Tag Archives: VPK

Reaction to Putin’s Armaments Conferences

Actually, one reaction . . . a succinct editorial from Vedomosti capturing many good points with few words.

Vladimir Putin (photo: RIA Novosti / Aleksey Nikolskiy)

Vladimir Putin (photo: RIA Novosti / Aleksey Nikolskiy)

In Sochi last week, President Vladimir Putin conducted a whirlwind three-day series of meetings on Russia’s rearmament programs, giving his primary attention to strategic nuclear ones.

Here’s Vedomosti’s thinking on the sessions:

“Vladimir Putin conducted an intensive series of defense-industrial meetings.  During the trip to Olympic Sochi, the president in turn reviewed the problems of the development of aviation, the fleet, Space Defense Troops [sic] and the Missile Troops of Strategic Designation.  The fact that the discussion of military issues was raised to the highest level, signifies, probably, both the depth of the problems, and the priority of the subject.  The rational use of colossal resources was discussed:  expenditures on defense rose from 600 billion rubles in 2003 to 2.3 trillion rubles in 2013, and the general volume of the State Program of Armaments to 2020 is 20 trillion rubles.”

“These meetings affirmed:  Recent bureaucratic and staff [apparat] decisions, including appointment of a new minister of defense and a “military-industrial” deputy prime minister, did not solve the systemic problems of rearming the army and the quality of work of the domestic VPK.”

“The domestic VPK’s development is frozen, it needs foreign scientific and design developments — both dual-use and exclusively military, observes the director of the Center for the Analysis of Strategies and Technologies Ruslan Pukhov.  These demands can hardly be satisfied because of constant altercations with Europe and the USA on foreign policy issues.  Moreover, the objective requirement for technological cooperation will contradict Defense Minister Sergey Shoygu’s announced course of refusing imports of foreign armaments, combat equipment and support means (the purchase of the “Mistrals” is the exception proving the rule).  Of course, it is possible to hope that intelligence agents will acquire the needed technologies, as it was in Soviet times.”

“However, even this will not quite forestall the lag:  the institutes and specialists who provided the correct implementation of foreign technologies have been lost.”

“There is still a key question requiring a strategic decision at the highest level, — what is more important:  production of the maximum possible quantity of combat equipment or the training of professionals capable of using the most complex armaments, including foreign-produced ones.  For now, judging by Shoygu’s announcement on the preservation of conscript service, at the top they are inclined toward extensive development, toward employing unpaid labor, the use of which in the army turns into huge losses for households and the economy as a whole.”

“The personal participation of the president is essential in the resolution of conflicts between those who order and suppliers of armaments.  The latter in the absence of competition between various design bureaus and factories (it, as is well-known, existed in the time of the USSR and was one of the engines of the country’s technological development) have become monopolists, not interested in raising quality.  They are sure that the armed forces will buy their products, and know, that in case of disagreements with the military, the directors of state companies from among the closest associates of the first person will turn up on their side.”

Lots of thoughts and propositions for discussion and debate.

Clean Slate

It took a brave man to tell the State Duma what department chief Aleksandr Piskunov said in the Audit Chamber’s annual legislative report in February.  Voyenno-promyshlennyy kuryer published excerpts of his remarks.

Piskunov’s a government official.  Not a powerful voice, but an authoritative one in his specialty.

Auditor Aleksandr Piskunov

Auditor Aleksandr Piskunov

To say he’s well-equipped for his work is an understatement. 

Sixty-one or 62 years old, Piskunov graduated from the RVSN’s Dzherzhinskiy Military Academy with a radio engineering degree.  He served on active duty to the rank of general-major, spending many years at the Plesetsk cosmodrome.  He later trained in the RF Government’s Financial Academy and a business school in London.  He has a PhD in economics.

Piskunov served in both the RSFSR Supreme Soviet and State Duma in the early 1990s, and was deputy chairman of the Defense Committee for each body.  He also chaired the Defense Ministry’s Military-Technical Policy Committee.  In the mid-1990s, he moved to the staff (apparat) of the RF Government and was deputy chairman of its Committee on Military-Industrial Issues.

