Russia's Military Industry Forecast 2023-2025

EURASIA PROGRAM

Russia’s

Military Industry Forecast

2023–2025

Pavel Luzin

Russia’s Military Industry Forecast 2023-2025 Pavel Luzin

FOREIGN POLICY RESEARCH INSTITUTE

INTRODUCTION After the start of Russia’s aggression against Ukraine on February 24, 2022, the arms expenditures and military budget of Russia skyrocketed and continue to grow for the foreseeable future. However, the military industry is under threat despite the additional massive financial inflow.

The military industry could not—with few exceptions— increase the production capacity significantly nor solve its other major problems of workforce deficit and annual net losses. Moreover, the Western embargo on the supply of components, industrial equipment, and technologies makes the further development of the Russian military industry doubtful. Even reverse engineering has become an impossible task. However, the Kremlin’s choice in this situation would be in favor of more arms expenditures and extending the practices of the command economy.

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A Russian service member stands in front of a Pantsir anti-aircraft missile system on combat duty in the course of Russia-Ukraine conflict in the Luhansk region, Russian-controlled Ukraine, January 25, 2023. REUTERS/Alexander Ermochenko

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MILITARY BUDGET Since February 24, 2022, Russia’s national defense (ND) budget and national security and law enforcement (NSLE) budget as parts of the federal budget have been skyrocketing compared to the previous decade, as seen in Tables 1 and 2.

The NSLE is assigned to the military activity of Russia only through the Federal Security Service (FSB), the Federal Guard Service (FSO), the Federal National Guard Service (Rosgvardia), the Foreign Intelligence Service (SVR) and the Main Directorate for Special Presidential Programs (GUSP).The last available data on the share of these services in the NSLE budget was about 38% in 2020.1 However, the absolute majority of the additional NSLE spending that has appeared since February 2022 must be related to these services Their share has now exceeded 50% and will not decrease, but it is expected to grow at least until the end of the war.

Even though the budgetary planning for 2024–2025 presumes 4.6 and 4.2 trillion rubles respectively on the ND, and 4.3 trillion rubles for each year respectively on the NSLE, these plans do not consider the unpredictable development of the war itself and the domestic political and economic situation in Russia in general.

Moreover, the increase of the formal number of the Russian armed forces (RAF) to 1.5 million soldiers and officers by 2027 was announced in December 2022, after the law on the federal budget was passed. The current number of the RAF established since January 1, 2023, by the decree of August 2022, is nearly 1.151 million soldiers and officers, 137 thousand higher than it was in 2017–2022.Therefore, even if the increase is mostly on paper because of demographic factors and specifics of the Russian labor market, the budgetary spending on the armed forces after 2023 is on track to be locked in the levels of 2022–2023 or to increase further.

As a result, the military and security budgets are tending to become a permanently growing burden for the Russian economy and society. Moreover, considering that the supply chains of the RAF and military industry still depend on the global market in arms manufacturing and other goods and services such as consumer goods that are purchased by soldiers, officers, industrial employees, and civilian officials, the inevitable devaluation of the ruble makes the maintaining of military expenditures expressed in US dollars much harder if not impossible. The most probable scenario is that the Kremlin will try to increase the military and security budgets in rubles at any cost to maintain the equivalent expressed in US dollars as long as possible.

For comparison, the original law on the federal budget for 2022–2024 was passed in December 2021 and established the following spending, as seen in Tables 3 and Table 4.

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ARMS PROCUREMENT BUDGET AND EXPORT REVENUES The Ministry of Defense (MoD) maintains the most significant part of arms procurements which count as a part of the ND budget in Russia. The security services like FSB and Rosgvardia also conduct their arms procurements, but the amount compared to the MoD may be considered insignificant.

Normally, the share of arms procurements within the ND budget is 50%, and there was no evidence that the proportion has changed significantly since Russia started the full-scale aggression against Ukraine.

There were exceptions in 2016 and 2019 when the Russian government made repayments of the military industry’s bad loans.

budget as it was originally planned for 2023 in December 2021.4 The problem for the Kremlin is that its arms procurement budget has not surpassed yet the levels of 2013–2014. Moreover, instead of systemic work within the state rearmament program for 2018–2027 like it was during the state rearmament program for 2011–2020, the Russian authorities were de facto forced to give up the program in 2022 to focus on restoring the military power that was lost in Ukraine. Also, the development of the state rearmament program for 2024–2033 has to be finished in 2023, but it is not clear whether or not this work can be completed within the circumstances of war. Because the Russian military industry works within the restored command administrative environment rather than within the market environment, it does not have enough flexibility and efficiency.

Therefore, Russia’s arms procurements in rubles as part of the national defense budget almost permanently increased for many years. However, in the US dollars, the Russian arms procurements demonstrate contradictory dynamics.

The cost-plus inflation in the military industry is much more challenging outside the state rearmament program.

