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Editorial #4 (18), 2009 China’s Modernization: the Russian Factor 2 PUBLISHER Centre for Analysis of Arms Trade Strategies and Russian Exports to China: What the Future Holds 6 Technologies CAST Director & Publisher Defense Industries Ruslan Pukhov Editor-in-Chief Strategic Cruise Missile Carrier H-6K – Mikhail Barabanov A New Era for Chinese Air Force 8 Advisory Editors Highlights From Almaz-Antey 2008 Financial Report 10 Konstantin Makienko Alexey Pokolyavin Researchers Armed Forces Ruslan Aliev Sergey Denisentsev The ‘New-Look’ Russian 12 Polina Temerina ’s Defense Spending 19 Dmitry Vasiliev

Editorial Office 3 Tverskaya-Yamskaya, 24, office 5, Trade & Procurement Moscow, 125047 phone: +7 495 251 9069 Identified Contracts for Delivery of Russian Arms fax: +7 495 775 0418 Signed in January-September of 2009 23 http://www.mdb.cast.ru/ To subscribe, contact 24 phone: +7 495 251 9069 Our Authors or e-mail: [email protected]

Moscow Defense Brief is published by the Centre for Analysis of Strategies and Technologies All rights reserved. No part of this publication may be reproduced in any form or by any means, electronic, mechanical or photocopying, recording or otherwise, without reference to Moscow Defense Brief. Please note that, while the Publisher has taken all reasonable care in the compilation of this publication, the Publisher cannot accept responsibility for any errors or omissions in this publication or for any loss arising therefrom. Authors’ opinions do not necessary reflect those of the Publisher or Editor Cover story Computer design & pre-press: ZEBRA-GROUP The new Chinese YJ-62 coastal-launched anti-ship cruise missile paraded during the 60th PRC www.zebra-group.ru Anniversary celebrations in Beijing on October 1, 2009. The missile (and the long-range CJ-10 version) The editorial team would like to thank Ivan Khokhotva for his contribution is based on the famous Soviet/Russian Raduga Kh-55 (AS-15) design. It appears to have been developed in translation, editing and proof-reading using Russian and Ukrainian expertise. The wheeled chassis is a Chinese clone of the Soviet MAZ-543, made since 1999 at a joint venture Cover photo by: REUTERS/Nir Elias with a Belarusian partner in Hubei Province. © Centre for Analysis of Strategies and Technologies, 2009 The truck in the foreground is Dongfeng EQ2050 Mengshi, a Chinese clone of GM’s High-Mobility Printed in Russia Multipurpose Wheeled Vehicle (HMMWV).

# 4, 2009 Moscow Defense Brief 1 Editorial

China’s Military Modernization: the Russian Factor Mikhail Barabanov

he Chinese leaders hoped the in Beijing industry’s effort was therefore aimed at ripping off the more Ton October 1, the 60th anniversary of the People’s recent Soviet designs, which Beijing was smuggling in via Republic, would showcase the success of communist China’s third countries. That is how China had cloned the T-72 main “Fourth Modernization” – that of its armed forces. The event battle by the late 1980s, as well as the BMP-1 armoured was supposed to demonstrate that rapid progress in military infantry fighting vehicles, the 122 mm and 152 mm self- technology has propelled the country into the ranks of the propelled and towed howitzers, the 122 mm Grad MRL world’s most advanced military powers. systems, the Malyutka (AT-3) anti-tank missiles, and the All the brand-new military equipment put on display in Strela-2 (SA-7) man-portable SAMs. Beijing has produced the required impression on the patriotic In the 1980s China managed to achieve a certain Chinese public, as well as some Western observers now gushing degree of rapprochement with the West, based on shared about the newly modernized People’s Liberation Army. hostility towards the . That gave it access to A more careful look at China’s military capability some modern Western technology. From France, it licensed suggests there is little ground for either excessive optimism the Super Frelon (Z-8) and Dauphine (Z-9) helicopters, or alarmism – depending on the observer’s attitude to the as well as the Crotale SAM system. Another SAM system, country – about China’s status as a great military power. Aspide, was licensed from Italy. China also bought a number of other weapons systems from France and Italy, and signed contracts with US companies to retrofit Chinese planes with The fruits of new great friendship new avionics. Another key partner was Israel, which became instrumental in the development of the new J-10 fighter jet. For almost three decades between the Soviet-Chinese But the Tiananmen events of June 1989 soon put an end to bust-up in the early 1960s and the collapse of the Soviet Union China’s imports of military technology from the West, and in 1991, China was mired in technological backwardness. plunged the country’s defense industry into a new bout of After the generous flow of military equipment from Moscow technological isolation. ended abruptly in 1961, the Chinese army was stuck with Fortunately for China, relations with the Soviet Union old Soviet technology dating back to the 1950s. The obsolete took a sharp turn for the better at about the same time, and MiG-19 Farmer fighter jets manufactured under a Soviet new defense contracts with Moscow soon followed. In 1991, license (Chinese designation J-6) remained the backbone of China signed the first deals to buy modern Soviet weapons, the Chinese fighter fleet. The adoption of the early versions including 24 Su-27 Flanker fighters and two of the Project of the MiG-21 Fishbed (J-7) fighter was excruciatingly slow 877EK (Kilo class) conventional submarines. and painful. The bulk of the bomber fleet was made of the Il- This breakthrough was vitally important to China. It 28 (H-5) Beagle aircraft, plus a few long-range Tu-16 (H-6) would not be an exaggeration to say that modern Russian Badger bombers. The piston-engine Mi-4 (Z-5) Hound weapons and defense technology bought after 1991 have been remained the main Chinese helicopter, the T-54 (designated at the heart of the People’s Liberation Army’s modernization in China as the T-59) the main battle tank, and the S-75 and the Chinese defense industry’s progress in recent years. (HQ-2) the main SAM system. The Chinese navy relied on old For China, Russia has become an abundant source of almost Soviet designs of the 1950s, or their simplified clones. And the every type of modern weapons technology. Chinese ballistic missile technology was based on the early Thanks to the massive supplies of the Su-27 and Su-30 Soviet R-2 (SS-2), R-11 (SS-1B) and R-12 (SS-4) missiles, families of fighter jets from Russia (a total of 178 by 2005), which had given away as a gift. the Chinese Air Force has leapfrogged from the second to China’s own attempts at weapons-building tended to the fourth generation of combat aircraft. The launch of yield either feeble contraptions such as the J-8 Finback fighter production of the Su-27 (J-11) jets in Shenyang under a 1996 jet and the Ming class submarine, or slipshod modernizations license deal gave a similar fillip to the Chinese aerospace of and missiles that were obsolete even before they left sector, which had acquired access to modern avionics, radars, the drawing board. The main thrust of the Chinese defense engines and missiles. 2 # 4, 2009 Moscow Defense Brief China’s Military Modernization: the Russian Factor Editorial

Supplies of modern Russian jet engines became a real the archaic S-75’s (SA-2) dating back to the Francis Gary boon for the Chinese combat aircraft makers, hidebound Powers era. Since 1996, China has bought 28 of as they were by the unavailability of powerful modern the S-300PMU1/2 SAM (SA-20) SAM systems. What is more, propulsion units. China has finally managed to launch mass it has also developed its own version of the Russian system, production of the only two decent fighter jets that it has - the the HQ-9, with the help of the Russian Almaz-Antey group - J-10 and the FC-1, fitted with the Russian AL-31FN and RD- although the Chinese are still having trouble launching mass 93 turbofan engines, respectively. production. The HQ-16 and HQ-17 systems also appear to be A total of 12 Project 636 and Project 877 (Kilo class) Russian designs, to all intents and purposes. China has also conventional submarines have been built for China by Russian relied on Russian assistance in developing its short-range shipyards, in addition to four Project 956 (Sovremennyi SAM systems (in addition to buying the Russian Tor SAMs) class) destroyers. For the first time in its history, the Chinese and radar stations. Navy has got hold of some truly modern ships with advanced In airborne weapons, China became the main importer acoustics, radars, torpedoes and supersonic anti-ship of Russian air-to-air and air-to-surface missiles. It has also missiles (Moskit and Club). And the Project 956 destroyers launched joint production of the Kh-31P/KR-1 (AS-17) anti- are the first Chinese Navy ships armed with medium-range radar missiles (essentially those are just being assembled in air-defense missile systems (as opposed to short-range China). And Russia’s MNPO Agat has developed an active missiles). radar homing seeker for the latest Chinese PL-12 air-to- Even more importantly than buying individual Russian- air missile. The developers of the latest Chinese airborne made weapons, China has been able to acquire and license a and ground-based cruise missiles are also believed to have wide range of Russian military technology, and to make use made use of Russian assistance, as well as of some related of Russian military expertise to design some new weapons - technologies and the Kh-55 (AS-15) cruise missiles bought indeed, sometimes entire new weapons systems - of its own. from Ukraine. In the 1990s and the early part of this decade, many if not Russia is known to have been heavily involved in the most of the Russian military design bureaus and research development and fine-tuning of the J-10 and FC-1 fighters. facilities worked for the Chinese, who had become their main Russia’s Yakovlev bureau took part in the development of the customer. As a result, many of the latest Chinese weapons new Chinese L-15 training jet, which appears to be a clone systems developed over the past decade bear the hallmarks of the Yak-130. of their Russian origins. The Chinese Navy has also made a colossal leap forward One example is the Bakhcha-U turrets of the new thanks to the acquisition of Russian arms and technology. Chinese ZTD-05 armoured infantry fighting vehicles, which It has bought a number of weapons and radar systems for were paraded on October 1. It was designed for China by its destroyers and frigates, such as the Rif-M (SA-N-20) the Tula KBP bureau, using the fighting compartment of and Shtil-1 (SA-N-12) SAM systems (the later includes a the Russian BMP-3 armoured infantry fighting vehicle as vertical launch version). The Chinese-built Type 051C the starting point. The Kurgan machine-building plant was and 052B destroyers, for which those systems have been involved in the development of the rest of the vehicle, as well bought, were themselves designed with the participation as the launch of its mass production. The same is true of the of Russia’s Severnoye bureau. The same bureau appears to Chinese ZBD-03 airborne fighting vehicle. have contributed to the design of the Chinese Type 052C fleet China’s latest artillery systems are licensed and destroyers and Type 054 frigates, while the Rubin bureau was slightly modified versions of Russian designs - and even the involved in designing the new Chinese subs. In the 1990s, modifications themselves were probably made by Russian Russia sold China the full set of designs and documentation designers. That includes the fighting compartment of the for the Var yag heavy aircraft carrier cruiser. And the Nevskoye 155 mm PLZ-05 self-propelled howitzer (a version of the bureau has actually designed an entire medium-size aircraft Russian 2S19M1 Msta-S), the 120mm PLL-05 self-propelled carrier for the Chinese, which fact it announced with little gun-mortar (2S23 Nona-SVK), and PHL-05, a 300mm MLRS fanfare in its annual report last year. China has also licensed based on the Russian 9K58 Smerch system. China has also the Russian 76 mm AK-176 naval artillery systems, and licensed the Krasnopol guided artillery projectiles, the Russian companies have been developing torpedoes and Basnya, Refleks-M and Bastion tank-launched anti-tank mines for the Chinese Navy. guided missile systems, and the RPO-A rocket infantry It is therefore clear that Russia has been the main engine flame-thrower. And the latest Chinese powered chassis are of the Chinese army’s technological transformation, which obvious licensed clones of the MAZ chassis. fact has not escaped the attention of the experts who watched Another area of Russian involvement worth a separate the October 1 parade. At least 12 of the key weapons systems mention is the development of the latest Chinese SAM put on display on Tiananmen Square that day have either systems. Until recently China was hopelessly stuck with Soviet or Russian origins. Russia has been both the main # 4, 2009 Moscow Defense Brief 3 China’s Military Modernization: the Russian Factor Editorial

