Russian Roulette | Page 2

revolves around two pivots: the increasingly
fractured and warlord controlled military and, ever more importantly,
the KGB's successors, mainly the FSB.
A. The Military
Two weeks ago, Russia announced yet another plan to reform its
bloated, inefficient, impoverished, demoralized and corrupt military.
Close to 200,000 troops are to go immediately and the same number in
the next 3 years. The draft is to be abolished and the army
professionalized. At its current size (officially, 1.2 million servicemen),
the armed forces are severely under-funded. Cases of hunger are not

uncommon. Ill (and late) paid soldiers sometimes beg for cigarettes, or
food.
Conscripts, in what resembles slave labour, are "rented out" by their
commanders to economic enterprises (especially in the provinces).
A host of such "trading" companies owned by bureaucrats in the
Ministry of Defense was shut down last June by the incoming Minister
of Defense (Sergei Ivanov), a close pal of Putin. But if restructuring is
to proceed apace, the successful absorption of former soldiers in the
economy (requiring pensions, housing, start up capital, employment) -
if necessary with the help of foreign capital - is bound to become a
priority sooner or later.
But this may be too late and too little - the much truncated and
disorientated armed forces have been "privatized" and commandeered
for personal gain by regional bosses in cahoots with the command
structure and with organized crime. Ex-soldiers feature prominently in
extortion, protection, and other anti-private sector rackets.
The war in Chechnya is another long standing pecuniary bonanza - and
a vested interest of many generals. Senior Russian Interior Ministry
field commanders trade (often in partnership with Chechen "rebels") in
stolen petroleum products, food, and munitions.
Putin is trying to reverse these pernicious trends by enlisting the (rank
and file) army (one of his natural constituencies) in his battles against
secessionist Chechens, influential oligarchs, venal governors, and
bureaucrats beyond redemption.
As well as the army, the defense industry - with its 2 million employees
- is also being brutally disabused of its centralist-nationalistic ideals.
Orders placed with Russia's defense manufacturers by the destitute
Russian armed forces are down to a trickle. Though the procurement
budget was increased by 50% last year, to c. $2.2 billion (or 4% of the
USA's) and further increased this year to 79 billion rubles ($2.7 billion)
- whatever money is available goes towards R&D, arms modernization,
and maintaining the inflated nuclear arsenal and the personal gear of
front line soldiers in the interminable Chechen war. The Russian daily
"Kommersant" quotes Former Armed Forces weapons chief, General
Anatoly Sitnov, as claiming that $16 billion should be allocated for
arms purchases if all the existing needs are to be satisfied.
Having lost their major domestic client (defense constituted 75% of

Russian industrial production at one time) - exports of Russian arms
have soared to more than $4.4 billion annually (not including
"sensitive" materiel). Old markets in the likes of Iran, Iraq, Syria,
Algeria, Eritrea, Ethiopia, China, India, and Libya have revived.
Decision makers in Latin America and East Asia (including Malaysia
and Vietnam) are being avidly courted. Bribes change hands, off-shore
accounts are open and shut, export proceeds mysteriously evaporate.
Many a Russian are wealthier due to this export cornucopia.
The reputation of Russia's weapons manufacturers is dismal (no spare
parts, after sales service, maintenance, or quality control). But Russian
weapons (often Cold War surplus) come cheap and the list of Russian
firms and institutions blacklisted by the USA for selling weapons (from
handguns to missile equipped destroyers) to "rogue states" grows by
the day.
Less than one quarter of 2500 defense-related firms are subject to (the
amorphous and inapt) Russian Federal supervision. Gradually, Russia's
most advanced weaponry is being made available through these outfits.
Close to 4000 R&D programs and defense conversion projects (many
financed by the West) have failed abysmally to transform Russia's
"military-industrial complex". Following a much derided
"privatization" (in which the state lost control over hundreds of defense
firms to assorted autochthonous tycoons and foreign manufacturers) -
the enterprises are still being abused and looted by politicians on all
levels, including the regional and provincial ones. The Russian
Federation, for instance, has controlling stakes in only 7 of c. 250
privatized air defense contractors. Manufacturing and R&D
co-operation with Ukraine and other former Soviet republics is on the
ascendant, often flying in the face of official policies and national
security.
Despite the surge in exports, overproduction of unwanted goods leads
to persistent accumulation of inventory. Even so, capacity utilization is
said to be 25% in many factories. Lack of maintenance renders many
plant facilities obsolete and non-competitive. The Russian
government's new emphasis on R&D is wise - Russia must replenish its
catalog with hi-tech gadgets if it wishes to continue to export to prime
clients. Still, the Russian Duma's prescription of