The Real Cost of Modernizing the Military

Throughout the summer, a serious conflict broke out between military manufacturers and the Defense Ministry over the fulfilment of weapons contracts for the state’s defense and rearmament program through 2020.

There are three main reasons for the crisis. First, this is the first time during the post-Soviet period that the military has tried to purchase weapons five to 10 years in advance. The Defense Ministry has no prior experience in creating a large-scale military-industrial program in a market economy. For example, the military has not been able to produce the required number of economists and pricing specialists for products with long production cycles — that is, individuals who can properly factor currency fluctuations and inflation into the end cost. At present, only state arms trader Rosoboronexport has such specialists, and that agency has already discovered the need to predict and hedge against macroeconomic risks in the pricing of its long-term contracts.   Read More

The Moscow Times

Posted in: News