Russia and Global Security Risks
The Impact of the Coronavirus Epidemic on the Global Defence Industry

We can state that in 2020 the world defence industry has faced its largest crisis since the end of World War II, which hasn’t concluded yet. How we exit from it will depend on if a second wave of coronavirus arrives and related measures are taken, as well as the state of the economies of the world, which, as a result of this year’s depression, could significantly reduce defence spending over the next two-three years, wriltes Valdai Club expert Andrei Frolov.

COVID-19 has without a doubt affected almost all aspects of the global economy on an unprecedented scale. The armed forces and the defence industry have been no exception. Interestingly, the world’s military forces were perhaps among the first to respond to the novel coronavirus. This became noticeable after the cancellation of a number of international exercises; at some point even the rotation of UN contingents in African countries stopped.

The global military-industrial complex also experienced no less influence. For obvious reasons, there is not much information about this, but even the information that has become public allows us to compose the following picture. A significant decline is already evident in new contracts for defence supplies, and there’s been a decrease in supplies for already-concluded contracts.

Global Governance
Defenders of Europe’: Threats to the World or Why NATO Carries Out New Exercises Amid Pandemic
Nikolay Mezhevich
By deploying its troops in Poland and Eastern Europe, the United States is preparing for real hostilities, but it is also achieving a wide range of geopolitical and geo-economic objectives, writes Nikolay Mezhevich, Professor at the European Studies Department of St. Petersburg State University. The most important of them is the prevention of strategic partnership between Russia and the EU, primarily between Russia and Germany, No less significant is the strengthening of the role of Poland in Eastern Europe as a strategic ally and conductor of American interests.

In general, the scheme for most European, American, Russian and Chinese manufacturers was as follows. Around the end of March and the beginning of April, when the scale of the pandemic became obvious and began to take on disastrous proportions, industry began to close under lockdown. How it looked in practice, can be seen in the example of a plant in the French town of Garchizy, which manufactures Arquus armoured vehicles. On March 17, only 20 employees, who were responsible for logistics, remained on the premises. The usual number of employees on the site is 450 people, including temporary workers and employees on fixed-term contracts. The situation began to change only in mid-May, when the number of employees increased to 230 people, and by summer it was planned to increase this number to 300. To restore normal work, according to management estimates, it was necessary to hire up to 30-40 people a week. As a permanent measure, mass gatherings of people, as well as visits from outside, are limited at the plant. Large meetings are held in the conference hall in compliance with distance measures or by video. Desktops and keyboards are regularly cleaned. In the dining room, staff seating is arranged in a chessboard way. Indoor and outdoor cleaning by a hired company is also more frequent. Coffee machines are forbidden; instead, the company provides teapots and capsules with instant coffee.

Another French manufacturer of armoured vehicles, Nexter, reported that that the French Ministry of Defence had requested 128 Griffon armoured vehicles and four Jaguar vehicles, but that the order is likely not to be fully implemented. This is due to the fact that three large subcontractors and hundreds of small ones, which were involved in the production programme, suffered from coronavirus restrictions.

Interestingly, one of the few known disruptions in the fulfilment of military export contracts is connected with France. Due to the pandemic and lockdown, Dassault Aviation has postponed the transfer of Rafale fighters to India from May to (presumably) July.

American defence companies have also had difficulties, and these overlapped with a number of problems that were not directly related to the coronavirus. Lockheed Martin announced a reduction in the production of F-35 fighters this year from 141 (according to plan) to 123-117 due to the negative impact of coronavirus on subcontractors. In this case, apparently, the policy of “import substitution” of Turkish manufacturers, which produced up to 1,000 components for aircraft of this type before Turkey was forced out of the project, also acted as a certain negative factor.

America’s largest airplane manufacturer, Boeing, also encountered production problems, which, in addition to serious difficulties in its production and financial plan due to two catastrophes involving 737 MAX aircraft, also faced a dramatic drop in demand for air transportation, and, as a result, a decrease in purchases of new aircraft. The company was forced to close a number of production sites, and at the end of May laid off more than 12,000 people. All this partially influenced the production programme of the Р-8А Poseidon patrol aircraft, which are a modified version of the B737-800 civil aircraft.

In late March, the coronavirus seriously threatened the personnel at military bases and defence enterprises in the western part of the United States.

The only thing that is known about Chinese industry is that at the Wuchang Shipbuilding Industry Group, the construction of S20 non-nuclear submarines for Pakistan (Hangoor class) was temporarily stopped. This happened in late March or early April.

Russia wasn’t spared these “global trends.” The most sensitive period was the beginning of April; after President Vladimir Putin’s April 2, 2020 decree No. 239, it was unclear how lockdown restrictions would be applied to defence industry enterprises. The status of enterprises with a continuous production cycle, which were subsequently allowed to continue working, was also unclear. According to well-circulated information, the majority of enterprises actually stopped their work for a period of one to two weeks, although they quickly resumed operations, albeit with a number of limitations, including due to the irregular work of subcontractors. For example, as of April 10, out of the 122 subcontractors of the helicopter manufacturer Rostvertol, 25 had significantly limited operations.

Nonetheless, there were cases where people working in the defence sector had become sick. For example, at the end of April there were 111 cases in Roskosmos, in May three employees of Progress AAC (which produces Ka-52 combat helicopters) fell ill. The need for disinfection has also reduced the ability to operate normally: by the end of May, approximately 200 defence industry enterprises had been disinfected by Russian Ministry of Defence units alone.

The pandemic also affected exports. Again, no official data were provided on this subject, however, back in early February, the Russian exporter Rosoboronexport admitted that the coronavirus had influenced the supply of S-400 systems to China. This, in principle, was obvious after an effective ban on international air transportation to Russia came into force, which prevented the arrival of both groups of negotiators and workers to send already-manufactured equipment to the country.

Thus, we can state that in 2020 the world defence industry has faced its largest crisis since the end of World War II, which hasn’t concluded yet. How we exit from it will depend on if a second wave of coronavirus arrives and related measures are taken, as well as the state of the economies of the world, which, as a result of this year’s depression, could significantly reduce defence spending over the next two-three years. Apparently, a certain clarity in this matter will come in early autumn.

A New Dimension of Advanced Military Technologies Development
Andrei Frolov
In 20 or 30 years, the role of the state in carrying out security functions will hardly disappear. It may change, a number of functions may leave the state control, or new ones may be added. But specific systemic changes are highly unlikely.
Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.