Cash for Clunkers, Moscow Edition

Bulava is designed to be the primary SLBM for several decades, which makes it one of the key linchpins in Russia’s nuclear force–the other two elements being the Tupolev Tu-160 Blackjack and Tu-95 Bear strategic bombers and the fleet of land-based ICBMs. If its design flaws cannot be corrected (which appears increasingly likely) planners for the Russian ballistic missile submarine force, which is the most potent leg of the Russian nuclear triad, will be facing a bit of a sticky wicket.

The three next-generation Borei-class nuclear submarines are specifically designed to fire the Bulava. The new subs represent the highest-level priority program of the Russian armed forces–being one of the few weapon systems development that the Russian government has actually funded while neglecting most of rest of its defense-industrial complex. The investment in the Borei-class design, by Russian standards, is immense. Just one of these submarines, the Yury Dolgoruky, has a price tag of 23 billion roubles (roughly U.S. $800 million) and after having completed sea tests it is ready for a full set of trial runs with the Bulava missile on board. Unfortunately, the new SLBM is not close to being cleared for deployment.

Russian military officials are now faced with a couple of unhappy options. One is to continue work on the Bulava in the hope that the program can be salvaged. This seems unlikely, as the original premise on which the Bulava’s design was based–extrapolating the configuration of the single-warhead Topol-M land-based ICBM into a multi-warhead SLBM–was a flawed concept from the start.

The other route is to redesign the Borei-class subs so they could instead launch the other new SLBM in Russia’s arsenal, the Sineva. But this missile had its own problems with test launches, although it is currently deployed with the Russian submarine fleet. Also there is the small inconvenience that redesigning the launch bays of the Borei submarines to enable them to launch the Sineva instead the Bulava would require a major re-fit, the cost of which has been priced out at being equal to building new submarines from scratch.

Aside from the ballistic missile submarine fleet, the other Russian strategic priority has been to try and hold onto its most important cash-generating weapons export clients, which for almost two decades have been China and India, the income from which has helped to fund the submarine program. China has almost no other options than to turn to Russia for its advanced weapons purchases and will remain in the Russian camp for now–albeit at much lower levels of purchases than the previous ten years–but Moscow is in real danger of losing India as a customer.

The subcontinent has been a major buyer of Russian weaponry for far longer than the Chinese. However, the increasing number of options being offered to New Delhi by the United States and European defense firms–and some high-profile Russian failures on deliveries to India–are forcing the Indians to consider abandoning its decades-long partnership with Moscow.

In 2004 Russia’s state arms export agency, Rosoboronexport, signed a landmark deal with New Delhi to provide the Indian Navy with an aircraft carrier capable of launching and recovering conventional take-off and landing (CTOL) aircraft. India was to receive the carrier for free, but would have to then pay $700 million for the refit of the Russian Navy’s used Admiral Gorshkov, which involved replacing the vessel’s steam power plant with a diesel propulsion system and extending the flight deck to include a ski-jump style take-off ramp. This extended take-off ramp would enable the Indians to operate a new-age, modernized carrier-capable variant of the Mikoyan MiG-29 Fulcrum, the MiG-29K-9.41 model.

U.S. weapon programs that overrun their budgets and fail to adhere to their production schedules have nothing on the Russian shipyards responsible for the re-work of the Gorshkov, which has seen Moscow periodically coming back to the Indians to ask for more money to finish the project. The steady increases in this program’s budget now have the Indians being asked to pay a whopping $2.9 billion–more than four times the original estimate.

When the overruns on the costs for the Gorshkov had only reached the $1.5 billion the vessel was being labeled a “lemon” by Russian defense commentators. But at almost twice the “lemon” price and the ship itself being 27 years old qualifies it as a gold-plated, seaborne clunker–a budgetary black hole that keeps swallowing up money and returning nothing. But the bad news gets even worse. Aside from India now paying a sum equal to the entire previously broke (and now re-funded) Obama administration’s “Cash For Clunkers” program, the Gorshkov delivery date has been pushed back from 2008 to 2012. (And there are very few in Russia familiar with the state of this carrier project who believe that the even the 2012 deadline is realistic at this point.)

Indian officialdom are something less than amused at this state of affairs. India’s national government auditor has released an official report on military spending by New Delhi and singles out the Gorshkov as the poster child for dumping Russia as a weapons supplier. The report states that at the present price the India navy would have paid less in the long run if it had opted for the purchase new carrier in 2004 to begin with. “At best, the Indian navy would be acquiring, belatedly, a second-hand ship with a limited lifespan by paying significantly more than what it would have paid for a new ship,” wrote the auditing agency. The situation has caused even more voices within the Indian political and military establishment to call for weaning themselves from Russia as their major source for weapons buys and “diversifying the supplier base.” India, it seems, is tired of being the entity that is paying out on what is becoming the largest cash for clunkers program in the world.

