(C) Daily Kos This story was originally published by Daily Kos and is unaltered. . . . . . . . . . . Quick Explainer: Why can't Russia produce new weapon systems? [1] ['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.', 'Backgroundurl Avatar_Large', 'Nickname', 'Joined', 'Created_At', 'Story Count', 'N_Stories', 'Comment Count', 'N_Comments', 'Popular Tags'] Date: 2023-04-14 T-14 Armata tank having suffered a breakdown during a parade rehearsal in May 2015 The T-14 Armata Main Battle Tank in 2014. The 2S35 Koalitsiya-SV self propelled howitzer in 2015. The Su-57 stealth fighter in 2020. These were a new generation of Russian weapon systems that were supposed to propel the Russian Army into a new technological era. Having relied almost exclusively on upgrades to late era Soviet weapon systems, Russia made a major push from the late 00’s to now, intending to introduce new and modern tanks, artillery and fighters that were supposed to be the equal or superior to their NATO counterparts. The Armata Tank was supposed to be a heavily armored tank that addressed the light protection of the T90 and prior Soviet tanks. The Koalitsiya-SV was supposed to be a high mobility howitzer with a conventional artillery range of nearly 40km, instead of the 25km range of prior Soviet weapons. The Koalitsiya was also to have had an arsenal of GPS guided artillery shells. The Su-57 stealth fighter was supposed to be Russia’s first major stealth aircraft, intended to be capable of going toe to toe with the F35 or F22 stealth fighters. This effort uniformly failed. Only 20 T-14 Armata tanks are known to have been completed, none are believed to be in combat shape despite being deployed. Numerous engine problems and deficiencies in its advanced electronics have been reported. Only 12 2S35 Koalitsiya-SV were produced, none are known to have ever seen combat. The GPS shells entered development hell, as did the extended range conventional shells, leaving the artillery system with no useable ammunition. The vehicle itself reportedly suffers from numerous issues with its electronic equipment. Only 21 Su-57 Stealth Fighters were produced, and they similarly have never seen combat. The craft has suffered from various problems with its avionics design and reportedly little money or efforts has been put towards fixing the various known issues. And like the Armata and Koalitsiya, the electronics are unreliable and buggy. While the Armata remains arguably the face of Russian failure to modernize its Army prior to the Russo-Ukrainian War, it is clear that it is not an isolated occurrence. Russia has essentially been unable to mount production of new major weapon systems since the collapse of the Soviet Union. One worthwhile question is—why? To understand why Russia is almost uniquely terrible among developed nations in conducting research and development (R&D), one must look at how the Russian weapons development and procurement systems changed after the collapse of the Soviet Union. The Soviet System of Procurement One good way to understand how the Soviets thought about weapons development is to look at the T64, T72, T80 and T90 Main Battle Tanks (MBT), the backbone of the Soviet and Russian armies. A good way to characterize Soviet procurement was “large orders at low margins.” With the sprawling Soviet Empire’s satellite states military needs, and taking orders from a wide array of Soviet aligned states across the globe, Soviet procurement forced manufacturers to accept low profit margins on a per-unit basis, while making large enough orders to make it worth their while. Additionally, Soviet procurement relied on long production cycles that made incremental improvements on existing models, as opposed to developing entirely new platforms. For example, below are from the left, the T64, T72 and T80 tanks. By way of contrast, here is a T90 tank and a T-14 Armata side by side. From the T64 to the T90, the USSR’s MBTs are all virtually the same size and shape. The T-14 is very different. This is not accidental. The T-64 was the USSR’s first modern MBT. It was considered an innovative and solid design, with good weaponry, optics, armor protection, engine power, and reliability. At a touch under 40 tons, it was a bit smaller than the US manufactured M60 tank (50 tons), but they were roughly comparable. Subsequent version of Soviet tanks (T-72, T-80, T-90) added armor, improved the fire control system (FCS), improved the ammunition, the engine, etc. But the tanks remained approximately the same size and shape. This had huge cost benefits for Soviet production, as the same assembly lines that made the T72 could be switched over without major changes to the T-80, then the T-90, simply by swapping out the components manufactured prior to assembly. This had the benefit of limiting the fixed costs of manufacturing. On the flipside, the downside to this approach