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Moscow Defense Brief Your Professional Guide Inside # 1, 2011 Moscow Defense Brief Your Professional Guide Inside # 1, 2011 Russian Army’s New Look CONTENTS Defense Industries #1 (23), 2011 New Management at the United Aircraft Corporation 2 PUBLISHER Centre for Analysis of Arms Trade Strategies and Russian Arms Trade in 2010 4 Technologies CAST Director & Publisher Procurement Ruslan Pukhov Editor-in-Chief Russian Military Spending in 2011-2020 12 Mikhail Barabanov Advisory Editors Konstantin Makienko Space Alexey Pokolyavin Russian Space Industry in 2010 17 Researchers Ruslan Aliev Polina Temerina Armed Forces Dmitry Vasiliev Russia’s “New-Look” Army: the Medical Service 20 Editorial Office 3 Tverskaya-Yamskaya, 24, office 5, Demographics vs the Russian Army 25 Moscow, Russia 125047 phone: +7 499 251 9069 fax: +7 495 775 0418 Our Authors 28 http://www.mdb.cast.ru/ To subscribe, contact phone: +7 499 251 9069 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 Translated by: Ivan Khokhotva Computer design & pre-press: B2B design bureau Zebra www.zebra-group.ru Cover Photo: Soldiers of the 5th Independent Motorized Rifle Brigade on a rest break during an exercise Photo by: Vadim Savitsky © Centre for Analysis of Strategies and Technologies, 2011 Printed in Russia # 1, 2011 Moscow Defense Brief 1 Defense Industries New Management at the United Aircraft Corporation Konstantin Makienko ew management has arrived at the United Aircraft Sukhoi company. The Irkut alliance is centered on the Irkut NCorporation (OAK) after former president Aleksey corporation set up in 2001; its main asset is the Irkutsk Fedorov resigned on February 1, 2011. The company’s Board aircraft plant. In 2003 Irkut acquired the Yakovlev design of Directors has accepted his resignation and on February bureau and took control of the Beriyev bureau, the designer 25 appointed Mikhail Pogosyan, the CEO of Sukhoi and MiG of amphibious aircraft and platforms for airborne radars. In companies, to replace him. 2005 the group also took control of the MiG corporation after Aleksey Fedorov, the Irkut corporation’s president and largest shareholder, was appointed the director-general of MiG. The The reasons group’s expansion culminated in Fedorov’s appointment as president of the United Aircraft Corporation. With their The main reason for Fedorov’s departure is the poor state of political and economic clout at its peak, the group’s captains affairs with the commercial and transport aircraft projects. even began to think of the acquisition of their main rival The development of the new Il-112 military transport has been Sukhoi. That would have meant unqualified victory for Irkut painfully slow, and the MoD seems less then enthusiastic about and spelt the end of any competition between the Russian the results so far. The Russian-Indian multi-role transport aircraft aircraft makers. Apart from its streak of acquisitions, the project, the MTA, has been making very little progress, and a lot group was the first Russian defense contractor to conduct an of uncertainty remains about plans to resume production of the IPO in 2004. In 2006, a 10 per cent stake in Irkut was bought An-124 heavy transport. Missed deadlines and spiraling costs by Europe’s EADS. of the Il-476 project are yet another failure laid at the feet of the As it happens, crisis struck just as Irkut was at the previous OAK management. In the commercial aviation segment, peak of its power in 2006. First, bitter rivalry broke out production of the An-148 regional jet is facing great difficulties. between Fedorov’s two heirs apparent, Sergey Tsivilev, who Even more worryingly, the medium-haul Tu-204SM project is oversaw the Irkut IPO, and Valeriy Bezverkhiy, who was in on the verge of collapse; the aircraft has failed to secure enough charge of the relationship with EADS. Even worse, following orders to make its production economical. Fedorov’s appointment as OAK president and his succession The latest failing that actually triggered Fedorov’s as MiG director-general by Tsivilev, the Russian prosecutor- resignation was the botched interior finish and entertainment general’s office developed an interest in Tsivilev’s affairs. He system in the new presidential Tu-204PU jet, as well as was investigated on several criminal charges. By 2009 both Jordan’s complaints about delays with the delivery of the Tsivilev and Bezverkhiy had left the industry. Il-76MF military transports under a 2007 contract. Finally, the reputation of Irkut and its president Aleksey The appointment of Mikhail Pogosyan to replace Fedorov sustained a serious blow from the Algerian fiasco. Fedorov means: In 2006 Algeria signed a contract for 34 MiG-29 fighters. But • a sharp rebalancing between the two Russian aerospace