Consequently, the increasing expenditures for arms procurements do not mean the corresponding increase in the arms production rates.

Regarding the estimation of arms procurements in 2022 and 2023, we do have two official statements. First, Andrei Elchaninov, the deputy chair of the board of the governmental defense industrial commission, declared that the arms procurements increased “600–700 billion rubles” in 2022.2 Second, Sergei Shoygu, the minister of defense, declared that the arms procurements (“the ND order”) “will increase by 1.5 times in 2023”3 which was probably counted in comparison to the ND

Therefore, arms procurements will tend to become more chaotic. However, the main measure for preventing this administrative chaos would be further increasing governmental spending. For instance, in 2023–2025, the Russian government is

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planning to spend an additional 1.7 trillion rubles (almost $25 billion according to the average exchange rates of 2022 or $23 billion according to the average exchange rates of 2023) for development of technologies and industrial base for the import substitution. 5Currently, in 2023, the confirmed annual governmental subsidies for industrial companies—most of which are related with the defense sector—exceeded 700 billion rubles ($9.5 billion according to the current average exchange rate) in 2023 and in 2024 respectively.6 That is much higher than in 2018–2022 and indicates a significant cost-plus inflation. This positions the military industry to become the main beneficiary of these investments.

On the other hand, the role of arms export as a source of revenues has been declining for years. Despite the fact that Russia’s arms export was officially declared stable in recent years, the real situation was not promising.

After 2014, Russia needed to subsidize its arms export, and it needed to convert some contracts into national currencies instead of using US dollars.7 The aggression against Ukraine brought additional damage to the Russian arms trade. The officially confirmed amount of Russia’s arms export is seen in Table 6.

However, even the Russian official statements toward the arms trade are contradictory enough. The Federal MilitaryTechnical Cooperation Service (FSVTS)

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A member of the Ukrainian Territorial Defence Forces inspects remains of a Russian Sukhoi Su-34 fighting aircraft among residential area, as Russia's attack on Ukraine continues, in Chernihiv, Ukraine April 6, 2022.

REUTERS/Serhii Nuzhnenko

declared in 2021 that the Russian annual arms trade revenues from the Middle East and North Africa were $6 billion and 50% of its total arms trade revenues.8 At the same time, the total amount of arms supplies to India were $13 billion in 2018–2022 which indicates an average $2.6 billion annually during the period.9 Considering that India has been the main consumer of Russian arms for many years and that China’s and other countries’ shares in Russia’s arms sales are lower than India’s, it is difficult to predict whether or not the real annual amount of Russia’s arms trade could surpass $12 billion in the recent five years.

in contrast to the statement of the Russian official who confirmed that S-400 systems arrive in India according the contract schedule.11 Though, the first delays related with the contract appeared in late 2022,12 just several months after another declaration from Russia that the war in Ukraine cannot influence the supplies of S-400 to India.13 As a result, the military industry of Russia is becoming more dependent on the ND order and less flexible in the face of deficit of dollar revenues from the global market.

Combined with the Western embargo on technologies, components, and industrial equipment, these factors almost inevitably turn the arms manufacturing into a financial black hole for the Kremlin.

Paradoxically, Russia has delayed the supply of S-400 systems that was previously scheduled for 2023.10 This delay appeared

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Russian President Vladimir Putin (2nd L) listens to Yan Novikov, chief executive of Russian missile manufacturer Almaz-Antey, during a visit to the new 70th Victory Anniversary plant producing missile systems, in Nizhny Novgorod, Russia, March 29, 2016. REUTERS/Mikhail Klimentyev/Sputnik/Kremlin

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ARMS MANUFACTURING: KEY TRENDS AND PROBLEMS

Moscow continues to struggle to increase arms manufacturing and restore the arms storage after 13 months of largescale aggression against Ukraine. The manufacturing output index in industries that involve Russian arms manufacturing in 2022 within the context of the previous 5-year period is seen in Table 7.

the known delays in delivery of ordered arms and other military systems. All the arms supplies planned for 2022 must be completed by the end of February 2023.17 However, these indexes are counted in rubles, not in units, and it is still hard to say whether the manufacturing dynamic is sustainable considering the inflation of the ruble and growth of other costs. For instance, the category “semiconductor devices and their parts “as part of the “computers, electronic, and optical devices” represented in other data sets is counted in units and also demonstrates a significant increase: 7.5 million units or 145.2% in January–February 2023 compared to the same period of 2022. Though, in problematic fashion, the manufacturing output of this category in February 2023 was 89.7% compared to January 2023.

That means there were almost 4 million semiconductor devices in their parts manufactured in January 2023 and 3.5 million of them manufactured in February 2023.18 For comparison, the Russian companies produced 39.3 million (153.9%) and 43.2 million (109%) semiconductor devices and their parts in 2021 and 2022 respectively.19

There is also a manufacturing index related to the high-technology industries including medical drug production, aircraft, spacecraft, electronics, and advanced industrial equipment which is also dependent on the imported components, as seen in Table 8.14 This index may also be used for understanding the approximate dynamics of arms manufacturing in Russia. As seen in the table, additional expenditures for arms procurements in 2022 showed a moderate result.

