Eurasia Program

Issue 3 March 2020 Procurement Produced by the Foreign Policy Research Institute exclusively for the U.S. European Command, Strategic Initiative.

Issue #3. March 5, 2020

Project leadership team: Chris Miller, Stephanie Petrella, Maia Otarashvili Designed by: Natalia Kopytnik

© 2020 by the Foreign Policy Research Institute

Prime Contract Number GS00Q14OADU401 OASIS Delivery Order Number 47QFCA18F0067 JCETII PS-03C: Foreign Policy Research Institute. Russia’s Military Defense and Arms Exports. FEDSIM LOA: 2018025DE-1270

This publication was funded by the Russia Strategic Initiative U.S. European Command Stuttgart, Germany http://community.apan.org/wg/rsi/ Our Mission

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This project examines changes in Russia’s military-industrial complex and arms export industry amid U.S. sanctions, shifts in Russian political economy, and Russia’s evolving long-term military strategy.

Throughout 2020, each month, the Foreign Policy Research Institute explores this topic by tracking and analyzing domestic and international shifts related to the Russian military-industrial complex, including:

♦ Trends in Russian military procurement and implications for Russian defense strategy. ♦ Measuring and analyzing Russia’s defense burden. ♦ Mechanisms of financing the Russian defense sector via state budget and the “anti-sanctions” bank, Promsvyazbank. ♦ The debt burden of the Russian defense sector and implications for future spending. ♦ Russian attempts to increase defense firms’ sales of civilian or dual-use products. ♦ Russian investment into advanced tech for the defense sector. ♦ The effect of sanctions on Russia’s aggregate arms exports. ♦ Indications of future arms deals in Russian and local press (e.g. Vietnamese, Chinese, Turkish) press. P

5 Procurement

In 2020, Russia will complete its ten-year state armaments program (GPV) that was intended to resolve deficiencies revealed in the 2008 Russo-Georgian War. GPV-2020 focused on modernizing Russia’s military equipment with the Navy and Air Force receiving the bulk of funds. Russia’s new state armament program through 2027 seeks to counterbalance these trends. The Airborne and Ground Forces are now a priority, as GPV-2027 seeks to ameliorate Russian defense weaknesses that are relevant to both large-scale conventional conflicts and smaller -type expeditionary operations.

♦ Russian defense procurement is organized around ten-year state armaments programs (gosudarstvennaia programma vooruzheniia or GPV), which dictate equipment procurement, repair and modernization, and research and development priorities for that period. The GPV is allocated across each year’s procurement conducted within the state defense order (gosudarstevennyi oboronnyi zakaz or GOZ). Although each GPV lasts for ten years, only the first five years are planned in detail, and a new GPV typically begins every five years. Russia’s current procurement activities are organized within GPV-2027, which began in 2018 and will last until the end of 2027. The previous state armaments program, GPV-2020, covered 2011-2020, and a new GPV was supposed to begin in 2016. However, Russia’s volatile financial position in 2015-2016 led Russian authorities to delay the approval of a new GPV until 2017-2018 when a more accurate ten-year economic forecast could be made.1

♦ GPV-2020 was designed to compensate for the ’ limited procurement over the previous two decades, and it was approved soon after the 2008 war with Georgia. Although Russia prevailed in the five-day war, the Kremlin concluded that much of the Russian military’s equipment was outdated, and, in many cases, was worse than Georgia’s. The Russian military also embarked on a comprehensive reform under Minister of Defense Anatoli Serdyukov, which reduced the number of officers, increased the number of enlisted servicemen serving under contract, expanded constant readiness units, and shifted from a division structure to a brigade structure for the Russian Ground Forces. The Russian Armed Forces were allocated 19.4 trillion rubles as part of GPV-2020, though the actual amount of funds distributed will likely only reach 12.8-13.3 trillion rubles, or 65-70% of the stated figure. In addition, the program was backloaded, with only 5.9 trillion rubles, or 31%, to be spent in the first five years, and the remaining 69% from 2016-2020. By service, 25% of GPV-2020’s funds were supposed to go to the Navy, 24% to the Air Force, 17% to the Air-Space Defense Forces (in 2015 the and Air-Space Defense