weapons supplier and the key weapons design bureau for indigenous mass production looks especially uncertain China over the past decade and a half. where it comes to a number of modern missile systems, and SAMs in particular. Careful study of China’s military capability and its latest Trying to stand on its own two feet weapons systems also leads to a number of other conclusions, which the Chinese would doubtless prefer not to hear. One In the past few years, however, it has become quite obvious problem is the poor functionality and design of some obvious that defense industry cooperation between Russia of the Chinese weapons systems, which look half-finished. and China is on the decline. In the 1990s, China was the main Another is the uninspired imitation of foreign designs, importer of Russian weapons, accounting for up to half of which points to a deficit of independent ideas in technology, Russian arms exports in 2004-2005. By 2007, that figure strategy and tactics of warfare. There are gaping holes in had shrunk to just 25 per cent. The projection for 2008-2010 some important areas of Chinese military capability. The is a mere 12-17 per cent. China has almost stopped buying air defenses of the parts of the country not covered by the complete weapons platforms from Russia. It is now interested Russian-made S-300PMU1/2 systems are a joke. Battlefield only in components, subsystems, engines, and technical air defense also remains woefully inadequate. The anti-tank expertise. Once the final deliveries are made in 2010 under capability is rudimentary, and the country has no combat the S-300PMU2 contract, exports to China can be expected to helicopters whatsoever; the Z-10 attack helicopter project shrink even further. Beijing has also chosen not to continue is languishing because there is no indigenous engine it the licensed assembly of the Su-27 fighter jets. could make use of. The strike potential of the Chinese Air China appears to have acquired all the technology it Force remains very limited, and the bulk of its fleet is made wanted from Russia, and its strategy now is to develop its of the 1960s designs. The Chinese navy’s ability to defend own weapons systems based on this know-how. On the other against modern submarines is rated as very low, and on many hand, Russia has obviously been careful not to sell China its important indicators that navy itself is nothing more than a very latest weapons. Interestingly, some of these weapons coastguard fleet. Moscow has been prepared to sell to India, but not to China. Finally, the bulk of the Army’s equipment remains Essentially, Russian-Chinese defense industry cooperation obsolete. The handful of new vehicles of each type trotted has hit a glass ceiling. out in of Mao’s mausoleum do not change the bigger What is more, the Chinese actually believe now that in picture. Fewer than 300-350 of the latest Type 99 main battle many areas their technology is sufficiently advanced to do tank have been built over the past decade. In order to be able away with Russian assistance. That has resulted in blatant to replace the ancient T-59’s, which still make up the bulk of attempts to clone some Russian weapons rather than license the fleet, China has been forced to maintain production of the them. The most notorious example is China’s “indigenous” cheap, simplified and painfully obsolete Type 96. This kind J-11B fighter jet made in Shenyang, which is actually nothing of approach - i.e. producing a few modern-looking showcase more than a pirated copy of the Su-27 jet previously assembled pieces while the bulk of the output is made up of spruced-up there from Russian kit. old junk - exemplifies the current state of affairs in China’s However, this particular “achievement” has actually defense industry. Even the Chengdu facility, which builds put in stark relief the limitations of China’s defense industry. the latest J-10 fighters, also continues to churn out the J-7G Only a few samples of the J-11B appear to have been built to model, a slightly updated version of the venerable MiG-21. date. China’s attempts to end its dependence on Russia for Meanwhile, the Type 99 tank is a fine example of the jet engines also remain fruitless. The powerful indigenous true level of Chinese military technology. It traces its lineage WS10A turbofan engine, which was designed to replace the to Type 90, which is itself a heavily upgraded clone of the old Russian AL-31F on both the J-10 and J-11B fighters (and T-72. Chinese military web sites and forums, as well as some which could itself be a partial clone of the AL-31F), is still Western observers who take all the patriotic verbiage at face struggling with teething problems. All this is forcing Beijing value, sing the praises of Type 99. They describe it as world- to swallow its pride and keep signing contracts for new class; some even go as far as to suggest that it outclasses the shipments of the AL-31FN engines for its latest prime fighter, Russian T-90A. the J-10. The truth is, the armor system of the latest and greatest It would appear that by remaining the sole source of Chinese tank’s turret looks nothing short of ugly. Due to some key components, Russia is keeping its finger on the poor design choices, the thickness of the armor at the 30- pulse (or its hand on the tap if you like) of a whole number 35 degrees angle is a mere 350mm, whereas the figure for of crucially important Chinese weapons programs. And the latest Soviet/Russian tanks is about 600mm from all many of the latest “indigenous” or licensed Chinese weapons angles. Roof armor at the front is also weak, and the tank has systems still rely on Russian supplies. China’s ability to launch inherited the weakness of the porthole and hatch areas from 4 # 4, 2009 Moscow Defense Brief China’s Military Modernization: the Russian Factor Editorial

the old Soviet designs. The dimensions of the Type 99 turret antiquated Soviet Tu-16 long-range bomber. Some of these make any substantial improvements in its built-in protection aircraft are now being fitted with the DH-10 cruise missiles. system all but impossible - witness the latest modification, That could make them a more powerful instrument - but they Type 99A1. Meanwhile, the decision to use the powerful would still be a far cry from a proper strategic bomber. but bulky German MTU diesel engine forced the Chinese China’s program of developing a new generation of designers to add an extra meter to the tank’s length, bringing strategic nuclear missiles has evidently hit some serious its weight to 54 metric tons despite the sacrifices made in problems. Meanwhile, the existing arsenal, due to the armor strength. (Besides, the use of imported engines - or limitations of its underlying technology, has insufficient their assembly from imported components - seems to be the potential and low combat-readiness. It is also highly key reason why so few of the Type 99’s have been built so far.) vulnerable to a nuclear strike by the United States or Russia. So compared to the latest Russian designs, Type 99 is a bulkier That means that the Chinese nuclear arsenal is not fit for the tank with weaker armor, handicapped by poor engineering. purpose of either effective first strike or retaliation (since it The Chinese rely too much on superficial mechanical copying would hardly survive the first strike against itself). And if of individual design elements, which often do not fit together the United States deploys even a limited ABM system, the very well. This copying does not translate into any advantages utility of the Chinese nuclear deterrent will diminish even compared to the original foreign designs, and in many further. cases leads to unexpected problems. Compared to the vast The Chinese leadership (including the defense experience of Soviet/Russian tank designers, the Chinese are industry captains) as well as the ordinary Chinese seem only making their first steps - and it really shows. to be unreasonably euphoric about their country’s touted Finally, a few words about China’s nuclear potential. For advances in military strength. Mesmerized by the brightly all the achievements of China’s defense industry, the country painted ranks of their new tanks and missiles, the Chinese remains a clear outsider among the five official nuclear powers flag-wavers tend to ignore the fact that their country’s in terms of its strategic nuclear capability. Beijing has no military technology achievements are fragile, tentative more than 40 intercontinental ballistic missiles (ICBMs), and and scant. And most importantly, these achievements are about 120 intermediate-range ballistic missiles. The number primarily based on Soviet and Russian imports rather than of the new DF-31A (CSS-9) solid-fuel ICBMs manufactured indigenous technology. China has succeeded in importing a each year is in the low single digits. China has only one Type wide range of military know-how from Russia - but it is far 092 SSBN carrying 12 aged ballistic missiles of the JL-1 type. from certain that the Chinese defense industry will actually The sub has never been at sea on active duty. There are also manage to absorb all that know-how. There are questions the two recently completed Type 094 SSBN subs, but the JL-2 even about China’s ability simply to replicate the technology missiles they are supposed to carry are still in development. is has already bought. The current strategy of scaling down That means that the Chinese nuclear arsenal does not have defense industry cooperation with Russia could yet come a combat-effective sea-based component. The Chinese Air back to haunt China, revealing the decrepitude behind its Force, meanwhile, does not have a strategic bomber. It has army’s high-tech veneer. And then Beijing will have to turn to make do with the H-6 (up to 100 units), a clone of the to its northern neighbor for help once again.

# 4, 2009 Moscow Defense Brief 5 China’s Military Modernization: the Russian Factor Arms Trade

Russian Exports to China: What the Future Holds Konstantin Makienko

he decline of Russian-Chinese defense industry bureau, which is authorized to export components and spare Tcooperation that began in 2004-2005 has continued into parts bypassing the intermediary – may have signed another 2009. Up until five or six years ago, China was the largest 300m dollars worth of contracts with the Chinese, taking importer of Russian weapons, accounting for about 40 per the total figure for 2006 to 500m. CAST estimates that sales cent of all Russian arms exports over the period of 1992-2004. to China in 2007 were in the region of 700-800m dollars, or In some years that figure reached 55-60 per cent. 5.5-6 per cent of the total. That means that as an importer of But after 2004, Russian sales to China fell off a cliff. The Russian weapons, China has been overtaken by: first signal was Beijing’s decision not to exercise its option to •• India (which accounted for at least 45 per cent of the buy 95 Su-27SK Flanker fighter jet kits for licensed assembly contracts in 2007, and about 30 per cent in 2008) in Shenyang. China took delivery of 105 such kits in 1998- •• Algeria (18 per cent in 2007) 2004. But now that it has launched mass production of the •• Syria (9 per cent in 2007) J-11 (the Chinese name of the licensed Su-27SK) and ironed out teething quality problems, the plan, apparently, is to dump licensed assembly in favor of home-made clones. There have What happened? already been media reports claiming that the engines and radars of the new J-11B version are of “China’s own design There are three main reasons behind the slump in and manufacture”. Russian-Chinese defense industry cooperation: Russian hopes that China would order a second batch •• China’s defense industry has now developed the capability of the navalized Su-30MK2 fighters have also been dashed. to produce third and fourth generation weapons systems, The first 24 aircraft were delivered in 2004. The expectation which the country previously had to import from was that the Chinese Navy would soon order more of these Russia; jets, which have an advanced anti-ship capability. That now •• China has lost its status as a critically important buyer of seems unlikely. The last known Chinese contract for Russian Russian arms after Moscow signed large contracts with aircraft platforms was the 2005 deal to buy 34 Il-76MD Algeria and Venezuela in 2006, and bolstered its domestic Candid military transport aircraft and four Il-78MK Midas weapons procurement programs; aerial refueling tankers. But only a year after the deal was •• Moscow is wary of allowing the Chinese to get hold of struck, it became clear that the Tashkent aviation plant would the more advanced Russian weapons of the 4+ and 4++ be unable to make the deliveries. It had run out of Soviet-era generations. stocks of components, underestimated its costs and failed to Another important, albeit local factor is that the factor in the weakness of the dollar. Tashkent aviation plant has run out of old Soviet stocks of That means that the last known aviation or naval components. That is why the 2004 contract to supply 38 Il-76 platforms contract with China that has actually been fulfilled platforms fell through. dates back to 2003. From then on, most of the new orders In the 1990s, Russian-Chinese defense industry were either for the modernization of Russian-made aircraft, cooperation was a vital necessity to both sides. After Europe or for new airborne weapons and engines, as well as naval slapped its arms embargo on Beijing, Russia remained weapons and AA systems. One notable exception is the Mi-17 almost the only country both willing and able to sell modern Hip transport and assault landing helicopters, as well as the weapons and technology to China. Only Israel could give naval Ka-28 Helix ASW helicopters – China still continues to Moscow a run for its money in this area. But the Israelis buy those. But the overall revenue from Chinese contracts has had their hands tied by their dependence, both financial dried up. According to Sergey Chemezov, the director general and military, on the United States. America is not keen to of Russia’s sole arms exports intermediary Rosoboroneksport, watch Beijng being armed with the latest weapons. Israel has his company’s Chinese portfolio was only 200m dollars in already had to turn down a Chinese contract for the airborne 2006. Other Russian arms exporters – primarily the Sukhoi Phalcon radar, after Washington brought its pressure to bear.