He returned to the Duma briefly in 1999, and became deputy chairman of its “Regions of Russia” faction.

He went to the Audit Chamber in 2001, and is currently in his third term of service.

Piskunov thinks Russia can’t produce new, better, or more weapons and military equipment without modernizing its badly neglected defense industrial base.  But he has pretty much nothing but scorn for the current management of the state defense order.  And he sees little but failure in the GPV over the last 20 years.  In particular, Piskunov calls for incorporating life cycle costs into the GPV.  Ultimately, however, he says auditors and accountants can’t fix the GOZ or GPV, but lawmakers could.

Enough preamble.  Here’s VPK’s excerpt of Piskunov’s remarks.

“STRICT CONTROL OF FULFILLING THE ARMAMENTS PROGRAM IS NEEDED”

“I represent a department that performs strategic audits in the Audit Chamber.  We’ve done a lot of work in evaluating the condition of practically all 1,350 enterprises of the defense-industrial complex, their financial stability and real contribution to equipping the Armed Forces.”

“We looked at how balanced the program of defense-industrial complex modernization and State Program of Armaments were.  A gap of 700 billion rubles was observed.  At the same time, 1 trillion 200 billion is built into the budget to guarantee compensation to enterprise directors who go to commercial banks for credits.”

“Similar credit practices are leading to the growth of OPK enterprises with an unstable financial situation.  More than 30 percent are like this.  Only 20 percent come close to world standards in technical equipping.  More than half are in a condition where their restoration is already senseless — it would be better to build from a clean slate.”

“In preparing the law on the state defense order we tried to correct this situation.”

“From my point of view, our system of administering the state defense order is uncompetitive.  The adopted law preserved the situation under which  management amounts to a lag in the state defense order.”

“The deputy prime minister, responsible for the defense-industrial complex, reported that the state defense order was fulfilled by 99 percent as in past years.  But almost one hundred percent fulfillment of state defense orders over the last 20 years has not prevented the failure of all arms programs or fulfilling them at 30, 40, 50 percent.”

“Dmitriy Rogozin himself noted that fulfillment happened because of the appearance of realization.  During the execution of the arms program 7,200 changes were introduced into it, that is the real result is being slanted to agree with this fact.”

“Meanwhile Rogozin recognized that the arms program has gotten old.  The task of preparing a new State Program of Armaments stands before him.  So the problem of forming a legislative basis and management of the State Program of Armaments is more acute than ever.”

“Our opponents in government, having considered it inexpedient to include the management of the acquisition program life cycle in the GOZ law, said it was necessary to include this management in the law on the State Program of Armaments.”

“To me it seems necessary in this instance to hold them to their word — to propose that the government prepare a draft law on the State Program of Armaments.  It’s possible this will allow us to compensate for not realizing it in the GOZ law, and meet the president’s demand to create essential management of the life cycle of weapons systems.  But today the state of affairs is seriously complicated by the fact that the life cycle is really torn into several parts in the Defense Ministry itself.”

“Those who’ve served understand:  you can’t modernize armaments without the experience of using them.  Who really tracks all this life cycle?  It would be logical if Rosoboronpostavka were occupied with this, but it is located at the junction of the functional orderer — a service of the Armed Forces and a contracting firm.  It would be more appropriate to subordinate this department to the government.  It’s perfectly clear that the main risks are connected not to corruption, but to the low qualifications of the orderer.  Someone needs to “hang” over the orderer from the point of view of its responsibility for how both the program and the contract as a unitary whole are being executed.  Juridical responsibility is not rebuilt only through the contract.”

“The level of project management in our ‘defense sector,’ unfortunately, is also very low, especially the quality management system.  We are all witness to what is happening now in space.”

“It’s frightening that it’s impossible to create new equipment without metrics.  We lost the project management culture and stopped training specialists in military academies and schools.  The very best on this plane is OOO ‘KB Sukhoy’ and it used the American experience-plan for metrics on developmental aircraft.  The Americans seized and simply closed the issue — this project is no longer being supported.  To rewrite project documentation now in some kind of domestic variant is complex, therefore the development of these systems is essential.”

