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Editorial Last Updated: Jan 9, 2020 - 8:49:07 AM


Putin’s Russia – Nigeria With Snow
By Dr. Gary K. Busch, 8/1/20
Jan 9, 2020 - 8:44:03 AM

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It may seem a strange comparison to make between Russia and Nigeria but, on a fuller analysis, there is much evidence which indicates a great similarity in the deep-rooted level of corruption in the society, coupled with an unhealthy reliance on the funds generated by the export of the nation’s natural resources; especially oil and gas.

The genesis of this high level of corruption is quite different between the two countries. Nigeria is essentially a rentier state where a small elite group of politicians benefit from sharing the wealth which is generated by massive sales of oil and gas in the world market without the necessity of depositing much of that wealth in the national treasury. The Russians, on the other hand, are led by a small elite group of former security personnel who benefit from sharing the wealth which is generated by massive sales of oil and gas in the world market without the necessity of depositing much of that wealth in the national treasury. On analysis, both countries are adequately described by the statement “They are rich countries led by poor leaders and they are poor countries led by rich leaders”.

This year, 2020, is the twentieth anniversary of the rise to power of Vladimir Vladimirovich Putin. On 25 July 1998 Yeltsin appointed Vladimir Putin head of the FSB, the successor agency to the KGB and, in August 1999 he was named a Deputy Vice President of Russia. Later that same month he was elected Prime Minister of Russia. On New Year’s Eve 1999, Yeltsin resigned his post as President which left Putin as Acting President. Putin’s first decree as Acting President was to issue a “Get Out of Jail Free” card to the Yeltsin ‘Family’.[i] This decree said that corruption charges against the outgoing President and his relatives would not be pursued. This was convenient as there were outstanding charges against the Yeltsin Family in Russia and Switzerland for money laundering, etc. Putin’s alignment with the Yeltsin Family assisted him in his election as President and Putin won the post on the first ballot on 26 March 2000. Vladimir Putin was inaugurated president on 7 May 2000.

The changes which have occurred in the Russian political system as a result of the replacement of Boris Yeltsin by Vladimir Putin were generated by the emergence of a new class of powerful, largely unelected, people who have been put in charge of virtually all the levers and agencies of power in the state as well as in charge of many of the vast private enterprises which emerged from the privatisation schemes of the Yeltsin period.

Despite the notion that Communism died with the fall of the Soviet Union, the state, its agencies and its companies are still populated by the Undead; the unreconstructed nomenklatura of the failed communist system. In his book, Capital, Marx wrote that 'capital is dead labour which, vampire-like, lives only by sucking living labour' He coined the term ‘Vampire Capitalism”; of corporations whose exploitations 'only slightly quenches the vampire thirst for the living blood of labour', and that 'the vampire will not let go while there remains a single muscle, sinew or drop of blood to be exploited'. What Putin has created is a society of Vampire ex-Communists where the Undead suck the life blood from private corporations and government agencies; leaving drained and powerless structures behind them.

The new and powerful people (‘siloviki’) have been almost exclusively drawn from the ranks of the ‘Chekists’. A ‘Chekist’ is a general, if pejorative, term for those who are or once were employed in the security operations of the Soviet state- KGB, GRU, MVD, FSB etc. (the ‘Organs’).  Dzerzhinsky’s original agency was the Cheka. Under Putin, these new ‘siloviki’ have been firmly installed in the corridors of power. Under Putin, the Chekists, primarily the St. Petersburg flavour of Chekist, openly took power as ministers, government advisors, governors, bankers and politicians. There may be as many as six thousands of these Chekists in powerful positions in the Russian state. They are known as “oligarchs in epaulets”. There is little unity in the ‘siloviki’ policies. There is no one united plan that they follow. These ‘siloviki’ are in competition with each other and form cliques, alliances and temporary groupings to further their aims. In doing so, they often attack other members of the clan and do serious damage to the Russian companies and agencies they control. There are more factions of ‘siloviki’ than there are factions of Trotskyites. These are a different kind of “oligarch” than those who rose to power under Yeltsin.

Initially, the introduction of the “shares for cash” privatisation under Yeltsin provided for the introduction into the world of commerce of young men, groomed for their tasks by the KGB and political leaders like Silayev, Kasbulatov and Soskovets, to take over many corporations and set themselves up as ‘oligarchs’. These new oligarchs had limited political power and, when Putin took office, he instantly moved to control the remaining political powers of the oligarchs by appointing Chekists to their boards and began a program of increasing state ownership of these companies. The oligarchs soon learned that they could keep their money, but they should not dabble in politics. Putin and his ‘siloviki’ began to recreate the “Power Vertical” and to turn many of the private companies back to replicas of the former state companies.

These private companies have become part of the state system. In Russia, this state company system has always meant that there has never been a direct linkage between company activity, productivity and performance with the resources needed for its survival or expansion. The money pot is held by the state stakeholders as owners of the shares, and funds are made available to the individual companies at the whim or fortune of the group of competing ‘siloviki’ who control it in the name of the state. Theoretically these state-owned companies are the responsibility of a board of directors and management appointed by the state, but their retained capital and cash-flows are controlled outside of the company structure. This lack of linkage has meant that the profits of an enterprise are not necessarily available to that enterprise for R&D, repairs or expansion. Access to these funds must come from the pool of funds controlled by the ‘siloviki’ and reflect the consensus of competing factions in their number. It is a very cumbersome process.

Karl Marx wrote a popular pamphlet called the “Eighteenth Brumaire of Louis Bonaparte” demonstrating how the class struggle in France created circumstances and relationships that made it possible for a grotesque mediocrity to play a hero's part. The 18th of Brumaire is a date in the Revolutionary calendar when Napoleon Bonaparte intervened and became ‘First Consul’ of France (e.g. the ‘People’s Sovereign’). The takeover by his progeny, Louis Napoleon, was portrayed as more of a farce. Louis Napoleon became the head of a state run by the security organs and the bureaucracy. ‘Bonapartism’ has been used to describe a government that forms when a military, police, and state bureaucracy intervenes to establish order. Putin’s Eighteenth of Brumaire has added to this brew the state or parastatal corporations, run by the security services or their ‘siloviki’ colleagues.

