Streetwise Professor

July 16, 2011

Pity the Poor Furniture Salesman

Filed under: Military,Politics,Russia — The Professor @ 7:26 pm

The good news–for the Russians–is that there was another successful launch of the Bulava missile.  It looks like the weapon may be usable after all, and that the program need not be scrapped as feared.

The bad news–for the Russians–is that the military procurement system is so dysfunctional that the prospects for actually going into serial production are dismal:

Russian Defense Minister Anatoly Serdyukov is caught between conflicting orders. President Dmitry Medvedev is trying to reduce corruption in the military, and has ordered Serdyukov to make it happen. But in doing that, Serdyukov has withheld payment to many military suppliers, because these firms refuse to explain why prices have suddenly increased. That has created problems with Medvedev, who is also demanding that defense industries produce the quantities of weapons agreed on, and according to promised delivery dates. That will not happen as long as Serdyukov is putting contracts on hold to deal with corrupt practices. President Medvedev has to decide, but in the meantime he has asked for more details. This might speed corruption investigations, but will definitely be interesting no matter how it turns out.

The problems Defense Minister Serdyukov went public with, also impact weapons exports. For example, a Russian shipyard recently revealed that it would be late delivering three Talwar class frigates (ordered five years ago, for $1.6 billion) and wanted another $100 million (from the government, which handles arms exports) to complete construction. Problems like this have led to record low approval ratings for the national government. President Dmitry Medvedev and prime minister (and former president) Vladimir Putin have run the country for over a decade and have done a lot to clean up corruption and economic problems. But corruption has proved resistant to reform efforts, and popular anger at the continued corruption is linked to  dissatisfaction with politicians in general.

The designer of the Bulava–who was dismissed from heading up the program because of the repeated test failures–leveled a broadside against Medvedev, though not referring to him by name:

Ostensibly about defense budgeting and the state of the Russian strategic arsenal, the interview was actually a stinging attack on President Dmitry Medvedev’s leadership in one of Russia’s most politically and internationally fraught arenas: strategic nuclear weapons. The Russian commander in chief emerged from Solomonov’s portrait as a bad strategic planner, an inept manager, and a Khrushchev-like shoe-banging blusterer who is making Russia’s already weakened position in global politics even more perilous.

Solomonov’s barrage may be revenge for his dismissal, but maybe not.

Surdyukov’s head must be spinning:

Russian Defense Minister Anatoly Serdyukov faced a very public upbraiding from Russian President Dmitry Medvedev after it emerged the submarine manufacturer Sevmash had missed the target on the delivery of a submarine for the Russian navy.

Further angry exchanges followed complaints about the inflated prices demanded by military manufacturers, alleged corruption and malpractices at different levels of the defense manufacturing infrastructure.

Sevmash is the acronym favored by the giant shipyard Severnoye Mashinostroitelnoye Predpriyatie Northern Machine-Building Enterprise based in the White Sea port of Severodvinsk. The company employs about 27,000 people and specializes in building ships, submarines and other military equipment for the Russian navy.

. . . .

The comments raised an uproar during which the president “blew up” at Serdyukov for disruption of the state defense order, Itar-Tass reported.

In later comments, the Novye Izvestia quoted Medvedev denouncing Solomonov.

“You well know how scaremongers were treated in war times — they were shot,” Medvedev said, adding he was authorizing the defense minister to “fire everyone.”

Serdyukov earlier acknowledged the ministry was having difficulty concluding contracts with manufacturers because of inflated prices. He complained of a “wild growth” in defense contract prices, one of the reasons why the ministry had trouble signing contracts.

More than $3.57 billion in contracts for defense spending in 2011 remain unsigned, he said.

Itar-Tass cited corruption was aggravating the situation.

The Komsomolskaya Pravda said it was the fourth time in six months that Medvedev had lashed out and demanded punishment for those putting Russian defense manufacturing in jeopardy.

So Medvedev has ordered Surdyukov to spend a lot of money to build a lot of weapons fast, and then is furious when Surdyukov balks at overpaying defense contractors who are trying to take advantage of the government’s haste to spend money and buy weapons now, Now, NOW!  Try walking into a car dealer sometime, and say: “I’ve got money burning a hole in my pocket.  And I need to buy in a hurry.”  That usually doesn’t work out well.

Surdyukov, a former furniture salesman and director of a furniture company, is under orders to root out corruption in defense contracting and also under orders to expedite procurement.  These are effectively incompatible goals.  Not to mention the fact that the defense base is so eroded that it is doubtful that it could meet the lofty objective of making up for 20 plus years of a virtual standstill in procurement in less than 10 years.

