The Russian Military Import Substitution Program: Still Struggling

The independence of the Russian defense industry on foreign components has been on the table for years. There have been many talks about import substitution, vast sums of money were spent, but the situation hasn’t considerably changed. Since Crimea’s annexation, this issue became even more relevant. First, because of the economic sanctions. Second, because of the interdependence between the Russian and the Ukrainian military-industrial complexes.

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Another problem has been the relationship between the Armed Forces and the Russian Military-Industrial Complex, which is still problematic, although it was even worse until 2014. On the one hand, the military often complain that the industrial sector is unable to fulfill the procurement demands and that the Armed Forces’ needs aren’t matched. Quality is considerably low. On the other hand, the industrial sector complains that the Armed Forces don’t know what to procure, including the technical specifications and requirements. In other words, the industrial sector complains that the Armed Forces don’t know what they want. There’s poor planning.

Nevertheless, from 2008 the result was that the industrial lobby was able to impose its specifications and norms on the Armed Forces. In 2012, the then Minister of Defense Anatoly Serdyukov even blackmailed the Military-Industrial Complex saying that “if you don’t provide us with what we want, we’ll buy foreign on-the-shelf full-scale systems. This was one of the most critical factors for Serdyukov being substituted by Shoigu, who has been less confrontational. It didn’t work as expected, because of MoD officials lobbying the interests of the industrial sector.

The relationship deteriorated on such a scale that in December 2014, Putin decided to renew the Military-Industrial Commission (in Russian “VPK” like the newspaper). Its role has been to be a coordination platform between the MoD and the industry to promoting consensus and compromising. And since 2016 to promote import substitution and stimulate technological development.

In 2016 it was disclosed that some 800 weapons systems’ production depends on foreign components from NATO and EU countries, and the Security Council returned to the discussions about import substitution. Although it has been happening for decades, it never really happened despite the luges amounts of money invested. This time, the VPK asked the domestic industry to replace 127 items. One year later, in 2017, they managed seven. There isn’t more recent information.

The volume of civilian dual-use systems is supposed to increase by 30% in 2025 and by 50% in 2030. The logic is to follow the same model as the United States since the 1950s, the one of the military-industrial complex and military Keynesianism. There’s a good story about this. A real one. When the Americans had to go to space, they faced a problem. How to write with a fountain pen without gravity? They developed a pen for that, which gave the technical base for the modern pens we use today. And the Soviet Union? They used a pencil.

And this is the biggest problem. Most of the technology Russia has is still from Soviet times. There is no serious financing for Research and Development Programs. The Russians are also convinced that the best is to exploit possible spillovers with the oil and gas sector, but the industry lacks economic complexity. Although such spillovers might be good at the sectoral level, they won’t promote economic development. Nor reduce the dependence on Western technologies.

Another serious problem for the Russian military industry has been the war with Ukraine. Before Crimea and Eastern Ukraine, some sixty Ukrainian companies produced ship engines, and aircrafts and their components for the Russian military. It included nuclear weapons’ key components like the R-36M missile system and the Voyevoda RS-20 missile (which in NATO is known as the SS-18 Satan). It was developed in the 1980s in the Dnepropetrovsk Design Bureau “Yuzhny” and produced in the same place by “Yuzhmash.”

The Russian MoD has announced plans to dispose it, but at the same time, there is information that their service life is being extended. The obvious conclusion is that the Russians still don’t have a replacement for these systems yet. The deployment of the Sarmat (Satan 2) missiles is expected for no sooner than 2021. Another example is the TOPOL-M, which was developed in the Kyiv Arsenal Plant. There are rumors they will be completely withdrawn from service in 2021 to be replaced with Russian-made Yars and Yars-M missile systems.

The production plans of ships also had to be adjusted because there are no modern Russian ships engines. At the beginning of the modernization program, the MoD counted on the Ukrainian Zorya-Mashproekt’s gas turbine engines. Some ships were designed to use these engines, including the Project 11356 “Patrol Guards,” the Project 22350 “Frigates” and Project 21956 “Multi-Purpose Destroyers.” In September of 2019, the Russian government announced that the United Engine Corporation, the NPO Saturn (Rybinsk, Yaroslavl region), and the OJSC Klimov from Saint Petersburg would replace the Ukrainian engines. There isn’t a precise timing for the commissioning of the new ships.

Some import substitution has been happening in helicopters engines. The Kazan Helicopters and the JSC Kamov, which produce the Mi and the KA series, have been using engines produced by the Zaporizhzhya Motor Sich company from Ukraine. Now they are receiving the Rostech VK-2500 engine, which is more expensive and still needs a complete foreign base. Unmanned aerial vehicles are advancing more. The Forpost-R system was being produced under an Israeli license. Russian companies were able to replace all components. Another drone, the S-70 “Okhotnik” for reconnaissance and strike, was fully developed in Russia and is allegedly able to interact with the 5th generation Su-57 fighter.

Finally, the GLONASS satellites. Until 2014, the share of foreign components was 70%, mostly from the United States. Today it is approximately 40%. The Glonass-K2 satellite, with only domestic components, was expected to be ready by 2021, but there is no recent information about the program.

Import substitution was very effective in promoting South Korea’s economic development. It could work in Russia, but there is a significant barrier posed by the lack of new technologies. Before, it was possible to develop independently. The technology was free. Today, there are patents and intellectual property. One component might use multiple technologies of different owners. It is not possible to develop new technologies isolated from the rest of the world, especially when R&D is underfinanced, and the last significant technological developments were in the 1980s. One alternative is a partnership with China, which has been developing Western level technologies in some spheres, but many times ignored the international rules of property rights.

Can Russia do it? Probably not. Development based on natural resources isn’t sustainable, as discussed by the great Adam Smith already in 1786. Norway might be the exception, but it has a very complex economy. Russia’s development is to be characterized by a situation of the development of underdevelopment. In technological terms, it’ll always be catching up, unless huge, but really huge sums of money are invested in R&D, and new brains are attracted to the country. A herculean task, that, probably, won’t happen. As warfare is increasingly dependent on new technologies, with time, Russia’s operational capabilities will become outdated, forcing the Armed Forces to rely on the nuclear arsenal for deterrence and asymmetric methods for combat.


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