Why Russia Cheers Me Up

If you’re frustrated by what you see happening with the US defense industry, here’s good way to cheer up: read about the state of Russia’s defense industry.

Worked for me anyway.

Stephen J. Blank, a professor at the Strategic Studies Institute of the Army War College, has published a new monograph, entitled: "Rosoboroneksport: Arms Sales and the Structure of Russian Defense Industry".

That’s a nice title, but, I’d would humbly suggest changing it to: "How an Already Dysfunctional, Bankrupt, Corrupt, Doomed Industry Can Get Even Worse (and Play with Nukes, Too!)".

Consider this: there is something like 1,700 defense companies operating in Russia today, all but a handful of which are bankrupt. Most are relics of the Soviet system with no products, no orders and no prospects — yet, somehow in existence anyway.

To reform this bloated, non-productive mess, Vladimir Putin and his favorite henchman — er, Minister of Defense — Sergei Ivanov have a really bright idea: centralize the industry under state control. (After all, when the modern economy fails you, why not take a page from the ever-popular Tsarist textbook of economics?)

Thus, senior members of the Russian government now wear second hats as executives and members of the boards of directors at Russian defense companies. Blank notes: "It is as if [former] Defense Secretary Donald Rumsfeld were a member of Lockheed Martin’s Board of Directors". (Well, on second thought, maybe there are some similarities …)

But, more alarmingly, Blank describes some notable consequences of the crisis in the Russian defense industry. Russian defense firms are forced to survive on the international arms market. Long-time customers China and India, however, are moving away from Russian arms imports. Meanwhile, an anti-US stance in the Kremlin puts no checks on sales to very unsavory customers, to include the Sudan, Venezuela, Iran and Syria.

Even worse, Russia’s defense industry along with the rest of the economy may be headed for an epic crash. Says Blank:

"As history shows, it inevitably leads Russia into strategic competitions that it cannot afford and to economic and political rigor mortis. If this structure continues, can Russia — and the globla community — afford the crash that becomes increasingly thinkable with each more regressive step."

Like I said, it will cheer you up.

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