Leaders win through logistics. Vision, sure. Strategy, yes. But when you go to war, you need to have both toilet paper and bullets at the right place at the right time. In other words, you must win through superior logistics.Tom Peters
Russia’s arms exports are collapsing as sanctions had a “devastating impact on Russia’s defense industry” CSIS report
The center for strategic and international studies compiled a report on Russia’s defense industry. This report has laid bare how badly prepared Russia actually is for a war of attrition
Recently, I have talked about Russia’s tank production
When the war began, Russia still enjoyed the element of surprise. Russia also had access to its inheritance from Soviet times. These stockpiles are now running dry. This means that Russia must make do with what they can acquire from abroad or which they can produce themselves.
Russia’s systemic problems with corruption and its lack of young and healthy males are dimming its prospects of any kind of victory in Ukraine
Russia faces many different challenges to prevent their defense sector from collapsing. These problems range from systemic corruption to no access to high-tech chips and a lack of production facilities for many different types of components.
This lack of computer chip production facilities makes Russia utterly dependable upon imports
The high-end chip sector is exclusively in Western hands. China is mass-producing low-end to mid-tier chips in the 28nm and 14nm range. China has also managed to produce 7nm chips, however, the 7nm process is a copy of the N7 node TSMC put into mass production four years ago. So, while this is impressive China is nonetheless not able to replace the top tier cutting edge chips, that Russia has now lost access to.
Russia’s cash poor geography and major security concerns will scare away foreign investors
This is a major short, medium- and long-term contingency. This isn’t just bad news for Russia’s defense sector but for Russia’s entire economy. Additionally, the loss of life in Ukraine, the over one million Russians that have fled in conjunction with Russia’s demographic collapse are creating a “perfect storm” for Russia’s industrial sector.
These men and women aren’t just any citizens either
These experts and researchers are among Russia’s best and brightest. This hurts the Russian tech sector massively. Over 200.000 IT specialists of roughly 1 million of those in total have reportedly left the country.
It will be near impossible to overcome these severe limitations
The ruinous war in Ukraine might even lead to the collapse of the Federation within this decade. As always, the devil is in the details, so let’s have a look at the CSIS report in detail.
Russia uses legacy Russian systems, which are inferior in quality to Western weapons
These older weapons are less backed up by Western technology. These Cold War systems have inferior optics, inferior accuracy, inferior armor, and inferior engines. These shortcomings have already become apparent in the 1980s.
Back then, Soviet missiles and Soviet tech were roughly 5 years behind Western tech. This gap has widened in many instances. For example, in Russia’s tank and aviation technology the gap is likely widening now to decades and not years.
The best example is Russian tanks, which have many limitations
Russia was and will be unable to ever mass produce the T14-Armata. Russian tanks are based on the V2 Diesel engine. The Armata was supposed to get a new engine. But it turned out that the engine was faulty. Instead of building a new engine, though, Russia has decided to build a faulty tank around the engine.
The loss of face for Russia would have been too big
However, Russia fails to produce this tank at an industrial scale. Russia assembles tanks, but it can’t mass produce them. The story of this tank is exemplary for Russia’s failing defense sector.
Russia’s refurbishment efforts are pathetically inadequate and semi-effective at best
Russia likes to pretend that the rules of engineering somehow don’t apply to them. Well, unfortunately for them, they do. Russia can’t just use one specific component, some duct tape, and put it on another tank.
These current refurbishments instead of producing new tanks will allow Russia to field more tanks more quickly. Russia needs roughly 3 dysfunctional T64s to create one refurbished T64. This isn’t a sustainable strategy.
Russia truly is the master of creating short-term solutions that have highly detrimental long-term consequences.
This lack of a sufficient number of spare parts will affect weapon quality and Russia’s industrial output. This also provides a training issue. Russian tank crews operate systems which they aren’t familiar with.
The lessons learned from this situation can and will be quite costly
This report by the institute for the study of war indicates that Russian training schemes have been well. I would call that sub-par even before the full scale invastion had even begun.
Russia but also the West will face massive logistical challenges
Logistics are an issue for both sides, of course. Ukraine and its allies face challenges as well. The US has the best military logistics system of the planet. And that system will be direly needed to field the diverse set of modern weaponry that was provided to Ukraine.
Ukraine must field these weapons, and the West must ensure that Ukraine can sustain them
Luckily, NATO gear is by design quite well integrated with other NATO gear from other countries. Still, sustaining the various types of tanks, armored vehicles, and artillery systems to keep them in the fight is tough nut to crack. The West always rightly so said, "we will not provide any system that Ukraine can’t sustain.”
