Russian defence industry revolt
Russian shipyards refuse to build submarines for the price offered by the Defence Ministry.
While both Russian missile producers and the aircraft constructors finally have agreed to the terms offered by the ministry, the shipbuilding industry still refuse to accept the ministry’s budget conditions. The main reason is the major costs and unpredictability linked with the construction of submarines.
According to RIA Novosti, the budget offered by the ministry is “tens of billions of rubles” lower than the demand of the United Shipbuilding Corporation.
However, it took quite some time for the Defence Ministry to agree also with the other producers of military hardware. The United Aircraft Construction Corporation long refused to complete the construction of eleven YAK-130 fighter jets to the price offered by the ministry. The price offered did not correspond with the costs related to the construction of the aircrafts, a source close to the industry told newspaper Kommersant. Negotiations were tough also with the Moscow Institute of Heat Energy, the state company which is responsible for the construction of the Bulava missile, the highly advanced weaponry designed for the fourth generation Russian strategic subs, Newsru.com reports.
Read also: Background on Bulava missile tests
The situation in the shipbuilding industry still differs from the other military sectors. According to a source from the Russian military-industrial complex, the Ministry of Defence had to cash out 50 billion RUB for the first Graney-class (Yasen) attack submarine, the “Severodvinsk” and the second vessel of the class, the “Kazan”, will become far more expensive, as much as 110 billion RUB. That is more than twice the price of the strategic submarines of the Borey class, the source told Izvestia. The Russian Defence Ministry wants a total of up to ten Graney-class subs to be build by 2020. That will alone account for five percent of the total defence budget in the period.
Read also:More than 10 new attack submarines
The Sevmash yard in Severodvinsk, which is responsible for the construction of the new submarines, argues that it can not produce the vessels for the price offered by the ministry. A representative of the United Shipbuilding Corporation in August told newspaper Vedomosti that both the Sevmash yard and the Zvezdochka yards, as well as the Admiralty yard in Sankt Petersburg, were on the verge of collapse following insufficient funding from the defence authorities. If the ministry does not take the measures needed, the yards will not be able to pay their workers and the construction of 13 major projects together worth up to 40 billion RUB will be stalled, the source said.
The defence ministry however insists that both Sevmash, Zvezdochka and the other yards reduce costs and step up efficiency. If not, consequences will follow, newly appointed Deputy Defence Minister Aleksandr Sukhorukov said in a recent press conference. He confirms that Nikolai Kalistratov was fired from his post as leader of Sevmash in Severodvinsk because of the yard’s inability to complete construction works in line with the ministry requirements. Also other leaders of military plants have been fired for the same reason, Nezavisimaya Gazeta reports.
Read also: Sevmash director to resign
In that same press conference, the new top defence official also outlined major reforms in the Russian military-industrial complex. According to Sukhorukov, a total of three trillion RUB will be spent until 2020 on the modernization of the defence industry. That will make the Russian Armed Forces able to replace outdated weaponry with new top modern equipment. By year 2015, the Army and the Fleet will have replaced 30 percent of their current weaponry with new equipment. By 2020, the figure will rise to 60-70 percent, Rossiiskaya Gazeta reports. In addition, new requirements on quality and efficiency will be introduced.
The major defence spending has triggered major controversy in domestic Russian politics. As reported by BarentsObserver, the military investments were one of the official reasons why Sergei Kudrin eventually had to leave his post as Russian finance minister. Kudrin criticized President Medvedev Medvedev for his high focus on military investments. Medvedev responded that “Russia will always spend a lot of money on its Armed Forces” and subsequently dismissed the experienced minister.
Read also: Ex-Finance Minister Kudrin says defence spending overextended