By seeking to recreate the Soviet model of central control these ‘siloviki’ have overseen the weakness of the Russian economy and provided for the continued stranglehold of the ‘siloviki’ on the direction of the economy. This has had its effects on the economy but especially on the ‘oligarchs’ who remain in businesses but the ‘siloviki’ have removed the oligarchs’ access to political power. The oligarchs are, in many ways, the first victims of Putin and the ‘siloviki’. They have real companies, real banks, real productive capacities but these are becoming subject to the idiosyncratic demands of the ‘siloviki’ with whom they are in competition.

Despite their power, the ‘siloviki’ have had to form alliances of a sort in order to cement their power. They have allied with the huge class of government bureaucrats in the form of the so-called Party of Power, Unified Russia. In order to maintain their domination of the bureaucracy, the ‘siloviki’ use the tried-and-true method of selective repression and intimidation. Over the last two decades the ‘siloviki’ waged a "quiet cultural counterrevolution" with tremendous effect. They worked to systematically devalue and compromise liberal values, standards, and institutions -- values that had massive public support in the early 1990s. This was coupled with repression, and murder, of politicians, journalists and commentators hostile to their views.

Russia’s Demographic Crisis

One of Russia’s continuing crises has been the decrease in its population. Russia has a severe demographic problem. There were about 1,599,316 (10.9/1,000) births in 2018, a decline of 5.4% relative to the 1,689,884 (11.5/1,000) births in 2017. There were about 1,817,710 (12.4/1,000) deaths in 2018, a decline of 0.4% relative to the 1,824,340 (12.4/1,000) deaths in 2017. Consequently, the rate of natural increase declined from -134,456 (-0.9/1,000) in 2017, to -218,394 in 2018. The population was estimated at 146,793,744 as of Jan 1, 2019, down from 146,880,432 exactly one year earlier. This implies about 131,706 in long-term net immigration, down from 172,551 last year. If accurate, this would mark the first time since 2007 that the population of Russia has declined in absolute terms.[ii] Most importantly there has been a mass migration of rural Russians in Siberia and the Russian East into the cities, leaving largely unpopulated regions and the influx of Asian migrants who have flooded into the East of Russia.

Russia has not fared well in the Human Development Index the UN has compiled annually during the last 29 years. The index ranks all the world nations in terms of how well they do in terms of life expectancy, education and income. In 2019 Russia was 49th out of 189 nations while neighbours like Finland were 12, Poland 32, Ukraine 88, Latvia 39, Belarus 50, Georgia 70, Azerbaijan 87, Armenia 81 and Uzbekistan 10.

When the Cold War ended, the Soviet Union had a total population of nearly 290 million, and a Gross National Product estimated at about $2.5 trillion. At that time, the United States had a total population of nearly 250 million, with a Gross Domestic Product of about $5.2 trillion. That is, the population of the United States was smaller than that of the Soviet Union, with an economy that was only twice that of the Soviet Union. Two decades later, Russia's population is about 140 million, with a GDP of about $1.3 trillion, while the population of the United States is over 300 million, with a GDP of $13 trillion. Today, the population of the United States is twice that of Russia, and the US economy is ten times as large.

Global tables of male life expectancy put Russia in about the 160th place, below Bangladesh. Russia has the highest rate of absolute population loss in the world. The Russian population is aging, and Russia remains in the throes of a catastrophic demographic collapse. The population is expected to fall to 139 million by 2031 and could shrink 34 per cent to 107 million by 2050.  Russia is suffering from a mass emigration of its populace, especially among the educated. According to the State Statistics Service (SSS), approximately 4.5 million people moved out of Russia between 1989 and 2014. The smallest outflow occurred in 2009 when just 32,500 people emigrated, but the numbers began rising again after 2011, and in 2014 once again reached 1995 levels. Today, the situation is significantly worse. Russian government statistics show a sharp upturn in emigration over the last four years. Almost 123,000 officially departed in 2012, rising to 186,000 in 2013, and accelerating to almost 309,000 in 2014 after the annexation of Crimea and even more in 2015.[iii]

It isn’t only the educated and the young who are leaving Russia; their money is leaving even faster. According to expert estimates, for all the years, about $ 3 trillion has been exported abroad.  “The net outflow of private sector capital from Russia in January-February 2019 amounted to $ 18.6 billion, which is 2.1 times more than the figure for the same period last year – $ 8.7 billion, the Russian Central Bank reports. According to Bloomberg’s estimates, over the past 25 years, about $ 750 billion have been taken out to offshore jurisdictions from Russia. Calculations of the MGIMO professor Valentin Katasonov show that about $3 trillion were withdrawn from the country since the collapse of the USSR.”[iv]

Bloomberg Economics’ calculations suggest some $750 billion in Russian assets moved offshore over the last 25 years. The bleeding appears to have slowed, though it’s unclear if this reflects tighter controls and mounting geopolitical risk, or if the flows have simply been getting harder to track. x

The Heavy Burden of Military Expenditure

The cost of the continuing war in the Ukraine and the massive bleed of Russian military resources in Syria are taking a heavy toll on the Russian budget. The cost of rebuilding Syria will make a noticeable dent in Russia’s economic well-being. However, it has committed itself to a wide range of improvements in its military capabilities, despite its lack of adequate shipyards, missile factories, available conscript manpower, essential electronic and guidance systems and subsystems blocked by sanctions, the burden of maintaining aged and decrepit equipment and an ever-expanding effort to extend its political reach into the Middle East, Africa and Latin America. Much of this is the traditional Russian policy of bluff and bluster but, with the official burial of the INF Treaty, it is engaged in some expansion of its intermediate range of its missile systems. Some of these efforts towards greater capability appear to be directed against the Ukraine as Russia is stepping up its threat level against the Ukraine.