6 # 4, 2009 Moscow Defense Brief Russian Exports to China: What the Future Holds Arms Trade

And before that it had to end its participation in the Chinese The situation in Russia itself has also changed beyond J-10 fighter program. That is why only Russia could help recognition. The country has become much stronger, both China make a leap from the second generation of weapons politically and economically. It has become a more powerful to the third or fourth. Meanwhile, the Russian designers force on the world stage, and won some new friends in various and manufacturers of conventional arms depended on corners of the globe. That has resulted in an impressive the Chinese contracts for 30-50 per cent of their revenue. diversification of its arms exports, which were previously Beijing had become an indispensible partner for Russia in confined mainly to China and India. In 2003, Moscow signed that regard. Without the Chinese orders, the Russian defense up to 2bn dollars worth of contracts with three Southeast industry would not have survived the 1990s. The Indian Asian countries: Malaysia, Vietnam and Indonesia. Two large contracts, for all their importance, would not have sufficed deals were signed in 2006 with Algeria and Venezuela, worth on their own. up to 11bn. There are also indications that Russia secured But by the middle of this decade, the landscape had large Middle Eastern contracts in 2006-2007. The bottom changed dramatically. Russia was no longer the sole player line is, the list of Russia’s defense customers has become very on the Chinese market for 1980s weapons technology. It now long, and China is nowhere near the top of it. In fact, orders faced stiff competition from China’s own defense industry, have piled so high that the Russian contractors may have a which had performed a feat of technological transformation problem delivering. On an average year back in the 1990s, in a space of 15 years. The Russian specialists who have seen they had about 7bn dollars worth of contracts between them. up close the latest Chinese aviation, engine and shipbuilding As of late 2007, that figure had rocketed to 32bn. Meanwhile, facilities, all agree that they are built to world-class standards. defense industry capacity has been static at best, and may Chinese workmanship and the expertise of its scientists, have actually shrunk compared to the previous decade. As designers and engineers have all been improving in leaps a result, a whole number of contractors (including Irkut, and bounds. And on top of all that, as soon as the Chinese lay Almaz-Antey and helicopter makers) are fully booked until their hands on Russian weapons systems, they immediately 2012. And these are the very companies that produce Russia’s attempt to copy them. Apart from the J-11B, they are known most competitive offerings on the world arms market. That, to have tried to clone the S-300P (SA-10/SA-20) SAM system, incidentally, may be one of the reasons for the slow progress naval SAM systems and aircraft engines. For now, they have of arms exports talks with Libya and Saudi Arabia. But be little to show for their efforts. But they have succeeded before that as it may, the Chinese contracts are no longer critical in cloning and then continuously modernizing second- for the Russian defense industry as a whole - although their generation Soviet technology (especially the MiG-21 Fishbed scarcity has become a serious problem for some individual fighters). So sooner or later, they will crack the more recent suppliers. systems too. In this situation, the Russian generals are quite right Meanwhile, some European nations have been to oppose the transfer of more advanced weapons systems campaigning for five or six years now to lift the Chinese arms and especially technology to China. The imbalance of the embargo. Beijing is therefore hoping that it will soon have two countries’ potentials is growing, and that is a legitimate access to the latest European weapons technologies. By 2005- reason for concern among the Russian military elite and 2006, it had obtained all the spruced-up fourth-generation expert community. Previously, the Chinese contracts were weaponry that it wanted, including aviation and naval instrumental in preventing the degradation of Russia’s systems. Now it demands much more advanced technology defense industry. That degradation was a much more serious from the prospective suppliers. It also insists on buying only threat than China’s growing military power. Now, however, a small batch of each system, preferring to import the know- the Russian defense contractors are doing rather well how rather than the finished product. And unlike India, China even without the Chinese money. The era of large Chinese is showing little appetite for joint development, manufacture contracts for Russian weapons seems to have come to an and marketing of new-generation systems. end.

# 4, 2009 Moscow Defense Brief 7 Russian Exports to China: What the Future Holds Defense Industries

Strategic Cruise Missile Carrier H-6K – A New Era for Chinese Air Force Vasiliy Kashin

hina officially confirmed the entry into service of its land targets. The missile was obsolete and had a range of only Clatest H-6K bomber only during the recent celebrations about 200km, leaving the pilot little chance of accomplishing of the People’s Republic’s 60th anniversary. But first reports his mission when faced with modern air defenses. The range about the aircraft (including photos) were available from of the bomber itself also remained a problem. All that called open sources and Chinese web sites as far back as late 2006 for a radical overhaul of the H-6. Work on the new H-6K – early 2007. Information about the bomber is still scant. It project began in 2000, and the first test flight took place in has largely been upstaged by the more acclaimed Chinese January 2007. aircraft, including the J-10, J-11 and FC-1. The main difference of the new H-6K, made by Xian Such relegation appears entirely underserved. For China’s Aircraft Company, from the previous versions is the Russian- strategic aviation, the H-6K is as much of a breakthrough as made D-30KP-2 turbofan engines. They replaced the WP-8 the J-10, J-11 or Su-27 were for its tactical wing. This is in fact turbojet units, which were a copy of the old Soviet AM-3M, the China’s first proper strategic bomber, and its specifications original engines of the Tu-16. The new engines, made by NPO make it entirely fit for modern warfare. It has an increased Saturn, are much more powerful and fuel efficient. China had range, new engines, a modified airframe, and improved previously bought them for its Il-76 fleet. An announcement avionics. It is also the first Chinese aircraft to be armed with made in March 2009 said China had signed a contract to buy relatively up-to-date long range cruise missiles, which can 55 such engines, with an option for another 33. The official be launched from beyond the enemy’s air defense radius. version was that the engines were “for the existing Chinese The bomber appears to have been dubbed God of War by the [Il-76] fleet”. Chinese - that was the name on the side of one of the first But the Chinese Air Force has only 14 of the Il- H-6K units pictured on the Chinese websites. 76 transports, and another five KJ-2000 airborne early The new bomber has evolved from the H-6, the Chinese warning planes, a modification of the A-50I (which is itself version of the Russian Tu-16 Badger. The Chinese made several a modification of an Il-76 AEW version). Plans to purchase improvements to the old model in the 1970s-early 1990s, another 38 Il-76 transports and Il-78 aerial refueling tankers including better navigation, targeting and communication under a 2006 contract fell through because Russia was unable systems. They built a navalized version carrying anti- to make the deliveries. Clearly, China did not sign such a ship missiles, the H-6D. There were also attempts to fit the large contract for the D-30KP-2 engines in the expectation plane with new engines (the H-6I project), but they proved that most of its existing Il-76 fleet would suddenly develop unsuccessful. engine problems. The engines are obviously meant for the In the 1990s, the H-6 was still a reasonably serviceable H-6K fleet. model when used as an anti-ship missile carrier. China’s To accommodate the new propulsion unit, the engine land bomber fleet, however, was in an obvious crisis. Its inlet of the new bomber has a much large diameter and a only weapon was the free fall bomb, and the chances of the very different shape compared to the early H-6 versions or the bombers themselves penetrating the enemy’s air defenses Soviet Tu-16. This is one of the most distinguishing features were minimal. All the H-6 versions also suffered from in the new bomber’s appearance. The main purpose of insufficient range, which was especially problematic given replacing the engines was to give the bomber a greater range. the growing range of modern fighters and the wide spread Chinese media sources put the new model’s combat range at of mid-air refueling. Some Chinese analysts argued in the 3,000-3,500km. There has been no official confirmation of 1990s that there would be no point maintaining a fleet of the the figure to date. H-6’s after the arrival of the Su-30 fighter, with its mid-air China is trying to end its dependence on Russia for refueling capability. aircraft engines. To that end it is developing the WS-18 The H-6H version, which appeared in the late 1990s, turbofan engine, an unlicensed copy of the D-30KP-2, which was China’s first attempt to address that glaring problem. it also plans to install on its future heavy transports. Testing It carried only two KD-63 cruise missiles, which were of the WS-18 began in 2007 at one of the facilities of Chengfa themselves a remake of the anti-ship C-601, modified to hit Group (former Factory 420 in Chengdu). It is not clear when 8 # 4, 2009 Moscow Defense Brief Strategic Cruise Missile Carrier H-6K – A New Era for Chinese Air Force Defense Industries

the engine might be ready for mass production. Chinese has retained some role in the CJ-10 project, in areas such engine programs are notorious for missing deadline after as the manufacturing of engines and navigation systems. deadline, and for taking an inordinate amount of time to Also, after America’s failed Tomahawk missile strike against achieve the target specifications. the Taliban targets in in 1999, China acquired The nose section of the H-6K has been completely several salvaged missiles, which fell somewhere in Pakistan reworked. The new version is missing the navigator’s cockpit and Afghanistan. The information gleaned from the salvaged and the attendant glass paneling. The nose has therefore Tomahawks was used in the CJ-10/YJ-62 project. Recent become shorter, with a visible change of proportions compared reports suggest that at present, these missiles are not being to all the previous members of the H-6 family. In place of fitted with nuclear warheads. They are seen instead as a the navigator’s cockpit, the bomber has a radome covering a weapon for surgical strikes. powerful radar “of a new type” (no further details have been It is estimated that fitted with the new missiles, the H-6K given to date). The plane is therefore missing the ventral can strike land targets at a distance of at least 5,000km. This radome under the navigator’s cockpit, which was clearly visible makes the new bomber a serious threat to America’s military on the H-6H and all the naval versions of the H-6. Several bases in Asia Pacific. And when fitted with the YJ-62 missiles, photos apparently showing the new plane’s crew station, which it can also threaten the navies of the United States and its seems to employ a glass cockpit design, have been published allies in the region - provided of course that the new bomber on Chinese web sites. There is no information on the plane’s is produced in sufficient numbers. avionics or radioelectronic warfare equipment. Equipped with high-precision cruise missiles, the H-6K The bomber has six wing pylons for the CJ-10A cruise can be an effective instrument of delivering a non-nuclear missile, an airborne version of the CJ-10, with a range of 2,000 preemptive strike against India’s small and vulnerable km (some sources put the figure at 2,200km). Some reports nuclear deterrent. This threat will probably prod India into claim that a seventh missile can be mounted on the centerline an expensive effort to upgrade its nuclear infrastructure and pylon. The H-6K does not seem to have a bomb bay - the space air defenses. is used to house an additional fuel tank and radioelectronic If China modifies its nuclear doctrine and develops equipment. Some experts believe that in future, the new a new, nuclear-armed version of the CJ-10A, the Chinese bomber will also carry the heavy YJ-62 anti-ship missile with strategic aviation can become an integral part of a highly a range of over 300km, a design based on the CJ-10. This flexible and resilient strategic nuclear triad. On the whole, raises the prospect of a navalized version of the bomber with the Chinese are inclined to believe that their new bomber’s special avionics. capability is close to that of the Russian Tu-22M3 Backfire The YJ-62/CJ-10 family is an evolution of the earlier long-range bomber. The H-6K is going to become the Chinese land-based Honhniao (Red Bird) cruise missiles. backbone of the Chinese bomber fleet, and to retain that role Their design also seems to use some elements of the Soviet for an indefinitely long period, until the Chinese aerospace Kh-55 (AS-15) cruise missiles. China bought several of industry can offer the country’s armed forces a radically new, those in Ukraine in 1999-2001. It is possible that Ukraine indigenously designed long-range aircraft.

