Restructuring the defence industry and arms production in Russia

Europe - Asia Studies

Volumn 52, Issue 5, 2000, Pages 897-914

  Sánchez Andrés, Antonio ^a  

^a UNIVERSITY OF VALENCIA   (Spain)

Author keywords

[No Author keywords available]

Indexed keywords

HIGH TECHNOLOGY INDUSTRY; INDUSTRIAL STRUCTURE; REFORM PROCESS; STRUCTURAL CHANGE;

RUSSIAN FEDERATION;

EID: 0033944563     PISSN: 09668136     EISSN: None     Source Type: Journal    
DOI: 10.1080/713663089     Document Type: Article

References (101)

1. Postanovlenie pravitel'stvo RF 'O perechne predpriyatii i organizatsii oboronnogo kompleksa, privatizatsiya kotorykh zapreshchena', no. 802, 12 July 1996.
2. Antonio Sánchez-Andrés, 'Privatisation, Decentralisation and Production Adjustment in the Russian Defence Industry', Europe-Asia Studies, 50, 2, 1998, p. 245.
3. I. Labrushenkova & A. Voyakina, 'Institutsional'nye preobrazovaniya v oboronnom komplekse', Voprosy ekonomiki i konversii, 1996, 1, p. 58.
4. Civil Code of the Russian Federation, art. 113 and 115 and Postanovlenie pravitel'stva RF 'O poryadke planirovaniya i finansirovaniya deyatel'nosti kazennykh zavodov (kazennykh fabrik, kazennykh khozyaistv)', no. 1138, 6 October 1994.
5. Note that this number of companies approximately coincides with the GKOP estimate of the future number of state-owned organisations, set out in Table 1. See Ekspert, 1996, 20, p. 33 and Rasporyazhenie pravitel'stva RF, no. 125-r, 28 January 1997.
6. This distinction in the type of scientific centres partially reproduces the traditional difference in the field of scientific activities between NPO and Nil (or KB). See Marianna Afanasieva & Marie L. Couder, 'Restructuring of R&D Organisations and the Defence Industry in the Russian Federation', Journal of Applied Management Studies, 7, 1, 1998, pp. 36-37.
7. See 'Gosudarstvennye nauchnye tsentry oboronnogo kompleksa', Konversiya, 1995, 12, pp. 11-13; Yu. Zhbanov, 'Regional'nye aspekty konversii v Rossiiskoi Federatsii', Konversiya, 1996, 1, p. 3 and NITs PEU, 'Deistvuyushchaya struktura oboronno-promyshlennogo kompleksa Rossii'. http://www.vpk.ru:8082/www-vpk/vit/stat2.htm. January 1998.
8. See 'Gosudarstvennye nauchnye tsentry oboronnogo kompleksa', Konversiya, 1995, 12, pp. 11-13; Yu. Zhbanov, 'Regional'nye aspekty konversii v Rossiiskoi Federatsii', Konversiya, 1996, 1, p. 3 and NITs PEU, 'Deistvuyushchaya struktura oboronno-promyshlennogo kompleksa Rossii'. http://www.vpk.ru:8082/www-vpk/vit/stat2.htm. January 1998.
9. See 'Gosudarstvennye nauchnye tsentry oboronnogo kompleksa', Konversiya, 1995, 12, pp. 11-13; Yu. Zhbanov, 'Regional'nye aspekty konversii v Rossiiskoi Federatsii', Konversiya, 1996, 1, p. 3 and NITs PEU, 'Deistvuyushchaya struktura oboronno-promyshlennogo kompleksa Rossii'. http://www.vpk.ru:8082/www-vpk/vit/stat2.htm. January 1998.
10. Antonio Sánchez-Andrés, 'The Transformation of the Russian Defence Industry', Europe-Asia Studies, 47, 8, 1995, pp. 1272-1274; and Julian Cooper, 'The Future Role of the Russian Defence Industry', in Roy Allison & Christoph Bluth (eds), Security Dilemmas in Russia and Eurasia (London, 1998), pp. 107-110.
