operation” than an export contract.

Baev says the Russian Navy didn’t really want such ships, but went with the idea when it was foisted on them.  The real struggle and lobbying over Mistral concerns which shipyard in Russia will build units 3 and 4, according to Baev.  He suggests the whole deal might have been French President Sarkozy’s way of placing a bet on President Medvedev to be Russia’s future leader, and organizing the “political climate” in Europe toward this end.  But right now, of course, the Mistral deal looks very uncertain.

BFM.ru asked Baev for his interim assessment of the military reforms begun in late 2008:

“Purely catastrophic.  In every reform, there’s such a moment when the old thing is no longer working, and the new one isn’t working yet.  At this critical moment for any reform, we have a situation when nothing is working; where to move — either forward along the path of reforms or to try to work back, — is in large measure a political question.  Just in the area of Armed Forces personnel policy, an unknown number of things have been botched.  The initiatives advanced, — cutting the officer corps, contract service, sergeant training, cutting the conscription term — each of them has its own basis, but they’re absolutely mismatched.  That is, we now have a situation with military personnel when the army is in fact not combat capable.”

Asked about military pay raises planned for next year, Baev says:

“I think the main sense of this initiative is still to lift the officer corps’ very obvious dissatisfaction with all these reforms.  Great potential dissatisfaction has built up in the army, it is focused more or less on the minister, which, they most likely will sacrifice.  But this isn’t enough to lift this dissatisfaction, but the promised money plus the long ago promised apartments, and they are still gradually giving them out, — this is somewhat capable of  damping down this dissatisfaction.  And the fact that they are promising lieutenants, — for young officers it sounds completely improbable, and, most likely, they are prepared to wait for such money.”

“It’s perfectly obvious that very many political initiatives are aimed at this critical electoral sector — to lift the tension now, to make so that the army sits quietly in its barracks, not speaking out, waiting for its money and apartments, — and everything.  These are purely short-term things, which can help get through a complex electoral period.  It seems no one particularly looks after this [military] sector, inasmuch as, generally, for officers money is money, but they are people of service.  If even in addition they pay the money, service doesn’t go because they aren’t succeeding in reforming the Armed Forces so that they become combat capable, then this is a more serious source of dissatisfaction than simply a lack of money.”

“. . . the Armed Forces are the only area where genuinely serious and deep reforms are going on.  But with reforms, problems always take on a new character, change.  Here some kind of forward dynamic is occurring, it isn’t going in circles.  But the lack of resolution of these problems in the absence of political will is very evident, and all political will is going now to electoral projects which aren’t clear how they will be implemented because it’s not clear to anyone who in the end will be Supreme CINC, that is also a question of no small importance for the Armed Forces.”

Baev sees a lesson for Russia and the Russian Army in the Arab revolutions:

“But it’s clear that several conclusion flow from the Arab revolutions, and not just in relation to missile systems, but in the fact that the army is a serious political force.  This is more the conclusion of events not in Libya, but of the situation in Egypt.  And attempts somehow to neutralize the politicization of the army grow more from here [Egypt], than from Libya, where the army was in a pitiful condition, from here [Libya] also, in large measure, there is a civil war.  If there were a powerful army there, such a thing [civil war] wouldn’t have occurred.”

He finishes by talking about obsession with ultra-modern weapons when existing systems are perfect for today’s armed warfare.  His discussion leads to an open question about the fit between Russia’s military doctrine and its future armament plans:

“Therefore, the conversation about how we realistically need to outfit the Russian Armed Forces depends largely on whom we intend to fight, where we intend to employ these Armed Forces, against what kind of potential enemies, — answers to all these questions don’t exist, the doctrine doesn’t provide these answers.  It’s essential to replace weapons systems which have already outlived their time, but whether it’s necessary to replace them with the most super modern systems, — this is still a question.”

Military-Theft Forces

Prosecutors Rate the Most Corrupt Service Branches

40-50 Percent of State Defense Order Simply Stolen in Recent Years . . . no wonder large-scale procurement hasn’t happened.  Serdyukov supporter Korotchenko tries to paint opponents of military reforms as people trying to protect their corrupt schemes.  This surely goes on, but there also have to be people opposing them for reasons other than greed.  Finally, it’s at least conceivable that, if Serdyukov doesn’t make progress against corruption, it could cost him his job (if he stays that long, he is approaching the four-year mark).  Thus endeth the precis for this post . . .

This week Profil investigates military corruption.  The magazine notes the number and scale of Defense Ministry corruption cases is growing by leaps and bounds, reaching losses of 2.2 billion rubles for the first ten months of 2010.  It concludes, despite a significant cut in the officer corps and Defense Minister Anatoliy Serdyukov’s battle against “thieves in broad stripes [generals],” the number of corruption crimes is not only not declining, but has substantially increased.  Profil obtained an analytical report compiled by the Main Military Prosecutor (GVP) showing who has stolen how much this year.