The first significant evidence of growth of the manufacturing output index in the industries related to arms manufacturing appeared only in 2023, as seen in Table 9.15 At the same time, the supply index during the same period differs from the manufacturing index, as seen in Table 10.16 This difference between the two indexes in the first months of 2023 may be explained by the way that Russian companies recently supplied production which was manufactured in late 2022 considering

Despite the relatively optimistic statistics of early 2023, the problems of arms manufacturing remain an urgent topic for the Kremlin. In this way, Dmitry Medvedev,

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Table 8: The manufacturing output index in high-technology sectors, 2018-2022, in % to the previous year.

Table 9: The manufacturing output index in industries related to arms manufacturing, January- February 2023, in % to January - February 2022.

Table 10: The supply index in industries related to arms manufacturing, January-February 2023, in % to January-February 2022.

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Rostec Exposition at the International Military and Technical Forum Army 2022 (Rostec).

the deputy chair of the Security Council of the Russian Federation, announced a new group of supervisors that is responsible for the control of manufacturing high-priority arms. He also publicly warned managers of the defense factories about the criminal liability in cases of further violations of arms manufacturing contracts.20 Then, Vladimir Putin publicly criticized Denis Manturov, the minister of industry and commerce, regarding the contracting delays with military and civil aircraft.21 Finally, Mikhail Mishustin, the prime minister of Russia, is personally responsible22 for establishing two additional tank repair plants and one artillery repair plant. 23

declared at 2 million people.24 Moreover, the Russian authorities were unable to change the situation with the workforce deficit during the decade. Since the early 2010s, the deficit has worsened.25 In an aim to solve the trouble, the government launched the educational and training program, but the planned number of people who will go through the program is just 12 thousand.

Consequently, this number of trainees will not solve the problem in a foreseeable future.

For example, the representatives of manufacturers of the main battle tanks and the armored vehicles, Uralvagonzavog and Kurganmashzavod respectively, recently claimed that they just cannot find more workers and engineers despite increasing salaries and other bonuses.26 That means they are hardly able to make a three-shift work schedule on a permanent basis, and the same is true for most arms manufacturers in Russia except those

Nevertheless, the structural problems of arms manufacturing cannot be solved. First, the industry suffers from the personnel gap.

This gap was estimated at 400 thousand engineers and workers in June 2022 when the total number of all employees in the Russian defense companies was officially

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Table 11: The degree of wear of the industrial equipment in industries related with arms manufacturing, 2017-2021, %.

factories where the continuous production cycle is predetermined.

The third major trouble of Russia’s military industry is access to Western industrial equipment. The rearmament programs of the 2010s have become possible only because of purchasing industrial equipment from the United States, the European Union, Japan, Taiwan, and South Korea.

This equipment still works but its lifetime is limited. For example, the degree of wear on the industrial equipment in the industries related to arms manufacturing demonstrated a moderate and still reversible growth during recent years, as seen in Table 11.29

In this way, even the repair of arms used or damaged on the battlefield became a problem. The two tank repair plants mentioned above—the 71st armor repair plant near Moscow and the72nd armor repair plant near Rostov-on-Don, also suffer from a deficit of workforce. These plants are ready to employ completely inexperienced personnel.27 Second major trouble of Russia’s military industry is reverse engineering together with other R&D programs. Generally speaking, even if Russia has access to Western technologies, it is not capable of replicating them with proper quality. This trouble is also far from being solved.28 The paradox is that the task of extending the manufacturing of existing models of arms and the task of extending reverse engineering and other types of research and development contradict each other when they are realized within the same companies. As a result, these tasks cannot be completed together in an effective way.

These degrees are far from disastrous, but in face of the Western embargo on supplies of advanced industrial equipment in Russia, the trend toward further wear will become irreversible. Therefore, the Russian military industry will slowly lose its manufacturing capacity.

The heads of the Russian defense industry, like Sergei Chemezov of the corporation Rostec,30 Yuri Borisovof Roscosmos,31 and Alexei Rakhmanov of the United Shipbuilding Corporation,32 confirmed that the efforts toward peak capacity of arms manufacturing

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Dmitry Medvedev at the Kalashnikov Concern, January 27, 2023. (Rostec)

lead to cost-plus inflation and losses.

in 2024–2025.38 The Russian military industry traditionally creates such stores before the long-term arms contracts start.

Consequently, the Russian defense industry should produce as many arms as possible in 2023 instead of maintaining a relatively balanced schedule by 2025. The immediate result would be further cost-plus inflation with the inevitable prospect of decline in production in coming years which means that the average annual arms manufacturing either will not change much or will also decline.