# 4, 2009 Moscow Defense Brief 9 Strategic Cruise Missile Carrier H-6K – A New Era for Chinese Air Force Defense Industries

Highlights From Almaz-Antey 2008 Financial Report Said Aminov, editor of Vestnik PVO web site (www.pvo.su)

or several years now the leading Russian manufacturer proposal on setting up a comprehensive system of repair and Fof air defense systems, Almaz-Antey, has been publishing maintenance of the Triumf and Antey 2500 missile defense its annual financial reports. The 2008 report is especially systems for foreign customer 682” - 682 being the Russian interesting since it contains detailed information on the code for Saudi Arabia4. group’s finances, R&D program and export contracts.1 This has been the first official mention of a proposal According to the report, the entire group’s consolidated to export Antey 2500 (S-300VM) (SA-23) for several years. revenue from core activities reached 88.8bn roubles (about The document also says that in 2008, the company finished $3.3bn) in 2008 – up 37.1 per cent on the previous year. The the assembly of the test samples of the modernized S-300V group’s head company reported that its own revenues from system, as part of the Modern-2 R&D project. The system core activities were up 73.1 per cent to 26.13bn roubles. By includes a command station, a multi-channel missile that indicator Almaz-Antey remains Russia’s biggest defense guidance station, a launcher and a radar station5. All that contractor. suggests that the company continues to work on improving The group normally exports its air defense systems the S-300V system and its updated Antey 2500 version, and via Russia’s state-owned Rosoboroneksport intermediary. that both systems are being marketed abroad. Antey 2500, Revenues from direct exports of spare parts and components, when paired with the powerful S-400 Triumf (SA-21), can as well as contracts for maintenance of previously exported offer the potential foreign buyer (such as Saudi Arabia) an equipment, added up to a mere $12.6m in 2008. The absolute impenetrable system of defense against aircraft and non- figure is not very impressive – Sukhoi, a combat aircraft strategic missiles. That could translate into a major boost for manufacturer, exports $200m worth of spare parts every year Almaz-Antey’s exports. – but it still represents a six-fold increase on 2006 (no figures The R&D-related parts of the report worth a separate are available for 2007). Considering how much military mention include the completion of several research equipment Almaz-Antey has already sold abroad, and how projects under the program of Russia’s future aerospace much it keeps selling, the direct repair and maintenance defense strategy, including the Razvitiye-KTVD-25 and contracts are expected to become a much larger part of its the Vozrozhdeniye research projects. Almaz-Antey has also portfolio. produced schematic designs for the Triumfator-M project The report also contains a list of countries Almaz- (which is apparently an improved version of the S-400)6, Antey is dealing with. Interestingly, it includes the United Morfey (presumably referring to the ultra-short range air Arab Emirates, Oman and Kuwait, although there has been defense system Morfey)7 and Vityaz-PVO (presumably no recent reports about Russian military exports to these the medium-range air defense system Vityaz)8. It has also countries in the Russian media. There have been mentions of completed early designs for a proposed new automated the proposal to build an air defense system for the UAE based system of air force and air defense command. Meanwhile, on the Russian S-400 (SA-21) SAM system, but in 2008 the the Tikhomirov instrument-building research institute has country opted for the US-made Patriot PAC-3 instead. built the first sample of an active phased array airborne radar The list does not, however, include Venezuela, which, for the T-50 fifth-generation fighter being developed by the according to media reports, has been planning to buy the Sukhoi bureau.9 Russian Tor-M1 and Tor-M2E (SA-15) mobile SAM systems. The report also says that in 2008, Almaz-Antey And in September 2009, Venezuelan President Hugo Chavez, manufactured several sets of the 40N6 ultra-long range (up fresh from a visit to Moscow, announced several large to 400 km) anti-aircraft guided missiles designed by MKB contracts to buy Russian weapons, including the S-300V (SA- Fakel10. The missiles were needed for the state trials of the 12/SA-23) SAM system2. Nether does the list include Saudi 40R6 system (S-400 Triumf)11. There have been reports in Arabia, which is apparently in talks with Russia to buy air the Russian media that first deliveries of the 9M96 missiles defense equipment. Various media reports3, as well as Almaz- and the long-range 40N6 missiles designed specifically for Antey’s annual financial report itself suggest that such talks use with the S-400 are not expected before 201012. have indeed taken place. The document says that in 2008, the Almaz-Antey has also been working to modernize the concern “developed and submitted to Rosoboroneksport a Buk (SA-11/SA-17) series of its air defense systems. The 10 # 4, 2009 Moscow Defense Brief Highlights From Almaz-Antey 2008 Financial Report Defense Industries introduction to the report by the group’s director-general, commander Nikolay Frolov said in December 2007 that first Vladislav Menshikov, mentions R&D work on the project to deliveries of Tor-M2 to the were expected modernize the Buk-M2E system (for a foreign customer) and in 2009. It was said that the system would be equipped with to upgrade the Buk-M2 (SA-17) systems to the Buk‑M3 level improved missiles, and its combat performance figures (for Russia’s own armed forces). The report also mentions would more than double compared to the previous version18. that the company has completed the installation and tuning Whereas the export version, Tor‑M2E, is still equipped with of the 9S18M1-3 radar for Buk-M3. It has also completed the standard 9M331 missile, the version for the comprehensive preliminary trials of the Buk-M1-2A system will probably come with the new 9M338K. equipped with the 9M317A active radar homing seeker13. That The report also says that due to the deficit of the latter system is now awaiting state trials. The commander of GM‑352M1 tracked chassis for the Tor mobile launchers, and the Army Air Defense, Nikolay Frolov, said in September of the GM-355A chassis for the Tunguska (SA-19) tracked 2007 that first deliveries of Buk-M3 to the Russian Armed gun-missile air defense systems, Almaz-Antey has submitted Forces will be made in 2009. In addition, the 2006 annual a proposal to the Russian Defense Ministry to resume the report of the NPP Dolgoprudnenskiy company15 (which is production of these chassis at the Minsk tractor plant in part of the Almaz-Antey group) mentioned plans to complete . 19 the development of three new versions of missiles for the Also in 2008, the company’s Kolchan SAM system Buk SAM systems - 9M317A, 9M317M, and 9M317ME - by equipped with the 9M330 missile passed the first stage 2009. It also said the company had begun developing the of the state trials. This is a modernized version of the 9M317MAE missile for export markets. Kinzhal (SA‑N-9) naval short-range missile system. It is Almaz-Antey is also working on short-range air defense being developed as part of the navy ships modernization systems, including the Tor (SA-15) SAM system. Its Tor-M2 program.20 system equipped with the 9M311 missile passed state trials Finally, the Almaz-Antey annual report mentions the in 2008. Tor-M2 in a combination with the 9M338K16 missile completion of preliminary trials of Product 3M14 as part of successfully completed comprehensive preliminary trials in the Kalibr R&D project21. This is a conventional submarine- the same year. The company has also been developing the launched land-attack cruise missile developed by OKB export version of the system, Tor-2ME.17 Army Air Defense Novator design bureau.22

1 Almaz-Antey yearly report for 2008 / editorial commission chairman Y.V. Novikov. Moscow: OAO Concern PVO Almaz-Antey, 2009 2 Terekhov A. Chavez reveals his weapons plans // Nezavisimaya Gazeta, September 15, 2009. If the contract is confirmed, Venezuela will become the second foreign country to buy the S-300V. The first buyer was the United States, which in the mid-1990s purchased one unit which was missing some components. 3 Konovalov I. Reality in documents // Kommersant, July 29, 2009 4 Almaz-Antey yearly report for 2009, P 38 5 Almaz-Antey yearly report for 2009, P 32 6 Nefedova A. Half a century of service to Motherland // Argumenty i Fakty (Bryansk), July 29, 2009 7 Ibid 8 Ibid 9 Butovski P. Fighter jets of transitional period // Kommersant supplement, August 21, 2007 10 Richardson D. Russia Tests Missile for S-400 // Jane’s Missiles & Rockets, 02.01.2009. 11 Almaz-Antey yearly report for 2009, P 32; Gyürösi M. Russia Plans New Chassis for S-400 Triumf // Jane’s Missiles & Rockets, 05.05.2009; ZRS Triumf - main result of 2007 // Strela, December 2007 12 Barabanov M. Where the Russian aviation flies //Vlast , August 25, 2008 13 Almaz-Antey yearly report for 2009, P 32 - The letter A in the missile’s name stands for “Active radar homing device”, see http://www. reference.com/browse/Buk+missile+system?jss=1 14 Tor-M2 and Buk-M3 air defense systems to be delivered to Russian armed forces in 2008-2009 // Gazeta, September 19, 2007 15 DNPP yearly report for 2006 (www.oboronregistr.ru/DNPP/1-07/Doc8.doc). 16 Almaz-Antey yearly report for 2009, P 32 17 Ibid, P 3 18 Deliveries of Tor-M2 missile systems to armed forces to commence in 2009 // Ria Novosti, December 25, 2007 19 Almaz-Antey yearly report for 2009, P 38 20 Catalogue of Russian Arms for 2006-2007 (www.centrmag.ru/book2869.html). 21 Almaz-Antey yearly report for 2009, P 32 22 OKB Navigator advertising brochure 3M-14E/3M-14TE (http://paralay.com/885/88515.jpg). # 4, 2009 Moscow Defense Brief 11 Highlights From Almaz-Antey 2008 Financial Report Armed Forces

The ‘New-Look’ Russian Army Ivan Konovalov, a Kommersant correspondent, for Moscow Defense Brief n October 2008, Russian Defense Minister Anatoliy the reform, there will be more than 60 such reserve depots, ISerdyukov announced a new stage of military reform, most of them storing enough equipment to field a brigade.1 and the most radical transformation of the Russian military Another important change as part of the new brigade machine since 1945. The MoD set about implementing the structure is the transition towards a three-tier command new strategy with great energy – most of the changes are system comprising Command, Operational supposed to be in place by December 1, 2009. The reform Command, and the actual brigades. Some 23 divisions are to will affect the Army’s numbers, structure, command system, be disbanded (with the exception of the 18th Machine-gun and officer training. & Artillery stationed on the South Kuril Islands, The key elements of the reform are as follows: and of the airborne divisions). The existing divisions, •• Accelerate the downsizing of the Armed Forces; combined services and army corps will be replaced by •• Reduce the number of officers and restructure the officer brigades, all taking orders from their respective Operational corps; Commands. These Commands will use the Western ‘joint’ •• Establish a noncommissioned officer (NCO) corps; setup structure, whereby a single Operational Command •• Centralize the system of officer training; will be in charge of all the forces in its area of responsibility, •• Reorganize and downsize central command, including the including aviation, air defense, missile units, etc. MoD and the General Staff; The new Operational Commands are supposed to be in •• Eliminate cadre-strength (skeleton) formations and bring place by the end of 2009, to replace the existing Combined all units to permanent readiness status; Services Army commands, which will be disbanded. Latest •• Reorganize the reserves and their training system; reports suggest that there will be a total of eight Operational •• Reduce the number of units, formations, and military Commands. One will be created in the Moscow Military bases; District on the basis of the 20th Army command. Another •• Reorganize the Army into a brigade system, abolishing the will be set up in the Volga-Urals Military District, to replace division, corps, and army echelons; and the 2nd Army command. There will also be two Operational •• Reorganize the Airborne Troops, abolishing divisions. Commands in the North Caucasus Military District (both Moscow Defense Brief outlined the gist of the reform replacing the 58th Army command), two in the Siberian in Issue No 4 of 2008. Arguably the most interesting part of Military District (replacing the 36th Army and 41st Army the whole package is the abolition of Army divisions and commands) and another two in the Far East Military District in favor of the new brigade structure. (replacing the 5th Army and 35th Army commands). 2 The main thrust of the reform is to abandon the Six Strategic Commands will be set up on the basis of traditional Soviet and Russian model of mass mobilization the six existing Military Districts. The commanders of the army. The idea is that in peace time, the new Russian Army Military Districts will be in charge of the respective new will be made of fully-manned formations which are always Strategic Commands. The Military Districts themselves ready for combat duty – the so-called permanent readiness remain in place.3 forces. All skeleton-strength units are to be disbanded. If the reform goes as planned, by 2012 all Army formations should be fully manned, i.e. become permanent The new brigades readiness forces. To that end, Russia is moving away from conscription and towards professional military service. The The restructuring of divisions into brigades commenced increase in the numbers of permanent readiness forces will in October 2008, and the standard make-up of the new brigades compensate for the overall downsizing of the Army. The was approved in December 2008. The reform proceeded at a skeleton-strength units, manned in peace time by officers brisk pace throughout 2009. Most of the changes were in place without any privates, will be disbanded. That means than by June 1, and the remaining ones should follow by December many officer vacancies – most of them senior – will also be 1, 2009. Some of the new brigades have already taken part in cut. several exercises. The results of these exercises are being used The existing arms and equipment reserve depots will to fine-tune the final structure. become the key element of the Army’s reserve system. The The entire Russian Army now consists of 40 regular reserve depots are essentially warehouses that store division combat brigades, including 4 tank brigades, 35 motorized or brigade-size complements of military equipment. Under rifle brigades, and one ‘cover’ (fortification) brigade. All four 12 # 4, 2009 Moscow Defense Brief The ‘New-Look’ Russian Army Armed Forces