“The participation of commercial banks in providing credit for the state defense order is an important question.  Now in the government they are discussing how these 23 trillion will go — through commercial banks, for free or for money?  It’s understood that banks simply don’t work that way.  There is a precedent — the government resolution on the Mariinka, the Bolshoy [theaters], the M-4 [highway].  If you calculate it, then 20 percent received from 23 trillion over these years, it’s necessary to take an additional amount from the taxpayers or cut the defense order by this sum.”

“Not less sensitive is the issue of intermediaries.  If the Defense Ministry and government don’t put transactions under the strictest control, then there are all the calculations on the defense order, life cycle and cooperation levels, we will mess up this program of armaments also.  This, undoubtedly, is one of the most dangerous questions for the Defense Ministry — too large lobbyist forces participating, too large sums going.”

“Questions of managing the life cycle and control of finances are the most fundamental.  The treasury is incapable of resolving this task.”

GPV 2016-2025

Dmitriy Rogozin

Dmitriy Rogozin

Last week Rossiyskaya gazeta’s Sergey Ptichkin reviewed Dmitriy Rogozin’s comments on the formation of the next state armaments program, GPV 2016-2025.  Rogozin is Deputy Prime Minister and Chairman of the Military-Industrial Commission (VPK) attached to the RF Government.

Rogozin indicated the next GPV will be very different from the current one, according to Ptichkin.

Rogozin said fulfillment of GPV 2016-2025 will be tracked with a new automated system GAS-GOZ, or the State Automated System of the State Defense Order (or perhaps State Automated Defense Order System?).  It’s supposed to allow for “quickly reacting to the smallest failures” in the GOZ.

The Future Research Fund (FPI or ФПИ, the emerging Russian DARPA) will effectively develop the most promising military and civilian technologies in 2016-2025.

Systems now in RDT&E are supposed to be in serial production.  There may be some weapons based on “new physical principles.”

The PAK DA, a new strategic bomber, should be developed and produced during this GPV.  The fifth generation fighter, PAK FA, will be in production.

There will be new missiles, from operational-tactical to strategic, hypersonic ones too.

It’s “not excluded” that aviation-carrying formations (aircraft carriers) will appear in the Navy.

Rogozin said the “active inclusion of the Military-Industrial Commission in developing the future GPV” is a first, and will allow for avoiding “many problems and collisions” along the way.

Rogozin criticized the “former Defense Ministry leadership” for refusing to accept the BTR-90, not ordering the BMD-4, not taking delivery of assembled BMP-3s, and not testing Obyekt 195 (a future tank) after GPV 2011-2020 was already finalized.  Instead, rushed orders for developing and producing the wheeled Bumerang, light tracked Kurganets-25, and heavy tracked Armata ensued. 

These armored vehicles are supposed to enter the force in a year or two, but this seems unlikely.  They will probably become part of GPV 2016-2025.

Rogozin promised the next GPV will be the most balanced, most well-calculated, most innovative, and, at the same time, most realistic.

It’s very early to talk about the next GPV.  Traditionally, this is a sign things aren’t going well in the GOZ or the current GPV.  The overlap in consecutive GPVs makes it difficult (perhaps impossible) for anyone — citizens, lawmakers, bureaucrats, military men, and, defense industrialists — to understand exactly what’s been procured (or not) under each GPV.  This state of confusion probably serves the interests of some of the same  groups.  Rogozin makes it sound as if defense industry, rather than the military, will drive the train this time around.

Not Enough Resources

Konstantin Makiyenko (photo: Radio Mayak / Kirill Kurganov)

Still parsing reaction to Prime Minister Putin’s manifesto on the army . . . there are lots of positive reviews and recapitulations.  But commentators who don’t exactly agree with Putin are far more interesting and illuminating.

One particularly fitting this description is Konstantin Makiyenko, who makes succinct, obvious, and bravely ventured points.

Makiyenko, Deputy Director of CAST, is by no means anti-regime.  He is, however, honest.  His observations appeared in Interfaks-AVN, and you can read them courtesy of VPK.name.

He concludes simply that Russia may not have the resources for the plan of major army and defense industry modernization Putin laid out in his campaign article:

“The Russian economic system, which, with oil prices at 100 dollars a barrel, provides only four percent GDP growth, isn’t capable of being the base for realizing the plans outlined.”

