Defence Industry Before and After February 24, 2022

NEW – February 26, 2023

In the years preceding the Special Military Operation, there was a steady development of the domestic military-industrial complex. The army was generously funded and defence enterprises were provided with orders. Many of them made good money on export contracts.

However, free money was mainly spent on research and development, and not on the expansion of production, because the need for technology was small. The prospect of a large-scale conflict seemed unrealistic. But when the guns thundered, our “defence industry” was not ready for the sharply increased needs of the armed forces.

A lot has been fixed in a year. The Soviet legacy, namely excess production lines and huge stocks of weapons, has mitigated the crisis, but the situation is still very far from ideal. Some enterprises quickly restructured and dramatically increased output, but still some factories faced problems with the expansion of staff.

Another difficulty for the “defence industry” was import substitution. It is no secret that foreign microchips are found in Russian weapons. Often they were used not even because of the lack of Russian analogues, but for reasons of the availability of components and economy. So far, the sanctions have not affected the availability of chips, but there are still certain difficulties.

The situation with export contracts has also changed dramatically. For the coming years, they are at least reduced for Russia due to the full load within the framework of the State Budget. Moreover, some of our traditional clients are afraid of secondary sanctions from the United States, although they still show interest. The problem is that the defence industry is very dependent on foreign orders. The Ministry of Defence often forced the military-industrial complex to sell products at low prices, so that exports were an opportunity to earn and support production when there were no domestic orders.

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To solve all the problems, long and systematic work will be required, but the main thing is that the Russian defence industry currently continues to supply all the necessary products in sufficient quantities and effectively opposes the entire industry of the West.

Sovereign Economy

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