Russia’s own challenges with logistics are even more severe
Russia’s most underreported problem is a small machine part called bearings. Bearings are alloys of high temperature steel. These machine parts are used in motor vehicles, railway carts, and heavy machinery, which is used in manufacturing.
According to CSIS, 70 up to 80 percent of these bearings came from the West or from China prior to the war
The limitations due to sanctions provide a major problem for Russia, which has tried to ramp up domestic production, but achieving a good quality standard for these bearings is difficult.
The metallurgical processes in Russia are imperfect and technologically inferior compared to Germany or France
This leads to a shorter lifespan of these bearings and more frequent breakdowns than before. Japan and South Korea also produce high quality bearings. They are longstanding allies of the West and have sanctions of their own in place against Russia.
The regime in Moscow won’t be able to access tools from Japan and South Korea either
Russia will have to turn to China instead. This will be a further step into Chinese vassalage. Even China will likely refuse Russia. As China is not keen on receiving secondary sanctions from the West. China needs Western technology and the unlimited friendship with Russia ends where this friendship doesn’t serve China’s self-interest.
Russia will likely attempt to solve this problem with a multiprong approach
This will include import substitutions from China and other countries. A network of shadow companies to evade the sanctions and Russia’s own limited production capacity.
The next major problem on the horizon is high precision machine tools
So far, it’s still possible for Russia to obtain machine tools that have civilian use. However, some high precision machine tools came from Germany. The access to those tools has been completely cut off. Russia has been heavily reliant on Western machine tools, and adequate replacements are hard to come by.
Russia fully depends on German made computer numerical machines, so “CNC” tools
These tools are essential for precision components and turbo fan engines and for submarine propulsion quieting technology. The West is a world leader for these tools. Apart from missiles, these CNC machines are also used for a whole range of other products. In total, 70 % to 80 percent of the material in Russia’s defense industry is based upon Western machine tools.
This will have a pernicious effect on Russia’s defense production and its arms exports
The problems described above will likely prevent Russia from bringing on or expanding their existing production capacity. Another aspect here is maintenance for each manufacturing mission. But not just that if support from the company is required, this support will not be there.
Russia won’t have easy access to replacements
Problems will arise when machines need to be upgraded or reprogrammed. Russia will also require spare parts, replacements, and engineering support from the manufacturer. Now, Russia can’t turn to these Western manufacturers due to the sanctions the West has put in place. This will cause frequent problems in the production process and it may sometimes even cause a complete halt of production.
The sanctions had an indirect impact on Russian missile production of the KH 101 missile
The production of these missiles had to be shut down for a while, and Russia had trouble bringing it back up. This is a problem Russia will likely face in many areas of their defense industry.
Russian factories currently run of double or even triple shifts
This extreme situation puts a massive strain on machine tools, while Russia still may have tools in its storage. But if something breaks, Russia can’t go to the original supplier to replace these tools.
This situation will lead to the early retirement of many of Russia’s big platform weapons, especially their navy and airforce, which will suffer tremendously under the present circumstances.
Russia either has to do it themselves, or they need to find an inferior replacement elsewhere
Russia uses these machines and machine tools more frequently than in normal times now. This is causing more breakages of equipment, and it is dramatically shortening the life span of these machine tools.
Russia was heavily reliant on Ukraine for many of its engines
After the occupation of Crimea, a decoupling process was initiated, and this is negatively affecting Russia’s own military industrial complex to this day. When the Soviet Union collapsed, 15 to 25 percent of the military industrial complex of the Soviets was in Ukraine.
Ukrainian production was responsible for several larger Soviet systems
Those systems were also crucial to producing Russia’s own systems. After 1991, these linkages have been restored, but those were broken once again a decade ago.
The systems in question were connected to frigates, helicopter engines, and military grade air transport vehicles
This is a major problem for Russia as most of this support was cut off in late 2014 and early 2015. Russia prioritized this area in its efforts to become more self-reliant. Russia has made some progress here as they started to produce engines internally.
There are substantial problems, though. Especially the export of Ka-52 helicopters has been heavily affected. Egypt had reported major technical problems with this Russian made helicopter type.
Another major problem for Russia will be maintaining access to microchips
Russia has been cut off from Taiwanese chips but also from other Western suppliers. This might be the most important potential challenge that Russia is facing. CSIS reports that good data is hard to come by.
Russia’s weapon systems are heavily reliant on Western made chips. Russia imports 90 percent of its chips from abroad. Russia has no domestic chip production and is very backward in this sector.