after 15 fighters had been delivered, the Algerian Air Force arch-rivals, the Sukhoi company and the Irkut alliance; put the contract on hold and then returned all 15 MiG-29’s to • the presidential administration’s encroachment upon Russia, citing technical problems with the aircraft. the traditional turf of the Cabinet; While the Irkut alliance was lurching from one crisis • strengthening of the positions of the US makers of to the next, Sukhoi was steadily building up its political commercial jets on the Russian market. muscle and reputation. In 2008 two of the company’s new aircraft took to the air: the Su-35 fighter and the SSJ-100 commercial regional jet. In 2010 came the maiden flight Competition between the Irkut group and of the T-50 fifth-generation fighter. In 2011 the second Sukhoi T-50 prototype entered the flight tests program. All thee projects (S-35, SSJ and T-50) are making rapid progress, By the late 1990s two rival groups had coalesced in the in stark contrast to the languid pace of Russia’s other Russian aerospace industry: the Irkut alliance and the aerospace endeavors. 2 # 1, 2011 Moscow Defense Brief New Management at the United Aircraft Corporation Defense Industries In 2008 Sukhoi CEO Mikhail Pogosyan was put at part of that relationship, EADS had acquired a stake in Irkut the helm of MiG while retaining his previous position, corporation and pursued a project to launch production of essentially becoming the de-facto captain of the entire Airbus components at the Irkutsk aircraft plant. Another Russian combat aviation sector. In 2009 his de facto status joint project was the conversion of Airbus planes into cargo was made official when Pogosyan was appointed head of the versions, involving Russian engineers and, quite possibly, Combat Aircraft division at the United Aircraft Corporation. Russian production facilities as well. As part of the same The appointment has spelt the end of the 10-year rivalry trend, Russia’s Vneshekonombank has accumulated a 5 per between Sukhoi and Irkut, and signaled a decisive victory cent stake in EADS. Russia has also discussed participation in for Sukhoi. the Airbus 350XWB and new medium-haul aircraft programs to succeed the ageing A-320 family. Sukhoi, meanwhile, has always preferred to work with Interpretation and consequences Boeing. First it hoped to persuade Boeing to a joint supersonic business jet project, then it wanted to secure access to the US Apart from the sound and possibly final victory for Sukhoi market for its own regional SSJ-100 aircraft. Now Russia’s over its Irkut rivals, the appointment of Pogosyan can also cooperation with EADS, which has been stagnating in the be interpreted as a significant strengthening of Boeing’s past two or three years, risks being pushed to the sidelines positions on the Russian market and further emancipation altogether. In what seems a clear indication of things to come, of President Medvedev, no longer a mere shadow of Vladimir almost simultaneously with Pogosyan’s appointment Russia’s Putin. flag carrier Aeroflot placed an order for eight Boeing 777 Up until recently, the aerospace industry was informally jets, although previously the company’s product strategy regarded as Putin’s turf. It was Putin who had made the preferred the European A-330 liners in the long-haul segment. decision to set up the OAK corporation and appoint Aleksey New contracts for American aircraft also sit well with the US- Fedorov its president. What is more, word has it that Putin Russian policy of Reset in bilateral relations, which has been had given Fedorov a firm promise that he would remain spearheaded by President Medvedev, whereas Prime Minister OAK president until his contract expires in November 2011. Putin has taken a more conservative stance. With the abrupt sacking of Fedorov and the appointment As for the OAK product strategy, the following of Pogosyan to replace him, the delicate balance between assumptions can be made: the two Russian aerospace rivals which Putin had been • Prospects for the An-148 project are looking very bleak carefully maintaining has been unceremoniously wrecked. in Russia, especially after one of these aircraft crashed President Medvedev, meanwhile, appears to have broken on March 5 near Belgorod; the convention and barged into the turf of his partner in • The MS-21 future liner project is facing growing risks the tandem. It seems more likely, however, that this is not a and may be revised to ensure greater compatibility with case of direct competition between the president and prime the SSJ platform; minister, but rather a tussle between anti-Putin elements in • Russia will now pursue a more hard-nosed commercial the presidential administration and people in Putin’s Cabinet.
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