By John Q. Hosedrinker 
Recent reports indicate a slowdown in Russia’s defense sector after three years of robust growth fueled by the war in Ukraine. Data from the Russian national statistics agency, Rosstat, reveals stagnation or declines in military-linked companies in September, a shift from the double-digit growth seen in previous years. Key manufacturing areas like fabricated metal products and transport equipment experienced a significant decline or slowed growth, dragging down the broader manufacturing index. Consequently, the Central Bank has cut interest rates to combat economic stagnation, simultaneously revising its inflation outlook upward and lowering its economic growth forecast for next year.
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Russian Defense Sector Shows ‘First Signs of Slowdown’ Since Invasion of Ukraine
It appears the Russian defense sector is showing its first signs of a slowdown since the invasion of Ukraine, and it’s a complicated picture. A key factor driving this is the depletion of readily available, refurbished Soviet-era arms. Now, instead of sprucing up existing equipment, they’re forced to manufacture everything from scratch. This is a significantly more time-consuming and expensive process, which, in turn, hampers their ability to rapidly produce new weapons. This slowdown is becoming increasingly visible.
Moreover, the impact of Ukraine’s strikes on Russian factories cannot be ignored. While the damage inflicted might be a small percentage of overall output, any disruption to facilities that produce weapons and the materials used in their construction can contribute to a dip or even a reversal of growth. It’s a clear indication that a full-on war economy is taking its toll.
The situation is further complicated by the reported influx of weapons from other countries, notably Iran and China. Even the importation of some Western products through neighboring countries raises questions about the overall picture. It’s interesting how the terms “defense sector” are used – a stark contrast to the reality of warfare and its consequences. This is where the warning of someone like Dwight D. Eisenhower comes into play, regarding the influence of the military-industrial complex. It is a very valid point.
It’s interesting how they are running out of readily available equipment, and potentially having to redistribute resources to stay afloat, as well as the increase of incentives to entice soldiers into the battlefield. This is especially true now that liquid capital is becoming scarce.
The ability to rebuild or shift production is a valid point. During WWII, the Allies found that bombing the factories themselves wasn’t as effective as targeting the facilities that produce the crucial inputs. Creating bottlenecks in material production can be particularly disruptive. The capabilities of certain weapons such as drones and missiles to take out important infrastructure is critical, and the availability of such tools is another factor to consider in the overall equation. The effectiveness of hitting factories depends on what’s available and who’s controlling those tools.
Of course, Eisenhower didn’t warn against having a defense sector, but the undue influence of it. He understood the importance of a strong defense industry. He knew it was necessary.
Looking at the current state of affairs, one thing is clear: the modern defense industry and its factories, including the goods they produce, have become vastly more complex, difficult, and expensive to maintain than in the past. If a factory producing critical equipment such as T-90 tanks or AA interceptors is destroyed, the replacement period is no longer a matter of months, but rather years. Even if the will is there, the means are becoming increasingly restricted.