“Russian weapons are littered with Western microchips of various kinds.” RUSI
Russia has managed to increase their import of microchips via third parties and has been cannibalizing microwaves and washing machines
Putin clearly also ordered his minions to stockpile microchips prior to the invasion. However, over time, neither these parallel imports nor the stockpiles will provide a long-term viable solution.
This lack of access to Western technology will result in a lower accuracy of many of Russia’s weapon systems and higher rates of failure. This provides a significant downgrade for many of Russia’s remaining capacities to produce highly sophisticated near cutting-edge systems.
Russia is adapting, and the authorities became aware that the sanctions are here to stay
Russia will now likely double down on their import substitution efforts. These efforts have been ongoing since 2014. However, their success remains limited. Corruption and the difficulty of getting access to high tech are problems which are likely here to stay.
It’s unlikely that Russia will meet their production quotas CSIS
Russia has announced that it wishes to reduce this reliance until 2030.
The government claims that it will be able to supply 30 percent of Russian households with Russian electronics by 2030. That seems unlikely, and consumers already complain that the state-run companies produce very poor-quality products. The few companies who produce any computer chip components rely heavily on Western components.
The Russian government invested heavily to find solutions for this major problem
But the money often disappears. CSIS sees somewhat successful efforts with import substitution. However, only 30 to 40 percent of Chinese chips end up being effective as a dual use. Using commercial components will result in more casualties and more accidents. Import substitutions, therefore, remain rather unsuccessful domestically.
The main Russian collaborators to bust Western sanctions are Iran, Serbia, Turkey, and the Eurasian Economic Union EAEU or EEU countries (Armenia, Belarus, Kyrgyzstan, Kazakhstan)
For EAEU, there are no custom checks which makes the circumvention of sanctions a lot easier. China is another major player. Russia has a joint technology project with China. So far, China has refrained from providing many of the military components Russia has asked for.
China fears sanctions, and the regime in Beijing is careful not to cross this line
China provided Russia with civilian equipment, some body armor, small arms, and some electronics. In my opinion, Russia’s massive problems with corruption provide the biggest obstacle to create an effective system to circumvent the sanctions at a large enough scale.
Russia was able to fiscally maintain the war effort last year due to high oil prices
The original impact of the sanctions was cushioned by unprecedented oil and gas revenues and full storage facilities. The oil sanctions have brought Russia the worst monthly deficit since 1989. Russia managed to modify tax rates, which is another short-term fix. It is hard to see how Russia will find the revenue to fund the war without a massive increase in inflation and domestic debt.
There is still always more to be done, of course
For example, the West should issue secondary sanctions and lower the oil price cap soon to increase the pressure on the Russian economy even further.
Summary and Conclusion
Russia’s industry is suffering. This much is clear. And it’s not just their military industrial complex. Automotive and the aviation sector are suffering as well. The long-term consequences of that are devastating. Russia will likely lose its place as one of the top 5 exporters of weapons next year. The West will likely attempt to persuade former costumers of Russia to follow the example of Egypt and buy their weapons elsewhere.
Russia’s process of reverse industrialization will likely force them to rely on older, less sophisticated weapons and missiles
Russia’s capacity to produce weapons has been impacted, but it hasn’t prevented them from producing weapons. This production continues in smaller numbers, and some materiel will likely have to be held in storage for their own defense.
This collapse of industrial output will likely worsen in the near future
The air pollution data seems to indicate that Russia’s industrial output is consistently dropping in key areas for several months by now. That will likely cause them major re-supply issues. These problems will likely worsen significantly in the next 6 to 12 months.
These findings also seem to confirm the suspicions of many experts
Among them is Jeffrey Sonnenfeld, who always doubted the veracity of the data sets which Russia’s regime provided. Russia is failing to provide data on several key aspects of its economy. the situation is likely a lot worse than Russia is willing to admit.
Over the last six months, the readings show that urban pollution in Moscow and St. Petersburg has ticked higher. But pollution in industrial regions has fallen 1.2% in the six months to April, and is 6.2% lower year over year.
Russia may not be 12 feet tall. They aren’t 4 feet tall, either Kofman
To be clear, there will always be some production even if the Federation would suffer a total socio-economic collapse. This total collapse is unlikely in 2023. The first cracks have appeared, and this will get a lot worse for Putin’s empire in the months to come. The next 6 months will be critical on the battlefield.
A nation that is scrambling so heavily for supplies. A nation that needs ammunition from North Korea. Russia isn’t a nation that is losing a war. This is a nation that is failing. Peter Zeihan
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Sources:
https://inf.news/en/world/61437e0f6502d3a688ccea73fde3de76.html