AVN says Makiyenko doesn’t exclude that, owing to insufficient budgetary resources, the Finance Ministry will have to work out plans for future cuts in spending on national defense.  But, at the same time, he apparently said Putin’s manifesto on the army wasn’t populist, and he has “no objection” to majority of the Premier’s proposals.

But Makiyenko lays down a sharp, if understated, critique of Putin’s stewardship of Russia’s defenses since 1999.  Agreeing that nuclear deterrence has been the only guarantee of Russia’s security, Makiyenko continues:

“In this relation, the current situation is in no way different from the state of affairs in the 1990s, when, as it’s justly noted in [Putin's] article, ‘other weighty material arguments didn’t exist.'”

“. . . adequately evaluating the situation now, one has to admit that even today other ‘material arguments’ haven’t appeared for Russia during the last 12 years.”

“In this connection, the thought about how one should particularly attentively follow the appearance of new technical means, for example MD systems and long-range, precision non-nuclear means, capable of devaluing Russia’s nuclear deterrence potential, are very important.”

So, conventional weakness drives Russian objections to MD, one supposes.

AVN also indicated Makiyenko is skeptical of Putin’s call for public-private partnerships and more private capital investment in the OPK given that the once-and-future Supreme CINC nationalized first-class companies like Irkut and Saturn.

Innovation Locomotive or Brake?

Maksim Blant

Newsru.com economics commentator Maksim Blant wrote on an interesting subject this week:  is spending on the OPK an engine or drag for Russia’s innovation economy?

Blant has two primary arguments against military Keynesianism in Russia’s context.  First, more money for the OPK will further tighten an already taut market for certain labor.  Second, OPK spending’s multiplier effect will benefit raw materials producers more than consumers.

His article appears against a backdrop of questions about Russia’s ability to meet increasing pension obligations over the next 2-3 years without raising taxes, and former Finance Minister Kudrin’s contention that it could, but for the 20 trillion rubles going to the military’s rearmament program.

The problem, Blant concludes, is not that President Medvedev intends to rearm by depriving pensioners of their last bread crusts.  No, Medvedev defends rearmament as a means of stimulating growth in manufacturing, and turning the defense sector into an innovation development “locomotive.”

Blant allows that a majority of experts are inclined to agree that increased military spending can stimulate economic growth, and large defense industry orders can have a multiplier effect causing expansion in other sectors.  The argument is familiar.  State orders lead to job creation and greater consumer demand.  Defense enterprise orders to suppliers spur the process in other sectors.  The jolt causes the economy to turn around.

Blant says there are cases where military spending has brought an economy out of crisis, but asks will it work in Russia? 

He doubts creating jobs in the defense sector will increase consumer demand.  Even discounting how much procurement money will be stolen in the military or OPK, he says relatively little of the trillions will go for wages.  It would be easier to increase consumer demand by raising pensions.

Blant says this job creation effort will occur in the midst of a demographic crisis — not an excess, but rather a relative shortage of labor.  With state orders in hand, defense enterprises will compete against private businesses for engineers and skilled workers.  Faced with this, civilian producers can either raise wages and lose competitiveness, or “escape” to countries where the labor market isn’t so tight.  This, concludes Blant, makes the OPK not a “locomotive” of innovation development but rather its gravedigger.

Blant turns to the multiplier effect in adjacent sectors.  Yes, OPK money supports them, but raw materials suppliers and processors most of all.  Together the two sectors form a “closed loop,” only weakly connected to other industries.  In the end, he foresees a repeat of the 1980s, where the USSR’s defense sector, heavy machinebuilding, and raw materials producers sucked up the lion’s share of labor and other resources, leaving nothing for the consumer sector.

Nyet Means “Not Yet”

Fleet Admiral of the Soviet Union Kuznetsov (photo: Denis Abramov)

Russian aircraft carrier lobbyists — admirals and shipbuilders — define persistence.  To them, nyet means “not yet” or “keep trying.”