One of the problems in relying on conscript soldiers is their term of service. At the beginning of 2014 the services were only 82% manned - a shortage of nearly 200,00 personnel. This was exacerbated by the reduction in 2013 of the term of conscription to one year of service as opposed to the previous three years. Since these terms of service are so short, military adventures have to be timed with the availability of soldiers in their cycle of enlistment. More importantly these conscripts are untrained which has meant that they do not have the experience or training to fill the important jobs of operating and maintaining the sophisticated weapons systems used by the special forces units like the Air Assault Troops (VDV) and other elite forces. There is a deep deficit in Russian Reserve units which are used to carry out the training of conscripts despite the establishment of a new Reserve Command in 2013. There has been a reduction in the numbers of conscripts successfully evading the draft; a frequent Russian problem.

One of the most serious concerns of the soldiers and their parents is accusations that military commanders have turned a blind eye to the brutal hazing practices that plague the Russian Army. The Soldiers' Mothers Committee says 80 percent of cases of violence against soldiers go unreported, adding that the few incidents that do come to attention are usually reported by relatives of victims, doctors, and rights groups. According to the Defence Ministry, sixteen soldiers died last year as a result of bullying, although rights groups say the real number is much higher.

The practice of hazing in the Russian Army is often known as "dedovshchina," the informal subjugation of new recruits to older soldiers. Roughly "dedovshchina" translates as the "rule of grandfathers."

As a result of the resistance of the conscripts and their families to fighting in the Ukraine there has been a growing resistance to serve there. This resistance is not unique. Such resistance was common among Russian troops in the Russian war in Afghanistan and even at higher levels of the military in the Chechen War. In the past, the Russian military has resisted and refused to follow the orders and directions of the political leadership. Perhaps the best example was the unwillingness of the Russian Army to fight in Chechnya.  The preparation for a war in Chechnya did not have the support of the Russian military.

The political leadership of Russia makes demands on the military that it knows it can’t resolve. This was first evident during the Chechen War, when an unwilling Army was pressed to fight fellow Soviet citizens in the South. What the Russian army didn’t want to do was to fight in Chechnya. It was unprepared, disorganised and had serious political inhibitions against killing Russian people, even Chechens. Yeltsin was determined to resist this independence movement and consulted with his military leaders. Yeltsin's adviser on nationality affairs, Emil Pain, and Russia's Deputy Minister of Defence, Boris Gromov, both resigned in protest at the invasion, as did Gen. Boris Poliakov. More than 800 professional soldiers and officers refused to take part in the operation; of these, 83 were convicted by military courts and the rest were discharged. Later Gen. Lev Rokhlin also refused to be decorated as a Hero of Russia for his part in the war. This is why, under Yeltsin, the war in Chechnya was fought almost entirely by the military forces of the MVD (Ministry of the Interior) not the Army.

There has also been a growing reaction among the families of these conscripts at the secret burials in Russia of the dead from the Ukraine where there is no indication where they died. This was true in Afghanistan and in Chechnya. There are reliable estimates that there have been at least 1,520 Russian soldiers’ bodies which have been sent back to Russia from the Ukraine for burial and an unknown number of wounded.. The white “Emergency Relief” trucks sent from Russia are returning to Russia with dead soldiers as their cargo. As in the Chechen Wars there is a Committee of Mothers of sons in the Army who protest loudly at the failures of the military.

The equipment supplied for the use of the rebels and for all, but the most specialist units of the Russian army has been outdated equipment from previous conflicts. The Russian Army has been starved of new equipment for over twenty years and much of what they had available was built in the Ukraine. Despite promises by the Russian Government of investment in the military stock and its modernisation these improvements have never really come. The most advanced equipment used by the Russians in the Ukraine is operated and controlled by regular Russian soldiers as opposed to the Donbass rebels who do not have access to them.

A major difficulty for the Russian Army in the Ukraine has been sustaining a military force to support the ‘irregulars’ of the Donetsk and Lugansk rebels. The Russian army in the field is composed primarily of conscripts from across Russia with insufficient training and aging equipment. Moreover, these conscripts are unwitting and/or unwilling to fight in the Ukraine. There have been increasing reports of conscripts having been press-ganged or tricked into taking part in this covert war in Ukraine, and the RUSI report says enforcer units have had to have been deployed to stop them fleeing the frontlines. It says these “barrier squads”, or anti-retreat troops, are drawn from the interior ministry’s Dzerzhinskiy division. “A further example of such actions is the deployment of the Russian Ministry of the Interior’s Dzerzhinskiy Division in the role of ‘barrier squads’ – punitive action, anti-retreat troops – behind the lines of rebels and Russian regulars. This has been reported at both the northern part of the rebel-controlled territory near Debaltsev and near Mariupol on the southern operational axis. On five identifiable occasions, detachments of the Dzerzhinskiy Division have undertaken punitive action against Russian regulars; rebels have also reported punitive actions by the Dzerzhinskiy Division against them. The necessity of such deployments further highlights problems the Russian command has with the morale of both its own troops and the rebels.”[v] Recently, the Russian Army installed the 34th Control Brigade of the 58th Army of the Southern Military District to add to barrier strength.

Because of Russia’s continuing dependence on oil and gas exports for most of its income, the revenues for running the country are greatly diminished by the fall in prices of these commodities. As important as the drop in revenues, the Western ban on technological exports to Russia and the credit squeeze has made investing in new hardware and governing much more difficult for Putin. The dissonance between increasing demands on the Russian military and the concomitant squeeze on revenues available have proved difficult for the leaders of the Russian military to provide a coherent program. This has led to a sustained conflict between the leadership and Putin; often with devastating effects.

