Last month the Russian Navy hosted its biennial naval show in St. Petersburg. Usually it showcases Russian naval technology while announcing plans to regain or exceed its Cold War strength.
This time naval commander-in-chief Admiral Vladimir Vysotsky made a startling admission: the Russian shipbuilding industry had so declined that he was interested in foreign-built warships, including French carriers and amphibious ships and even German-built diesel submarines. A Russian correspondent, reporting on what he called the irreversible decline of the Russian fleet and its supporting industry, visited the Rubin submarine design bureau, responsible for numerous Soviet-era nuclear-powered submarines and also for the widely-exported Kilo-class boats. He claimed that most of its offices were either empty or rented out to other concerns. The correspondent also pointed out that any hope of rebuilding the fleet is a fantasy now that income from the main Russian source, oil and other mineral sales, has slowed badly due to the international economic crash and, it seems, the bursting of an oil bubble.
Since the collapse of the Soviet Union in 1991, the large Russian arms industry has subsisted mainly on export orders. These are a small fraction of the government orders it had received in the past. The post-Soviet government is discovering that it can barely afford to keep the major design organizations alive, and that the subcontractor base has largely vanished as companies either disappear or shift to profitable pursuits.
For example, the designer of the new Bulava solid-fuel missile, versions of which are to arm both strategic submarines and the land-based missile force, has blamed numerous test failures (the latest in July) on sub-standard components. He has stated that it will be impossible to produce a MIRVed version of the missile for many years. Critics have charged that the entire Bulava project has been a costly mistake, and that it should be cancelled. Unfortunately it seems unlikely that the new strategic submarines, the first of which has just run trials, can be modified to carry the alternative Sineva liquid-fueled missile, which is being made to rearm old Delta IV-class submarines.
Quality-control problems also seem to be cropping up in export weapons. The Indians have complained that half of their new RVV-AE air-to-air missiles are defective (the Russian exporter charges that such complaints were engineered by competitors). Algeria returned MiG-29s that were discovered to be heavily used rather than new aircraft. The Russians dismissed Indian complaints that MiG-29s were breaking up in midair, but they later grounded their entire MiG-29 fleet, and reportedly the MiG design bureau is close to dissolution. The Indian Navy rejected initial delivery not only of its Russian-built Talwar-class frigates but also of modernized Kilos, although eventually it accepted both and has ordered more frigates. Sea trials of the nuclear-powered attack submarine Nerpa-which the Indians are to take over as the Chakra-were stopped after a fatal accident. Despite reports that new trials were at least a year away (it would take that long to train new test specialists) delivery is going ahead, post-accident trials having been run in June.
There are also indications that the Russians are still relying heavily on the physical capital built up under the Soviet system. Thus the new strategic submarine Yuriy Dolgorukiy seems to embody numerous elements of cancelled Akula- and Oscar-class submarines. Newly-delivered Kilos seem to be built from parts produced in the past, which may be why the new Amur class, the Kilo follow-on, has not materialized apart from one prototype (which has yet to be commissioned); it was begun 13 years ago in hopes of a sale to India, but is now to join the Russian Navy. Two Gepard-class corvettes ordered early in 2006 for Vietnam are apparently being built from material assembled in the 1980s for the cancelled third and fourth units of this type.
New construction has been remarkably slow. The Steregushchiy, first of a class of new 2,600-ton missile frigates, is still missing her cruise missiles a year after completion, suggesting that production has been either slow or nonexistent. A second unit is not expected until 2011. This design has been marketed since 2002. The 4,500-ton frigate Gorshkov, laid down in February 2006, is now to be launched in 2011 (initially she was to have been delivered in 2009), and there is no sign of a second unit.
Apart from Admiral Vysotsky's comments, the Russians are not admitting anything is wrong. They still advertise heavily, both in publications and at various international shows. However, visits to these shows reveal less and less new equipment and fewer and fewer previously unknown weapons. It is possible that anything new is now classified, hence not on show (or not on show to anyone but likely buyers). However, the comment about Rubin, which must have been one of the more successful Russian naval organizations, seems suggestive.
What Went Wrong?