The GVP presented its report to a closed session of the Duma Defense Committee.  It says its analysis shows “efforts to counteract corruption in the troops are insufficiently effective.”

Profil’s first graphic . . .

Growth of Corruption Crimes in the Army (First 10 Months of 2010)

Troops/Military District/Fleet                     2009       2010       Growth (%)

North Caucasus MD                                             184          311                 69

Moscow MD                                                              94           152                61.7

Air-Assault Troops (VDV)                                 34            119                250

Siberian MD                                                             76            117                 54

Strategic Missile Troops (RVSN)                  59              93                 57.6       

Northern Fleet                                                      50              59                 18

Space Troops                                                        27              44                 63

Caspian Flotilla                                                      5                  7                 40

Black Sea Fleet                                                      2                  6                 200

Profil suggests the recent wave of military retirements signed off by President Dmitriy Medvedev could have been sparked by corruption charges.  While possible, there’s no evidence to support this thesis. 

A Profil source in the Defense Ministry says, not surprisingly, officials responsible for the State Defense Order (GOZ or ГОЗ), capital construction, and the disposition of military property (first and foremost real estate) inflict the greatest losses on the budget.  The article quotes Igor Korotchenko:

“In the course of recent years, 40-50% of resources allocated for the State Defense Order were simply stolen.  This happened, for example, when money was directed at the fulfillment of some concrete work, but there were no real results.  Write-offs appeared in the end or a weapons system was developed that simply didn’t meet its technical requirements.”

Profil suggests that many officers are rushing to get one last bite of military money before Serdyukov’s reforms completely derail their schemes.  It cites Ruslan Pukhov offering two different explanations for rising military corruption:

“Feeling an impending dismissal, officials are probably trying to take the maximum from their positions.  However, it can’t be ruled out that the prosecutor has really reinforced his work in different areas.  Corruption is an acute issue for the prosecutor.”

Pukhov thinks that, although the percentage increase in corruption looks really bad for the VDV, “corruption in the armed forces is spread equally and the growth in corruption crimes in separate branches or districts is connected only with where they are being investigated.”

A very good point, Mr. Pukhov.  Yes, the results of this little anticorruption experiment are very much influenced by where and how it is being conducted.  One should also pay much more attention to the absolute numbers of corruption cases than the percentage changes, and nothing has been said about the relative size of the various parts of the armed forces . . . no per capita figures are provided.  Are 44 crimes in the relatively small Space Troops more significant than 152 in the larger Moscow MD?

Korotchenko, a fairly strong Serdyukov proponent, says the Defense Minister and his tax service colleagues are beginning to break existing corrupt ties, institute financial transparency, and deprive the generals of the right to conclude any contracts.  Dividing the Ministry into military and civilian halves will keep military men out of financial expenditures, and this “process of shifting generals out of the feeding trough” will continue until 2012.  The generals will provide requirements, and civilians will allocate the financing.

A second graphic with some absolute figures on losses due to corruption . . .

Growth of Corruption Crimes in the Army (First 10 Months of 2010)

Troops                                                                  Loss Amount                      Annual Growth

                                                                           (millions of rubles)                        (times)

Strategic Missile Troops (RVSN)                      59.8                                            15          

Air-Assault Troops (VDV)                                   57.5                                            12.2

Space Troops                                                            47.6                                              2.2

Korotchenko claims:

“The campaign against Serdyukov is mainly heated up by those people who’ve been deprived of the feeding trough.  So, the director of a large defense enterprise has for many years sawed off rubles by the billion every year in the transfer of money that comes to fulfill the Gosoboronzakaz.  When Serdyukov deprived this director of such a trough, he began to finance any actions directed at discrediting and, possibly, even removing the Defense Minister.”

So, Korotchenko asserts most conflicts over army reform are banal conflicts of interest for those who can’t steal like they used to.  But didn’t the GVP just say they’re doing a better job of stealing than ever before?

Korotchenko continues:

“Of course, Serdyukov is not an angel, and many of his actions on the military reform plane call forth questions, but it’s another thing that before he arrived, corruption in the Defense Ministry had achieved such a level that he was forced to cut to the bone.  Many scandals proceed only because their financial-economic interests were affected:  the meetings of the airborne guys is just one in this series.”

Then Profil turns to Vitaliy Shlykov, who says:

“Broad publicity for corruption scandals in the Defense Ministry cannot but affect the minister.”

But he believes the Kremlin knows no one can fight corruption like Serdyukov, therefore the GVP report isn’t a real blow to him.