of the new tank brigades have been formed from pre-existing •• two self-propelled howitzer artillery battalions (each tank divisions. Of the 35 motorized rifle brigades, 10 had been armed with eighteen 152mm self-propelled howitzers); in place before 2008, 21 have been formed from pre-existing •• a rocket artillery (18 122mm Grad MLR motorized rifle divisions, and another four have been newly systems); created using equipment stored in the reserve depots. •• an anti-tank artillery battalion (24 self-propelled anti- Under the new guidelines, at least 95 per cent of personnel tank missile launch vehicles plus six 125mm 2S25 Sprut- vacancies in the new brigades should be filled. The actual figures SD self-propelled anti-tank guns or 100mm MT-12 towed are all in the range of 95-100 per cent. All the new brigades are anti-tank guns; alternatively, 12 self-propelled anti-tank fully supplied with equipment and other provisions.4 missile launch vehicles plus 12 towed anti-tank guns); The actual make-up of the new brigades is not much •• a SAM battalion (12 Tor-M1 [SA-15] or Osa-AKM [SA-8B] different from the brigade structure that was introduced in self-propelled SAM systems); the early 1990s. It essentially follows the model established by •• a mixed SAM-artillery air defense battalion (six Strela- the independent brigades that existed in the period of 1993- 10M3 [SA-13] self-propelled SAM systems, six 2S6M 2008. The core of the new brigades is made of the former tank Tunguska [SA-19] self-propelled gun-missile systems, and motorized rifle regiments of the Soviet Army, but with and 36 man-portable SAMs); a stronger logistics component, and with some additional •• four support battalions (engineers, communications, combat support (artillery, air defense, etc) that was previously repair and maintenance, and logistics); situated at the divisional level. So essentially the new brigades •• five separate companies (reconnaissance, radio electronic are the old regiments, but with additional artillery, air defense warfare, NBC, medical and a commandant’s service and logistics. Organizationally, this allows for a relatively company).5 straightforward process of forming new brigades from the The numerical strength of an independent motorized old regiments. A tank brigade includes three tank battalions rifle brigade in peace time is 3,500-4,400 servicemen, (each armed with 31 tanks) and one motorized rifle battalion. including some 300 officers. The commander has the rank A motorized rifle is made of three motorized rifle of major general.6 battalions and a single tank battalion (with 41 tanks). Each The make-up of a mountain motorized rifle brigade is brigade keeps the former regiment’s two artillery battalions, quite different - it is essentially a light formation, designed and gets an additional rocket artillery battalion. Its existing for combat in mountainous areas. The structure of these mixed SAM-artillery air defense battalion is bolstered by an brigades was approved back in 2007 for the newly created SAM battalion. Each brigade therefore has a new artillery and 33rd and 34th Mountain Motorized Rifle Brigades stationed air defense command and control chain. in the North Caucasus. The changes made to the brigade The composition of the formations that make up the structure in 2008-2009 were fairly insignificant. A typical brigades has undergone more substantial changes, but mountain motorized rifle brigade comprises: they are not groundbreaking, being essentially based on •• two mountain motorized rifle battalions (armed with the existing structure. The number of officers has been cut MT-LBV); (mostly in the command chain, with the expectation that in •• a reconnaissance battalion (armed with MT-LBV, the future they will be replaced by noncommissioned contract essentially a special task force); officers). At the same time, each formation now has more •• one self-propelled artillery battalion (18 self-propelled firepower and a stronger logistics component, in an effort to 122mm 2S1 howitzers). make the companies and battalions more independent. The mountain motorized rifle brigade has no tanks, There are two types of brigades: tank and motorized rocket artillery, anti-tank or air-defense battalions.7 Examples rifle. There are also at least five variations of the motorized of the brigades that use this fairly unusual structure include rifle brigade. Two of them rely mostly on infantry combat the 27th Motorized Rifle Brigade (based in Moscow, merged vehicles (BMP), another two on armored personnel carriers with the former 1st Independent Rifle Brigade, which guarded and their amphibious versions (BTR and MT-LBV-M), and MoD facilities), and the 15th “peacekeeper” Motorized Rifle one is a mountain motorized rifle brigade. Brigade (Samara). The brigades stationed outside Russia (in A good example of a ‘new-look’ brigade is the make- , Abkhazia and South Ossetia) also have a different up of the typical Independent Motorized Rifle Brigade, make-up.8 approved in December 2008. Such a brigade includes: In 2009, the MoD approved the standard make-up of •• a tank battalion (41 tanks, four tank companies with 10 a “light” motorized rifle brigade armed with the MT-LBV tanks each); vehicles. It is similar to the composition of the mountain •• three motorized rifle battalions (the numerical strength motorized rifle brigades and includes two motorized rifle of each is 510; each has 43 of the BMP, BTR or MT-LBV-M battalions (armed with MT-LBV), a reconnaissance battalion vehicles, plus six to eight 120mm mortars); (also armed with MT-LBV) and one self-propelled artillery # 4, 2009 Moscow Defense Brief 13 The ‘New-Look’ Russian Army Armed Forces

battalion. The numerical strength of this light brigade is The brigade would comprise: 2,200.9 •• a command battalion; The ‘new-look’ Independent Tank Brigade (under the •• two tank battalions, each armed with 41 tanks; peace time structure approved in 2008) has largely retained •• three motorized rifle battalions; the make-up of the former tank regiments. It is made of: •• a reconnaissance battalion; •• three tank battalions (armed with 31 tanks, and comprising •• two self-propelled artillery battalions; three 10-tank companies); •• a SAM battalion; •• a motorized rifle battalion (43 BMP-3 vehicles, plus six to •• an anti-tank battalion; eight 120mm mortars); •• an engineer battalion; •• a self-propelled artillery division armed with 18 152mm •• a logistics battalion; self-propelled howitzers; •• an NBC company; •• a rocket artillery battalion (18 122mm Grad MLR •• an electronic warfare company; systems); •• a medical company. •• a SAM battalion (12 self-propelled Tor-M1 SAM It is not clear whether and when this proposed new systems); structure will be enacted.13 A number of critics argue there •• a mixed SAM-artillery air defense battalion (6 Strela- is no need at all for independent tank brigades. 10M3 self-propelled SAM systems, 6 2S6M Tunguska The structure of the “dormant” tank and motorized rifle self-propelled gun-missile systems, and 36 man-portable brigades, which exist in peace time in the form of equipment SAMs); stored at the reserve depots, is similar to that of the deployed •• three support battalions (communications, repair and brigades. However, several of these dormant brigades have maintenance, and logistics); fewer pieces of artillery, and some older models of other •• six separate companies (reconnaissance, radio electronic equipment.14 warfare, engineer, NBC, medics and a commandant’s The ongoing reform has also introduced an entirely new service company).10 type of brigade – the Reconnaissance Brigade. So far there is The tank brigade has a total of 94 main battle tanks and no information as to the exact structure of the new formation, 2,900 servicemen, including 250 officers.11 but it is expected to be a hybrid of the mountain motorized Both types of the “heavy” brigade (tank and motorized rifle brigade and the airborne assault brigade. One report rifle) seem to have largely the same list of logistics and support suggests that such a brigade will include two reconnaissance units. There have been reports that after the new tank and battalions (which will look similar to a special task force motorized rifle brigades took part in a few training exercises unit), an airborne assault battalion, and an electronic warfare in 2009, it was decided to upgrade their reconnaissance battalion.15 Two reconnaissance brigades will be created from component from a single company to a battalion. This change the existing formations. One is the 56th Airborne Assault to the standard brigade structure, which was introduced Brigade16, which is now being relocated to Mozdok, and the in May 2009, has been the most significant to date. The other is the 33rd Mountain Motorized Rifle Brigade.17 The new reconnaissance battalion includes the command and official line is that there will be “several” of such brigades.18 three companies (reconnaissance, technical reconnaissance It is also worth a separate mention that as part of the equipment and ELINT). The battalion should be equipped ongoing reform, the MoD has disbanded almost all the with 18 GAZ-2330-24 Tiger vehicles, designated as the main ‘machine-gun & artillery’ formations (which are essentially reconnaissance vehicle.12 part of the fortifications on Russia’s Eastern borders, mainly Further changes can be expected in the structure of the with China). Most of the fortifications themselves will new brigades. The top brass reportedly believe that they may apparently be demolished, and the rest are to be mothballed. have gone a bit too far – which is not unusual for Russia – in The only remaining formation of this type - indeed, Russia’s slashing the number of commanding officers, so some of only remaining Army division - is the 18th Machine-gun & those cuts may have to be reversed. Another idea is to bolster Artillery Division, stationed on the four disputed South Kuril the reconnaissance component yet again. The MoD is also islands, which Japan claims as its own. It is not clear what future reported to be considering an increase in the number of awaits the division beyond 2009. It was reduced to just two tanks in the motorized rifle brigades. The proposal is that machine-gun & artillery regiments during the 2009 reform. instead of just one tank battalion armed with 41 tanks, these But it was also slated to receive some modern equipment. The brigades should have two battalions, each armed with 31-41 only similar “positional” formation that will remain on the tanks, taking their total tank strength from 41 to 62 or 82. Russian mainland is the 69th Independent ‘Cover’ Brigade Journalists were shown papers outlining the structure of this stationed in the Jewish Autonomous Region.19 beefed-up motorized rifle brigade at a meeting with the chief As for the military bases outside Russia, the 4th Military of General Staff, General Makarov, in the summer of 2009. Base in the South Ossetia and the 7th Military Base in 14 # 4, 2009 Moscow Defense Brief The ‘New-Look’ Russian Army Armed Forces