However, in an aim to achieve this still desirable peak capacity,33 the further extension of the command administrative model is considered inevitable for arms manufacturing. 34 Though, in face of the ongoing bureaucratic games, there are only two major ways for increasing arms manufacturing in Russia.35 The first way is the extensive use of workforce by reducing the number of weekends, holidays, and vacations in light of the deficit of engineers and workers.36 Nevertheless, the challenge of quality of produced arms and other military equipment remains.37

Therefore, the Russian defense industry is far from operational sustainability. That means the increase of arms manufacturing may be a much harder problem for Russia than the official statistics demonstrate.

Though, the Russian leadership probably prefers to ignore this prospect.

The second way to increase arms manufacturing is to use the stores of components and materials that were previously reserved for arms manufacturing

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A view shows a workshop of Obukhovsky plant, which is one of the production sites of the Russian missile manufacturer AlmazAntey, during the visit of Russian President Vladimir Putin in Saint 15Petersburg, Russia, January 18, 2023. Sputnik/Ilya Pitalyov/Pool via REUTERS

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ARMS MANUFACTURING: ESTIMATED PRODUCTION OF KEY TYPES OF ARMS Besides all the indexes and trends, it is necessary to estimate the absolute number of arms that Russia was able to produce on the eve of its full-scale aggression against Ukraine and to compare these estimations with the actual evidence, plans, and official statements regarding the arms manufacturing in 2023–2025.

In this way, the officially declared plans for tank manufacturing, modernization, and repair do not indicate a significant increase in manufacturing and deep modernization.

The production capacity here is limited not only by the tank factories in Nizhniy Tagil and Omsk but also by the only factory in Chelyabinsk that produces tank engines.

This engine factory is completely dependent on imported industrial equipment.44

Main battle tanks: Vladimir Putin claimed in March 2023 that Russia will produce and modernize 1600 main battle tanks in 2023–2025.39 This number includes T-72, T-80, and T-90 tanks, as the old Soviet tanks like T-62 are taken from the storage bases and modernized on the armor repair plants.

Vladimir Putin probably also counts the tanks which are being repaired and modernized after returning from the battlefield.

Artillery munitions: Vladimir Putin also said that Russia will produce and modernize more than 3 million artillery rounds by 2025.45 However, that means that Russia has not been able to increase its manufacturing and modernization rates compared to the estimations of 2022, about 1.7 million rounds annually. This estimation46 derives from the known number of repaired Soviet-era rounds47 of all types and the fragmentary data48 about revenues of the factories49 engaged in the manufacturing of artillery rounds. 50 Therefore, Russia switched on the wartime mode for its artillery rounds manufacturers even before 2022.

For comparison, the total average annual amount of modernized and newly manufactured tanks and armored vehicles was 650 during the past decade.40 The annual share of T-72B3/B3M tanks may be estimated as no more than 160–170 units during 2011–2020, and it decreased to 34 units in 2021.41 The share of T-80BVM tanks may be estimated as 45–50 units annually during 2017–2021.42 The annual manufacturing of relatively advanced T-90M tanks was insignificant during the period, from 10 to 30 units, and the upgrade of T-90A tanks, produced in 1990–2000s, to T-90M version has been delayed.43

Combat aviation: In an aim to understand Russia’s limitations in combat aircraft manufacturing, it is possible to use just some examples. The first example is Su34 fighter bomber. Its average annual manufacturing was 8–12 units in 2011–2020, and the current contract for 2021–2024 is to deliver 20 Su-34 which means seven aircraft

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Sergey Chemezov at the Irkutsk Aviation Plant, July 2022. (Rostec)

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annually, significantly lesser than during the previous decade.51 It is possible that Russia will try to increase manufacturing of Su-34 to the past level, but it looks almost impossible that the level of 8–12 aircraft could be surpassed.

produces up to 2000 such missiles.

Though, most of the Russian air/missile defense missiles belong to the short- and medium-range types including the manportable air-defense systems (MANPADS).

Toward the manufacturing of each of several types of missiles for the most advanced Russian long-range S-400 system, it could be estimated in a range from several tens to a couple of hundreds annually. The estimation57 is based on manufacturing rates of the American missiles of comparable specifications like SM-6 and PAC-3 respectively.58

The same situation is in the manufacturing of combat helicopters. For instance, the current contract for 2022–2023 is to deliver 30 Ka-52, the most advanced Russian combat helicopter. That means 15 units annually,52 and this level is hard to surpass especially in face of Russia’s dependence on the Ukrainian company Motor Sich in manufacturing of helicopter engines that took place until March 2022.53

Considering the limited manufacturing rate and limited existing amount of the missiles for S-400 system, it is significant fact that Russia used a number of S-400 missiles against Kyiv in January 2023.59 Probably, the deficit of cruise missiles is of concern for Moscow, and their annual manufacturing rate is comparable to the manufacturing rates of S-400 missiles if not lesser. Consequently, the manufacturing of air defense missiles as a matter of pride for the Russian leadership outlines the actual problems with manufacturing in other sectors of the defense industry.