One of the most important roots of this conflict between Putin and the military is the concentration of expenditures on hardware and the continuing burden of debt from prior investments in hardware which has left a diminishing sum for the welfare of soldiers.  In late 2016 the Russian press highlighted the rise of the “Homeless Regiment” at the Monument to the Heroes of 1905. More than 10,000 veterans of the Russian military in Moscow – and 30,000 members of their families -- who had been promised housing were not getting it because the defence ministry had redirected the money allocated for construction to the current military build-up required for the Kremlin’s aggressive foreign policy.

The Russian government has a long history of not keeping its promises to veterans, a shortcoming that is increasingly infuriating those who aren’t getting what they were promised and certainly is doing nothing to boost morale of those who are still serving and may have increasing doubts that Moscow will live up to its promises when the time comes.  There are now 10,297 military veterans who have not received new housing when they were promised it and for most of them, prospects for acquiring it in the visible future are practically lacking.

The situation of Russia’s military pilots is particularly critical. Defence Minister Shoigu revealed that the deficit reached 1,300 pilots. To resolve this massive shortfall, the professional lifespan of pilots in the Armed Forces has been extended by five years. The officer corps, reduced to about 150,000 people in the course of the reform, seems to have retained that number. The reforms instituted by former Minister Serdyukov were designed to maximise the power and projection of military force within the area of Russian security space. Putin, and his planners, made those proposals and reforms obsolete by introducing a foreign policy which included a hot war in Syria which required massive use of scarce military resources and an invasion of the Ukraine and the occupation of Crimea.

Putin and his close confidants began an internal war against the Russian Army. The military had been appalled at the lack of co-ordination of the Russian occupation of Afghanistan and the large-scale drug abuse that war brought back to Russia. The Army returned in disgrace. Very little was done to rejuvenate the military after its return from Afghanistan. Instead, Putin began a wholesale purge of the Russian military. That is a purge of the genuine soldiers, not the political hangers-on and intelligence services refugees who take on military ranks when they move into the armed services bureaucracy. The day before the giant parade in Red Square of the might of the Russian Armed Forces in 2015 Putin dismissed twenty generals from their posts. Among those let go was the lieutenant general of police, Sergey Lavrov, as well as the head of media relations in the Ministry of Internal Affairs, Andrei Pilipchuk. The first deputy commander of the central regional military command, Vladimir Padalko, was also dismissed, according to the Gazette.

Three months earlier he had dismissed six other generals. These generals were dismissed by a presidential decree announced through the Gazette and without fanfare. On the 29th of June 2016 Putin’s Ministry of Defence suddenly announced it was firing fifty naval officers, including Vice Admiral Viktor Kravchuk and chief of staff Rear Admiral Sergei Popov. They were both fired for cause, as were several other unnamed senior officials from their posts in the Baltic Fleet. This came as a great shock to the country as such a purge of serving top commanders had not been seen since the days of Stalin, during the Yezhovshchina of 1936-38. Earlier, Admiral Viktor Chirkov had been removed in November 2015 officially because of ‘health concerns. Chirkov, who had been Kravchuk’s patron in the navy for many years, was rumoured to have also been removed due to complaints about inadequate readiness in some units This may well have been true but others in the Navy have reported that the unwillingness of the admirals of the already-reduced Baltic Fleet to provide vessels and support to the Russian naval presence in Syria was a more immediate cause of the rift.

In February 2017 Putin dismissed 16 generals from the Interior Ministry, the Emergency Services Ministry and the Investigative Committee.

In May 2017, Russian President Vladimir Putin dismissed 12 high-ranking officials from the Ministry of Internal Affairs, high-ranking generals of the MIA, the ICR and the Ministry of Civil Defence and Emergency Response Ministry lost their posts

When the Russian presence expanded dramatically in the Syrian conflict the troops deployed were essentially mercenaries (because of the service restrictions on serving outside Russia) and outside the direct control of the Army. There were objections. In July 2017 a decree was published on the Russian official portal of legal information. Eight generals were immediately released from their posts by the decree.

These Russian fighters are in Syria as contractors or mercenaries, hired by a private company, rather than regular troops. But despite their unofficial status, according to these accounts, they operate in coordination with the Russian military and are given privileges back home normally available only to serving soldiers. They fly to Syria on board Russian military aircraft which land at Russian bases. When they are injured, they are treated in hospitals reserved for the Russian military and get state medals.

Under Russian law, it is illegal to work as a private military contractor in another country. However, Russian citizens have participated in wars across the former Soviet Union throughout the 25 years since it broke up in 1991. In 2014, large numbers of Russians fought openly on behalf of pro-Moscow separatists in Ukraine. Western countries say those rebel units were organized, paid and armed by Moscow; the Kremlin says any Russians there were independent volunteers. They fight as part of “Wagner” led by a man who has become a leader of Russian mercenary forces in Syria, Africa and Latin America.

Perhaps the most upsetting aspect of Putin’s antipathy to the Russian armed forces is the litany of those officers whose lives were terminated permanently in the purges. The Russian website “info-Napalm” has produced an infographic which brings this home.

Why The Attack on the Ukraine is Driven By Military, Not Political, Concerns

The Russian attack on the Ukraine derived from the fear that the Ukraine would ally itself with the European Union and would join NATO, as it had been discussing. Russia desperately needed the military production of the Ukraine to supply and maintain the Russian Army.

The military-industrial complex of Ukraine is the most advanced and developed branch of the state's sector of economy. It includes about 85 scientific organizations which are specialized in the development of armaments and military equipment for different usage. The air and space complex consist of 18 design bureaus and 64 enterprises. In order to design and build ships and armaments for the Ukrainian Navy, 15 research and development institutes, 40 design bureaus and 67 plants have been brought together. This complex was tasked to design heavy cruisers, build missile cruisers and big antisubmarine warfare (ASW) cruisers, and develop small ASW ships. Rocketry and missilery equipment, rockets, missiles, projectiles, and other munitions are designed and made at 6 design bureaus and 28 plants.