Abkhazia have the same structure as a standard motorized All the SAM brigades armed with the S-300V (SA-12) rifle brigade. The 102nd Military Base in Armenia will include SAM systems, and some of the brigades armed with the Buk two fully-equipped motorized rifle brigades (although there (SA-11/SA-17) SAM systems, have been transferred under have been reports that one of those brigades might have to be the command of the Air Force and Air Defense. The “new- disbanded to cut costs). Meanwhile, the 201st Military Base look” Army is now left with eight SAM Brigades armed only in will retain its quasi-divisional structure and with the Buk SAM systems. They also have one additional include two motorized rifle regiments.20 brigade and two air defense missile regiments for training Unlike the tank or motorized rifle brigades, the new purposes.21 Artillery Brigades represent a radical departure from the Command of all the support brigades has now been old Soviet model. The old artillery regiments and brigades fully centralized under the Military District commands. were fairly “heavy” formations, comprising a large number of To illustrate, previously the engineer brigades took their artillery battalions. The new artillery brigades are unusually orders from the Army’s commander of Engineer Troops. The compact. Each includes only three battalions, one of which arms reserve depots were part of the Main Rocket Artillery is an anti-tank unit. It appears that these new brigades will Directorate’s chain of command. Now, all these units take have a two-fold task. In peace time, they will be used in local their orders directly from the commander of their respective conflicts as a compact and mobile means of bolstering tank Military District, and are essentially part of that district.22 and motorized rifle brigades with additional artillery. And Several tank and motorized rifle regiments attached during war, they will serve as a platform for assembling new to four Military District’s Training Centers have retained artillery formations from the equipment stored in reserve their regimental setup. That includes the Moscow, Volga- depots. To that end, a reserve depot of missile and artillery Urals, Siberian and Far East training centers. All four of these equipment is being created near every new artillery brigade. centers had training division status until 1987. Meanwhile, This means that these brigades are training and reserve the 56th Guard District Training Center of the Leningrad formations, to a large extent. But at the same time they are Military District will move towards the battalion structure. fully manned, and therefore qualify as permanent readiness Beyond 2009, the status of the district training centers forces. remains uncertain. The new artillery brigades comprise: Of all the former engineer brigades, only the 317th •• one or two self-propelled howitzer artillery battalions Engineer Brigade has retained its former status as a result (each has 18 152mm 2S19 self-propelled howitzers); of the reform, and takes its orders directly from the center. •• one rocket artillery battalion (replacing one of the self- The rest of the permanent-readiness engineer formations propelled howitzer artillery battalions and armed with are now regiments within the structure of their respective eight 220mm 9P140 Uragan MLR systems); Military Districts. However, each district has an engineer •• one anti-tank battalion (18 Shturm-S [AT-6] self-propelled troops reserve depot (for a total of six for the whole Army), anti-tank missile launch systems and six 100mm MT-12 which should deploy into independent engineer brigades towed anti-tank guns); during mobilization.23 •• one reconnaissance artillery battalion (or battery). Each of the artillery reserve depots holds enough equipment to arm seven batteries, including: Airborne Troops •• three battalions of 152mm howitzers or guns (18 units of either 2S5 Giatsint-S, 2A36 Giatsint-B or 2A65 Msta-B); Plans for the reform of the Airborne Troops (VDV) •• two rocket artillery battalions (each armed with eight have undergone a substantial transformation in 2008-2009. 220mm 9P140 Uragan MLR systems); In 2008, the proposal was to disband airborne divisions •• two anti-tank battalions (each armed with 18 Shturm-S altogether, and to replace them with brigades (up to eight self-propelled anti-tank missile launchers and six 100mm of them). Later it was decided to preserve the divisional MT-12 towed anti-tank guns). structure of the Airborne Troops, but cut the number of Russia has four Rocket Artillery Brigades and two the divisions from four to three by disbanding the 106th rocket artillery regiments armed with the 220mm 9P140 ‘Tula’ Airborne Division. An order to disband the 106th Uragan and 300mm 9A52 Smerch MLR systems. Each of the Division by November 1 was signed in January 2009, but brigades now has 12-18 of these systems, and the regiments later rescinded at the insistence of Gen Vladimir Shamanov, 24 each. The rocket artillery brigades of the new type are who was appointed commander of the Airborne Troops in structured in the same way as the regular artillery brigades. May 2009.24 What is more, Shamanov proposed an entirely The Missile Brigades comprise three missile battalions opposite course of action, arguing that the Airborne Troops (each armed with four Tochka-U [SS-21] or Iskander [SS-26] should be strengthened. His proposals were accepted. All missile systems for a total of 12 systems per brigade). four of the airborne and air assault divisions (the 7th, 76th, # 4, 2009 Moscow Defense Brief 15 The ‘New-Look’ Russian Army Armed Forces

98th and 106th) will not just be left in place but actually motorized rifle divisions were fully deployed in terms of reinforced. The plan now is that the number of parachute their personnel numbers. And of those five motorized rifle regiments in each division will be increased from two to three divisions (the 3rd, 19th, 20th, 27th and 42nd), only the last (thus restoring the pre-2000 situation). For now, only the one was manned under a full war-time schedule. The rest 76th ‘Pskov’ Guard Airborne Assault Division has received an of the formations had only one or two deployed regiments additional regiment (the 23rd Airborne Assault Regiment).25 each. This means that the number of the deployed brigades Also at Shamanov’s initiative, the SAM battalions of the and regiments has been cut by a third (from 66 to 44), which airborne divisions were upgraded into SAM regiments in is still a very significant reduction. Comparisons of the pre- the summer of 2009. reform numbers of battalions in several Military Districts In addition to that, the latest reform plan is to increase the with the current situation yield a similar figure of reductions number of separate airborne and airborne assault brigades in the Army’s combat strength. As an example, all the Army to six, one for each Military District. The brigades will be divisions and brigades of the North Caucasus Military taking their orders from district commanders. In addition to District had a total of 65 deployed tank and motorized rifle the single airborne brigade (83rd) and two airborne assault battalions between them. By late 2009, that number was brigades (11th and 31th) that existed prior to 2008, brigade expected to fall to 40 (including the military bases in South status has also been returned to the 56th Airborne Assault Ossetia and Abkhazia). Regiment. The formation, which was formerly part of the That means that despite the ongoing instability in the 20th Motorized Rifle Division in Volgograd, is now being North Caucasus and last year’s war with Georgia, the Russian relocated to Mozdok. But there have also been reports that military strength in the region will be reduced. Even steeper it will be reformed into a reconnaissance brigade. There are reductions are in the pipeline for the also plans to form another new airborne assault brigade, - from 50 deployed tank and motorized rifle battalions to 22. to be based in Smolensk, Moscow Military District. In That last number may yet have to come down even further, if future, each of the new airborne assault brigades will also be the district’s 5th Motorized Rifle Brigade is transferred to the reinforced with a helicopter regiment (armed with 60 attack North Caucasus in 2010.27 Meanwhile, Russian Army strength and transport helicopters). That move will be part of the on the border with Ukraine will be reduced to almost nothing. process of returning Army Aviation, which was previously Once the 10th Guard Tank Division is disbanded, Russia will transferred to Air Force and Air Defense command, back to have only an Army reserve depot in the region, which can the Army. The top brass also believe that the Army needs to deploy the 1st Tank Brigade in case of necessity. In theory, have independent combat helicopter regiments to support the situation will improve somewhat once the new airborne combat operations.26 assault brigade, reinforced with helicopters, is in place in Smolensk. But for now, we are witnessing an unprecedented weakening of the Army’s strength in central Russia and along Numerical strength its Western borders. The creation of the 25th Motorized Rifle Brigade in the In absolute terms, the reform of the Russian Army has Leningrad Military District, and the deployment of the 23rd led to a significant reduction in the number of large military Airborne Assault Regiment as part of the 76th Guard Airborne formations. As of early 2008, the Army (not counting the Assault Division, strengthens the Russian Army group along Airborne Troops) had 24 divisions (three tank divisions, 16 the Baltic States border to a certain extent. But on the whole, motorized rifle divisions, and five machine-gun & artillery the ongoing reform continues the general trend of reducing divisions), 12 independent rifle and motorized rifle brigades, the Russian military strength deployed in the West of the plus two divisional strength military bases (in Armenia country. The obvious conclusion is that the Russian military and Tajikistan). That made for a total of about 112 tank, and political leadership does not consider an armed conflict motorized rifle, and machine-gun & artillery regiments or or large-scale combat action in the European part of the brigades. The ‘new-look’ Army has 40 deployed brigades and country (apart from the North Caucasus) a real possibility. brigade-strength bases (4 tank brigades, 35 motorized rifle The regular ‘new-look’ tank and motorized rifle brigades brigades and one ‘cover’ brigade). The Army has also retained will have a total of about 45 tank battalions and 160 motorized the 18th Machine-gun & Artillery Division and the 201st rifle battalions between them. That means that rearming all Military Base (comprising two regiments each). The number these battalions with new and modernized equipment by of regimental or brigade-size formations has therefore been 2016, under the 2007-2015 National Armaments Program slashed by almost 60 per cent. (GPV-2015), is quite feasible. As part of the program - which, Of course, the real-terms reductions in Army strength incidentally, was adopted before the launch of the latest stage were not as great. Out of the 24 divisions and two bases of military reform - the Army should receive 22 battalions of that existed in 2008, only the 201st Military Base and five new tanks and 23 battalions of upgraded tanks by 2016. It 16 # 4, 2009 Moscow Defense Brief The ‘New-Look’ Russian Army Armed Forces

will also have enough new equipment to arm 93 motorized all the Army formations that were transferred to the Navy in rifle battalions and 50 airborne battalions, plus enough the 1990s, only the coastal defense forces in the Kaliningrad upgraded equipment for roughly another 80 motorized rifle Defense Area have retained their former status after the latest battalions.28 But these figures may well have to be revised in stage of reform. These forces have, however, been reduced view of the economic situation. They may also be affected by in strength. Of the two motorized rifle brigades stationed the latest plans to increase the numerical strength of each there (7th and 79th), one (the 7th) has been reformatted battalion (such as increasing the number of tanks in each into the 7th Independent Motorized Rifle Regiment. In the tank battalion from 31 to 41). Kamchatka, the 40th Motorized Rifle Brigade has become the As for the new-look tank and motorized rifle reserve 40th Marine Brigade - but that happened back in September depots, their number is relatively small for now. Only about 2007.30 15 brigade-size reserve depots (for one tank brigade and 14 The Russian Navy’s Marine corps has also undergone motorized rifle brigades) should be created by the end of fairly significant changes as part of the ‘new-look’ drive. In 2009.29 On the whole, we believe that the question of whether 2009, the Navy’s only existing marine division (the 55th, the ‘new-look’ mobilization deployment system is fit for stationed with the Pacific Fleet in Vladivostok), was reduced purpose is one of the most contentious issues of the whole in strength to become the 165th Marine Brigade. And the reform package. 40th Brigade in the Kamchatka, which was only recently transformed into Marines, has become the 31st Marine Regiment. The Caspian Flotilla’s 77th Marine Brigade, which Marines and Navy Coastal Defense Troops was created as recently as 2002, was again split into two independent marine battalions. In November 2009 all three The reform of the Marines and the Navy’s Coastal Defense marine brigades of Russia’s “European” Fleets (the 61th, 336th Troops follows the same pattern as the reform of the Army. Of and 810th) were converted into the Marine Regiments.