And for 2021–2027, Moscow planned to purchase 150 new aircraft of all types including 76 Su-57 fifth-generation fighter jets and at least 20 additional Su-34.54 Though, the series manufacturing of engines for Su-57 will start no earlier than 2025, and today Su-57 jets use engines of the previous generation.55 Therefore, Russia needs to choose between following the original plan despite losses and the Western embargo, and it must revise the plan toward replacement of lost and damaged aircraft and helicopters.

Air and missile defense: In January 2023, Vladimir Putin visited another manufacturer of air defense systems, Obukhovsky Zavod in Saint Petersburg, where he was able to declare that Russia produces three times more air defense missiles than the United States every year.56 This statement gives valuable information: if the American companies produce 600–650 air/missile defense missiles of all types annually, Russia

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STATEMENT OF KEY INDUSTRIAL ACTORS

Besides the lack of workforce and objective limitations in the manufacturing capacity, the Russian military industry faces economic inefficiency and, consequently, financial imbalances which lead to the growing turbulence of the military sector. For instance, the industry’s total net losses surpassed 1.7 trillion rubles only in 2016– 2020 (more than $26 billion according to the average annual exchange rates). Together with the Western embargo on components, technologies, and industrial equipment, these imbalances will definitely lead to further losses and cost-plus inflation.

billion rubles ($730 million) of net loss in 2021–2022 respectively and almost no one Roscosmos main entity fulfilled its contract obligations in 2021–2022.62 The disclosed poor financial results may be compared to 1.8 billion rubles ($28 million) of net loss and 0.5 billion rubles ($7 million) of net profit in 2019–2020 respectively. Moreover, the cumulative net loss of the corporation since its establishment in 2015 as a successor of the Federal space agency surpassed 90 billion rubles ($1.3 billion) which his comparable to the Russian annual spending on civil space exploration.63

Almaz–Antey: The state-owned corporation Almaz–Antey, the major Russian manufacturer of air and missile defense systems, did not clarify its operational results after February 2022. However, Yan Novikov, the head of the corporation, officially confirmed that the war created significant problems for the corporation’s manufacturing activity as early as in April 2022.60

Rostec: Sergei Chemezov, the head of Rostec, confirmed that the state-owned corporation faced a significant decline in net profit in 2022 despite the fact that it fulfilled all the arms supply contracts, the revenue grew and the net profit was already low in the previous years.64 United Shipbuilding Corp.: Alexei Rakhmanov, the head of the USC, declared that the corporation’s revenue was 380 billion rubles ($5.5 billion) in 2022 and that the corporation again got a massive but unclarified net loss.65

Tactical Missiles Corp. (KTRV): This corporation did not clarify its operational results for 2022. At the same time, it is the only major arms manufacturer in Russia that declared the fulfillment of all governmental arms contracts in 2022.61

All that means that the huge additional governmental arms procurements related with the war have not improved the financial statement of the Russian military industry in 2022. And the arms expenditures are

Roscosmos: The corporation got 31 billion rubles ($421 million) and more than 50

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Dmitry Medvedev at the Kalashnikov Concern, January 27, 2023. (Rostec)

unlikely to improve the statement somehow in 2023 or in 2024–2025 because the attempts towards increase arms production rates in emergency mode, within the revived command model and in face of the Western embargo on components and industrial equipment together with domestic deficit of qualified engineers and workers mean the exponential cost-plus inflation. As a result, the Russian defense industry will lose as

a potential for development as an ability to maintain the quality of produced arms and equipment even if it will be capable to maintain their amount in coming years.

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ABOUT THE AUTHOR Pavel Luzin holds a doctorate in international relations from the Institute of World Economy and International Relations (IMEMO). He is an expert on Russia’s politics, defense affairs, and global security. Dr. Luzin studies these fields for Riddle media.

Previously, he covered these issues for the presidential campaign of Alexei Navalny in Russia (2017-2018), “Nations in Transit” project at Freedom House (2016-2018), and Center for Polish-Russian Dialogue and Understanding (2015-2018). He has worked for Russian think tanks IMEMO and PIR-Center, and taught at Perm State University and at Higher School of Economics (Perm campus).

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ENDNOTES 1 Ministry of Finance of the Russian Federation. “Implementation of the Federal Budget and Budgets of the Budgetary System of the Russian Federation over 2020,” Accessed April 28, 2023. https://minfin.gov.ru/ common/upload/library/2021/03/main/Ispolnenie_2020_god.pdf 2 “First Deputy Chairman of the Collegium of the Military-Industrial Complex: RF Replenishes Stocks of Weapons and Military Equipment-.” Accessed April 28, 2023. https://www.militarynews.ru/story. asp?rid=2&nid=576219&lang=RU. 3 Rosyiskaya Gazeta. “Shoigu: In 2023 Financing of the State Defense Order Will Increase 1.5 Times,” November 30, 2022. https://rg.ru/2022/11/30/shojgu-v-2023-godu-finansirovanie-gosoboronzakazauvelichitsia-v-15-raza.html.

