What impact for the aerospace industry? (1040 words)

Published: 8/22/2000

In the recent dismissals of high-ranking generals, the removal of Colonel General Anatoly Sitnov, responsible for the Armaments Directorate within the Ministry of Defence, probably has the most direct impact on the aerospace industry. Sitnov, one of six generals 'purged' by the Putin administration, lost his position in what is seen as a struggle for control between Igor Sergeev, Minister of Defence, and Anatoly Kvashnin, Chief of the General Staff. For the defence industry, the change at the top could be dramatic. Sitnov has been responsible for the industry since 1994 and has played a critical role in determining the shape of the industry following the break-up of the Soviet Union. This is a role that has involved determining the future of whole regions, given his Directorate's ability to determine the flow of available funds and the future of plants. It appears however, despite the Colonel General's longevity in the post, having seen four defence ministers come and go since taking over in 1994, he has found himself on the wrong side of the struggle. His departure may signal the start of a new direction for the defence industries. According to sources, Sitnov's view of the future of the industry during his time at the Directorate was shaped by his desire to match that of the USA and designed to fulfil the Soviet scenario of a major conflict, involving a blitzkrieg attack probably across Western Europe. A perspective supported in Sitnov's view by the conflicts in the Gulf and Kosovo. This has led to claims that the Russian armed services are simply scaled-down versions of the Soviet forces and are inadequately equipped to meet their changed mission of the protracted low-level engagements of Chechnya and Afghanistan and are equally unable to sustain their historical role given the lack of funding. For some commentators this misdirection of strategy has been illustrated by the poor performance of the Su-27 in Chechnya, where the main ground attack role has ended up being shouldered by the dated Su-24 and Su-25 and there has been no role for the Su-27's air superiority capability. Helicopter cover has also been provided not by the cutting edge Ka-50, but the aging Mi-24 and Mi-8, with the Ka-50 still only present in the armed forces in small numbers and increasingly being seen by army planners as less attractive than the cheaper upgraded Mi-24. Focused on the task of fighting a major conflict, the Ministry of Defence under Sitnov has continued the Soviet system of funding multiple parallel producers in effort to maintain as wide a production and design base as possible in the event of such a conflict. The outcome of the policy however, has been the dispersal of funding throughout the industry effectively stalling the industry by denying any one enterprise the substantial funds for the development of their business and products. Certain areas faired better than others and strategic missile programmes such as Topol-M were funded as a priority, assisted by the fact that Ukraine ended up with the parallel part of this segment of the industry and the ascendancy of Sergeev, a missile officer, to Minister of Defence. The overall impact of these funding problems has been to divide the industry into two distinct elements. The first deals with the Ministry of Defence as providers of sophisticated strategic weapons such as missile, space and nuclear weapons that have received funding throughout the nineties. The second is producers of more conventional weapons that have focused not on producing weapons for the military. This is a customer uncertain of what products it requires, given the changing challenges it was confronted with, and largely deprived of the means to pay. The focus of the second group has therefore largely been on the provision of weapons to foreign customers who paid $3.4 billion in 1999 in contrast to the Ministry of Defence, who accumulated huge debts with the industry paying the industry only $800m in 1999. In the aerospace industry the best illustration of the impact of the changing face of exports on the producers has been the rising star of Sukhoi at the expense of MiG. A change largely driven by exports and the revenue generated from sales to overseas customers. In the case of the Su-27 family, the development of the fighter has been largely driven and paid for by export customers such as China and India, in the form of variants of the Su-30. A similar situation has been witnessed with the two competing parallel producers of long-range anti-aircraft systems — S-300V and S-300P, Antei and Defence Systems, where the latter has been more successful in export sales and is likely to be the survivor. For Sitnov's replacement the challenge is to transform the Russian defence industries into a viable entity capable of meeting the changing defence needs of Russia in conjunction with being arms suppliers to the world. This will however, involve difficult decisions that Sitnov and his colleagues proved to be reluctant, for political or strategic reasons, to make. The production of fighter aircraft particularly, despite indications of restructuring in early 1999, continues to be split between two design bureaux loosely affiliated with production plants, with continuing delays in plans to create joint stock vertically integrated producers. This lack of restructuring has meant, according to some observers, that the industry continues to waste scarce resources in competition outside Russia, recently witnessed in the tender for attack helicopters in South Korea, where the Ka-50-2 and the Mi-28N are competing against well-funded US producers for the large contract. A situation criticised recently by the Director General of Kamov, particularly when the bids for both aircraft are being presented by two government export agencies. The future shape of the industry will therefore be largely determined by the ability of these groupings to attract export business, as it seems highly unlikely that, despite the current fifth-generation programme from MiG and Sukhoi, government funding will be forthcoming for the MiG-31 replacement or the prospective strategic bomber programme. For the Russian military and the Armaments Directorate, future equipment may be determined less by their specific needs and more by export customers providing funding for development.

Article ID: 2019