Table 1. Post-reform Russian Army formations, as of late 2009 (projection)

Formation Military District Total Leningrad Moscow North Volga- Siberia Far East Abroad Caucasus Urals Tank brigades - 2 - 1 1 - - 4 Motorized rifle brigades (BMP) - 1 3 2 4 5 2 17 Motorized rifle brigades (BTR) - 2 2 2 1 - 2 9 Motorized rifle brigades (MT-LBV) 3 - 4 - - 2 - 9 ‘Cover’ brigades - - - - - 1 - 1 Airborne divisions 1 2 1 - - - - 4 Airborne and airborne assault brigades - - 1 1 1 1 - 4 Machine-gun & artillery divisions - - - - - 1 - 1 Motorized rifle divisions (201st Base) ------1 1 Reserve depots (tank brigade equipment) - 1 - - - - - 1 Reserve depots (motorized rifle brigade 1 1 - - 5 7 - 14 equipment) Special task force brigades 1 1 2 1 1 1 - 7 Missile brigades 1 2 1 2 1 2 - 9 Artillery brigades 1 2 1 1 2 2 - 9 Rocket artillery brigades - 1 1 - 1 1 - 4 Source: Table compiled by the author using open sources

# 4, 2009 Moscow Defense Brief 17 The ‘New-Look’ Russian Army Armed Forces

1 Time for mobility: Interview with Army Commander Gen V. Boldyrev // Krasnaya Zvezda, October 1, 2009 2 Warfare.ru 3 Time for mobility: Interview with Army Commander Gen V. Boldyrev // Krasnaya Zvezda, October 1, 2009 4 Statement by Army Commander Gen V. Boldyrev // ARMS-TASS, September 29, 2009 5 www.soldat.ru/forum/viewtopic.php?f=12&t=15555&start=40 and www.ryadovoy.ru/forum/index.php/topic,279.msg2670. html#msg2670 6 www.soldat.ru/forum/viewtopic.php?f=12&t=15555&start=40 7 www.ryadovoy.ru/forum/index.php/topic,422.0.html 8 www.ryadovoy.ru/forum/index.php/topic,422.0.html 9 www.ryadovoy.ru/forum/index.php/topic,422.651.html 10 www.soldat.ru/forum/viewtopic.php?f=12&t=15555&start=40 11 www.soldat.ru/forum/viewtopic.php?f=12&t=15555&start=40 12 http://www.ryadovoy.ru/forum/index.php/topic,422.630.html 13 www.ryadovoy.ru/forum/index.php/topic,422.0.html 14 www.ryadovoy.ru/forum/index.php/topic,422.0.html 15 desantura.ru/forums/index.php?showtopic=15001&st=900 16 Gulko N. Russia deploys new reconnaiisance and assault brigades // Kommersant, June 8, 2009 17 www.ryadovoy.ru/forum/index.php/topic,422.630.html 18 Time for mobility: Interview with Army Commander Gen V. Boldyrev // Krasnaya Zvezda, October 1, 2009 19 www.ryadovoy.ru/forum/index.php/topic,340.105.html 20 specnaz.pbworks.com/201-%D0%92%D0%91 21 www.ryadovoy.ru/forum/index.php/topic,421.0.html 22 Time for mobility: Interview with Army Commander Gen V. Boldyrev // Krasnaya Zvezda, October 1, 2009 23 www.ryadovoy.ru/forum/index.php/topic,438.0.html 24 Konovalov I, Muradov M. No-one but him // Kommersant, May 26, 2009 25 Statement by Gen Shamanov, quote from desantura.ru/forums/index.php?showtopic=15001&st=920 26 Gulko N. Russia deploys new reconnaiisance and assault brigades // Kommersant, June 8, 2009 27 www.ryadovoy.ru/forum/index.php/topic,422.609.html 28 Russian National Armaments Program for 2007-2015, see www.ru.wikipedia.org 29 www.ryadovoy.ru/forum/index.php/topic,340.105.html 30 www.ryadovoy.ru/forum/index.php/topic,86.21.html

18 # 4, 2009 Moscow Defense Brief The ‘New-Look’ Russian Army Armed Forces

Ukraine’s Defense Spending Anton Lavrov kraine’s new leaders, who came to power after the large chunk of MoD outlays came to depend on it. Offloading Uso-called ‘Orange Revolution’ in late 2004, had some much of the defense spending onto the Special Fund has ambitious plans for the Ukrainian army. The aspiration been a forced step on the part of the Ukrainian government. was to make it a more capable fighting force, equipped with The country’s budget is deeply in deficit, which means that modern weapons and manned by professional servicemen there is only enough cash in the General Fund to cover the rather than conscripts. The long-term goal was to join NATO, very basic needs of the army - such as payroll, utility bills which meant that the Ukrainian military had to be adapted and fuel. to a new set of Western requirements. All that called for a In an effort to bolster Special Fund revenues, the steep increase in defense spending – indeed, a much steeper government approved a massive program in 2008 to sell large one than Kiev could afford. The ambitious plans were soon amounts of excess military equipment2 and hundreds of on the rocks. MoD properties. Entire military compounds were supposed to be put up for sale. The proceeds were to be used on new and modernized equipment, new housing for servicemen, General and Special Fund the Antonov An-70 military transport aircraft program and other projects. The MoD was essentially told that if it wanted The Ukrainian national budget consists of two parts: to modernize the army, it would have to generate the money the General Fund and the Special Fund. The General Fund from its own sources. includes revenues from all the usual sources such as taxes The 2004 and 2005 defense budgets were not much and other incomes. The Special Fund is for target spending different from all the previous ones during the Leonid using revenues from specific sources strictly defined by the Kuchma presidency.3 Drawn before the arrival of the new legislation.1 Revenues of the Ukrainian MoD’s Special Fund ‘Orange’ administration, they remained relatively small are generated by selling off excess military equipment, land (about 1bn dollars), and unambitions. Payroll and related and property on the ministry’s balance sheet, as well as by outlays accounted for over 80 per cent of MoD spending. In privatizing MoD-owned companies. order to address this sorry situation, in 2005 the government The initial purpose of the Special Fund was to ensure adopted the National Armed Forces Strategy for 2006-2011. reliable financing of critical programs, even when there is an The program envisioned a gradual increase in military overall shortfall in budget revenue. But lately that strategy has spending, with a higher proportion of it channeled into backfired: spending from the general fund is mostly on target, army reform and modernization.4 whereas revenues of the Special Fund are well below the The 2006 budget was entirely the product of the new projections. The MoD has been especially hard hit because administration. Military spending was increased by 28 a large proportion of its financing comes from the Special per cent to 7.6bn hryvnyas ($1.45bn), with a noticeably Fund. different spending structure.5 The bulk of that increase was In 2004-2008, the Special Fund was just a peculiar supposed to be financed by revenues of the Special Fund. budget instrument. But in the crisis-hit 2009 and 2010, a Its share in total military spending was increased to 22 per

Ukrainian MoD budget in 2004-2010

Year 2004 2005 2006 2007 2008 2009 2010 (projection) Total, million UAH 5,225.5 5,925.7 7,594.9 9,061.5 9,926.4 11,650.1 13,035.7 General Fund, million UAH 4,423.5 5,324.1 5,915.7 7,549.4 8,926.5 7,428.5 8,279 Special Fund, million UAH 802 601.6 1,679.1 1,512.1 999.9 4,221.6 4,756.7 As share of GDP, % 1.5 1.3 1.4 1.3 1 1.1 1.2 UAH/USD exchange rate 5.32 5.12 5.05 5.05 5.27 7.7 7.5 Total, million USD 982.2 1,157.4 1,503.9 1,794.4 1,883.6 1,513 1,738.1 Source: Ukrainian Legislation, Ukrainian National Bank (http://www.bank.gov.ua/) # 4, 2009 Moscow Defense Brief 19 Ukraine’s Defense Spending Armed Forces

Share of Special Fund revenue in Ukrainian MoD budget

Year 2004 2005 2006 2007 2008 2009 2010 Share of Special Fund, % 15.3 10.1 22.1 16.7 10.0 36.2 36.5 Source: Ukrainian Budget Legislation for 2004-2010

cent, or 1.7bn hryvnyas in real terms – triple the previous The government was hard-pressed to meet its budget year’s figure. Most of the increase was supposed to be covered revenue and spending targets in 2008 due to the onset of the by proceeds from privatization of companies and facilities world financial crisis and the devaluation of the hryvnya owned by the MoD. that soon followed. Nevertheless, defense spending from the But this attempt by the new government to ramp up General Fund came right on target that year. Thanks to a more the special fund of the defense budget ended in failure. The realistic projection of Special Fund revenues, spending from privatization deals the government had hoped for never that source came in at 62 per cent of the target, and in real materialized, and actual military spending from the Special terms the defense funding shortfall was a relatively modest Fund was only 41 per cent of the projected figure (696.4m 376m hryvnyas.11 The only program that was seriously hryvnyas)6. The MoD had to put on hold the procurement underfunded was the reform of the army and the transition of new equipment and freeze a number of R&D projects. Its from conscription to professional service. ambitious program of building new housing for servicemen But although the spending targets for 2008 were largely was also hit. met, the inadequacy of the targets themselves was becoming The 2007 budget projected another substantial increase increasingly obvious. The army’s combat training programs in military spending (by 19 per cent to 9bn hryvnyas, or had to be scaled down, and many of the best-qualified $1.8bn). Despite the massive shortfall in Special Fund revenue servicemen left in search of greener pastures. in the previous year, the 2007 target was only slightly lower The world economic crisis was already in full swing (1.5bn hryvnyas).7 This time the government was determined as the 2009 budget was being drawn, so the spending plans to press ahead with the sale of MoD-owned companies and had to be adjusted accordingly. The Ukrainian General Staff properties. estimated that the army’s minimum funding requirement was Most of the spending increase was supposed to 17.5bn hryvnyas ($2.2bn) in 2009. The budget allocation was be channeled into procurement of new and modernized 11.65bn, with only 7.4bn coming from the General Fund.12 equipment, as well as R&D programs. The 2007 budget Amid this bleak economic outlook, the Ukrainian allocation for these purposes was 934m hryvnyas, compared government once again resorted to offloading a large part to 191m in 2006 and just 60m in 2005. The programs that of military spending onto the Special Fund. In practice would benefit from this largesse included the Antonov An-70 this translated into a reduction of “guaranteed” military project, R&D work on a new corvette and a tactical missile spending from the General Fund. The 2009 Special Fund system, and procurement of the upgraded T-64BM Bulat revenue projection more than quadrupled to 4.2bn hryvnyas main battle tanks.8 compared to 2008 - despite the fact that the actual spending But the MoD special fund revenue fell well short of its figure for 2008 came in well below target at 651 million.13 target yet again. Actual military spending from the Special Meanwhile, defense allocation from the General Fund was cut Fund in 2007 was only 513.5m hryvnyas, or 32.6 per cent by 1.5bn, or 16 per cent. Given the 22.3 per cent inflation figure of the projection. Meanwhile, MoD financing from the for 2008, the real-terms spending cuts were even deeper. The General Fund also came in below target at 88.4 per cent. The worst affected by this General Fund spending cuts were the procurement and R&D programs were the hardest hit. Their army reform and development program (a reduction of 84 funding was 453m hryvnyas (about 50 per cent) below target. per cent, or 445m hryvnyas), equipment procurement (cut The funding gap for the army reform program was 260m by 71 per cent, or 307m hryvnyas), applied R&D (90 per cent, hryvnyas.9 or 353m) and housing for military personnel (50 per cent, Ukraine’s 2008 defense budget rose by only about 10 per 359m hryvnyas). cent in absolute terms, which did not even offset the inflation. The bulk of the spending on these programs was Defense spending as a share of GDP fell to 0.99 per cent, the transferred to the Special Fund. The proportion of the budget lowest level in recent years. That was largely because the allocation for payroll and utility bills coming from the Special government had recognized the failure of its special-fund Fund was also increased. The already questionable projections strategy in the previous two years. It lowered the 2008 Special for Special Fund outlays became even more unrealistic. And Fund revenue projection to a more realistic 1bn hryvnyas, it is not just the reform and development programs that now compared to 1.5bn in 2007.10 depend on the proceeds from selling military equipment and 20 # 4, 2009 Moscow Defense Brief Ukraine’s Defense Spending Armed Forces