1 For information on Russian defense procurement, see: Julian Cooper, “The Russian State Armament Programme, 2018 – 2027,” NATO Defense College, May 2018, http://www.ndc.nato.int/news/news.php?icode=1167; Richard Connolly and Mathieu Boulègue, “Russia’s New State Armament Programme Implications for the Russian Armed Forces and Military Ca- pabilities to 2027,” Chatham House, May 2018, https://www.chathamhouse.org/sites/default/files/publications/research/2018- 05-10-russia-state-armament-programme-connolly-boulegue-final.pdf; Ivan Safronov and Alexandra Dzhordzhevich, “19 trillion put into service,” Kommersant, November 15, 2017, https://www.kommersant.ru/doc/3467573; Ivan Safronov and Svetlana Bocharova, “The main theme of Putin’s closed defense meetings will be the Navy,” Vedomosti, November 29, 2019, https://www.vedomosti.ru/politics/articles/2019/11/20/816770-glavnoi-temoi-vmf; Meeting of Russian Federation Security Council, November 22, 2019, http://en.kremlin.ru/events/president/news/62096. 1 Forces were combined to create the Russian Aerospacee Forces), 15% to the Airborne and Ground Forces, 5% to the Strategic Missile Troops, and the remaining 14% to other sources. This meant that the Russian Navy and Air Force were the relative winners of GPV-2020’s funding distribution. Although the Russian Ground Forces were the lowest relative priority in GPV-2020, they received greater funding after 2014 as a result of the war in Ukraine.2

♦ The key target and primary metric for assessing GPV-2020’s success was the share of modern equipment. The Russian Armed Forces were supposed to increase their share of modern equipment (this includes new and modernized variants of older systems, such as the Su-35S fighter, T-72B3 tank, Mi-8AMTSh helicopter) from an estimated 15% in 2011 to 70% by the end of 2020. At the beginning of 2020, Deputy Minister of Defense Aleksey Krivoruchko said that the share of modern equipment was 83% in the strategic nuclear forces (76% for the Strategic Missile Troops), 75% in the Aerospace Forces, greater than 63% for the Russian Navy and Airborne Forces (VDV), and 50% for the Russian Ground Forces.3 According to Russian officials, the current overall share is above 68% and is on track to reach the 70% target by the end of 2020.

♦ However, many genuinely new systems—as opposed to updated versions of existing Soviet systems—are delayed. This includes the Su-57 fighter, Borei and Yasen nuclear- powered submarines, Armata tank, Kurganets-25 infantry fighting vehicle, and the S-500 air and missile defense system, which were either not procured at all during GPV-2020 or significantly missed their delivery deadlines and will be pushed into GPV-2027. Nonetheless, GPV-2020 achieved its primary aim of mass procuring modern equipment for the Russian Armed Forces, and strengthened Russia’s strategic nuclear deterrence and conventional

2 Ivan Safronov and Alexandra Dzhordzhevich, “19 trillion put into service,” Kommersant, November 15, 2017, https://www. kommersant.ru/doc/3467573. 3 Alexey Krivoruchko, “The path to the new decade,” Radioelectronic Technologies, No 1, 2020, http://hi-tech.me- dia/122019.html. 2 capabilities. Among the notable successes of GPV-2020, Russia has procured more than sixty S-400 air defense battalions and thirteen Iskander-M missile brigades over the past decade exceeding the planned targets.

