Russia's Massive Military Modernization Might Be in Big Trouble

“Too much spending, too little effect” could end up being the epitaph for Russia's military modernization program if it is not careful. 

Most of the attention on Russia's ambitious plans to overhaul its armed forces has focused on questions of procurement—what new systems and capabilities the military has on its wish list. Russian president Vladimir Putin recently reaffirmed his commitment to the ambitious modernization program that he has put into place since returning to the presidency in 2012. However, the expected slowdown of the Russian economy (partly due to Western sanctions, partly due to a nearly 30 percent decline in the price of oil since the summer) will force the Kremlin to spend its defense rubles more wisely. Throwing large volumes of cash at the problem is no longer an option. Equipment certainly is important, but an examination of the specific trees—whether a fifth-generation fighter will be in service, a new class of nuclear ballistic missiles deployed, or focusing on the specifications of a next generation of armored vehicles, and so on—can miss the larger forest, principally the question as to whether Russia can in fact sustain the burdens of a twenty-first-century defense establishment.

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President Vladimir Putin, Defense Minister Sergei Shoigu, Finance Minister Anton Siluanov and the deputy prime minister in charge of the military-industrial complex, Dmitry Rogozin, will have to wrestle with this question. Here are the three main challenges they will have to face.

France's decision to suspend delivery of the Mistral helicopter carriers highlights the first challenge: preventing Russia's isolation from global markets, especially in terms of buying capabilities and platforms that Russia cannot currently source from domestic industries. Defense cooperation with Italian and German firms is also imperiled as calls for NATO members to restrict their defense cooperation with Moscow take root. Moreover, even with the events of the past year, the Russian military continues to depend on components produced by Ukrainian firms to equip itself. Although a Ukrainian government decree banning sales of military equipment for use in the Russian Armed Forces has been haphazardly enforced—with reports that some companies have sought to flout the rules by exporting to middleman firms who then resell items for Russian military use or by taking advantage of the legal loophole of selling components to Belarus—Ukraine is not likely to be a stable source of supply in the future. In a number of hi-tech areas, notably unmanned systems and electronic suites for effective command and control, Russia has turned to partners like Israel who are global leaders in this area. Yet Israeli sources have acknowledged that, under pressure from the United States, Israel has foregone additional contracts by limiting what it is prepared to sell to the Russian military. Even India—Russia's long-time defense partner, where joint collaboration has led to impressive results like the supersonic BrahMos cruise missile—is now considering whether it might be more advantageous to forge closer links with the U.S. defense industry. Other rising powers—Brazil and South Africa among them—may be interested in closer ties with the Russian defense complex. But while these countries may be able to help finance major, new arms deals, they are not particularly in a strong position to supply advanced components as part of any joint development project.

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Recognizing this problem, Rogozin has been consistently calling for Russia to strengthen its domestic capabilities and to diminish its dependence on international sources of supply, particularly for high-technology components (a call that has been mirrored by the energy industry, which sees ambitious plans for developing the Russian Arctic and nontraditional sources of hydrocarbons imperiled by sanctions prohibiting Western firms from transferring the needed technology for use in the Russian market). In his opinion, Russia's reserves, built up from the export of energy, should be used to jump-start the reindustrialization of Russia. The challenge here, however, is whether the Kremlin is capable of acting as an effective angel investor, rather than simply funneling large amounts of money that will end up wasted or diverted.