Back in Stock? The State of Russia's Defense Industry After Two Years of the War
csis.org
csis.org
what I don’t understand is that Russia has a $2 trillion GDP.
The US and the EU total around $40 trillion. In theory, with a little effort, don’t the much larger GDPs far outproduce the smaller in military investment?
I think that once it became clear that maximum 3 Lancet drones (which cost 35k a pop) can defeat a standard western battle tank (costing upwards of 10 million per unit) this whole GDP comparison business became essentially meaningless.
The other part is that you would obviously need to at least adjust for PPP but the key point is that a lot of the price tags on older equipment don't make any sense given all the recent innovations.
Drones also haven't made anyone stop using tanks, which means they still need them for something important. If they get blown up more often you need an even bigger tank manufacturing industry making more, and countries with higher GDPs are pretty much always better at that.
Then we'll probably put anti-drone systems on the tanks and make them even more expensive. War is a rich man's game.
The rest of your comment I agree with, but whilst people/countries are adapting/discovering what the actual value of tanks is vs what a drone offers you(and same for everything else, its a portfolio optimization problem really), the tanks do seem mispriced(at least the current generation). If all new tanks come with a comprehensive EW system the calculus will change again, but at least at the moment they seem to be overvalued.
The exact same thing applies to Russia as well, the entire Black Sea navy is basically useless due to rockets and maritime drones.
Yes, that's what is happening. That's why Ukraine is still surviving, and that's why the US & EU are happy to stay involved (well, parts of the US, at any rate)—for a very small percentage of our budget, we fend off one of our larger rivals. And most of that spending goes to our own defense contractors anyway, which is good for our economy.
Lots of equipment that can be used at the infantry level without much support works great like those anti-tank missile, but anything that requires a large logistics pipeline is largely off the table. For example Ukraine hasn’t even put the F16s it has received in the air yet because they’ve been training pilots and maintenance crews. It’s just not set up to fight a war the American way whereas Russia has a large industry manufacturing artillery shells to fall back on.
Russia, China, and Iran have a winning strategy. The West is about to lose this war and potentially its role in shaping global order. The Rest will rise up shortly after.
Maybe that’s good/bad, but global volatility has risks either way.
Fiona Hill’s 2023 Lennart Meri Lecture describes this well.
Here’s a link:
Russia spends a quite large % of their GDP on War/Defense (almost twice that of the US, and approx 4x China), and as Dostoevsky wrote - "the most basic, most rudimentary spiritual need of the Russian people is the need for suffering, ever-present and unquenchable, everywhere and in everything."
Suffering this long of course requires a reason - and the Russian state has provided no shortage of them, even if they are absurd to folks outside the system.
After the Ukraine war blitzkrieg failed, the Russian economy was also switched to a war economy footing. A lot can be accomplished if that is the case.
Leaving aside foreign assistance from the US and EU, Russia was always a large economy that always had the ability to be somewhat self sufficient - they've been a trillion dollar economy since 2007.
The War in Ukraine started in 2014, not 2022. Russia has been under a fairly heavy sanctions regime since 2015, and as such was able to retool the economy to be increasingly self sufficient before 2022.
Life ofc sucks day-to-day (eg. Hard to buy video games or a new iPhone, it's expensive to vacation in places like Turkey or Egypt or impossible to vacation in much of Europe now) but consumer substitutes already exist that are "good enough".
Furthermore, the Russian brain drain was largely in the private sector - not the public sector. Most Russian civil servants (eg. Central Bank economists, petroleum engineers for SoEs) knew they wouldn't be able to land a well paying job in the West due to hiring restrictions on Russian nationals as well as potential ramifications on their family in Russia, so they decided to stay put [0].
Finally, much of the world has caught up technologically to where the US was in the 1990s or 2000s, so the kinds of intermediate parts needed for missles or EWS are fairly democratized - just like the US, Russia is able to import commoditized or generic components from SEA, Turkey, China, India, UAE, etc.
The secondary sanctions enforcement is what will tamp down on Russian output.