By Polina Beliakova and Sam Perlo-Freeman
From the introduction:
Today, Russia is the world’s fourth largest military spender and second largest arms exporter. Their arms industry is probably the third largest in the world, after the USA and China. The Russian arms industry, despite its current strength, must be viewed within the legacy of the USSR. The current Russian state inherited a significantly wounded, but still powerful system of arms production and export. However, along with an aging industrial infrastructure and global relations with importing countries, Russian leaders were endowed with an arms industry rife with corruption that pre-dated the fall of the USSR and metastasized in the chaotic years that followed. Today, corruption still constitutes a significant problem facing the Russian arms industry. This report discusses publicly available information on corruption in the Russian defense sector, especially the arms industry, identifying key cases of corruption that have become visible in recent years, in particular since 2008, when Russia’s current set of military reforms, and major rearmament drive, began.
Any discussion of corruption in Russia, including in the defense sector, must take into account the central role of corruption in the Russian state. Section 1 discusses the role of corruption in the development of the post-Soviet Russian economy and state, and the centralization and politicization of corruption under President Vladimir Putin. It also briefly discusses the development of the post-Soviet Russian arms industry within this context. Section 2 presents a general discussion of corruption problems in the Russian defense sector, in the light of the previous discussion, including such information is available on the extent of the problem, as it is measured and investigated by Russian authorities. This focuses in particular on corruption in military procurement through the State Defense Order (SDO, gosoboronzakaz, GBZ, in Russian). Section 3 then presents a number of key cases of corruption in the SDO that have reached the public domain. Section 4 considers corruption in international arms trade performed by “Rosoboronexport” – the Russian defense export monopoly, which is itself part of the giant defense industry conglomerate, “Rostec”. Section 5 discusses anti-corruption efforts in the defense sector in Russia, and Section 6 concludes. Appendix I presents the legal and administrative framework governing corruption and anti-corruption efforts in the military sector in the Russian Federation.