was that Soviet Tanks gradually became undersized and under-armored compared to their Western counterparts. The US moved to the 60 ton M1A1 Abrams, a tank that was 20 tons heavier than the T64. Subsequent armor additions and engine improvement kept the speed constant while increasing the tank’s weight to over 70 tons. The Leopard 2 similarly weighs over 70 tons, while the T90M tank weighs only slightly more than 50 tons. Manufacturing the T-14 Armata represented not just a change from manufacturing the T-90 tank. It was changing a system of manufacturing tanks that dated back to 1966 when the T-64 was introduced. Furthermore, changes that Vladimir Putin made to Russian procurement to address budget shortfalls in the early 00’s crippled the Russian arms industry. This made this already difficult transition near-impossible. An End to Research and Development To understand why Putin radically changed how the Russian Army procures weapons, it’s useful to understand the state the Russian Army was in when Putin came to power in 2000. It should also make clear why Putin remains wildly popular among a substantial number of Russians. This is Russian GDP from 1988 to 2023. The Russian economy basically collapsed along with the USSR, declining every year from 1991 to 1999. GDP declined by an astonishing nearly 50%. Funding for the Russian military at this time virtually evaporated. Officers of the Russian Army went unpaid for 6 months in 1992, and payment of salaries became intermittent for years. Equipment went without any updates or upgrades for over a decade, and Russia could barely pay for security for its nuclear arsenal. Simultaneously, as Soviet military bases in its far flung empire were closed down in Warsaw Pact nations like Estonia, Poland, East Germany, Russian military supplies were withdrawn and deposited back in Russia. Russia did not have anywhere near enough military bases to account for all this equipment—many tanks were simply deposited in fields outdoors in Siberia. Smaller military supplies were simply stacked up in warehouses or barracks filled to the brim. Documentation was sparse. The combination of “no pay” and “tons of unaccounted for supplies” was a disastrous combination, as Russian officers (with some justification) felt entitled to pay their bills by taking and selling unused supplies on the black market. Corruption had always been a part of the Soviet Army’s culture, but the 1990s proved to be the time when endemic corruption took firm root in the Russian army’s officer culture. This was the Army that Putin inherited in 2000. Underfunded, corrupt, and too large for the Russian State to afford. Given that background, some of the radical steps that Putin took are more understandable. But the result of his actions was a crippling of Russia’s arms industry. First, Putin cut off all funding to Russian arms manufacturers that were not “self sufficient.” Meaning, any industry that did not turn a profit.' This saved the Russian state considerable money, as importing many goods was far cheaper than continuing to prop up Russian industry that produced inferior goods at higher prices. These companies only stayed in business with Russian support, and withdrawing that support meant bankruptcy. This crippled Russian arms industry in several key areas. Metallurgy—specialized steel alloy production declined by 98%, needed from artillery and tank gun barrels, armor, etc. Russia begin importing for EU based manufacturers. Semiconductors and electronics—needed for just about everything, and Russia began relying on imports from China for bulk low-end equipment, and the EU for higher end semiconductor chips. Range finders and optics—a topic I covered in greater detail here. The effects of this decision was exacerbated by an end to the Soviet-style “mass procurement-low margins” policy. As Poland, East Germany, Czech Republic, Estonia, Lithuania and many other former satellites began procuring from the West, the scale of purchases of Soviet/Russian arms declined precipitously. Many Soviet arms manufacturers were able to cover fixed costs due to the vast quantities of equipment they were able to sell. A major decline in volume meant they needed higher profit margins to stay in business. However, due to the budgetary crisis that Putin faced, Russia never increased the margins that they insisted arms manufacturers accept from the Soviet era. This had 2 important consequences. It was more profitable for Russian arms manufacturers to export arms, than to sell to the Russian government and army. It is very difficult for Russian arms manufacturers to recoup investments, meaning they need to rely on their existing investments for longer periods of time and are very reluctant to put money towards fixed costs. Lastly, Putin essentially axed the budget for Russian research and development. In the US (and most developed