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Russia's War Economy – an Assessment of Russia´s Military Industrial Complex

by Daivis Petraitis

A Long-Term Plan

Since the beginning of the brutal Russian war of aggression against Ukraine, analyzes have been carried out about the strength and endurance of the Russian military. Considering the importance of the military-industrial complex (MIC) during the Soviet era and its place in Putin's Russia leaves no doubt about the Kremlin's determination. There is no price we wouldn't pay for victory, is the message.

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To enrich the current public debate about Russia and its military, it is worth taking a look at its military doctrine. Accordingly, in times of war the entire economy is subordinated to the war. The doctrine states that everything must be set in motion to guarantee military victory. 

In the Soviet Union, according to doctrine, all necessary production and research capacities were placed under the Ministry of Defense. The military-industrial complex (MIC) played a dominant role in the economy. During the Cold War, the MIC became the driving force of the Soviet economy, accounting for around a third of its output. After the collapse of the Soviet Union, the Ministry of Defense lost control of the MIC. Its transformation in the 1990ies, which was initiated by President Boris Yeltsin – a ministry was even founded for these purposes – failed. The consequences were bankruptcies and subsequent privatizations as well as a massive decline in military exports. This trend changed radically when President Vladimir Putin took office in March 2000.

In October 2003, the Defense Ministry presented the “Ivanov Doctrine”, a guideline for military modernization. It states that the military should always be in a condition to be able to carry out two regional wars and an international peace operation at the same time – without mobilization. To this end, comprehensive military reforms were initiated in 2008. These were only partially completed by 2022. With these reforms, the Ministry of Defense succeeded in gradually expanding its influence on the MIC. The National Defense Management Center (NDMC), established in 2014, is just one example of the state's significant control over the MIC. The government commission for the MIC, for example, is personally headed by President Putin.

Since the beginning of the full-fledged war of aggression against Ukraine, the war economy has been running at full speed almost unhindered by sanctions. Market rules have been abolished and production is almost completely state controlled. MIC companies are largely owned by the regime. This means that large quantities can be produced even at short notice. Preparations for war have been going on for over 20 years.

Read the entire Monitor “Russia's War Economy – An Assessment of Russia´s Military Industrial Complex“ here as a PDF.

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