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Phoenix from the Ashes?

Phoenix from the Ashes?

Cameron Scott Mitchell
Volume: 175
Copyright Date: 2009
Published by: ANU Press
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  • Book Info
    Phoenix from the Ashes?
    Book Description:

    The continued existence of the Russian defence and arms industry (OPK) was called into question following the disintegration of the Soviet Union in 1991. Industry experts cited the lack of a domestic market, endemic corruption, and excess capacity within the industry as factors underpinning its predicted demise. However, the industry's export customers in China, India and Iran during those early years became the OPK's saving grace. Their orders introduced hard currency back into the industry and went a long way to preventing the forecasted OPK collapse. Although pessimistic predictions continued to plague the OPK throughout the 1990s, the valuable export dollars provided the OPK the breathing space it needed to claw back its competitive advantage as an arms producer. That revival has been further underpinned by a new political commitment, various research and development initiatives, and the restoration of defence industry as a tool of Russian foreign policy. The short-term future of the Russian OPK looks promising. The rising domestic defence order is beginning to challenge the export market as the OPK's most important customer. Meanwhile, exports will be safeguarded by continued foreign demand for niche Russian defence products. Although the long-term future of the OPK is more difficult to predict, Russia's solid research and development foundation and successful international joint military ventures suggest that the current thriving trend in exports is likely to continue. Russia represents the next generation of affordable and rugged military equipment for the arsenals of the developing world. Coupled with Russia's growing ability to rearm itself through higher oil prices and a more streamlined defence industry, the future of the OPK looks bright.

    eISBN: 978-1-921666-11-7
    Subjects: Political Science, History

Table of Contents

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  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Synopsis
    (pp. vii-viii)
  4. About the Author
    (pp. ix-x)
  5. Acknowledgements
    (pp. xi-xii)
  6. Acronyms and Abbreviations
    (pp. xiii-xiv)
  7. List of Figures and Tables
    (pp. xv-xvi)
  8. Chapter 1 Phoenix from the Ashes?
    (pp. 1-24)

    Russiaʹs defense industrial complex, or Oboronnyi-promyshennyi kompleks (OPK), has endured much over the past 15 years. Originally known as the military industrial complex (VPK), it became known as the OPK in the late 1990s. The political, social and economic transition from Soviet Union to Russian Federation was far from smooth, and the upheaval surrounding this political reversal manifested itself within the OPK. The rampant corruption and general disintegration of state systems witnessed during the death throes of the Soviet Union and the early years of the Russian Federation was no more evident anywhere than in the OPK.

    At the end...

  9. Chapter 2 The Origins and the Nature of the Russian OPK
    (pp. 25-40)

    The structure of the Russian defence industry can be very confusing to Westerners and even to industry analysts. The industry differs fundamentally from any Western model because of its Soviet, centrally-planned economic heritage. In order to unravel the complexities of the industry, one needs to look into the history of the Soviet-era military-industrial complex (VPK) and examine developments in the industry under the Yeltsin and Putin Administrations. This background creates a necessary platform for an increased understanding of the contemporary Russian defence-industrial complex (OPK).

    The embryo for Soviet economic advancement—including the evolution of the VPK, came in the form...

  10. Chapter 3 Domestic Drivers for Russian OPK Success
    (pp. 41-62)

    Essentially, the long-term success of the Oboronnyi-promyshennyi kompleks (OPK) success hinges on six key tenets. First, a more concrete linkage of army reforms and the restructure of the OPK is required. Attempts have been made to facilitate this, particularly the introduction of the Military Industrial Commission (MIC) in 2006, which has given Sergei Ivanov more direct control and input into the OPK. Second, active attempts must be made to battle endemic corruption within the industry. Again, attempts have been made in this area too, but it must be sustained and more focused, as the problems are deep-rooted and incessant. Third,...

  11. Chapter 4 External Drivers for OPK Success: Arms Transfers to China
    (pp. 63-72)

    In the late 1980s, with the advent of glasnost and perestroika, some 25 years of Sino-Soviet antagonism ended. Intensive cross-border movements of people and goods were renewed, including the transfer of Russian weaponry for the first time since the ideological divergence that led to the Sino-Soviet split in the 1960s. From 1980 to 1991, Chinaʹs Gross National Product (GNP) grew at an annual rate of 9.4 per cent, peaking at 13 per cent in the mid 1990s. Since then, GNP growth has held steady between 8 and 10 per cent.¹ GNP growth allowed the Chinese military budget to expand: it...

  12. Chapter 5 External Drivers for OPK Success: Arms Transfers to India
    (pp. 73-84)

    Indiaʹs choice of Russian military hardware is determined by a host of factors, such as their easy accessibility, the defence requirements of Indiaʹs armed forces, the quality of weapons, and pricing considerations. It is no secret that Russia sells similar weaponry at half the price demanded by European countries.² For example, a Russian Kilo-class diesel-electric submarine currently costs around US$200 million, whilst the less capable German Type 209 diesel-electric submarine costs around US$450 million. The Indian Navy operates 10 Kilo-class submarines but only four Type 209 submarines. A further factor is the inertia created by Indiaʹs four decades of heavy...

  13. Chapter 6 External Drivers for OPK Success: Emerging Markets
    (pp. 85-98)

    Other than the lucrative Indian and Chinese markets, there are a number of other markets that have been cultivated by the Putin Administration since 2000. With widespread expectations that the Chinese market in particular will begin to level out within the next 5–10 years, concerted marketing drives have been made into the Middle East, Southeast Asia, and Latin America by Rosoboronexport and the leading Russian defence enterprises. These efforts are beginning to pay dividends, as major arms contracts in 2006 signed by Algeria and Venezuela are expected to trigger further exports in these regions. As for Southeast Asia, a...

  14. Chapter 7 Conclusion
    (pp. 99-100)

    Russiaʹs Oboronnyi-promyshennyi kompleks (OPK) has embarked on a pathway to recovery and resurgence. It has emerged from its bleak post-Soviet reputation as a fragmented and disintegrating behemoth into a more streamlined, centrally controlled institution worthy of its status as one of the worldʹs most prominent arms suppliers. Whilst the OPKʹs long-term success is far from assured, the doubts surrounding its continued existence have quickly dissolved as its economic position has gone from strength to strength. Reliable economic links have been forged with India and China through regular military orders and the emerging markets that Rosoboronexport has fought hard to cultivate...

  15. Selected Bibliography
    (pp. 101-108)
  16. Glossary
    (pp. 109-110)
  17. Index
    (pp. 111-122)