As Solomonov puts it:

Solomonov began by describing the technological base of the Russian missile industry with a degree of frankness not heard from a Russian in a position of authority since the halcyon days of glasnost. Russia, he said, is utterly dependent on imports from the West because there are technologies that it “cannot make itself.” We “simply don’t have anything,” Solomonov told Kommersant. (According to Solomonov, the share of high-tech in Russia’s total exports is one-fourth of 1 percent.) One ought not be surprised that Russia is “looked down” on, he continued; for the West, Russia is just a “territory with a lot of nuclear weapons.”

The 2010 defense procurement order has fallen through, and Medvedev only now, “half a year later,” got around to holding a meeting with government officials and industry figures to look into what happened. Small wonder then, that, according to Solomonov, the 2011 defense plan is also a failure: The defense industry cannot possibly fulfill it.

This just provides further evidence of the insanity of Putin’s and Medvedev’s goal of restoring the Russian military to a semblance of its (or more properly, the Red Army’s) former glory.  The system is corrupt.  The defense base is decrepit, with both its physical and human capital highly degraded.  Even if weapons are procured, the personnel available to operate them are few in number, taken disproportionately from the left tail of a small demographic cohort, unmotivated, brutalized, poorly led, and in service for just about enough time to figure out how to clean their weapons.

The Russian military needs to redefine its mission and aspirations based on current realities, rather than dreams of past glories (and those rather exaggerated in the retelling).  It needs to start by fixing its software problems, both in the uniformed services and the defense industry, and only then turning to its hardware issues.  It’s very easy to spend money.  It is much harder to get anything for it.

Medvedev’s impatience is quite interesting.  It suggest that the defense issue is an acute pressure point for him.  Putin keeps making the promises, but Medvedev is on the hook for delivering on them.  Good luck with that.

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  1. Big wars shake the rust out.

    Comment by So? — July 16, 2011 @ 11:19 pm

  2. >”President Dmitry Medvedev and prime minister (and former president) Vladimir Putin have run the country for over a decade and have done a lot to clean up corruption”

    Apparently, a misuse of the English language. The context clearly suggests the word “streamline” where “clean up” was used.

    Comment by Ivan — July 17, 2011 @ 12:26 am

  3. Ivan, I noticed that, too. That was from an unattributed article in English. And the problem with it is indeed that it paints a picture of the boys at the top trying to do the right thing and end corruption, while the nasty corrupt officials and population below are fighting them. Of course, the problem is that the top bears put into place the system of corruption (particularly military contracts)and now they are wailing about the consequences.

    Comment by mossy — July 17, 2011 @ 3:00 am

  4. A little foornote to this.

    One of my suppliers of a weird alloy from Russia has had a large defence order. The knock on effect of that single order has been to double the global price for that specific weird alloy. Global production is sufficiently small that one large order can do that: it’s not only corruption causing the price rises.

    Comment by Tim Worstall — July 17, 2011 @ 4:24 am

  5. “It’s very easy to spend money.  It is much harder to get anything for it”.
    After a Google-check for originality I added it to my quote list. Sharp as a knife.

    Comment by David Gonzales — July 17, 2011 @ 5:11 am

  6. @David G–1) Thanks! 2) You doubted me? I always try to give credit where credit is due, especially since I’ve been ripped off quite often without even a hat-tip. I may be inadvertently unoriginal, but I would attribute that to Merton’s Law of Multiples. Or as Alfred North Whitehead said: “Everything of importance has been said before by somebody who did not discover it.” I wonder who said that first?

    The ProfessorComment by The Professor — July 17, 2011 @ 9:51 am

  7. […] Professor discusses development of Russian military technology and weapons procurement and the paradoxes they pose to […]

    Pingback by Russia: Defence Paradoxes · Global Voices — July 17, 2011 @ 12:46 pm

  8. Mr. Wortsall, I expect Boeing supplier AVO Avisma (sp?) was a big player in lobbying for the Reset and getting their partner to do so. I wonder why LR didn’t ask for a boycott of Boeing? 🙂

    Anyway, hopefully when all the Keynesian stimulus fails spectacularly the Anglo-American corporatist establishment won’t try the one they think ‘worked’ in the 1930s-40s — war. I think the Japanese and others are too smart to be used as proxies to Bait the Bear.

    Comment by Mr. X — July 17, 2011 @ 5:55 pm

  9. One ought not be surprised that Russia is “looked down” on, he continued; for the West, Russia is just a “territory with a lot of nuclear weapons.”

    Don’t worry! Once the Arctic icecaps melt Russia’s northern ports will be catapulted into growth and prosperity by the passage of large ships.

    Comment by Tim Newman — July 18, 2011 @ 11:39 pm

  10. “AGW” is a conspiracy against Russia and Canada.

    Comment by So? — July 19, 2011 @ 12:02 am

  11. […] Professor discusses development of Russian military technology and weapons procurement and the paradoxes they pose to […]

    Pingback by Official Russia | Russia: Defence Paradoxes — July 19, 2011 @ 1:03 am

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