October 12, 2007:
The $1.5
billion deal that sold the unfinished Russian aircraft carrier Admiral Gorshkov
to India, included a Russian shipyard performing $700 million worth of repairs,
modifications and upgrades. Another $800
will be spent on aircraft, weapons and equipment. The Admiral Gorshkov entered
service in 1987, but was inactivated in 1996 (too expensive to operate on a
post Cold War budget). The Indian deal was made in 2004, and the carrier was to
be ready by 2008. But a year ago reports began coming out of Russia that the
shipyard doing the work, Sevmash, had seriously miscalculated the cost of the
project. The revised costs were now more like $1.1 billion. The situation has
since gotten worse, with Sevmash now saying that it will cost over $2 billion
to refurbish the carrier. The Indians are not happy, and expects the Russian
government (which owns many of the entities involved in this deal) to make
good. Given that India currently has $10 billion worth of Russian military
items on order, and has been Russia's biggest, and most profitable customer for
military equipment for decades, the Gorshkov is looking to be an error of
gigantic proportions. The boss of Sevmash, when the Gorshkov deal was
negotiated, has been fired and is under criminal investigation, on suspicion of
financial mismanagement. To make matters worse, the additional work required on
the Gorshkov has caused Sevmash to turn down lucrative commercial projects
(like offshore oil platforms.)
Just to add to the pressure,
India is getting more interested in Western military equipment, including big
ticket items like warplanes and ships. The Indians have grown tired of the poor
performance of Russian equipment, and the poor service they often receive when
it comes to spare parts, or fixing design errors. For decades, this was
tolerated because Russian gear cost less than half what comparable Western
stuff went for. Since India's major foe was Pakistan, which was equipped with
equally shabby Chinese weapons, it all seemed to work out. But now many Indian
generals and admirals, noting the high performance of American troops in the
war on terror, are seriously considering the higher cost Western way of war.