4 RTRussian Service. “ ‘Triumph’ of de-dollarization: why the contract for the supply of S-400 India is concluded in rubles,” October 31, 2018. https://russian.rt.com/world/article/569300-indiya-s-400-rublikontrakt.

5 State Duma. “Draft federal budget for 2023–2025 adopted in first reading,” October 26, 2022. http:// duma.gov.ru/news/55593/.

6 President of Russia. “Meeting of the Presidium of the State Council,” April 4, 2023. http://kremlin.ru/ events/president/news/70860.

7 Gazeta RBK. “Accounting Misfire Russian Weapons.” Accessed April 28, 2023. https://www.rbc.ru/ newspaper/2019/11/12/5dc55ce89a7947b6b742a42d.

8 Interfax.ru. “FSMTC estimates arms exports to the Middle East and North Africa at $6 billion a year,” February 21, 2021. Accessed April 28, 2023. https://www.interfax.ru/russia/752028.

9 Interfax.ru. “Head of the FSMTC claims Russia continues to fulfill all obligations towards arms export,” February 13, 2023. Accessed April 28, 2023. https://www.interfax.ru/russia/885856 10 Pubby, Manu. “Air Force Slashes Procurement Budget on Russia Supply Delays.” The Economic Times, March 23, 2023. https://economictimes.indiatimes.com/news/defence/air-force-slashes-procurementbudget-on-russia-supply-delays/articleshow/98927147.cms.

11 Interfax.ru. “Russia plans to complete deliveries of S-400 systems to India on time,” February 13, 2023.

Accessed April 28, 2023. https://www.interfax.ru/russia/885870.

12Tass.ru. “India Receives Third Batch of Russian S-400s.” Accessed April 28, 2023. https://tass.ru/ mezhdunarodnaya-panorama/16782839.

13 Plavskaya, Elena. “Deliveries of S-400s to India will continue regardless of sanctions.” Izvestya, March 18, 2022. https://iz.ru/1307046/2022-03-18/postavki-s-400-v-indiiu-prodolzhatsia-vne-zavisimosti-ot-sanktcii.

14 Federal State Statistics Service. “The manufacturing output index of high-technology industrial sectors of economy,” April 26, 2023. Accessed April 28, 2023. https://rosstat.gov.ru/storage/mediabank/4-4_03-2023. xlsx.

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15 Federal State Statistics Service. “On industrial manufacturing in January–February 2023,” March 29, 2023. Accessed April 28, 2023. https://rosstat.gov.ru/storage/mediabank/47_29-03-2023.html.

16 Federal State Statistics Service. “Economic and social situation in Russia. January – February 2023,” March 2023. Accessed April 28, 2023. https://rosstat.gov.ru/storage/mediabank/osn-02-2023.pdf 17 “Meeting of the Coordinating Council to meet the needs of the Armed Forces of the Russian Federation, other troops, military formations and bodies,” April 28, 2023. http://government.ru/news/47563/.

18 Federal State Statistics Service. “On industrial manufacturing in January–February 2023,” March 29, 2023. Accessed April 28, 2023. https://rosstat.gov.ru/storage/mediabank/47_29-03-2023.html.

19 Federal State Statistics Service. “On industrial manufacturing in 2021,” February 2, 2022. Accessed April 28, 2023. https://rosstat.gov.ru/storage/mediabank/12_02-02-2022.html.

20 “Security Council of the Russian Federation.” Accessed April 28, 2023. http://www.scrf.gov.ru/news/ allnews/3408/.

21 President of Russia. “Meeting with members of the Government,” January 11, 2023. http://kremlin.ru/ events/president/news/70338.

22 Kommersant. “Mishustin instructed to create two armored plants for the repair of military equipment,” September 5, 2022. https://www.kommersant.ru/doc/5547483.

23 “Meeting of the Coordinating Council to meet the needs of the Armed Forces of the Russian Federation, other troops, military formations and bodies,” April 28, 2023. http://government.ru/news/48128/.

24 VPK.name. “Borisov: shortage of personnel at defense industry enterprises in the Russian Federation will be about 400 thousand people,” June 30, 2022. https://vpk.name/news/613140_borisov_deficit_ kadrov_na_predpriyatiyah_opk_v_rf_budet_sostavlyat_okolo_400_tys_chelovek.html.

25 State Duma. “13 мая в Госдуме состоялся «круглый стол», посвященный проблемам подготовки кадров для оборонно-промышленного комплекса,” May 14, 2013. http://duma.gov.ru/news/8057/.

26 “Old people go into battle: the country's defense plants cannot recruit workers - Latest news from Russia and the world today | NovyeIzvestia.” Accessed April 28, 2023. https://newizv.ru/news/2023-01-19/vboy-idut-stariki-oboronnye-zavody-strany-ne-mogut-nabrat-rabochih-394312.