Profil concludes, so far, Serdyukov hasn’t squandered the trust placed in him, but the struggle against corruption only strengthens him as long as it’s a success.  If corruption keeps growing, it’s possible the Defense Minister himself could wind up on the “shot list.”

BMD-4M Update

BMD-4M

An item on pending troop testing of the BMD-4M for VDV . . . .  No, they aren’t in the force yet.  Despite the optimism expressed below, it remains to be seen if the Defense Ministry will actually order the system upon completion of troop testing.  It sounds like the designers and builders have footed the bill — 200 million rubles — for the system’s development thus far.

From this week’s Voyenno-promyshlennyy kuryer:

“Troop testing of the modernized airborne combat vehicle BMD-4M is being conducted in the course of the 98th Airborne-Assault Division’s command-staff exercise (KShU), which will take place from 23 to 28 August near Ivanovo.”

“During the airdrop of military equipment, seven BMD crews will be inside the combat compartment of these vehicles.  Immediately on landing, the crews will move out to fulfill combat missions on unfamiliar terrain in the notional enemy’s rear area.”

“An airdrop of parachute troops and military equipment from aircraft of Military-Transport Aviation will occur in the course of the divisional KShU, which will be directed by VDV Commander General-Lieutenant Vladimir Shamanov.  In all, it’s planned to airdrop 15 pallets with military equipment, including the BMD-4M.”

“After the completion of troop testing of the modernized combat vehicle, development of which Kurganmashzavod, the Volgograd Tractor Plant and other enterprises of the ‘Tractor Plants’ Concern are engaged in, it will be accepted into the arms inventory of the ‘winged infantry’ and included in the state defense order.”

“Development and production of the BMD-4M is being conducted with the agreement of the Defense Ministry at the concern’s expense.  Expenditures on the first test models amounted to nearly 200 million rubles.”

Putin Reports on OPK and Military Housing

Putin Reports to the Duma

Yesterday Prime Minister Vladimir Putin reported on the government’s work over the last year to the State Duma.  His remarks focused on government efforts to handle ‘bread and butter’ economic and social issues during the 2009 crisis.

There was relatively little on military issues, except for some remarks on defense industry and military housing. 

He largely reiterated familiar themes like increasing modern weapons to 70-80 percent of the inventory; he congratulated those working on the fifth generation PAK FA and he emphasized development of a new strategic bomber.  Without being too specific, Putin suggested that OPK enterprises with heavy tax arrears might be getting some relief.

On housing Putin promised almost 52,000 military apartments this year.  But Duma deputies didn’t ask him about press reports that many of the 45,600 built last year remain empty because of construction defects, bureaucratic red tape, and even the fact that some were not really built in the first place.  Putin reiterated an earlier promise to house servicemen who didn’t get apartments in the first post-Soviet decade.  And he noted that privatization of service housing remains a possibility since the deadline has moved back.

First Putin’s description of the economic scene.

Putin said Russia’s GDP fell a record 7.9 percent, and industrial production declined 10.8 percent last year, but the government responded by greatly increasing budget expenditures—27 percent more than in 2008—even though revenue declined almost 21 percent.  Putin said the government used Russia’s accumulated reserves to finance the shortfall.  It spent 5 trillion rubles—1 trillion more than in 2008—on pay, pensions, social benefits, education, health, and housing, according to Putin.  He said 1.65 trillion rubles were invested in ‘developing the economy.’  Putin concluded that most of the government’s anticrisis program, the use of the budget, reserves, Central Bank resources, and state guarantees worked, and prevented the destruction of the real economy and the financial system.

Last year’s State Defense Order (GOZ) was one part of last year’s government spending program to counter the economic crisis.  Putin says the government spent 1.1 trillion rubles—150 billion more than in 2008.  He continued:

“During the crisis we also rendered targeted support to the defense-industrial complex and high-technology enterprises.  Last year’s gloomy forecasts by some politicians on the collapse of the defense-industrial complex were not borne out.”

“I know how many serious problems have accumulated here, we’ve been seriously occupied with this.  If you noticed, I’m always conducting special meetings on distinct sectors, there we deeply immerse ourselves in these problems.  Yet the volume of output of military production in 2009 increased by almost 13 percent—this during a general contraction!  The growth of production in shipbuilding generally was 31.6 percent, in the missile-space industry—16.5 percent, in aviation—9 percent.”