Ukraine has a well-developed scientific, technical and industrial basis for the indigenous research, development and production of small arms. A number of scientific-industrial corporations have started R&D and production of small arms. The armour equipment is designed and manufactured at 3 design bureaus and 27 plants. The scientific and industrial potential of Ukraine made it possible to create and produce modern technical means of military communications and automated control systems at 2 scientific-research institutes and 13 plants. A total of 2 scientific-research institutes and 53 plants produce power supply batteries; 3 scientific-research institutes and 6 plants manufacture intelligence and radio-electronic warfare equipment; 4 design bureaus and 27 plants make engineering equipment and materiel.[vi]

Perhaps the best example is the company Motor Sich. It is the sole producer of engines for the MI-8 and MI-24 helicopters. It produces these engines for the Russian helicopter industry and a wide range of other military components. The air firm Antonov is based in the Ukraine and is one of the major suppliers of aircraft for the Russian Air Force and for Russian arms exports.

The ability of the Russian industry to fill its own needs is compounded by the fact that it desperately needs Ukrainian parts and subassemblies for its exports. Losing control of the Eastern Ukraine jeopardised is Moscow’s ability to fulfil multibillion-dollar international contracts without Ukrainian inputs.

Important Ukrainian exporters to Russia include Mykolayiv-based Zorya-Mashproekt, which supplies several types of turbines to Russia, including those installed on military ships. Another is Kharkiv-based Hartron, which supplies the control systems for Russian missiles. The Yuzhmash plant in Dnipropetrovsk is the only service provider for Satan missiles that Russia uses. The Ukrainians are also the main supplier of spare parts which the Russian armed forces desperately need.[vii]

Ukraine’s belated decision to stop supplying weapons and military equipment to Russia, a month after Russian troops seized the Crimean Peninsula, has led to the cancellation of numerous international contracts signed by Moscow. The decision has seriously impeded Russia’s military-defence industry significantly as it has had to replicate, in Russia, the factories which formerly supplied them from the Ukraine.

As the world’s second largest exporter of arms, Russia was extremely dependent on Ukrainian supplies, which accounted for 87 per cent of its military equipment imports, according to the Stockholm International Research Institute. Russia doesn’t have the money to effectively replicate these plants lost in Ukraine and lacks the manpower even if the plants were built.

Russia’s New Weapon Systems And Delays

The Russian Navy has not only shrunk since the end of the Cold War in 1991 but it has also become much less active. In the last eight years, only about ten of their nuclear subs went to sea on a combat patrol each year. Russia has only 15 modern, 7,000 ton, Akula SSNs (nuclear attack subs) in service.  Actually, three are in reserve, for lack of money and crews, and another has been leased to India. All of the earlier Russian SSNs are trash and most have been decommissioned. Since the late 1990s, the Russian navy has been trying to reverse this decline but the navy budget, despite recent increases, is not large enough to build enough new ships to replace the current Cold War era fleet that is falling apart. The mighty Soviet fleet is mostly scrap now or rusting hulks tied up at crumbling out-of-the way naval bases.

In October 2019 Russia’s only aircraft carrier, the Admiral Kuznetsov, which was in Murmansk for an overhaul, was seriously damaged when the floating drydock collapsed and a crane fell on it during the repair work, gouging a hole in its deck. It then continued its repair until December when a fire swept through the vessel. The Navy estimates it will be 2024 before the vessel will sail again.

The Admiral Grigorovich is the first of the Project 11356 frigates, displacing 3,850 tons. It is designed for anti-ship and anti-submarine warfare on the high seas, and for anti-aircraft operations, both independently and as an escort ship. The vessel was completed on 2015 and entered service in early 2016. It was constructed at the Kaliningrad-based Yantar Shipyard and uses a Ukrainian Zorya-Mashproyekt gas-turbine propulsion plant. It was to be a project which would produce six ships, but while Russia had received the propulsion systems for the first three vessels, Ukraine's termination of defence exports to Russia left the final three without their turbines. The other three frigates lack propulsion plants, the production of which was to be launched by defence contractor Saturn in the city of Rybinsk under the import substitution program, but the navy rejected this. This was reported on 24 March 2017 by Deputy Defence Minister Yury Borisov. "Due to the untimely performance by the Almaz-Antey concern of the development works Polymet-Redut and Shtil, the terms of delivery of the 22350 Admiral Gorshkov and 11356 Admiral Makarov ships are in jeopardy”, Borisov said. According to him, the main reasons for late delivery were the low level of organization of their work, delays in the supply of components, insufficient production capacity and a lack of qualified personnel. In total, six ships were planned for this project, of which in 2016 the fleet received two - Admiral Grigorovich and Admiral Essen. "Admiral Makarov" is on state tests. The fourth and fifth ships of the series will be transferred to India, the fate of the sixth was still unknown.

These problems are mirrored in the production of tanks, aircraft and missiles. The heavy, liquid-fuelled Sarmat ICBM was developed as a replacement for Russia’s older R-36M missile (NATO Reporting name: SS-18 Satan). The Sarmat’s large payload allows for up to 10 heavy warheads or 15 lighter ones, or as many as 24 hypersonic Yu-71 glide vehicles. Production of the new missile and its prototype was entrusted to the Krasnoyarsk Machine Building Plant (Krasmash), which suffers from serious equipment depreciation issues—in 2010, fewer than 20 percent of machines at its fabrication facility were less than 20 years old. The quality and lead time was impeded by the lack of modernization of the production facilities at Krasmash.

