MILITARY-INDUSTRIAL COMPLEX

The Russian military industrial complex (voennopromyshlennyi kompleks, or VPK), recently renamed the defense industrial complex (oboronno-promyshlennyi kompleks, or OPK), encompasses the panoply of activities overseen by the Genshtab (General Staff), including the Ministry of Defense, uniformed military personnel, FSB (Federal Security Bureau) troops, border and paramilitary troops, the space program, defense research and regulatory agencies, infrastructural support affiliates, defense industrial organizations and production facilities, strategic material reserves, and an array of troop reserve, civil defense, espionage, and paramilitary activities. The complex is not a loose coalition of vested interests like the American military-industrial complex; it has a formal legal status, a well-developed administrative mechanism, and its own Web site. The Genshtab and the VPK have far more power than the American Joint Chiefs of Staff, the secretary of defense, or the patchwork of other defense-related organizations.

The OPK consists of seventeen hundred enterprises and organizations located in seventy-two regions, officially employing more than 2 million workers (more nearly 3.5 million), producing 27 percent of the nation's machinery, and absorbing 25 percent of its imports. Nineteen of these entities are "city building enterprises," defense industrial towns where the OPK is the sole employer. The total number of OPK enterprises and organizations has been constant for a decade, but some liberalization has been achieved in ownership and managerial autonomy. At the start of the post-communist epoch, the VPK was wholly state-owned. As of 2003, 43 percent of its holdings remains government-owned, 29 percent comprises mixed state-private stock companies, and 29 percent is fully privately owned. All serve the market in varying degrees, but retain a collective interest in promoting government patronage and can be quickly commandeered if state procurement orders revive.

Boris Yeltsin's government tried repeatedly to reform the VPK, as has Vladimir Putin's. The most recent proposal, vetted and signed by Prime Minister Mikhail Kasyanov in October 2001, calls for civilianizing some twelve hundred enterprises and institutions, stripping them of their military assets, including intellectual property, and transferring this capital to five hundred amalgamated entities called "system-building integrated structures." This rearrangement will increase the military focus of the OPK by divesting its civilian activities, beneficially reducing structural militarization, but will strengthen the defense lobby and augment state ownership. The program calls for the government to have controlling stock of the lead companies (design bureaus) of the "system-building integrated structures." This will be accomplished by arbitrarily valuing the state's intellectual property at 100 percent of the lead company's stock, a tactic that will terminate the traditional Soviet separation of design from production and create integrated entities capable of designing, producing, marketing (exporting), and servicing OPK products. State shares in non-lead companies will be put in trust with the design bureaus. The Kremlin intends to use ownership as its primary control instrument, keeping its requisitioning powers in the background, and minimizing budgetary subsidies at a time when state weapons-procurement programs are but a small fraction what they were in the Soviet past. Ilya Klebanov, former deputy prime minister, and now minister for industry, science, and technology, the architect of the OPK reform program, hopes in this way to reestablish state administrative governance over domestic military industrial activities, while creating new entities that can seize a larger share of the global arms market. It is premature to judge the outcome of this initiative, but history suggests that even if the VPK modernizes, it does not intend to fade away.

See also: kasyanov, mikhail mikhailovich; military-economic planning; military, soviet and post-soviet

bibliography

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Steven Rosefielde