“Tests of fifth generation fighters are going successfully, and I want again to thank everyone who worked on this machine, who now gets it ‘on its wings.’ “

“Of course, we do not limits ourselves to just this.  Following the fighter we need to begin work on the future aviation system long-range aviation [PAK DA], this is new Russian strategic bomber, missile carrier.  We conducted a serious inventory in the defense-industrial complex and are embarking on formation of long-term programs of rearmament in all fundamental combat systems:  in command and control and intelligence systems, armored and naval equipment, highly-accurate weapons.  As a result, the share of modern weapons in the troops should increase to 70-80 percent, and this will indeed be  weapons of a new generation.”

“The question of restructuring the tax arrears of OPK enterprises has come from [Duma] deputies.  Enterprises have such a possibility.”

“In December 2009 the government issued a corresponding decree, calculated for 2010.  It talks about indebtedness which arose before 1 January 2009 (the KPRF raised these questions).”

 On military housing, Putin first addressed war veterans in line since before 2005.  He said 28,000 of these veterans have been housed, and he wants to house any who were left out or joined the queue later.  The government has directed 34.5 billion rubles at this, according to Putin.

Turning to more recent servicemen, Putin says:

“We have also not retreated from another most important task, another priority.  In 2009 the Defense Ministry delivered 45,600 new apartments to servicemen.  You know there has never been such a thing.  In 2010 another 51,900 apartments will be allocated.  That is, over two years—almost  one hundred thousand.  As a result, we will finally end the demand of armed forces servicemen for permanent housing, as we promised.”

“But we have another category of people whom we should not forget.  The question is about those who retired from military service in the 1990s or beginning of the 2000s, without receiving housing.  I remind you, in that time due to the inpossibility of solving this problem at the federal level, they sent them into municipal lines [for housing], where, unfortunately, things are moving slowly.  Or more precisely—practically not moving.”

“Of course, people are not to blame for the fact that at the time the government simply could not afford to meet its obligations to them.  And we were obliged to return to this issue.”

“It was originally planned to complete the provision of housing to such citizens in 2012-2013.  But I think we can do it earlier—to give retired military men housing in 2010-2011.  For this purpose we will ask you [Duma deputies] to direct an additional 34 billion rubles.”

“Incidentally, free housing privatization has been extended until 2013.  Now, veterans and servicemen can calmly arrange ownership of housing.”

Just to complete this picture, Deputy Defense Minister and Chief of Housing and Infrastructure, Grigoriy Naginskiy, recently admitted that only 21,061 of those 45,600 apartments from 2009 are actually occupied because of poor construction and problems formulating ‘social lease contracts.’  But Naginskiy promises that 99 percent of the 45,600 will be occupied before 1 June.  That’s quite a promise.  Viktor Baranets has written recently about builders’ efforts to ‘economize’ and squeeze out extra profits on military apartments.  Olga Bozhyeva has written about servicemen turning to the courts over housing issues, as well as ‘virtual’ Defense Ministry apartments that don’t exist.  The Main Military Prosecutor has actually investigated cases of this in Chekhov.

To round out the economic picture, Putin asserted that signs of recovery include a forecast of 3 percent or more GDP growth for 2010, and industrial production growth of 5.8 percent and real income growth of 7.4 percent for the first quarter of the year.

Rearmament Tempo Less Than 2 Percent Per Year

Vasiliy Burenok

Vasiliy Burenok told a round table at the ‘Army and Society’ exhibition in Moscow Friday that the current pace of Russian force modernization, not more than 2 percent, won’t support the transition to a ‘new profile’ military.

Burenok is Director of the Defense Ministry’s 46th Scientific-Research Institute (46 NII).  The 46 NII is a lead organization involved in formulating the State Armaments Program (GPV) and State Defense Order (GOZ).  It works on military-technical policy documents and program planning methodologies.  Burenok is a member of the Scientific-Technical Council of the RF Government’s Military-Industrial Commission (VPK).

Reviewing history a bit, Burenok told his audience, at the beginning of the 1990s, the rearmament rate was 5-7 percent annually.  But, between 1991 and 2000, financing for new arms and equipment declined more than 50 times, leaving only enough money to maintain existing weapons.

Burenok concludes to get the army to the ‘new profile’ it’s essential to introduce 9 percent new equipment every year, and for some services and combat arms, up to 11 percent.

This 9 to 11 percent is, of course, the difficult target President Medvedev set at the Defense Ministry Collegium.  Burenok indicated just how difficult–going from less than 2 to an 11 percent annual renewal rate.

Armaments Chief and Deputy Defense Minister Vladimir Popovkin also addressed the ‘Army and Society’ round table.  He said GPV 2011-2020 will go to the president for approval in June.  The new GPV will be accompanied by yet another new Federal Targeted Program for OPK Development.

Popovkin said a number of systems won’t be produced under the new GPV.  They include short-range tube artillery, and BTR-80, BMP-2, and BMP-3 combat vehicles that soldiers are afraid to ride in.