The Sarmat’s development has consistently fallen behind schedule. The rocket prototype should have been ready in June 2015, but, in fact, it was designed only in November. Furthermore, pop-up tests of the missile prototype were scheduled for 2015 but were postponed to the first quarter of 2016 because sub-contracting enterprises faced problems with meeting deadlines for deliveries of Sarmat components during the project’s implementation. In February 2016, the test was postponed again for 3­–4 months because the launch silo was not ready. According to media reports, the issue was a lack of funding. The silo was finally complete in May, but the test launch did not take place again, this time due to technical problems with the missile prototype. The pop-up tests were, thus, postponed to November–December. However, in October, media sources reported that the pop-up tests were being rescheduled for January 2017. January came and went, again without a test launch.

In late December 2017, the first successful ejection test of the missile was carried out at the Plesetsk Cosmodrome. On 1 March 2018, Russian president Vladimir Putin, in his annual address to the Federal Assembly, said tests were continuing. On 30 March 2018, the Russian Defence Ministry published a video showing the Sarmat performing its second successful test-launch at the Plesetsk Cosmodrome.  On 24 December 2019, during the exhibition of the modern weapon systems at the National Defence Management Centre, it was reported that Sarmat is capable of a 35,000 km sub-orbital flight". The trials of the missile complex are expected to be completed in 2021, and, during the 2020-2027 period, "twenty missile regiments are planned to be rearmed with the RS-28"; unless there are further delays.

The Sarmat delays parallel the previous failures of the submarine missile Bulava—multiple failed tests and long delays in reaching operational capability. It is worth pointing out that the Bulava was declared operational only after eight years of testing. These delays are common in the development of Russian weapons. The new “Armata” tank has proved to be too expensive to deploy in large numbers and still technically unproved.

The Russian threat of a push towards military parity with its opponents, especially the “glavni vrag” (main enemy –the USA) is a delusion. The reality of the comparison between NATO and the Russian military shows the disparity in size. In 2015, NATO spent around US $861 billion on its arms build-up - just about thirteen times Russia's military budget (US $66 billion). NATO nations - without the USA - are spending nearly the same amount per capita on their armed forces (US $440) vs. Russia's US $470, while the USA, alone, spends US $1,870 per capita on its military. 800,000 Russian soldiers are up against 3.41 Million NATO soldiers, 750 Russian fighter jets and 1,400 ground combat aircraft are up against NATO's 4,000 fighter jets and 4,600 ground combat aircraft. In a warfare situation, a single Russian aircraft carrier (when it gets repaired) would have to take on 27 NATO aircraft carriers, 100 Russian frigates, destroyers or corvettes would confront 260 of the corresponding NATO warships, 60 Russian submarines would be confronting 154 NATO subs. Only in the domain of multiple rocket launchers (MRLs) and self-propelled guns (SPGs) would Russia hold a slight advantage over the western alliance. However, in modern warfare, the military advantage these weapons represent can be regarded as of subordinate significance.[viii]

The first two Avangard systems (a hypersonic glide missile system) officially began combat duty on December 27, 2019. It's been a long road for the glider - the program began more than 30 years ago, in the late 1980s. It was known as Albatros at the time. The first flight test of the system took place in February 1990 (although it was certainly an early development prototype). The program was revived in the early 2000s and made the first public appearance in February 2004.[ix] The Avangard hypersonic missile has been proclaimed a threat to the West by Putin. However, it is twelve years behind the U.S. development of a similar system.[x] In December, Putin also announced the introduction of the Tsirkon 3M22 naval missile procured for use on Project 22350 frigates and Project 1155 anti-submarine warfare ships. The large anti-submarine warships will be modernized and fitted with universal launchers, allowing them to fire both Kalibr and Tsirkon cruise missiles.[xi]

The Labour and Human Rights Challenge to Russian Corruption

There has been an outpouring of protest across the broad expanse of Russia against the difficulties posed to normal life by the austerity programs of the government, seeking to fund the expansive foreign policy of the Putin government, both military and civilian with diminishing national income. This has led to massive demonstrations against the high levels of corruption in the country, which has seen the continuous growth of poverty in the nation and the suppression of the manifestations of protest against these conditions.

2019 was not a good year for Russia. The economy is still stalled and, in many respects, is still in decline. Nationwide family income and living standards continue to decline. The government plays this down on its media outlets, but the average Russian knows better and is not happy with the situation. There are more protests and more public hostility aimed at the government.

The fundamental problem is that the policy ambitions of Putin’s government have continued to expand while resources available have continued to diminish. The government cracks down on dissent but makes little cash available to resolve important social issues. Because of the high levels of corruption, Putin’s primary job has been as a referee of the competing demands of the ‘siloviki’ for control of scarce resources; the so-called “war between the security services.” Whenever a criminal trial is brought before the courts there is an effort to establish which of the security services’ bosses has been strengthened, and which weakened, as a result of these.

The authoritarian nature of the Russian state means that its officials and the government are free to determine when and whether they are subject to their own laws. Accordingly, highest echelons of the security services are partially excluded from these laws and govern themselves by informal political and economic ties. A distinction being above the law and being lawless exists only in the mind of Russian government officials, for whom that border can be moved at will.[xii]

The rise of the ‘siloviki’ provided rich prizes for exploiting Russian legal norms. The earliest example was the milking of the Yukos cow where phenomenal sums of money were earned for the ‘siloviki’ with banking and stockbroking connections. There is no insider trading law in Russia which prevents this ‘speculation’. The government knew when it was going to make an announcement about Yukos; an announcement that would send its shares up or down dramatically. It knew when it would announce news about stopping or starting oil flows; an announcement that would send oil prices up or down. There is increasing evidence that the foreknowledge of government intentions led to trades in Yukos shares and oil futures by the ‘siloviki’, betting on a ‘sure thing’, the same groups of people who were making the decisions. They milked the Yukos cash cow for years. Serendipitously, much of these profits came from foreigners or international private investment funds. The President and the ‘siloviki’ made a great deal of money on Yukos.