27 Ramenskoye urban district. “Job center promotes vacancies at the tank and armored vehicles repair plant launched in Ramenskoye,” January 26, 2023. Accessed April 28, 2023. https://ramenskoye. ru/novosti/82-tsentr-zanyatosti-naseleniya/11869-o-vakansiyakh-sozdannogo-v-ramenskomavtobronetankovogo-zavoda-rasskazali-sobravshimsya-segodnya-v-tsentre-zanyatosti-naseleniya 28 President of Russia. “Meeting of the Presidium of the State Council,” April 4, 2023. http://kremlin.ru/ events/president/news/70860.

29 Federal State Statistics Service. “The degree of wear of the fixed assets by sectors of economic activity,” April 6, 2023. Accessed April 28, 2023. https://rosstat.gov.ru/storage/mediabank/St_izn_of_ved.xlsx

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30 Vedomosti. “Sanctions will remain for many more years,” October 23, 2022. Accessed April 28, 2023. https://www.vedomosti.ru/lifestyle/characters/2022/10/24/946954-sanktsii-ostanutsya-esche-na-mnogo-let.

31Vedomosti. “We will work on creating a more serious units,” December 21, 2022. Accessed April 28, 2023. https://www.vedomosti.ru/technology/characters/2022/12/21/956268-budem-rabotat-nadsozdaniem-sereznoi-gruppirovki.

32United Shipbuilding Corporation. “Interview of the USC director general A.L. Rakhmanov,” January 16, 2023. Accessed April 28, 2023. https://www.aoosk.ru/press-center/media-corporation/intervyugeneralnogo-direktora-osk-a-l-rakhmanova 33Vedomosti. “Gosplan 2.0 may be limited to the tasks of the state defense order,” December 22, 2022.

Accessed April 28, 2023. https://www.vedomosti.ru/politics/characters/2022/12/22/956468-gosplanmozhet-bit-ogranichen-zadachami-gosoboronzakaza.

34 President of Russia. “Meeting with Head of Roscosmos Yury Borisov,” January 19, 2023. Accessed April 28, 2023. http://kremlin.ru/events/president/news/70371.

35Tass.ru. “Chemezov: Rostec Plants Involved in State Defense Order Work on New Year Holidays,” January 2, 2023. Accessed April 28, 2023. https://tass.ru/ekonomika/16732727.

36 Ura.ru. “At the Kurgan defense plant, employees will work on weekends,” December 20, 2022.

Accessed April 28, 2023. https://ura.news/news/1052612136.

37 President of Russia. “Meeting with members of the Coordinating Council under the Government to meet the needs of the RF Armed Forces,” November 24, 2022. http://kremlin.ru/events/president/news/69932.

38 Ministry of Defense of the Russian Federation. “Broadened meeting of the Collegium of the Ministry of Defense of Russia was held under the presidency of the supreme commander-in-chief Vladimir Putin,” December 21, 2022. Accessed April 28, 2023. https://function.mil.ru/news_page/country/more. htm?id=12449212@egNews 39 smotrim.ru. “Moscow. Kremlin. Putin. The Visit of Xi Jinping and the Role of the West in the Conflict in Ukraine. Broadcastfrom26.03.2023.” Accessed April 28, 2023. https://smotrim.ru/video/2586697.

40 Ministry of Defense of the Russian Federation. “Broadened meeting of the Collegium of the Ministry of Defense of Russia: The results of 2017,” December 2017. Accessed April 28, 2023. https://itogi2017.mil.ru/ 41 Tass.ru. “More than 30 Modernized T-72B3 Tanks Delivered to the Troops by State Order in 2021 TASS.”AccessedApril 28, 2023. https://tass.ru/armiya-i-opk/13478539.

42 Rostec. “T-80BVM: "flying tank" Back in service,” August 3, 2021. Accessed April 28, 2023. https:// rostec.ru/news/t-80bvm-letayushchiy-tank-snova-v-stroyu/.

43Vedomosti. “The Ministry of Defense has decided on plans for the development of tank troops,” February 13, 2020. https://www.vedomosti.ru/politics/articles/2020/02/13/823042-minoboroni-opredelilos.

44 VPK newspaper. “Stronger than armor: Unique scientific and industrial tradition allows ChTZ to produce first-class engines,” July 16, 2013. Accessed April 28, 2023. https://web.archive.org/web/20220402051127/

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RUSSIA’S MILITARY INDUSTRY FORECAST 2023–2025

https://vpk-news.ru/articles/16738 45 smotrim.ru. “Moscow. Kremlin. Putin. The Visit of Xi Jinping and the Role of the West in the Conflict in Ukraine. Broadcast from26.03.2023.” Accessed April 28, 2023. https://smotrim.ru/video/2586697.