11. Antonio Sánchez-Andrés, 'The Transformation of the Russian Defence Industry', Europe-Asia Studies, 47, 8, 1995, pp. 1272-1274; and Julian Cooper, 'The Future Role of the Russian Defence Industry', in Roy Allison & Christoph Bluth (eds), Security Dilemmas in Russia and Eurasia (London, 1998), pp. 107-110.
12. E. Lensky & V. Tsvetkov, Finansovo-promyshlennye gruppy: istoriya sozdaniya, mezhdunarodnyi opyt, rossiiskaya model' (Moscow, 1997), pp. 157-182; and V. Dementev, 'Finansovo-promyshlennye gruppy v rossiiskoi ekonomike. Tema-1', Rossiikii ekonomicheskii zhurnal, 1998, 5, pp. 82-83.
13. E. Lensky & V. Tsvetkov, Finansovo-promyshlennye gruppy: istoriya sozdaniya, mezhdunarodnyi opyt, rossiiskaya model' (Moscow, 1997), pp. 157-182; and V. Dementev, 'Finansovo-promyshlennye gruppy v rossiiskoi ekonomike. Tema-1', Rossiikii ekonomicheskii zhurnal, 1998, 5, pp. 82-83.
14. Finansovye izvestiya, 23 July 1998, p. 2.
15. Postanovlenie pravitel'stva RF 'O kontseptsii restrukturizatsii oboronno-promyshlennogo kompleksa Rossiiskoi Federatsii', n° 1057, 20 August 1997. See httpV/www.vpk.ru:8082/www-vpk/vpk/ restr.htm. January 1998.
16. This type of programme assumes the traditional hypothesis that the greater part of domestic arms manufacture costs should be covered by domestic demand while exports will be a complementary element reducing the total cost. On these matters see Kelvin P. O'Prey, The Arms Export Challenge. Cooperative Approaches to Export Management and Defense Conversion (Washington, DC, 1995), p. 5.
17. To this end, the statements of Urinson, the Minister of Economic Affairs, are illustrative, as he does not acknowledge the defence industry to be an integrated complex, at the same time as underlining the need to apply economic criteria to the sector. See Russkii telegraf, 20 March 1998, p. 4.
18. Nezavisimaya gazeta, 26 December 1997, p. 2.
19. Krasnaya zvezda, 17 January 1998, p. 3.
20. Sharon Leiter, Prospect for Russian Military R&D (Santa Monica, 1996), p. 69.
21. Krasnaya zvezda, 5 November 1997, p. 1.
22. Delovoi mir, 11-15 December 1997, p. 7.
23. It must not be forgotten that manufacturers have traditionally been a very important agent in the defining of priorities, as well as having been able to impose their own criteria on the armed forces. See Peter Almquist, 'Soviet Military Acquisition: From a Sellers's Market to a Buyers'?', in Susan L. Clark (ed.), Soviet Military Power in a Changing World (Boulder, 1991), pp. 133-151.
24. Nezavisimoe voennoe obozrenie, 1997, 40, p. 6 and 1998, 19, p. 4.
25. Nezavisimoe voennoe obozrenie, 1997, 40, p. 6 and 1998, 19, p. 4.
26. These phenomena are connected to the defence industry's worsening economic conditions, especially the growing obsolescence due to the lack of investment, the ageing workforce and the loss of workers, particularly those most highly qualified.
27. On different aspects of the fully state-owned companies see E. Torkanovsky, 'Gosudarstvennoe predprinimatel'stvo: organizatsionno-pravovye formy', Voprosy ekonomiki, 1995, 12, p. 78; and A. Akhmeduev, 'Kazennye predpriyatiya: funktsii, kriterii i mekhanism khozyaistvovaniya', Ekonomist, 1998, 9, pp. 79-83.