Izvestiya’s Denis Telmanov reported this week on future plans to build two new nuclear-powered aircraft carriers by 2027 — one for the Pacific Fleet and one for the Northern Fleet — along with 15-ship battle groups to surround them.

After years of arguing, the admirals reportedly decided they need carriers (not just nuclear subs and cruisers) to “broaden the Russian Navy’s zone of influence in the Pacific Ocean and North Atlantic.”

The Navy is reportedly completing the “technical tasks” for a new carrier, with a first design due next year, and the final one by 2017.  The first hull is supposed to be launched in 2023.  According to Izvestiya, sections and components will be built in several shipyards, but final assembly will be at Sevmash to save resources instead of building a new yard large enough to put a carrier together.

The article might be as much about where carriers would be built as if they will be.  There has been talk that the nascent New-Admiralty Wharves could get this work.

Izvestiya says land-based carrier trainers at Yeysk and Saki (NITKA) in Crimea will be used.  The paper also notes the new carriers will need new support bases because the lack of them “killed” or complicated the service lives of Soviet “heavy aircraft-carrying cruisers,” including the Kuznetsov.

One surmises that Russia’s coming experience with building, basing, and operating Mistrals will affect all this too.

But let’s rewind a bit . . . Navy CINC, Admiral Vysotskiy said in early 2010 that Russia plans to launch a carrier by 2020.  Defense Minister Serdyukov, however, has said twice in the last year that Russia has no plans to build carriers in the near future [by 2020].  On July 1, he emphasized that the Genshtab and Navy will decide on the need for an aircraft carrier after a “preliminary design” is complete.

No matter how much some say “Russia must have aircraft carriers,” it ain’t necessarily so. 

It ain’t so because (1) Russia may have more important requirements to fill with its limited resources, and (2) the people talking about carriers ain’t the same people who ultimately decide which requirements get met. 

Telmanov’s article is full of this:

“Strategists insist . . . .  The Navy has decided . . . .  The admirals have selected . . . .  In the military’s opinion . . . .  A Navy Main Staff representative explained . . . .  The military is deciding . . . .”

Not this:

“The president has decided . . . .  The government has selected . . . .  The VPK insists . . . .  The defense minister explained . . . .  In the General Staff’s opinion . . . .”

When we read that these types of people have decided to build carriers, it might really happen.

Bulava Success

Interfaks and ITAR-TASS report Borey-class SSBN Yuriy Dolgorukiy successfully launched its third Bulava SLBM today, that’s the 17th overall test and the 10th success (including five in a row).

The earlier-reported launch window was missed due to bad weather, according to Flotprom.ru.

ITAR-TASS quoted the VPK this week regarding Borey unit 2 Aleksandr Nevskiy.  The VPK says Nevskiy won’t fire a Bulava before the summer of 2012.  After finishing its factory underway testing (ZKhI or ЗХИ) and several successful single Bulava launches, Nevskiy might be accepted into service by the end of 2012, according to the VPK.

Nevskiy’s now on a two-week phase of ZKhI and will be back in Severodvinsk by early December to rectify any problems identified.  ITAR-TASS says underway testing will continue as the weather permits.

Rossiyskaya gazeta Wednesday also noted that Nevskiy’s schedule has moved to the right, and it can’t be accepted until 2012.  RG covered how the first two Boreys used unused proyekt 971 Akula components, but some are talking about Borey unit three Vladimir Monomakh as a “modernized variant” and its builders will no longer be forced to stuff their “new contents” into a “different” hull.  Others have cited the lack of leftover parts as a problem that will increase the cost and difficulty of building the third new SSBN.

The paper says Nevskiy’s crew trained at Obninsk, and also aboard Dolgorukiy.  Like Dolgorukiy, Nevskiy will head for the Pacific Fleet, according to RG.  OSK and the Defense Ministry remain in difficult negotiations over the Borey’s reported 23-billion-ruble price tag.

Updating a related story, ITAR-TASS says new Yasen-class SSN Severodvinsk is now in its second underway period.  Its first (September until early October) was deemed successful; 80 percent of tasks were completed and only minor problems identified.

Worth recalling here that two Boreys, Bulava, and one Yasen were all on President Medvedev’s list of weapons systems to be procured in GOZ-2010.