The end of the Cold War not only broke up the Soviet Union but also its command economy. During the Soviet period, production was deliberately split among the Soviet republics to both reward loyalty and to make dissolution difficult. Plants and design bureaus in different places specialized in particular vital military products, although sometimes (as with sonars) parallel design organizations were set up in different republics (in Russia and in Ukraine, in this case). Thus a single organization in Ukraine produced all Soviet-era naval gas turbines, vital components of any modern surface combatant. Only this year has the Russian replacement plant produced its first gas turbine. One reason the Russians are concentrating on the Bulava strategic missile is that the main design bureau and plant for liquid-fuel ICBMs was in Ukraine (the first post-Soviet Ukrainian president was its old chief).
During the Soviet era, cash was not particularly meaningful in our sense. A ruble spent on, say, a nuclear-powered submarine could not be compared to a ruble spent building a school or an apartment building. Soviet rulers, particularly Nikita Khrushchev, were painfully aware that they were making economic choices, but prices were so meaningless that they could not tell what those choices were. Khrushchev in particular tried to force down defense prices, but that only caused defense plants to make up the difference by raising the prices of non-defense products, and without any market, such prices meant nothing. An office or plant assigned to buy, say, furniture produced by a shipyard could not buy less expensive furniture elsewhere. Instead it paid, in effect, a separate and unregistered defense tax, its expenditures reducing what the navy paid for, say, a minesweeper.
The Russians are now living in something much more like a Western economy. Rubles spent on a nuclear-powered submarine are real rubles that might otherwise buy factories or consumer goods, or might pay employees who would use them to buy real products. Worse, when the Russians try to buy defense products, such as gas turbines, from their former component republics, they have to pay real cash those companies can use.
It is extremely difficult for those brought up in a world in which cash was meaningless to adjust to thinking about money as Westerners do. Quite possibly veterans of the Soviet system such as Prime Minister Vladimir Putin have absolutely no idea of what cash can and cannot do, and thus of the limits within which they can try to modernize their military. This is aside from the rampant corruption that became evident once the Soviet state had collapsed. The reconstruction of the carrier Gorshkov for the Indian Navy may illustrate the problem.
The Russian government offered the Indians a price and a timetable. In the past, Soviet arms exports were priced to compete with equivalent Western products, not in relation to the cost of producing them (the price also depended on how close the buyer was to the Soviet Union, and on hopes that the deal might yield strategic advantages). This sort of pricing became obvious after the Soviet Union collapsed. For example, the Soviets never charged anything for Kalashnikov assault rifles, the idea being that dumping them in various places would cause trouble for the West.
The Gorshkov refit was probably priced in terms of what the Indians were expected to pay, rather than in terms of the likely cost of labor. Among the problems created by the collapse of the Soviet Union was the loss of the carrier shipyard at Nikolaev, with its detailed plans of ships it had built, including the carrier. Without the plans and the related expertise, the Russian yard promising to rebuild the ship was unlikely to know exactly what was involved. It also seems that Putin's government, perennially short of cash, decided to raid the payments to complete the new strategic submarine-probably a much higher priority than continued warm relations with the Indians. The calculation may have been that the Indians had nowhere else to turn in the near term for a large carrier.
The Russians seem never to have understood that dramatically raising the price once it had had been negotiated would leave a sour taste that might kill future deals. They cited unsuspected problems, including the need to rewire the ship, which can be attributed to the loss of Nikolaev and its knowledge.
Russia (and, for that matter, Ukraine) still has numerous world-class technological experts trained during the Soviet period. The tragedy for the Russians is that without enough money to pursue new projects, these experts are likely to export their knowledge, which is far less profitable. Thus the new Chinese missile destroyers were apparently designed, at least on the basic level, at the Russian Northern Design Bureau, but they are built in China. Similarly, the Chinese bought their active-array destroyer radar from the Ukrainian Kvant organization, which is unlikely to have the resources to develop the project much further.
It would be foolhardy to imagine that the Russians can never recover militarily, but to do so requires the recovery of the Russian civilian economy. Moreover, unless Putin or some successor can rebuild the Soviet-style command economy with its coercive politics, it is unlikely that the Russians can or will spend much more of their national income on defense than their Western equivalents-and very little of that small sum is likely to go to Russian sea power.