property – it is the actual upkeep of the army as well. It had For the first time since 2006, there is a separate line in become clear by the middle of 2009 that the Special Fund was the Ukrainian budget on the financing of the An-70 military hardly receiving any revenues at all. That has led so a severe transport project, to the tune of 120m hryvnyas ($14m). That underfunding of the Ukrainian army. is probably a reflection of resumed cooperation with Russia The repeat of the Special Fund experiment of 2006 has on the project. But it too will be financed from the Special produced an entirely predictable result. Combat training Fund, which almost certainly means spending cuts. programs have been slashed to a bare minimum. All joint All spending on procurement and modernization of exercises with foreign partners have been cancelled. Combat military equipment will also have to come from the Special training of pilots has practically ceased. Even the fighter Fund. That includes the T-64BM Bulat tank program, the pilots of the Rapid Reaction Forces had clocked in an average development of the Ukrainian corvette, the modernization of 10 hours of flight time by September 2009, compared to of several aircraft (MiG-29 Fulcrum fighters and L-39 the 2008 figure of up to 40 hours. And the Ukrainian attack trainers), and procurement of ammunition, including and bomber fleets have been grounded, to all intents and anti-tank guided missiles. In addition, the Special Fund purposes.14 is supposed to finance the army reform and development There is not enough money even for the bare basics. program (772m hryvnyas), as well as all outlays on storing Some military units and compounds had their electricity military equipment, repairing it and maintaining it in supply cut in the autumn of 2009 over unpaid bills.15 Spending combat-ready condition (614m). on transport has been slashed. A number of units have had to The MoD allocation from the General Fund in 2010 is cancel their catering arrangements with private contractors, 8.28bn hryvnyas. The bulk of that money (93 per cent) will and return to the old practice of cooking their meals at their be spent on the upkeep of the army, including payroll, utility own kitchens, sometimes in makeshift conditions. bills, fuel, medical and rehabilitation expenses, and officer Once it became obvious that the Special Fund was training at educational establishments. broke and no money would be forthcoming for development The 2010 budget draft has drawn a lot of flak in programs, the government was forced to step in. On October parliament. President Viktor Yushchenko, who is playing the 19, 2009, it allocated 250m hryvnyas from the stabilization nationalist card, and the General Staff have said that the level fund to finance the top-priority projects, including the of military spending is totally inadequate, and will lead to the upgrade of the Mi-24 Hind attack helicopters, the upgrading collapse of the Ukrainian army.21 of tanks to the T-64BM Bulat specification, the development These criticisms are quite fair. Attempts to generate of an indigenous corvette and a tactical missile system.16 enough revenue for the Special Fund of the MoD budget failed The move came after another 100m hryvnyas was allocated spectacularly in 2009. The government must therefore realize from the stabilization fund for the T-64BM tank upgrade that the Special Fund revenue projections for 2010, which program in May.17 Essentially, not a single one of the key dwarf previous year’s figures, are entirely unrealistic. By modernization programs has been properly financed from offloading outlays on the Special Fund, government ministers the Special Fund in 2009. are essentially trying to cover up the fact that Ukraine’s Amid the ongoing budget crisis, the government has actual defense spending has plummeted, and all the key decided to freeze the MoD’s budget in 2010. The General modernization programs have been frozen. This kind of Staff’s estimate for the Ukrainian army’s minimum funding chicanery has turned the country’s defense budget into a bad requirement for 2010 is 19.8bn hryvnyas. Normal functioning joke. It has only served to further complicate the spending and development, as opposed to bare survival, would cost of those moneys that are actually available. And on top of all something closer to 32bn hryvnyas.18 The defense allocation that, there is a real danger that in addition to problems with in the government’s 2010 budget draft is only 13bn, or 1.2 per the Special Fund, military spending from the General Fund cent of Ukraine’s GDP. Much of that figure - 4.8bn hryvnyas - will fall short of the projections as well. is still expected to come from the Special Fund, meaning that It has now become quite obvious that all the attempts it will have to be generated by the MoD itself.19 Judging from at modernizing and reforming the Ukrainian army made the experience of 2009, that is mission impossible, and the during the Yushchenko presidency have come to nothing. army will once again have to face acute funding shortages. Basic upkeep of the army (payroll, utility bills, etc.) will The programs that are supposed to draw the bulk of account for more than 80 per cent of the MoD’s spending their funding from the Special Fund will be particularly hard in 2009 and 2010 - just like it did back in 2004. Military hit. The construction and purchase of housing for military spending is barely able to keep up with inflation - indeed, personnel, which was partly financed from the general fund in the last few years this spending has actually fallen in real in 2008, relies solely on the Special Fund in 2009 and 2010. terms. This fall has been only partially offset by the reduction This year the program was frozen due to lack of financing. of the Ukrainian army’s numerical strength from 285,000 in Next year, the situation is unlikely to be any different.20 2005 to 191,000 as of late 2008. # 4, 2009 Moscow Defense Brief 21 Ukraine’s Defense Spending Armed Forces

Due to budget constraints, the Ukrainian armed has also fallen foul of the need to cut costs. There have been forces have been able to afford only a few odd pieces of new no major military construction works in recent years. The equipment. The modernization programs are proceeding at program of building new housing for military personnel is a glacial pace. There is not enough money even to maintain far from adequate, and the waiting lists are not becoming the existing equipment, despite the steep cuts in the any shorter. Cost cutting has also forced Ukraine to scale numbers of this equipment. The Ukrainian Air Force has down or freeze the programs of adapting its army to NATO been especially hard hit. As of September 2008, only about requirements and improving the system of cooperation 30 per cent of its aircraft were able to fly.22 Combat training with the alliance.

1 Ukrainian Budget Code, p 13 2 Ukrainian Cabinet decree No 1092-r // zakon.rada.gov.ua/cgi-bin/laws/main.cgi?nreg=1092-2008-%F0&p=1236921626908628 3 Law of Ukraine “On the 2004 national budget of Ukraine” // zakon.rada.gov.ua/cgi-bin/laws/main.cgi?nreg=1344-15 ; Law of Ukraine “On the 2005 national budget of Ukraine” // zakon.rada.gov.ua/cgi-bin/laws/main.cgi?nreg=2285-15 4 White Paper 2005. Ukraine’s Defense Policy // www.mil.gov.ua/files/white_book_uk2005.pdf 5 Law of Ukraine “On the 2006 national budget of Ukraine” // zakon.rada.gov.ua/cgi-bin/laws/main.cgi?nreg=3235-15 6 Execution of the state budget of Ukraine by the Defense Ministry // www.mil.gov.ua/index.php?lang=ua&part=budget_ army&sub=budget2006 7 Law of Ukraine “On the 2007 national budget of Ukraine”// zakon.rada.gov.ua/cgi-bin/laws/main.cgi?nreg=107-17 8 Law of Ukraine “On the 2007 national budget of Ukraine”// zakon.rada.gov.ua/cgi-bin/laws/main.cgi?nreg=489- 16&p=1257022406591458 9 White Paper 2007. Ukraine’s Defense Policy // www.mil.gov.ua/files/white_book/white_book_uk2007.pdf 10 White Paper 2008. Ukraine’s Defense Policy // www.mil.gov.ua/files/white_book/wb2008ukr.pdf 11 White Paper 2008. Ukraine’s Defense Policy // www.mil.gov.ua/files/white_book/wb2008ukr.pdf 12 Law of Ukraine “On the 2009 national budget of Ukraine” // zakon.rada.gov.ua/cgi-bin/laws/main.cgi?nreg=835-17 13 Ukrainian Defense Ministry Spending in 2008-2009 // www.mil.gov.ua/files/vudatku/vudatku-2008-2009.pdf 14 Ukrainian army has run out of money - and that is just the beginning, UNIAN // unian.net/rus/news/news-331431.html 15 Army in critical condition due to lack of financing - Yushchenko, RIA Novosti // www.rian.ru/crisis_news/20091008/188029837.html 16 Tymoshenko finds 250 million for weapons, UNIAN // unian.net/rus/news/news-342032.html 17 Defense Ministry receives 100 million to buy tanks // www.unian.net/rus/news/news-317961.html 18 General Staff: Current level of financing will destroy Ukrainian army, Korrespondent.net // korrespondent.net/ukraine/ events/966162 19 Draft Law of Ukraine “On the 2010 national budget of Ukraine”// zakon.rada.gov.ua/cgi-bin/laws/main.cgi?nreg=835-17 20 Gritsenko confident that 2010 budget will destroy Ukrainian army, Liga novosti // news.liga.net/news/N0933111.html 21 Ukrainian army to hungry and unwashed - expert, UNIAN// unian.net/rus/news/news-336000.html 22 Government receives a doze of reality, Kommersant-Ukraine // www.kommersant.ua/doc-y.html?docId=1033267&issueId= 47020

22 # 4, 2009 Moscow Defense Brief Ukraine’s Defense Spending Trade & Procurement

Identified Contracts for Delivery of Russian Arms Signed in January-September of 2009

Recipient System designation No. ordered Years Contract value, Notes of deliveries mln USD China AL-31FN turbofan engines 122 2009-? 500 For Chinese J-10 fighters D-30KP2 turbofan engines 55 2009-? n/a For Chinese H-6K bombers Venezuela T-72M1M main battle tanks 92 n/a 400-500 Upgraded ex-Russian Vietnam Su-30MK2 fighters 8 2010-? 320 Aircraft to be delivered without armament. Vietnam will buy it later Yemen BTR-80A armoured pesonnel 100 n/a 100 carriers Kamaz trucks 400 Sani 120 mm towed 50 mortars Kamaz trucks 1052 n/a 100 T-90S main battle tanks 10 2009 25 Pilot contract S-300PS SAM systems 10 battalions 2009-2011 n/a Ex-Russian Bolivia Mi-171 transport helicopters 4 2009 n/a Sri Lanka Mi-171 transport helicopters 4 2009 n/a Kuwait BMP-3M armoured infantry n/a n/a n/a fighting vehicles Source: Russian press

# 4, 2009 Moscow Defense Brief 23 Identified Contracts for Delivery of Russian Arms Signed in January-September of 2009 Our Authors Said Aminov is a 1994 cum-laude graduate of the Moscow Bauman National University of Technology specializing in aviation instruments and systems; in 1998, he graduated from the Financial Academy under the Government of the Russian Federation with a degree in banking. He has been working in the Russian banking system with corporate customers since 1994. As of 1999, he runs his own on-line project Air-Defense Herald (www.pvo.su), specialising on air and missile defense.

Mikhail Barabanov. Graduated from the Moscow National University of Culture, then worked for the Moscow City Government. Editor-in-Chief of MDB since 2008. An expert on naval history and armaments.

Vasiliy Kashin, PhD. Graduated from the Institute of Asian and African Studies (Moscow) in 1996, then worked for the Russian government. Currently a senior research fellow at the Institute of Far East Studies (Moscow).

Ivan Konovalov. Graduated from the Moscow Lomonosov State University in 1994 with a degree in Journalism. In 1994-2003 worked as a military journalist for Russian television, covering military conflicts in the former Soviet republics and other countries. A military analyst at the Kommersant Publishing House since 2008.

Anton Lavrov. Graduated from the Tver State Technical University. An independent aviation analyst and one of the most prominent independent Russian researchers of the 2008 Russian-Georgian War.

Konstantin Makienko. Graduated from the Oriental Department of the Moscow National Institute for International Relations in 1995 and the French-Russian Masters’ School of Political Science and International Relations in 1996. Project leader of a conventional armaments project at the Center for Policy Studies in Russia (PIR-Center) in 1996-1997. Deputy Director of CAST since September 1997. Author of numerous articles on Russian arms trade and advisor to the head of the Russian Federal Agency on Industry since 2007.

24 # 4, 2009 Moscow Defense Brief