♦ GPV-2027 aims to counter-balance the priorities of GPV-2020. The Airborne and Ground Forces are now a priority in GPV-2027, and increasing the share of modern equipment is no longer the most important objective. Indeed, during a speech to the Ministry of Defense in December, President Putin said, “This goal – 70% of modern equipment – must be attained and subsequently maintained,” but he did not emphasize increasing this share.4 Instead, GPV-2027 will prioritize quality over quantity and high-tech systems. The Air Force is not a major beneficiary under GPV-2027, largely because the mass procurement of helicopters and fixed-wing aircraft over the past decade has addressed its most pressing equipment problems. The MoD is planning to procure fewer than half the number of helicopters under GPV-2027 compared to GPV-2020, and projects smaller contracts for other aircraft like the Su-35S fighter and modernized variants of the Su-30SM and Su-34 aircraft.

♦ Many of the other equipment priorities are for systems that were supposed to be procured in large numbers in GPV-2020, but were delayed, such as Borei-A and Yasen-M nuclear- powered submarines, Su-57 fighters, Armata tanks, Kurganets-25 infantry fighting vehicles, Bumerang armored personnel carriers, 2S35 Koalitsiya-SV self-propelled howitzers, and S-350 and S-500 air defense systems. Strategic systems are also a priority, including the Avangard hypersonic glide vehicle, Sarmat intercontinental ballistic missile, Poseidon nuclear-powered and armed unmanned underwater vehicle, Burevestnik nuclear-powered cruise missile, and Peresvet laser system that President Putin mentioned during his March 2018 address to the Federal Assembly. Russia is also planning to procure at least Borei-A strategic ballistic missile submarines and ten new Tu-160M2 strategic bombers. It will also modernize existing Tu-160 bombers to the Tu-160M level, thirty or more Tu-22M3 bombers to the Tu-22M3M level, and continue deliveries of Yars and Yars-M intercontinental ballistic missiles.

♦ GPV-2027 will also emphasize improving Russia’s command and control (C2) and intelligence, surveillance, and reconnaissance (ISR) capabilities. Unmanned aerial vehicles (UAV) will be a priority given the critical role they have played in Russian operations in Syria and Ukraine and the relative weakness of Russia’s current fleet of UAVs (Russia still lacks an operational UAV that can launch or drop munitions). Mass procurement and development of precision-guided munitions is also a key component of GPV-2027. The Russian Navy has emphasized equipping as many submarines and surface ships as possible with Kalibr cruise missiles over the past few years, and this trend will continue with the hypersonic Tsirkon missile, which is currently in development. With the end of the Intermediate-Range Nuclear Forces (INF) Treaty last year, Russian officials announced that they might pursue a ground-launched variant of the Kalibr missile. Russia is also developing new and longer- range precision-guided munitions and anti-tank guided missiles for helicopters, attack aircraft, fighters, and ground vehicles. Another focus is on developing systems that can operate in the Arctic and secure the Northern Sea Route, including a series of expensive nuclear-powered icebreakers like the Lider-class.

♦ Regarding financing, GPV-2027 allocates approximately the same funding in nominal terms for the Russian Armed Forces as with the previous state armaments program with

4 Defense Ministry Board meeting, December 24, 2019, http://en.kremlin.ru/events/president/news/62401. 3 19 trillion rubles. Of course, this represents a reduction in real terms, and President Putin previously remarked that Russian defense spending would decrease gradually in the future (it peaked as a percentage of Russian GDP in 2015-2016). Given that GPV-2020 will only allocate approximately 65-70% of the 19 trillion rubles that was planned, GPV-2027 may still represent an increase in real terms if it adheres closer to its stated allocation.

♦ What do Russian defense procurement plans tell us about Russian foreign policy? Not much, because GPV-2027 is intended to ameliorate Russian weaknesses (e.g. UAVs and older Ground Forces equipment) that are relevant to both large-scale conventional conflicts and smaller Syria-type expeditionary operations. It shows that still emphasizes its strategic nuclear deterrent, particularly as the United States continues to develop ballistic missile defenses. Russia still views traditional ground combat power as critical facet of the Russian Armed Forces, but it now maintains a mix of heavy and light units. After becoming Minister of Defense in 2012, Sergei Shoigu reversed some of his predecessor’s reforms, bringing back divisions and regiments in the Ground Forces, which are viewed as a better structure for large-scale conventional conflicts than brigades. In contrast, brigades are perceived as better suited to smaller conflicts, such as the 2008 conflict with Georgia, because they are more flexible and can be deployed more rapidly.

