On 23 November in Sochi, President Vladimir Putin wrapped up a four-day meetings marathon in the presence of Russia’s military top brass and senior representatives of the defence industry. The now-traditional ‘Sochi meetings’ have been taking place twice a year since 2013 in order to address the main concerns in Russia’s military industry as well as to review advances in military procurement for the armed forces. Today in their tenth iteration, they represent a direct incarnation of President Putin’s ‘manual control’ over the decision-making process in the military industry. The November meetings were primarily aimed at finalizing the upcoming State Armament Programme 2018–2027.
Although initially planned to run until 2025, the new programme was, not without surprise, extended to 2027 and will be financed at 19 trillion rubles (roughly £244 billion) for 10 years. Adjusted to inflation, this figure is close to the amount attributed to the current 2012-20 programme, thus potentially giving the armed forces greater ease. Financing for the new programme represents an acceptable compromise – what President Putin called a ‘golden mean’ – for the Ministry of Defence and the Ministry of Finance after months of bickering between Defence Minister Sergei Shoigu and Finance Minister Anton Siluanov.
The allocation of an extra one trillion rubles is still under discussion, reportedly to ensure a streamlined ‘synchronization’ of military supplies and storage of defence equipment. While President Putin insisted on the necessity to earmark this expenditure, it might also represent a possible avenue for corruption inside the defence industry.
The draft State Armament Programme will be submitted to the presidential administration by mid-December for final approval. Although due to last for a longer time than initially expected, the programme for 2018-27 will probably be adjusted in the coming years to match the updated needs of the armed forces.
In step with the new programme and the implementation of the State Defence Orders, the Federal Anti-monopoly Service is currently working on a new formula to regulate pricing for military procurement. Through a revamped methodology, the mechanism is set to improve pricing regulations and procurement efficiency, and reduce production costs. Since the revenues of Russian military-industrial companies depend on production costs, this might turn out to be a problem for them in the coming years.
In the context of the new programme, the November meetings tackled the current state of the Russian armed forces as well as the entry into active service of new weapons systems. In this regard, President Putin outlined two priorities.
On the one hand, the defence industry is requested to increase serial and uninterrupted production of military equipment. This puts pressure on defence companies, who are now required to prepare for rapid increases in production as well as to modernize production lines to meet the challenge. However, defence companies often lack the technological and financial means to do so and are increasingly stretched thin in terms of production, as evidenced by the two ongoing import substitution programmes. This could have a detrimental effect on serial production of advanced military hardware – with the caveat that ‘serial production’ in Russia is different from mass production as understood in the West.
On the other hand, military-industrial companies will have to meet the demands of the new State Armament Programme in terms of technological improvements and the production of new systems – which in turn raises the question of what ‘modernization’ genuinely means.
The continued modernization of the strategic nuclear forces invariably remains a top priority, and so is the acquisition of air defence systems and precision-guided weapons for the armed forces.
Upon finishing a cycle of massive re-equipment, the Russian air force will acquire fewer aircraft and concentrate on logistics and power projection instead. Meanwhile, ground forces procurement will primarily focus on modernized main battle tanks and armoured vehicles. The navy will most certainly lose out in the new programme, with fewer surface ships and submarines being commissioned.
During the Sochi meetings, President Putin insisted on the need to develop next-generation systems as well as to concentrate efforts and resources on the ‘robotization’ of the armed forces. Yet if rumours are to be believed, the money earmarked for research and development in the new State Armament Programme will be substantially decreased, which will in turn further constrain the ability of the military-industrial complex to produce the most advanced systems and delay their entry into active service – a potential paradox that the Kremlin might have to address.
The Sochi meetings offered a glimpse into the long-term priorities in Russia’s military industry and defence sector. In his opening statement, President Putin discussed the necessity for the armed forces to ensure strategic deterrence as well as the ‘efficient neutralization’ of external threats. It remains to be seen if the new State Armament Programme will gear the armed forces of Russia towards this ominous objective.
Mathieu Boulègue, Research Fellow, Russia and Eurasia Programme.