28. On different aspects of the fully state-owned companies see E. Torkanovsky, 'Gosudarstvennoe predprinimatel'stvo: organizatsionno-pravovye formy', Voprosy ekonomiki, 1995, 12, p. 78; and A. Akhmeduev, 'Kazennye predpriyatiya: funktsii, kriterii i mekhanism khozyaistvovaniya', Ekonomist, 1998, 9, pp. 79-83.
29. Inzhenernaya gazeta, 1997, 72, p. 1.
30. Nezavisimoe voennoe obozrenie, 1998, 28, pp. 1 and 6.
31. Nezavisimoe voennoe obozrenie, 1998, 35, p. 1.
32. Nezavisimaya gazeta, 4 December 1997, p. 1.
33. Interview with Aleksandr Kabanov, Ministry of Economic Affairs, Moscow, 12 May 1999.
34. Segodnya, 28 August 1997, p. 6.
35. Postanovlenie pravitel'stva RF 'Ob utverzhdenii ustavov federal'nykh kazennykh predpriyatii Voskresenskii gosudarstvennyi kazennyi agregatnyi zavod, Verkhnesaldinskii gosudarstvennyi kazennyi zavod khimicheskikh emkostei i Girsovskii gosudarstvennyi kazennyi zavod pirotekhnicheskikh sredstv', no. 642, 26 May 1997.
36. Interview with Viktor Rassadin, Economic Forecasting Institute, Moscow, 6 May 1999.
37. Additionally, the sale of blocks of state-owned shares in 11 previously privatised defence companies was anticipated. See Kommersant', 1997, 31, p. 43.
38. Postanovlenie Pravitel'stva RF 'O naznachenii predstavitelei gosudarstva v otkrytykh aktsionernykh obshchestvakh oboronno-promyshlennogo kompleksa', no. 388, 7 April 1998.
39. Nezavisimaya gazeta, 26 December 1997, p. 2.
40. Originally there were 480 organisations, but two of these were found in the list of limited companies in which the state had representatives in the share holders' assemblies. To be specific, these two organisations were NPO Krasnaya zarya (St Petersburg) (belonging to the communications sub-sector) and Khabarovskii sudostroitel'nyi zavod im. 60letiya SSSR (Khabarovsk) (in the shipbuilding sub-sector).
41. Postanovlenie pravitel'stva RF 'O perechne aktsionernykh obshchestv, proizvodyashchikh produktsiyu (tovary, uslugi), imeyushchuyu strategicheskoe znachenie dlya obespecheniya natsional'noi bezopasnosti gosudarstva, zakreplennye v federaln'noi sobstvennosti aktsii kotorykh ne podlezhat dosrochnoi prodazhe', no. 784, 17 July 1998; and Postanovlenie pravitel'stva RF 'O dopolnenii perechnya aktsionernykh obshchestv, proizvodyashchikh produktsiyu (tovary, uslugi), imeyushchuyu strategicheskoe znachenie dlya obespecheniya natsional'noi bezopasnosti gosudarstva, zakreplennye v federaln'noi sobstvennosti aktsii kotorykh ne podlezhat dosrochnoi prodazhe', no. 246, 27 February 1999.
42. Postanovlenie pravitel'stva RF 'O perechne aktsionernykh obshchestv, sozdannykh v protsesse privatizatsii, proizvodyashchikh produktsiyu (tovary, uslugi), imeyushchuyu strategicheskoe znachenie dlya obespecheniya natsional'noi bezopasnosti gosudarstva strany, zakreplennye v federaln'noi sobstvennosti aktsii kotorykh ne podlezhat dosrochnoi prodazhe', no. 949, 18 September 1995.
43. Specifically, out of the 194, 167 organisations coincide, although in certain cases the state-owned block of shares is found to be smaller. Out of the 27 organisations which are not now considered to be strategic, several are joined together in associations controlled by the state and this questions the reductions set out in these last lists. On the other hand, it is worth pointing out that there were 15 organisations that appeared in the 1998 and 1995 lists, but not in the one where there were explicit state representatives. Lastly, in the 1998 list, there are three cases of organisations considered as strategic for the first time, as well as associations.