Having the Indians turn away from Moscow could cause Russian industry to lose a revenue stream that it could never recoup or recover from. So, a sensible person would ask how what was once one of the most capable, scientifically adept and universally feared defense-industrial complexes in history could have fallen so far from its Soviet-era pinnacle. There are a couple of reasons why.

It is a reasonably well-known fact the 1990s saw a freefall in the funding by the Russian government for its military contractors. Many of them could have well gone out of business if Indian and Chinese export orders had not resurrected them in the second half of the decade.

But these producers of final-assembled products like tanks, aeroplanes and air defense systems do not in reality really manufacture much of anything. What they are more than anything else are system integrators. They take thousands of bits and pieces delivered to them by suppliers from all over Russia and put them together like some enormous high-tech, metal, composite and electronic jigsaw puzzle connected by miles of wires and cabling.

While the big name companies and their product lines are still around–Mikoyan and Sukhoi jet fighters, Almaz-Antei surface-to-air missile batteries, Uralvagonzavod main battle tanks and the like–their component supplier base has been slowly dwindling away to nothing. Longtime Russian defense observer Aleksandr Golts wrote recently that the Bulava is a textbook case of this mounting crisis:

The other reason is that for all of the hoopla about how the Putin (and now Medvedev) presidencies would restore the rule of law in Russia, corruption is–by any and all indexes compiled by international monitoring organizations–far worse and more pervasive than it ever was under the “Wild East” that the nation was always accused of having degenerated into under former president Boris Yeltsin.

The defense sector is by no means immune from the damage done by this ever-increasing and under-the-table criminality. On 6 August Russian news outlets reported that between 2006-2007 four MiG-31 Foxhound airframes had been mysteriously sold off to a Russian dummy corporation for 153 roubles (slightly less than $5) each. The aircraft were sold “empty”–that is, without engines, avionics, weapon systems, etc.–but still weighing around 45,000 pounds with all of those items removed. Apparently, the problems with vanishing supplier base being unable to deliver components on time left these hollow air frames laying around for too long–and too great a temptation for Russia’s criminal and government structures (which are sometimes both one in the same) to pass up.

The MiGs were undoubtedly turned into scrap, as the weight of the steel, aluminum and titanium alloys in each air frame on the second-hand metals market has a value of about $3.7 million. (If you have been to Europe recently and purchased a packet of razor blades you may own a piece of one of these MiG-31s.) Not only were the MiG-31s officially sold for some criminally low and infinitesimal percentage of their real value, but the company that purchased them, Metalsnab, also has no legal licensed authority to deal in either the purchase, sale or cannibalizing of any military hardware.

The selling off of aircraft for pennies of their true scrap value and then having the buyer and seller split the profits when they are sold on the underground metals market “was a common practice in the 1990s,” said one former Russian defense industry engineer that spoke to me. The difference between then and now is that these 1990s scams usually involved older aircraft from air force inventory that were nearing the end of their useful service life. These four MiG-31s were unfinished, yet-unflown air frames that were literally stolen from the manufacturing stock of the Sokol aircraft plant in Nizhni-Novogorod.

The perpetrators that walked away with a mountain of cash for selling off half-finished fighter jets (that were brand-new and anything but clunkers) must be patting themselves on the back not only for their ingenuity, but also because it is unlikely they will ever be held accountable. In the “new, law-abiding” Russia the rule is not to arrest those who are truly culpable, but instead to engage in the age-old practice of iskats vinovatikh (find someone to blame).

No Russian state commission has been formed that would assess what ails the defense industry and how to arrest the deterioration of the nation’s network of thousands of component manufacturers, which would be the logical step of a responsible government. Instead PM Vladimir Putin’s alma mater, the Federal Security Service (FSB), is out looking for the saboteurs that “purposely supplied and installed defective parts” into the Bulava missile that failed the last test. Some Russian version of the Claude Rains character from the film Casablanca is literally at this moment “rounding up the usual suspects.” The only difference is that his modern-day Russian counterpart does not realize this is a very carefully calculated game being played by forces from above and he (or she) believes these “saboteurs” actually exist.

Meanwhile, missiles that will not perform properly, naval vessels that cannot complete their refitting, aircraft with no systems installed on-board–these and a thousand other stalled or failed programs are giving the Russian defense sector an undeserved reputation for not being able to design high-quality or reliable products.

The problem is the gang of former KGB cronies and other siloviki in power in the Kremlin. These Russian leaders continue to recite a well-worn mantra about Russia still deserving the label of a “great power,” as if relentless repetition of this party line would somehow relieve what Golts and others have called the “chronic inferiority complex” of Putin and President Dmitri Medvedev.

However, until they see fit to fund military industry at levels commensurate with that status Russian weapon systems are going to be increasingly seen as costly, half-baked clunkers. And, unlike in the U.S. plan for stimulating auto industry, governments around the world are not going to be willing hand over cash in exchange for them. They are instead going to start looking elsewhere for their tanks, jet fighters, missiles and battle cruisers.

Reuben F. Johnson is a frequent contributor to THE WEEKLY STANDARD Online.