nations) the government pays for initial R&D costs at 1 or more companies to produce a prototype. Once a design is selected, the government pays for further improvements and development until a final product design is completed. The US recoups on this investment by purchasing weapons at reduced costs. By contrast, in Russia, the arms developers who choose to submit a bid are on their own for R&D. Any recoupment by that company must rely on profits from subsequent sales of the weapon—which as noted above are very low for Russian Army contracts. Consequences of Putin’s Procurement Reforms Putin’s procurement reforms had several important benefits. Namely, it radically reduced the budgetary shortfalls suffered by the Russian Army—which made the large army that Putin inherited essentially from the USSR sustainable at a budget that the Russian State could afford. This large army allowed Putin to exert greater geopolitical influence than he otherwise could have done. However, the reforms had some huge drawbacks. Russian arms manufacturers were disincentivized from conducting R&D. They have to pay for their own R&D, and any recoupment in highly advanced technology intended only for the Russian Army will take an extremely long time to recoup due to low margins. If a design that’s developed is not chosen for procurement by the Russian army, the R&D costs are a total loss, making development highly risky. Russian arms manufactures were incentivized to focus on older reliable weapons systems Older weapons systems are less likely to be subject to export controls, and foreign purchasers offer higher profit margins. Existing manufacturing lines can be utilized and updated to produce at lower costs with minimal investment—further improving margins Basically, Russian arms industry was highly incentivized to focus on old Soviet designs, and put little to no money towards manufacturing or fixing new weapons systems. Sources at Uralvagonzavod (Russia’s biggest producer of tanks) state that the T-14 does not have it’s own assembly line, due to a lack of investment. Because updating T-72s for export are a more profitable venture, all the production lines at Uralvagonzavod are optimized for the T64 ~ T-90 designs, and no T-14 assembly line exists. As a result, T-14 Armata assembly is essentially “by hand.” this dramatically increases production costs, production time, and makes mass manufacturer impossible. Perhaps not understanding the root of the problem (incentivization), Putin tried to accelerate T-14 Armata production by throwing money at the issue. Putin spent tens of billions of Rubles purchasing equipment for manufacturing the T-14, and boxes upon boxes of equipment were delivered to Uralvagonzavod, but without an assembly line to put the equipment, the efforts were wasted. Even with this state support, it was presumably more profitable for Uralvagonzavod to continue to upgrade T-72s for export than to produce T-14s at low state specified profit margins. Uralvagonzavod factory floor Conclusion In a nutshell, Russia’s procurement problems can be summed up in this way. Russia faced major budget shortfalls in 2000. Putin could either reduce the size and scale of his army to one that better fits the size of the Russian economy, or cut corners elsewhere. Putin chose to basically slash the R&D budget to make ends meet. The procurement system that Putin implemented radically reduced costs, but at the expense of domestic manufacturing of key components Research and development budgets and incetives A draconian regime of low profit margins imposed that perversely incentivized companies to focus on the export market. This left a comparative rump of a Russian Arms industry that was reluctant to invest in anything but old and reliable arms for the export market. As a result, the Russian Army’s attempts to create a new generation of weapons in the 2010s largely failed. Virtually all of the newest Russian weapons (Kalibr Cruise Missile, Kornet ATGM, etc) began their development in the Soviet era, or are simply improvements or changes to existing designs (BMPT Terminator Tank is built on a modified T-72 tank chassis). These issues have been exacerbated by the Russo-Ukrainian War, as Russian industry is largely cut off from its Western suppliers, requiring a reliance on inferior Chinese or Indian goods, or purchasing black market goods at higher costs. It is unsurprising that Russia chooses to replace lost equipment with older and older equipment, than accelerating manufacturing of its newest weapons—it is extremely unlikely that it has the ability to do that, or will be able to do so in the near future. Without significant increases in Russian state investment and a wholesale reform of how Russia procures its weapons, it appears unlikely that Russia will have much success in modernizing its forces. 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