44. Postanovlenie pravitel'stva RF 'O merakh po vypolneniyu Ukaza Prezidenta Rossiiskoi Federatsii ot 20 yanvarya 1998g', no. 54; 'O realizatsii gosudarstvennoi politiki v oblasti raketno-kosmicheskoi promyshlennosti', n°440, 12 May 1998.
45. It must be pointed out that in the official list there are two sub-lists, the first corresponding to the state-owned organisations (in total 38) and the second to the privatised organisations (in total 21). Nevertheless, out of the state-owned organisations, one, the NPO Orion (Krasnoznamensk, Moscow oblast'), groups together six companies, while the NPTs im. Pilyugina (Moscow) is made up of two centres from the list of organisations not suitable for privatisation of July 1996. Thus the number 65 is reached.
46. Nezavisimaya gazeta, 20 December 1997, p. 1.
47. Kommersant', 1998, 39, pp. 28-29.
48. Segodnya, 27 October 1998, p. 2.
49. Krasnaya zvezda, 15 October 1997, p. 3.
50. Kommersant'-Daily, 29 April 1999, p. 7.
51. Inzhenernaya gazeta, 1999, 16, p. 1.
52. Russkii telegraf, 3 April 1998, p. 4.
53. Postanovlenie Pravitel'stva RF 'Ob obrazovanii Mezhvedomstvennoi komissii po optimizatsii gosudarstvennogo oboronnogo zakaza', no. 614, 19 June 1998.
54. Ukaz prezidenta RF 'O merakh po realizatsii promyshlennoi politiki pri privatizatsii gosudarstvennykh predpriayatii', no. 1392, 16 November 1992, prilozhenie no. 1, 'Vremennoe polozhenie o kholdingovykh kompaniyakh, sozdavaemykh pri preobrazovanii gosudarstvennykh predpriyatii v aktsionernye obshchestva'; Ukaz prezidenta RF 'O sozdanii finansovo-promyshlennykh grupp v Rossiiskoi Federalsii', no. 2096, 5 December 1993; Polozhenie o finansovo-promyshlennykh gruppakh i poryadke ikh sozdaniya, and Federal'nyi zakon RF 'O finansovo-promyshlennykh gruppakh', no. 190-FZ, 30 November 1995; and S. Tolkachev, 'Konkurentnye strategii rossiiskikh oboronnykh kompanii', Rossiiskii ekonomicheskii zhurnal, 1998, 1, p. 53.
55. Krasnaya zvezda, 13 September 1997, pp. 3 and 5.
56. Kommersant', 1997, 31, p. 43; and Krasnaya zvezda, 13 September 1997, p. 3.
57. Kommersant', 1997, 31, p. 43; and Krasnaya zvezda, 13 September 1997, p. 3.
58. Segodnya, 13 January 1998, p. 5; and Nezavisimoe voennoe obozrenie, 1998, 19, p. 6.
59. Segodnya, 13 January 1998, p. 5; and Nezavisimoe voennoe obozrenie, 1998, 19, p. 6.
60. At the beginning of 1998 there was a particularly interesting case when a new director of the group was appointed by the Ministry of Economic Affairs, thereby removing one of the traditional defence industry directors from the head of the association. This is to say that the Ministry of Economic Affairs laid great importance on the renewal of strategic posts within the most relevant organisations during the restructuring. In this way, they hoped to get rid of the burdens and prejudices of the old directors. On the conception of the restructuring of the group from the point of view of the new director of the Sukhoi group see, Russkii telegraf, 31 March 1998, p. 7.
61. Russkii telegraf, 8 April 1998, p. 7.