Nothing much has changed since the days of Yukos. In November 2019 the Russian government attempted to “nationalize” one of the country’s largest high-technology companies, Yandex, Russia’s leading search engine, Yandex holds 51 percent of the domestic market share in its category and is the fifth-most-used search engine worldwi­de; at the same time, the company is an important e-mail service provider in Russia,.  In recent years, the firm successfully di­versified, gaining control of huge segments of money transfer operations thro­ugh Yandex.dengi and taxi services through Yandex.taksi.

The company is incorporated in the Netherlands, with 15 offices throughout the world, and it has traded on the NASDAQ since 2011. However, in 2009, Yandex was forced to sell a “Golden Share” to Sberbank for a symbolic $1, allowing the state-owned bank to block any sale of the company’s stock representing more than a 25 percent stake. After Vladimir Putin returned to the Kremlin, the state interfered in Yandex’s business dealings more directly, forcing its search engine to serve up more “politically correct” results to users and forced Yandex searches to omit news about protest and opposition activity in the country. It also blocked the “electronic wallets” used to raise money for organizing street rallies or support political prisoners. Opposition activists’ e-mails were often ‘leaked’ to the Russian police and security services. Yandex’s main shareholder, Ar­kady Voloz, began negotiating with the several ‘siloviki’ involved (in both the Sberbank and the Duma) about the security of his holdings. His shares and Sberbanks’ were put in a special holding vehicle in Kaliningrad which put its own directors on the board. Gorelkin of the Duma introduced a bill about foreign ownership of the internet. The price of Yandex shares dropped by more than 25%. Then, Gorelkin removed his bill in the Duma and the shares soared.  The ‘siloviki’ made many millions on this insider trading deal in Yandex shares as a result of their prior knowledge of the trading deals and Gorelkin’s intentions. The government took control of the main internet search engine and emails. [xiii] This was similar to the shakedown at Vkontakte, Yukos and Mechel Steel.

Another example of the shady tactics of the ‘siloviki’ in muscling Russian business is the imposition of claims of unpaid taxes by companies the ‘siloviki’ want to control. Quite often these taxes are ad hoc taxes declared by one or more of the ‘siloviki’ in a government agency with demands for outrageous sums of unpaid taxes from the past. They seize the company for its debts, fire the management, and take over the company themselves, debt-free. Hundreds of middle-sized businesses have been taken over this way.

Another method involves a government agency attacking a company on made-up charges about contract deficiencies. Recently, Valery Izrailit, the chairman of the board of directors of Ust-Luga, a company developing а seaport in Russia’s Leningrad region, near St. Petersburg,  was charged with two counts of large-scale fraud with one accusation being that he supplied used pipes instead of new ones during construction, with damages estimated by investigators to be 3.2 billion roubles ($50 million). He was later charged with money laundering.

In the course of the investigation, Russia’s intelligence agency, the Federal Security Service (FSB), was able to access the businessman’s asset declaration, which included confidential information on Izrailit’s foreign companies and his London flat, as well as his foreign bank accounts and stocks. Izrailit had supplied this declaration to the Russian Federal Tax Service (FNS) in 2016 as part of Russia’s capital amnesty program; Putin’s scheme to allow Russians to repatriate and legalize assets held abroad on the guarantee that their declarations would not be used against them in the form of criminal, administrative, or tax investigations. As well as a clear and emphatic promise from Putin, this proposal was formalized into law a year later as Federal Law 140, which fleshed out the president’s guarantee that the information provided in declarations could not be seen or used by law enforcement officials. Nonetheless the FSB used this confidential information to bring additional, more serious charges, against Izrailt.[xiv]

The consequences for the Russian economy of the shady practices of the ‘siloviki’ and Putin’s cronies resulted in massive cost overruns on the Sochi Olympics and the football World Cup. These cost overruns went directly into the pockets of Putin’s friends. Perhaps the most expensive and illegitimate enterprise in corruption was the failures and theft in the construction of the space cosmodrome in Vostochny.

Construction of Vostochny has been underway for nine years now and it is still not finished. Costs have risen as a result and are now approaching five billion dollars. The corruption involved fifty-eight (so far) people convicted and punished for stealing $172 million. However about 32 percent of that was recovered before it could disappear into offshore bank accounts or investments. Even Putin complained at the corruption. Some of the corruption involved the use of substandard materials. This was the case with a launch pad and the defective concrete had to be laboriously removed and replaced with concrete capable of handling large rocket launches. Most of the corruption involved payroll (reporting more workers working more hours that was actually the case) and purchases of items that did not exist or were substandard. They even forgot to pay the workers who actually did turn up for work.[xv]

This continuing problem with corruption has had a dramatic effect on the lives of working people across Russia. Corruption is the rule in Russia. Practically every interaction between the citizen and the state (bureaucracy, police, tax bureau, banks, etc.) involve some form of extra-legal payment for what a free or regulated service should be. it is not a surprise that a new wave of labour militancy has exploded across Russia as people have run out of money, pensioners have seen long delays in receiving their pensions, prices have continued to rise and the government seems unwilling or unable to take the kind of action which would relieve these tensions.

These problems which affect individuals in Russia are compounded by the need for the government to deal with the massive commercial debt owed by Russia’s regions. The list of regions with burdensome debt has not changed since last year. There are 12 regions which hold debt equalling 80 to 100 percent of their revenue, seven hold debt totalling 100 to 120 percent of revenue, Moldova’s debt equals 185 percent of revenues.

The cost to the regions for servicing their debt to the state has doubled over the last three years, and the cost of paying down the debt has risen 360 percent to 2.3 trillion roubles. That total is almost equivalent to the size of the debt itself. The regions are operating with a “cash gap,”. The regions have already received 220 billion roubles, or 70 percent of the 310 billion roubles in cheap federal loans that Moscow had promised them for 2016, according to Finance Ministry data but that enables them to stand still, not to reduce their debts. The fundamental problem is that their nominal incomes rose by only 2.7 percent, whereas expenses grew by 5.7 percent. There only a shrinking or disappearing tax revenue base of income taxes, corporate taxes and property taxes due to the deflation of the economy and there is no place they can go to raise the region’s income.

