How the war in Ukraine revealed problems in the Russian defence industry?
    Efforts to restore military muscles

    ANALYTICS  25 January 2023 - 15:00

    Fuad Shahbazov

    Since Russia's military intervention in Ukraine in early 2022, the Kremlin seemed confident regarding the sufficiency of its military stockpiles to defeat the Ukrainian forces in a short period. However, on the war's first anniversary, Russia faced enormous arms production delays in light of heavy tactical losses and continued searching for answers to solve the problem of restoring its military power. Although the Russian MoD and authorities deny allegations regarding ammunition shortage in the army, in October 2022, Vladimir Putin has urged his government to cut through bureaucracy to crank out enough weapons and supplies to feed his troops in Ukraine.

    As such, it has become apparent that the Russian military’s supply shortfalls in the first year of the war have been so pronounced that Putin had to create a structure to try to address them. Shortly after Putin’s order, the Russian Security Council announced a new group of supervisors that would be responsible for controlling the manufacture of high-priority arms. According to the new direction, the local arms manufacturers are obliged to deliver all supplies to the Russian army by the end of February 2023. While the Council warned defence factory managers about the criminal liability that will come with violations of arms manufacturing contracts, Putin publicly criticised Minister of Industry and Commerce Denis Manturov regarding delays in fulfilling contracts for military and civilian aircraft.

    Nonetheless, the accurate picture of the Russian arms industry is more pessimistic than it looks, as the heads of Russia’s defence industry confirmed that efforts to reach peak capacity in arms manufacturing have led to cost-plus inflation and actual losses. For example, since the war unfolded, many of those mobilised to fight in Ukraine have not been provided with adequate basic equipment, such as medical kits and flak jackets, and have had to find their supplies.

    Moreover, military intervention has changed the fragile balance of the defence budget. Hence, the national defence spending in January-April alone was 1.6 trillion rubles ($23 billion), around 500 billion rubles ($7.3 billion) monthly in March–April. This was significantly higher than in previous years, and its extrapolation gives an annual total of at least 5.5–5.6 trillion rubles ($81 billion) by the year’s end. Indeed, the decline in the defence budget and shortage of ammunition allows us to predict that Russia’s traditional clients for defence products may soon face supply shortages and long-term delays.

    Therefore, Russia’s clients will find it challenging to conduct business transactions with the defence sector. Any potential arms deal with Russia may put an importer country at risk of being sanctioned by the US within the Countering America's Adversaries Through Sanctions Act (CAATSA) framework. In this vein, Russia’s gradually shrinking share in the global arms market paves the way for other potential suppliers like China, Türkiye, and South Korea to make inroads into the MENA region. Such scenarios, however, may be another scene for the US-China confrontation over the influence in the global arms market.

    Notwithstanding, the slower tempo of Russian air, missile, and drone strikes possibly reflects decreasing missile and drone stockpiles and the strikes' limited effectiveness in accomplishing Russian strategic military goals in Bakhmut and Soledar directions. Being unable to reach tactical goals in the battleground, the Russian army inflicted heavy damage on civilian settlements and infrastructure in Ukraine throughout the intervention campaign. Despite growing problems and shortages in the frontline, Russian state media desperately tries to demonstrate Russia as a superior military power.

    In order to curb the growing criticism of the country's defence manufacturers and the Defense Ministry's inability to supply the army with a sufficient amount of weaponry, Vladimir Putin visited the defence factory in Tula that produces the Pantsir short-range anti-aircraft systems in December 2022, followed by his visit to Obukhovsky Zavod in St. Petersburg, where he declared that Russia produces three times more air defence missiles than the United States annually.

    Given the data provided by the US regarding the annual production of air defence systems (around 600-650 units), Putin's remarks regarding Russia's production appear dramatically exaggerated, considering the real potential of the national arms manufacturers. Also, it is noteworthy that unlike the US and other NATO member countries, Russia produces mostly short and medium-range types of air defence missiles, including Man-Portable Air Defense Systems (MANPADS).

    Undoubtedly, the growing dilemma in the defence industry sector is one of the most critical challenges that Russia has faced since its unprovoked invasion of Ukraine in 2022. The ongoing supply problems increase Ukraine’s and its allies' chances to gain more leverage in the battleground while exposing Russia's security vulnerabilities and inability to cope with the modern warfare era.


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