62. Izvestiya, 25 July 1997, p. 5.
63. It did not include, for example, the Nizhegorodskii aviatsionnyi zavod Sokol (Nizhnii Novgorod), which manufactures several classes of MIG aircraft. See Inzhenernaya gazeta, 1994, 121, p. 2.
64. The helicopter design centre VNTK im. Kamova, for example. See Kommersant '-Daily, 16 April 1996, p. 2; and Nezavisimoe voennoe obozrenie, 1997, 13, p. 6.
65. The helicopter design centre VNTK im. Kamova, for example. See Kommersant '-Daily, 16 April 1996, p. 2; and Nezavisimoe voennoe obozrenie, 1997, 13, p. 6.
66. Ekspert, 1998, 12, pp. 30-32.
67. In particular, Eksperimental'nyi zavod im. Myasishcheva (Zhukovskii, Moscow oblast') and Arsen'evskoe aksionernoe ob''edinenie Progress (Arsen'ev, Primorskii krai). See Kommersant'-Daily, 25 June 1997, p. 10; Inzhenernaya gazeta, 1997, 35, p. 2; and B. Mil'ner, 'Krupnye korporatsii - osnova pod''ema i uskorennogo razvitiya ekonomiki', Voprosy ekonomiki, 1998, 9, p. 72.
68. In particular, Eksperimental'nyi zavod im. Myasishcheva (Zhukovskii, Moscow oblast') and Arsen'evskoe aksionernoe ob''edinenie Progress (Arsen'ev, Primorskii krai). See Kommersant'-Daily, 25 June 1997, p. 10; Inzhenernaya gazeta, 1997, 35, p. 2; and B. Mil'ner, 'Krupnye korporatsii - osnova pod''ema i uskorennogo razvitiya ekonomiki', Voprosy ekonomiki, 1998, 9, p. 72.
69. In particular, Eksperimental'nyi zavod im. Myasishcheva (Zhukovskii, Moscow oblast') and Arsen'evskoe aksionernoe ob''edinenie Progress (Arsen'ev, Primorskii krai). See Kommersant'-Daily, 25 June 1997, p. 10; Inzhenernaya gazeta, 1997, 35, p. 2; and B. Mil'ner, 'Krupnye korporatsii - osnova pod''ema i uskorennogo razvitiya ekonomiki', Voprosy ekonomiki, 1998, 9, p. 72.
70. Rasporazhenie pravitel'stva RF, no. 972-r, 10 July 1997.
71. Kazanskoe aviatsionnoe PO im. S.P. Gorbunova (Kazan'), whose activities have been reduced to the manufacture of class Tu-160 and Tu-22 M bombers, has not, at the moment, been included in this group. See Military Parade, January-February 1994, p. 44.
72. RIKA, 1992, 13, pp. 2-4.
73. Ukaz prezidenta 'O dal'neishem razvitii integrirovannykh aviastroitel'nykh kompleksov', no. 1453, 2 December 1998.
74. Russkii telegraf, 4 June 1998, p. 5.
75. Rossiiskaya gazeta, 4 January 1998, p. 12; and Ekspert, 1998, 35, p. 43.
76. Rossiiskaya gazeta, 4 January 1998, p. 12; and Ekspert, 1998, 35, p. 43.
77. Inzhenernaya gazeta, 1998, 23-24, p. 1.
78. See Postanovlenie pravitel'stva Rossiiskoi Federatsii 'O sozdanii otkrytogo aktsionernogo obshchestva Korporatsiya Aerokosmicheskoe oborudovanie', no. 1347, 14 November 1998.
79. Vechernyaya Moskva, 20 April 1999, p. 4.
80. Krasnaya zvezda, 26 April 1997, p. 3; and Voennye znaniya, 1997, September, p. 22.
81. Krasnaya zvezda, 26 April 1997, p. 3; and Voennye znaniya, 1997, September, p. 22.
82. Russkii telegraf, 19 March 1998, p. 1.
83. Postanovlenie pravitel'stva RF 'O merakh po realizatsii Ukaza Prezidenta Rossiiskoi Federatsii ot 23 Iyulya 1997 n°764 'O dopolnitel'nykh merakh po povysheniyu effektivnosti realizatsii prezidentskoi programmy 'Razvitie elektronnoi tekhniki v Rossii' " ', no. 1583, 18 December 1997.
84. Russkii telegraf, 21 August 1998, p. 4.
85. Russkii telegraf, 22 April 1998, p. 5.
