Kommersant, Russia
March 24 2006

Make Money, Not Weapons
// The price of the question

The uniqueness of the Russian military industrial complex, whose
technological potential allowed Russia to feed its inhabitants space
food from tubes, conquer the Moon and hold the United States in the
sights of its cruise missiles, is, no matter how you twist it, a
memory dating back to Soviet times. The new, undocumented
characteristics of the complex are only now becoming known. Like war
itself, the military industry is amazing resilient to reform and is
capable to fighting off any attempts to make it profitable.
The solution of the problem of Armenian gas is at least the second
case in 2006 of the preservation of the military industrial complex
as a black hole that the government is willing to throw any amount of
money into. Military enterprises remain the leading reserve of hidden
unemployment, budgeted losses, non-paying contractors, and
Soviet-style incompetent management. Armenia resigns itself to high
gas prices for getting cheap or free military products. Who will pay
for those? Saying that Azerbaijan will do so by buying even more arms
from Russia to maintain its parity with Armenia is just an excuse.
Nothing will make Azeri President Ilham Aliev underwrite the Russian
military industry with such profitable orders after it armed the
Armenians almost for free. Even if Russia does supply Azerbaijan with
a comparable volume of weapons, the price for it will be competitive.
The total of the two contracts will still be unprofitable. But
defense workers will have orders, no one will be laid off and they
can continue forming their holdings in that unkillable sector.

Who will pay? The federal budget will pay, that is, the taxpayers –
us. What are we paying for? For the growth of the Russian military
industrial complex, now under the control of Deputy Prime Minister
Sergey Ivanov and his military industrial commission. Haven’t you
noticed that Russian President Vladimir Putin talks almost
continually about increasing the volume of arms exports, but almost
never about the profitability of those operations, about the income
that that industry produces for the country? What do those games
cost? It’s a military secret.

The same situation could be observed last month in the contract with
Algeria. Putin forgave that country’s undisputed and reliable debt of
$5 billion so that it would buy arms from Russia. If Algeria is ready
to buy arms, that means that it needs them. But why deny the state
coffers $5 billion? So that the Russian military industrial complex
would not be forced to make its products competitive if Algeria held
a tender for its weapons contract.

It is no surprise that Russian missiles cannot hit their targets in
tests. If the current economic policy in that sector continues, the
missiles won’t take off at all in a few years. Maybe Deputy Prime
Minister Ivanov is a secret pacifist. But his pacifism comes at too
high a price for the country. Any middle-aged hippy from St.
Petersburg would be cheaper to keep in his position.

by Dmitry Butrin