The MIC performance results in 2014

The publication on 22 April on Russia's government official website of "The Main Results of the Performance of the Ministry of Industry and Trade of the Russian Federation in 2014" provides more details on the main performance results of the military industrial complex(MIC) which Prime Minister Dmitry Medvedev announced the day before at the State Duma.

The MIC industrial output increased 15.5%, a 2 p.p. outrun compared to that in 2013. The output increased in all of the industries operating in the MIC: 24% in the electronics industry, 17.1% in aircraft industry,14.4% in the shipbuilding industry, 13% in the ammunition industry and special-purpose chemical industry, 8.6% in the rocket and space industry, and 5.4% in the conventional weapons industry. Indeed, the first and the second of the above industries managed to overshoot for two consecutive years the target output growth rates and hence partially cover the debts accrued within the first two years since the current state arms program had been adopted. To be able to reach the planned output growth at the enterprises of Russia's MIC, as announced by Deputy Prime Minister Dmitry Rogozin in October 2012, the MIC in 2015 should boost its output more than 29%.

Although the new data from the Ministry of Industry and Trade (MinPromTorg) are generally more worthwhile compared to those published in the past year and even disclose in part the execution of the state defense contract (SDC) regarding naval construction of submarines and surface combatants (three submarines, projects 885, 636.3 and 636, and one corvette, project 20380), neither data on the previous periods, nor financial and economic performance figures have been provided, thereby making them far less informative than the information from non-government organizations. Furthermore, the published materials contain no results whatsoever on the SCD execution in MIC industries other than the naval construction.

The MinPromTorg document shows that late in 2014, 1339 organizations were included into the consolidated register of MIC organizations. Therefore, the number of organizations operating at the MIC has been reduced to 11 (0.8%), i.e. remained almost the same, for 12 years elapsed since the effective date of the register. Russia's MIC is still overloaded (the Ministry of Defense needs only 600 organizations) and inefficient, given the announced 21 April increase of SDC in 2014 to "more than Rb 1,9 trillion" (a growth of about 27% compared with 2013), the MIC has incurred losses of various nature running at not less than Rb 170bn, i.e. more than 9% of the SDC.

Vasily Zatsepin, Ph.D. in Military Science, the Head of Economics of the Military-Industrial Sector Department.