August 9, 2013:
Russia is finding that its communist past is hard to get away from. This is particularly true in the armed forces, where many old Soviet (communist) era practices still thrive. This is a serious problem with the navy, where Soviet era practices make simple (in the West) things nearly impossible, or ruinously expensive, to fix. Take, for example, shipyard maintenance. Warships, more so than commercial vessels, spend a lot of time in shipyards undergoing major maintenance, upgrades, and refurbishment. Russian yards consistently take twice as long as they say they should and often leave some items defective. This was a problem during the Soviet period and the government has recently conducted several studies to try and find out what needs to be done to change this. The most recent investigation found that the problems were related to Soviet era practices that were never changed after the communist government fell in 1991. The Soviet era military bureaucracy has proved remarkably resistant to change. For example, the bureaucrats in charge of estimating costs and time to complete the job had no real control over the many government (and now, increasingly, commercial) enterprises that actually did the work. So, as in the Soviet period, the bureaucrats just made a lot of estimates and then blamed the yards and suppliers for not meeting these goals that the suppliers were not really consulted about in the first place. The planning bureaucracy, as during the Soviet era, did not exercise control or supervision. They just issued orders and hoped for best, secure in the knowledge that they had done their job and were no longer responsible. Now the government is trying to instill this sense of responsibility and finding it difficult to get anyone to accept such an alien concept. Many of the senior people in the Russian leadership are still reluctant to take responsibility, as 70 years of communist rule put a premium on making excuses and shifting blame. That is not considered corruption, just following orders.
Other studies have found that about 20 percent of Russian defense spending is stolen by corrupt officers and officials. That there is corruption in the Russian military is no secret. Officers, including generals and admirals, have been prosecuted frequently for the last two decades. But this recent comprehensive investigation revealed that the extent of the thievery was greater than anyone could have imagined. This discovery is all part of a decade long trend. In that time the Russian government has been relentless in its campaign against corruption. Progress is slow but every year more people are prosecuted and more corrupt practices publicized. It may prove even more difficult to change attitudes towards accepting responsibility and getting others to do the same.
A large part of the anti-corruption effort is directed at firms that manufacture weapons. These companies have refused to justify their wildly gyrating prices. Last year this led to a curious confrontation, which resulted in Russian shipyards refusing to build submarines for the Russian Navy. This was caused by government efforts to rein in rapidly rising prices while also eliminating corruption.
All this put the Defense Ministry in a difficult position. The Russian Defense Ministry was caught between conflicting orders. So the Russian government simply ordered the Defense Ministry to make it happen. But in doing that the Defense Ministry withheld payment to many military suppliers because these firms refused to explain why prices had suddenly increased. That created problems with the government, which was also demanding that defense industries produce the quantities of weapons agreed on and by promised delivery dates. That will not happen as long as the government was putting contracts on hold to deal with corrupt practices. The government ultimately backed whatever the Defense Ministry wanted and this ended up with submarine builders threatening to close shop. All this sped up corruption investigations and resulted in lower prices. But production was disrupted.
Aircraft and missile manufacturers were the first to agree to lower their prices, but the submarine builders claimed they could not control their own rising costs. The government believed the higher costs were the result of inefficiency and mismanagement, as well as antiquated shipbuilding facilities and practices. This situation was unique to Russian shipbuilding, which never, like many other Russian manufacturing industries, managed to achieve world standards of efficiency and technology. The Russian shipyards are in such bad shape that the government allowed the purchase of a new Mistral class amphibious ship from France, as well as the purchase of the manufacturing technology so more Mistrals could be built in Russia.
But backwardness does not explain all the Russian shipbuilding problems, there was still a lot of corruption, and both problems have to be fixed before the Russian Navy can get affordable, effective warships from Russian yards. That's going to take a decade or more and will involve major reforms in how the procurement bureaucracy and defense suppliers do business. A mess that took 70 years to create will not be undone quickly.