Phoenix from the Ashes? : Russia s defence industrial complex and its arms exports

Abstract

The continued existence of the Russian defence and arms industry, known as the Oboronnyi Promyshennyi Kompleks (OPK), was called into question following the disintegration of the Soviet Empire in 1991. Industry experts cited the lack of a domestic market, endemic corruption, and excess capacity within the industry as factors underpinning its predicted demise. The most telling factor was the sudden removal of considerable government subsidies and high defence industry wages that had traditionally buttressed the industry's economic viability and encouraged the cream of Russia's workers into the sector. It was a crippling blow. However, the industry's export customers in China, India and Iran during those early years became the OPK's saving grace. Their orders introduced hard currency back into the industry and went a long way to preventing the forecasted OPK collapse. Although pessimistic predictions continued to plague the OPK throughout the 1990s, the valuable export dollars provided the OPK the breathing space it needed to claw back its competitive advantage as an arms producer. That revival has been further underpinned by a new political commitment, various research and development initiatives, and the restoration of defence industry as a tool of Russian foreign policy. In order to gauge the future prospects for the OPK, it is necessary to examine the domestic and external drivers that have either underwritten its success to date or are still required to ensure its long term endurance. Domestically, continued success demands a closer collaboration between the OPK and the Russian armed forces. It also requires serious efforts to curb endemic corruption, further consolidation of the defence industry and continued development of the Russian domestic market for arms. Externally, the strength of the state arms exporter, Rosoboronexport, global market diversification and joint military ventures with strategic partner countries are essential ingredients for long term OPK success. Cultivating and maintaining the ...