86. This is the case with the three state-owned organisations Novosibirskii zavod radiodetalei Oksid, Zavod poluprovodnikovykh priborov and NPP Vostok. See Inzhenernaya gazeta, 1992, 91, p. 2; Krasnaya zvezda, 21 August 1993, p. 4; and Delovaya sibir', 1996, 33, p. 6.
87. This is the case with the three state-owned organisations Novosibirskii zavod radiodetalei Oksid, Zavod poluprovodnikovykh priborov and NPP Vostok. See Inzhenernaya gazeta, 1992, 91, p. 2; Krasnaya zvezda, 21 August 1993, p. 4; and Delovaya sibir', 1996, 33, p. 6.
88. This is the case with the three state-owned organisations Novosibirskii zavod radiodetalei Oksid, Zavod poluprovodnikovykh priborov and NPP Vostok. See Inzhenernaya gazeta, 1992, 91, p. 2; Krasnaya zvezda, 21 August 1993, p. 4; and Delovaya sibir', 1996, 33, p. 6.
89. Nezavisimoe voennoe obozrenie, 1997, 34, p. 6.
90. From among some cases of state-owned plants we can note Zavod Kommunar (Kemerovo) and Biiskoe PO Sibpribormash (Biisk, Altai). See A. I. Lyubin, 'Potentsial promyshlennosti proizvodstva boepripasov i spetskhimii', Voprosy ekonomiki i konversii, 1995, 1, p. 65.
91. In 1996, for example, a special federal programme for the sector, 'Spetskhimiya', was approved but no financing was found for it. See Postanovlenie pravitel'stva RF 'O Federal'noi tselevoi programme razrabotki i primeneniya tekhnologii dvoinogo naznacheniya "Spetskhimiya" ', no. 1012, 26 August 1996, and Rossiiskie vesti, 23 October 1996, p. 2.
92. Vremya, 4 February 1999, p. 4; and Nezavisimaya gazeta, 5 February 1999, p. 2.
93. Vremya, 4 February 1999, p. 4; and Nezavisimaya gazeta, 5 February 1999, p. 2.
94. Tolkachev, pp. 52-53.
95. Delovye lyudi, 1999, 97, pp. 29-30.
96. In 1992 20 tanks were ordered, and although there was a rise in subsequent demand it was not a significant one. In 1995, for example, 60-80 were ordered and in 1996, only 58. See Steven Zaloga, 'T-90: The Standard of Russian expediency', Jane's Intelligence Review, 9, 2, 1997, pp. 58-64.
97. The decision was found to be particularly justifiable due to the arguable results obtained by the T-80 produced by this company during the Chechen war, as well as to the technical problems encountered in manufacture. See Stefan Marx, 'Advanced T-80 Designs', Jane's Intelligence Review, 7, 9, 1995, pp. 397-400; and Delovaya sibir', 1996 1, p. 10.
98. The decision was found to be particularly justifiable due to the arguable results obtained by the T-80 produced by this company during the Chechen war, as well as to the technical problems encountered in manufacture. See Stefan Marx, 'Advanced T-80 Designs', Jane's Intelligence Review, 7, 9, 1995, pp. 397-400; and Delovaya sibir', 1996 1, p. 10.
99. Nezavisimoe voennoe obozrenie, 1998, 47, p. 6.
100. Sticking to the criterion of concentrating military orders, support for this centre would exclude the organisations specialised in submarine manufacture situated in Nizhnii Novgorod from the defence industry.
101. In the building of this class of ship, the association could act as coordinator of the other two military shipyards in St Petersburg, Baltiiskii zavod and Severnaya verf', which would be excluded from the defence industry. See Delovoi mir, 18 November 1997, p. 3.