One of the key areas of social concern has been the shrinkage of the hospital care system which has led to massive hospital closures and a decrease in the quality of medicine in Russia. By 2021–2022, the number of hospitals in the country is likely to drop to the level of the Russian Empire. Between 2000 and 2015, the number of hospitals in Russia halved, dropping from 10,700 to 5,400, according to the Centre for Economic and Political Reform (CEPR), based on data from Rosstat. In a report entitled “Burying Healthcare: Optimization of the Russian Healthcare System in Action,”  CEPR analysts note that if the authorities continue to shutter hospitals at the current pace (353 a year), the number of hospitals nationwide will have dropped to 3,000 by 2021–2022, which was the number of hospitals in the Russian Empire in 1913.

It is not only the hospital closings which have affected Russian lives, the number of hospital beds also decreased during the fifteen-year period: on average by 27.5%, down to 1.2 million, according to the CEPR’s calculations. In the countryside, the reduction of hospital beds has been more crushing: the numbers there have been reduced by nearly 40%. This is not because there have been alternative health care provisions made; even out-patient clinics have ben closing. During the period from 2000 to 2015, their numbers decreased by 12.7%, down to 18,600 facilities, while their workload increased from 166 patients a day to 208 patients.

These phenomena have led to a rise is social discontent in Russia; especially among the workers. Despite heavy-handed tactics by the government there is a recurring nationwide truck strike in Russia. More than a million trucks have gone on strike across the country. The latest strike started on 28 March 2017 and is continuing to a showdown on April 15 when even higher charges on the trucking industry take effect. The origins of the protest were the unilateral imposition of a new tax on trucking by the government in 2015. This system (known as the ‘Platon’ system) was introduced to offset what the government said was ‘wear and tear’ on the nation’s road which is so dependent on trucks. The Platon tax applies to all trucks over 12 tons. This is in addition to all the other taxes paid by the truckers. The truckers have resisted paying this tax because they see the revenues earned going, not to repair of the roads, but directly to the pocket of Putin’s closest friend (and judo partner) the billionaire Arkady Rotenberg whose son owns the Platon system.

There are strikes all over Russia, primarily among workers who haven’t been paid their wages for months at a time. This has been going on for over five years; including doctors, construction workers, teachers, car workers, and factory workers. As these nationwide strikes expand and involve many more people, the independent unions of Russia are gathering their collective strengths to pose a real threat to the existing political system. The police and military may club and beat young protestors and put them in jail or in hospital, but they can’t club a worker to working anymore; still less a thousand workers. If wages are not being paid by employers or delayed indefinitely, the workers have nothing to lose. They can be militant by doing nothing. Putin hasn’t developed a response to that.

When Putin decided that he would ‘reform’ the social security and pension system (like Macron in France) he was confronted by mass demonstrations of workers and retirees across Russia. He raised the retirement age for men to 65 and women to 60 (after many marches and protests). While these ant-retirement change protest were taking place, the main opposition leader, Aleksei A. Navalny, who had been organizing a nationwide protest against these changes was sent to jail. Navalny has ben leading a major campaign against corruption in Russia and has produced several films and documentaries exposing this corruption. Navalny has energised many of Russia’s youth in support of the anti-corruption campaign and, with the rise of the social security protests, united many of the elderly of Russia to that cause. Putin’s response to these protests has been brutal, further distancing him from the mainstream of political change.

In April 2016 President Putin announced the creation of the National Guard, (‘Rosgvardia’) a powerful structure that includes more than 180,000 interior ministry troops plus special police units. Putin’s shakeup creates a military and police force of up to 400,000 well-trained servicemen loyal to him personally. The newly appointed commander is one of Putin’s most trusted men, a former undercover KGB agent named Victor Zolotov. Putin has created a vast Praetorian guard, loyal only to him. He has announced that the Rosgvardia is superior to the military and its needs take precedence over any military body; indeed, it can investigate and prosecute the military without judicial review.

Despite the hard work and efforts of Navalny and his supporters there is very little likelihood of an outbreak of democracy and rule of law in Russia. The corruption is so deep and entrenched in Russia that the comparisons of Russia with Nigeria are not fanciful. The difference is Russia pretends to be a Great Power and its leaders have convinced themselves that this is a true belief. Russia is not that strong, but its enemies are weak and that is enough.



[i] УКАЗ от 31 декабря 1999 г. № 1763

[iii] Yelena Mukhametshina,  Russia Must Deal With Catastrophic Brain Drain , Moscow Times, October

7, 2016

ix Crime Russia, "Capital outflow from Russia doubles since beginning of 2019, exceeds $18 billion"

12/3/19

[v] Dr. Ilya Sutyagin, Russian Forces in the Ukraine”, RUSI March 2015

[vi] Global Security 3/4/14

[vii] Ivan Verstyuk, “Ukraine Cuts Military Ties to Russia” Kyiv Post 4/4/14

[viii] Pavel K. Baev, "Military Force: A Driver Aggravating Russia’s Decline" Jamestown 27/6/16

[ix] Russian Strategic Rocket Forces 27/12/19

[x] https://limacharlienews.com/national-security/military-technology-multi-domain-battle-plan/

[xi] Roger McDermott,"Putin Prioritizes Tsirkon Hypersonic Missiles for the Russian Navy", EDM 5/12/19

[xii] Pavel Luzin, "Schrodinger’s Siloviki and Russia’s Criminal Conundrum, Riddle, 23.10.2019

[xiii] Vladislav Inozemtsev, “The Yandex Affair: Insider Trading and Institutionalized State”,  EDM 13/12/19

[xiv] Ben Noble, , “Russia’s Flawed Justice Is Holding Its Economy Back”, Moscow Times, 27/11/19

[xv] “Space: Cosmodrome Corruption Crises Confirmed “, Strategy Page, December 4, 2019


Source:Ocnus.net 2019

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