46 Ministry of Defense of the Russian Federation. “Broadened meeting of the Collegium of the Ministry of Defense of Russia: The results of 2017,” December 2017. Accessed April 28, 2023. https://itogi2017.mil.ru/; 47 RealnoeVremya.“The largest enterprises in Russia from the field of ammunition production.”

AccessedApril 28, 2023. https://realnoevremya.ru/attachments/146.

48 RealnoeVremya.“Review of companies supplying the Russian army from Tatarstan.”Accessed April 28, 2023. https://realnoevremya.ru/articles/57656-obzor-kompaniy-postavschikov-armii-rossii-iz-tatarstana.

49 Rostec. “Rostec Creates Ammunition Division,” June 13, 2017. Accessed April 28, 2023. https://rostec.ru/ news/4520499/.

50 “Rostec Annual Report of 2017.” Accessed April 28, 2023. https://raex-a.ru/annual_reports/reports/2017_ rosteh.pdf 51 Tass.ru. “The Ministry of Defense Signed a Three-Year Contract for the Construction of About 20 Frontline Su-34s.” AccessedApril 28, 2023. https://tass.ru/armiya-i-opk/8676891.

52 Tass.ru. “The Ministry of Defense Concluded a Contract for 30 Ka-52M Helicopters.”AccessedApril 28, 2023. https://tass.ru/armiya-i-opk/12205365.

53 Forbes.ua “‘We send dozens. Everything goes.’ Did Motor Sich supply engines for Russian military helicopters during a full-scale war? Here's what's known,” October 24, 2022. https://forbes.ua/ru/company/ motor-sich-pid-chas-garyachoi-viyni-postachala-dviguni-dlya-rosiyskikh-viyskovikh-gvintokriliv-yak-tsemozhlivo-24102022-9249.

54 Vedomosti. “Aircraft deliveries for the Russian Aerospace Forces continue to remain at a low level,”August 11, 2021. https://www.vedomosti.ru/politics/articles/2021/08/10/881601-postavki-aviatsii.

55 Tass.ru. “Production of Upgraded Su-57 May Start in 2025 – TASS,” August 8, 2021. Accessed April 28, 2023. https://tass.ru/armiya-i-opk/12085969.

56 President of Russia. “Visit to the Obukhov plant,” January 18, 2023. Accessed April 28, 2023. http:// kremlin.ru/events/president/news/70368.

57 Washington Headquarters Services. “Standard Missile – 6,” December 2019. Accessed April 28, 2023. https://www.esd.whs.mil/Portals/54/Documents/FOID/Reading%20Room/Selected_Acquisition_Reports/ FY_2019_SARS/20-F-0568_DOC_72_SM-6_SAR_Dec_2019_Full.pdf; 58 Media - Lockheed Martin. “New Lockheed Martin Facility to Support Increased PAC-3 Production.”

Accessed April 28, 2023. https://news.lockheedmartin.com/2022-10-04-new-lockheed-martin-facility-tosupport-increased-pac-3-production.

59 “Could the Russian Federation start using missiles for S-300 or S-400 for strikes onKyiv?”

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DefenseExpress. Accessed April 28, 2023. https://defence-ua.com/army_and_war/chi_mogla_rf_pochati_ vikoristovuvati_raketi_dlja_s_300_dlja_udariv_po_kijevu-10303.html.

60 Journal “National Defense”. “Unconditional Priority - Fulfillment of the Tasks of the State Defense Order.”

Accessed April 28, 2023. https://oborona.ru/product/zhurnal-nacionalnaya-oborona/bezuslovnyj-prioritetvypolnenie-zadach-gosudarstvennogo-oboronnogo-zakaza-43621.shtml.

61 Tass.ru. “KTRV Enterprises Fully Fulfilled the State Defense Order for 2022,” January 26, 2023.

Accessed April 28, 2023. https://tass.ru/armiya-i-opk/16889313.

62 Vedomosti. “We will work on creating a more serious units,” December 21, 2022. Accessed April 28, 2023. https://www.vedomosti.ru/technology/characters/2022/12/21/956268-budem-rabotat-nadsozdaniem-sereznoi-gruppirovki.

63 Roscosmos. “Annual Reports of Roscosmos: 2015–2020.” Accessed April 28, 2023. https://web.archive. org/web/20220205043613/https://www.roscosmos.ru/22444/ 64 Vedomosti. “Sanctions will remain for many more years,” October 23, 2022. https://www.vedomosti.ru/ lifestyle/characters/2022/10/24/946954-sanktsii-ostanutsya-esche-na-mnogo-let.

65 United Shipbuilding Corporation. “Interview of the USC director general A.L. Rakhmanov,” January 16, 2023. Accessed April 28, 2023. https://www.aoosk.ru/press-center/media-corporation/intervyugeneralnogo-direktora-osk-a-l-rakhmanova

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RUSSIA’S MILITARY INDUSTRY FORECAST 2023–2025

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