The Yuri Dolgoruky has a Bulava made of gold

17.09.2012 — Analysis

Russia intends to add the Bulava strategic missile to its arsenal in the fall of 2012, after two launches from missile carriers that are also ready for use. But in August it was discovered that the needed funds to test the missile were not available. The cost of the Bulava is now several times more than what it was five years ago and the industrialists have significantly increased the original cost estimate. As the columnist for RusBusinessNews has determined, the prices are rising for subjective reasons as well - the Russian military-industrial complex is turning into a "black hole".

Testing of the Bulava was completed in December 2011. Although only nine of the 18 launches were considered to be a complete success, the Russian government, nevertheless, decided to consider putting the missile into service. Two ballistic missile submarines will also be deployed along with the Bulava. It was expected that the Yuri Dolgoruky submarine would begin operations with the Navy in July 2012, and the Aleksandr Nevsky submarine - which is being tested at sea - in early 2013. But this did not happen.

The state commission has still not signed the certificate of acceptance for the Yuri Dolgoruky. Representatives of the military-industrial complex claim that the Bulava needs still one more launch at the command of the General Staff of the Armed Forces, as well as a standard launch from the Alexander Nevsky, but the manufacturer has no more missiles for the test. Industrialists offered to take two serial-produced Bulavas that are intended to arm submarines and conduct the official trials of the missile and its carrier.

In fact, the defense industry has requested that two more Bulavas be funded, at a cost of 1 billion rubles. Those at the head of the Defense Ministry believe that this is not their problem - the money for the research and development work and serial production has been allocated, but the missile is still not in service.

The military blames this on the fact that the Bulava is now several times more expensive than it was five years ago. Experts believe that it is too early to judge either the price of the weapon or the cost of the entire project. Bulava's testing is unlikely to be limited to two launches.

Aleksandr Khramchikhin, deputy head of the Institute of Political and Military Analysis, is convinced that it is too soon to deploy the Bulava, "It will take at least another ten successful launches before the equipment can be considered reliable. Of course, they can use an administrative fiat to force the commission to sign the certificate of acceptance, but I was under the impression that missiles were designed for defense, not for PR".

The costs to develop and manufacture the Bulava are unprecedented. In 1998, when the decision was made to use the missile design of the land-based Topol to create the sea Bulava, the cost of the completed missile was estimated to be 300 million rubles, and 7 billion for the entire project. This is in keeping with what was spent to develop strategic sea missiles during the Soviet time, according to the Independent Military Review. But industry today can only provide a crude, half-finished product for that price. The cost estimates are already several times higher, with no end in sight.

Why is the cost of Russian military production skyrocketing as we watch? As always, there are several reasons. Sergei Ostapenko, deputy CEO of Concern PVO Almaz-Antey, OJSC, claims that it is extraordinarily complex and expensive to create new products today. Energy-intensive equipment, low productivity of labor, idle capacity, and a less-than-optimal staffing structure mean that weapons prototypes and military equipment truly cost their weight in gold. And this is a situation that is hardly unique to the missile industry.

Factories that produce armored vehicles wildly inflate their costs during the development of new prototypes, under the pretext that they have to provide support to facilities that are sitting idle. As a result, the cost of a new vehicle developed by one of Russia's key defense contractors has reached $10 million. Clearly it is doomed even in a mass-produced version, because the Ministry of Defense is not willing to pay more than $3 million for this technology. So the factory is likely to be left without any orders and the country - without any modern armored vehicles.

Zinovy Pak, vice president of the League for Assistance to Defense Enterprises, said that there are also subjective reasons for the increase of the military production cost, in addition to objective explanations. Quite often the estimates are inflated in order to claim a greater share of federal funds. This expert is aware that there are an enormous number of ways to siphon off funds, and those who work with defense contracts are more than happy to make use of them.

Mikhail Delyagin, director of the Institute of Globalization Studies, argues that the country's theft rate has reached 30-60%. This level of "kickbacks" makes it impossible to modernize industry and reduce costs. Consequently, there is no point in investing trillions of rubles into the military-industrial complex - it will never become the engine behind the economy. M. Delyagin believes that the military-industrial complex is capable of originating new technology by replicating its innovations in the civilian sector. But in Russia, money, that is invested in the military industry, does not benefit the rest of society. The military-industrial complex is isolated from the civilian sector and can become nothing more than a "black hole".

And it seems that it's already become. The cost of the Yury Dolgoruky increased by seven times between the time its keel was laid in 1996 to 2008. It began its sea trials in 2009, but since it has not yet been put into military service, one can assume that the price, which includes expenses for adjustments and testing, is probably now several times higher. Modernizing Russia's nuclear-missile shield is methodically devouring the money of Russian taxpayers.

Vladimir Terletsky