♦ The Russian Ground Forces currently maintain a mix of brigades and divisions, which is seen as an optimal combination to respond to a variety of threats, including a potential large-scale conflict with NATO, a renewed conflagration in the Donbas, or an insurgency in Central Asia. The Russian Ground Forces maintain traditional heavy tank divisions with an emphasis on artillery and air defense forces, but they have also formed light air-mobile units based on pickup trucks that can be transported by helicopters. In addition, they have formed a dedicated peacekeeping motorized rifle brigade and expanded the number of military police units, which were formed to operate in peacekeeping operations with Typhoon Mine-Resistant Ambush Protected (MRAP) vehicles.

4 ♦ Russia’s Special Operations Forces (SSO) unit has also played an increasingly prominent role in the annexation of Crimea and in intervention in Syria. It is receiving a greater share of funding and support assets. At the same time, Russia’s Airborne forces are undergoing a large-scale reform to make them better suited to conduct expeditionary operations. VDV units have formed four tank battalions recently, and the VDV will receive its own organic helicopter brigade in the future after successful tests during the Tsentr 2019 and Vostok 2018 training exercises.5 Russia’s Naval Infantry has also begun a series of reforms to make it more capable of conducting independent expeditionary operations as well, and the Navy is slated to receive two new modified Project 11711 amphibious assault ships as part of GPV- 2027 as well as two helicopter carriers.6

The state armaments program (GPV) expiring in 2020 was designed to rectify equipment flaws demonstrated during the 2008 Russo-Georgian war after years of low Russian military procurement. GPV-2020 succeeded in resolving the military’s most pressing equipment needs, procuring systems such as the Su-35, T-72B3 tank, BTR-82A, S-400, and corvettes. Yet it failed to deliver brand new systems, such as the Armata tank, Su-57 fighter, S-500 air defense system, and most new nuclear-powered submarines and ships. The new GPV that expires in 2027 will prioritize these systems. GPV-2027 will also emphasize the Ground Forces, which will maintain a mix of divisions and brigades to uphold competitiveness in both large-scale conventional conflicts and rapid Ukraine- or Syria-style deployments. As defense spending decreases from its 2015-16 peak, the Russian military appears comfortable with its capabilities.

5 Roman Kretsul, Alexey Ramm, and Konstantin Valentinov, “Airborne is stronger: airborne troops will receive their own aviation,” Izvestia, January 17, 2019, https://iz.ru/832149/roman-kretcul-aleksei-ramm/vdvoine-silnei-vozdushno-desant- nye-voiska-poluchat-sobstvennuiu-aviatciiu; Ilya Kramnik, “Transition to air mobility: where will the airborne troops land” Izvestia, November 21, 2018, https://iz.ru/813997/ilia-kramnik/perekhod-k-aeromobilnosti-k-chemu-pridut-desantnye-voiska. 6 Alexey Ramm, Alexey Kozachenko, and Bogdan Stepova, “They will issue armor: naval infantry brigades will be strength- ened by tank units,” Izvestia, October 22, 2019, https://iz.ru/923772/aleksei-ramm-aleksei-kozachenko-bogdan-stepovoi/ vydadut-broniu-brigady-morpekhov-usiliat-tankovymi-podrazdeleniiami.; “Source: the first two helicopter carriers of the Russian Federation will be assigned the names from the ‘Mistral.’” TASS, January 12, 2020, https://tass.ru/armiya-i- opk/7499381. 5 The Foreign Policy Research Institute is dedicated to producing the highest quality scholarship and nonpartisan policy analysis focused on crucial foreign policy and national security challenges facing the United States. We educate those who make and influence policy, as well as the public at large, through the lens of history, geography, and culture.

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