By Thomas Grove
NIZHNIY TAGIL, Russia--The Russian military has shown off its
new fighting power during its airstrikes in Syria, releasing slick
videos of cruise-missile launches and satellite-guided bombs
hitting their targets.
But at the same time, parts of the military-industrial complex
at home are faltering. Russia's economy has been hit hard by
plummeting oil prices and Western sanctions over Ukraine, and some
of its biggest arms makers fear dwindling government support.
The Armata tank, produced in a town in the Urals, is a case in
point. The next-generation tank--designed to beat anything the
North Atlantic Treaty Organization has on the battlefield--is
considered a centerpiece of Russia's $300 billion plan to rearm its
military by 2020.
Russian President Vladimir Putin visited the factory in 2012 and
again this week to give it a personal endorsement. Last year,
however, the Armata became an object of rare public criticism as it
ran behind schedule and over budget. Now the military is slashing
its initial orders.
"The government can't pay for everything. These are new times,
because of the fall in oil prices," military analyst Alexander
Golts said.
Russia has already deployed one of its top air-defense systems
at its base in Syria in response to Turkey's downing of a Russian
jet on the Syrian border this week, which underscored the limits of
its forces in the Middle East, military experts said.
Russia's military has undergone painful restructuring in its
fighting forces to move away from a conscript army toward
professional, contract-based service. But the defense industry is
still plagued by Soviet-era problems of inefficiency and
corruption, Mr. Golts said, leaving in doubt its capacity for mass
producing some of its most powerful weapons.
"Unfortunately, the Russian defense industry has not passed
though the same severe reforms as the armed forces, which is why
the Russian arms industry looks like a parody of the Soviet
military-industrial complex," he said.
Russia is eager to play up large-scale plans. This month, state
television--supposedly inadvertently--leaked military plans to
create a submarine that could launch a nuclear torpedo that would
irradiate an enemy's shores.
But some of the more traditional programs have fallen behind
schedule.
This year, Deputy Defense Minister Yuri Borisov said the Russian
military was reducing its first purchases of the newly designed
fifth-generation T-50 jet fighter to around a dozen. A person close
to the defense ministry said the initial order was for as many as
100.
The navy is expecting at least eight next-generation Borei
nuclear submarines to be produced by 2020, but Andrey Frolov, an
analyst at Moscow-based defense think tank CAST, said it is likely
only six would be completed by the deadline.
While Mr. Putin has publicly protected the armed forces from
budget cuts, defense industry officials say firms have been asked
privately to make voluntary cuts in expenditures.
That has raised questions about the industry's ability to
fulfill 2015 procurement orders.
"For the first half of the year, Russia's arms industries only
fulfilled 38% of their contracts," Mr. Borisov said in July, adding
that state companies that failed on their contracts would be
punished. Even Kalashnikov, maker of Russia's noted assault rifles,
had fallen behind and was in arrears of $78 million to the
ministry, Interfax quoted him as saying.
The Russian technology on display in Syria also has its
limitations. The defense ministry has defended the accuracy of its
airstrikes, but it has mostly been dropping old-fashioned bombs,
according to the International Institute for Strategic Studies.
Russia's financial crisis, along with the devaluation of the
ruble, has hit its spending power. Ahead of the crisis last year,
Russian military spending was ranked as the third-highest in the
world in dollar terms. Now, expenditures rank seventh or eighth
globally, CAST says.
The flaws of the Armata tank program were painfully on display
when one of the units intended for Moscow's annual military parade
on Red Square on May 9 broke down during a rehearsal.
The tank's producer Uralvagonzavod, among the companies on the
U.S. and European sanctions list, is also facing difficulties. The
factory, which owes around 87 billion rubles--more than $1
billion--has been called to court by its creditors, including Alfa
Bank, one of Russia's largest privately held banks.
A court order this year to seize more than $7 million in UVZ
bank accounts was later lifted. The company's management says it
has obtained a government guarantee to help refinance its debt.
Those difficulties have translated to slower output and Nizhniy
Tagil, where UVZ's headquarters are, is feeling the squeeze.
In 1941, the main factory pumped out more than 1,000 T-34 tanks
a month for the war effort, making it at the time the biggest
producer of tanks in the world. During the Cold War, UVZ produced
the T-44 and T-62, both formidable battle tanks.
While the factory's workers wait for serial production of the
Armata to begin, they are being kept busy with a large contract to
modernize Russia's T-72 tanks. Even so, frustration is
mounting.
Walking out of the UVZ factory after a seven-hour shift, Yevgeny
Prodany, 28 years old, said business is slowing because of the U.S.
sanctions. "No one wants to see a strong Russia that is going to
defend its interests," he said. "The U.S. wants to keep Russia on
its knees and it needs sanctions to do it."
Write to Thomas Grove at thomas.grove@wsj.com
(END) Dow Jones Newswires
November 26, 2015 19:37 ET (00:37 GMT)
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