Russian defense industry still faces problems


MOSCOW. (Military expert Nikita Petrov for RIA Novosti) - The Russian defense industry, which scored some major achievements last year, still faces major problems.

It is unclear whether the 2007-2015 state rearmament program will be implemented because some of its provisions are not being fulfilled completely.

Speaking of achievements, the Teikovo division of the national Strategic Missile Force in the Ivanovo Region, Central Russia, received a battalion of mobile Topol-M (SS-27) inter-continental ballistic missiles last year and currently has one Topol-M regiment. This will help strengthen the potential of Russia's strategic nuclear forces.

Moreover, the Russians have tested a new generation RS-24 ICBM, due to replace the older SS-18 and SS-19 missiles, with multiple independently targeted re-entry vehicles.

A missile brigade in the North Caucasus Military District has received a battalion of Iskander-M shorter-range ballistic missiles. The Russian Air Force has started operating revamped Su-27-SMT Flanker fighters, Su-24 Fencer tactical bombers, as well as two Su-34 Fullback fighter-bombers. An S-400 surface-to-air missile (SAM) system has been placed on combat duty in the Moscow region.

However, the battalion of Iskander-M missiles was to have been supplied by late 2005. The management of the Novosibirsk Aircraft Plant had promised to supply six, rather than two, Su-34 bombers in late 2006.

Although the Defense Ministry planned to adopt the S-400 SAM system in March or June 2007, it did so only last August.

Moreover, the Global Navigation Satellite System (GLONASS) remains only partially operational with 13 spacecraft.

First Deputy Prime Minister Sergei Ivanov told a recent meeting of the government's Defense Industry Commission that the delays had been caused by the shortage of skilled workers, rapidly aging production facilities and deteriorating product quality.

In the last few months, defense factories have expanded production by 14.1%, boosting military-equipment and civilian output by 19.1% and 7.6%, respectively. Nevertheless, some of them are simply unable to fulfil the state defense order and to effectively spend federal-budget allocations.

This is rather unusual because the government is now lavishing money on the defense industry. For instance, the 2008 defense budget totals an impressive 800 billion rubles ($32.6 billion) and will swell to 900 billion rubles ($36.67 billion) and 1.1 trillion rubles ($44.82 billion) in 2009 and 2010, respectively. But it is unclear whether all this money will be put to good use.

It is impossible to overhaul the defense industry's production facilities in the next two years because modern metal-cutting tools and automatic transfer lines are expensive. Local enterprises turn out only part of their required range, and the rest has to be purchased abroad. Add to this high import duties, which cannot be reduced or abolished. This problem persists despite efforts by the government and corporate managers to solve it.

Right now, the Army can buy only six to seven, rather than ten, fighting vehicles because raw materials, components, fuel, heat and electricity are becoming increasingly more expensive.

One should also mention the gap between real and "official" prices, and the need to support reserve defense factories, which have mothballed production, but which still have to pay heating and power bills and are subject to sanctions for their failure to fulfil the defense order.

Only 36% of strategic defense enterprises are solvent, while another 23% are tottering on the verge of bankruptcy.

Another problem has to do with human resources. Most skilled workers and scientists are nearing retirement age. At the same time, quite a few technical-college graduates are in no hurry to sign up with the defense industry because of low wages and insufficient career opportunities.

The lack of qualified personnel and up-to-date production equipment will inevitably impair product quality. In fact, India, Algeria and some other countries are beginning to file quality claims.

Property rights are a serious problem, too. The state controls some defense factories, while others have been privatized; there are also mixed companies. But the government is delaying the creation of holding companies that could help the defense industry.

Sergei Ivanov said only 16 out of 37 holding companies had been established by late 2007, and that the statutory documents of another 21 companies had to be submitted to the government by January 1, 2008.

He said documents on just half their number were currently available, and that the heads of some ministries and departments had to assume responsibility for failing to fulfil presidential orders.

However, the newly-established holding companies are still unable to restructure production, to get rid of surplus core assets, to choose optimal development scenarios and the best weapons and civilian products.

Since 1992, not a single state defense order has been fulfilled completely and on time. It would be naive to hope that the industry's problems will be solved in a couple of years. Nor should we expect a major breakthrough this year. All we can do is work patiently, without deviating from the preset program.

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

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