Russia has its troops. But does it have the economy to supply them?

When Russia called up 300,000 reservists to fill out the army’s ranks for the ongoing Ukraine war, the bureaucratic chaos and public angst that erupted as men were dragged from their civilian lives into unexpected military service got a lot of media coverage.

But there is a parallel, economic mobilization that is still going on, to rapidly reallocate resources and labor from the civilian sector to war production. And it remains largely shrouded in secrecy and controversy.

Russia may have more men to throw into a coming winter offensive, but the thousands of fresh Russian troops now headed for the front will need the full gamut of provisions, from heavy weapons and ammunition to cold-weather gear, body armor, daily meals, and medical supplies. The Ukrainian military is being funded and supplied by a nearly united effort of powerful Western economies.

Hence, the most critical question of the moment in Russia, yet one of the most difficult to answer, is whether the country’s industry will be able to deliver matching support for its forces in the field. The results so far are murky, as most information is classified. But experts who are willing to talk about it insist that the Russian economy will prove far more capable of delivering the needed materiel than its detractors claim. That said, sanctions and three decades of peacetime economics have left severe bottlenecks and import dependencies that the economy will struggle to overcome.

“The past 10 months have shown that the Russian economy can adapt [to the near-total sanctions regime] faster than even we expected, but in some specific areas it will be hard to replace Western imports,” says Ivan Timofeev, an expert with the Russian International Affairs Council, which is affiliated with the Foreign Ministry. “We should not underestimate Russia’s capabilities.”

“We’re going to have a different economy”

No one ever doubted the ability of the former USSR to field huge mechanized armies, or the capacity of its military-industrial complex to churn out masses of weaponry, from ballistic missiles, tanks, and fighter planes to assault rifles, helmets, boots, and field hospitals. But after the superpower’s collapse, its war machine disintegrated. Many of the most advanced military industries, ironically, ended up in the territory of the newly minted Ukrainian state, including those in the areas of missiles, tanks, aviation, shipbuilding, and helicopters.

Post-Soviet Russia also made the political decision to build a Western-style consumer economy, and until recently, even Russian President Vladimir Putin was warning about the dangers of repeating the disastrous experience of waging an arms race with the West. After a brief war with Georgia in 2008 revealed the serious shortcomings of Russia’s Soviet-legacy armed forces, the Kremlin ordered sweeping military reforms including reduction of conscription, an increase of professional forces known as my contractand reequipping all services with modern weaponry.

After Russia’s annexation of Crimea in 2014, amid growing discord with the West, Russia began working to sanctions-proof its defense sector.

Dr. Timofeev argues that much of the public discussion in Western media about the impact of sanctions assumes that once a blow is struck against the Russian economy, the damage will be incapacitating and irreparable. Less thought is given to the possibility of blowback, and the abilities of the targeted country to find alternatives and workarounds, or even generate its own substitutes for the lost capacities. Although Dr. Timofeev would not comment directly on military industry, he did say that the principles that allow Russia’s civilian industry to adapt to new conditions should apply equally to Russia’s military production sector.

“Russia is a dynamic society; it learns and adapts and rearranges its priorities,” he says. “Russia’s economy is in the throes of profound change, and it might take some time for it to reach its new level. Import substitution, especially things like advanced technologies, microchips, etc., will be difficult. We’re going to have a different economy. In some areas it may be less modernized, but it will be sustainable.”

“I was a member of the public council in 2014, and that was the time authorities started a large-scale program for import substitution,” says Iosif Diskin, an economics professor at Moscow’s Higher School of Economics. “The aim was to close windows of vulnerabilities, to create our own technologies, microchips, electronics, etc., to lead to the independent development of our armed forces.”

Dr. Diskin says the effort has been at least partially successful. The impact of sanctions has been far less acute than widely predicted: Russia’s economy is only facing a shallow recession next year, and industrial production actually hit a six-year high last month. Much of that is probably due to state orders for military goods.

“Many military factories are currently working around-the-clock with three shifts. That has not happened since the end of World War II,” he says. “State orders are a boon. Maybe some sectors, like insurance, banking, and tourism, have suffered. But the total volume of industrial production is increasing.”

A boom in defense spending

National security spending has increased massively this year, after actually declining somewhat in recent years. President Putin has appointed a high-level council to oversee the country’s first wartime economic mobilization since World War II. But he has also promised to avoid Soviet-style state controls, such as nationalization and subordination to central planning.

Officially, defense spending is set to grow by 50% next year, although it is impossible to know the actual amount, or any details about its disbursement. “Defense spending is a military secret. These are closed budget items, the disclosure of which is a criminal offense,” says Dr. Disk. “If someone tells you a figure, it will either be a fiction or a direct path to prison.”

Some civilian businesses, such as textiles, food catering, and makers of drones, backpacks, and body armor, report a big uptick in production, which is presumably fueled by state orders.

Public sources indicate that deliveries of even the most sophisticated military hardware continue, and analysts privately scoff at any suggestion that the Kalashnikov Works in Kaluga can’t produce enough assault rifles, or the UralVagonZavod in Nizhni Tagil enough tanks, for the Russian army’s needs. Despite media predictions for months that Russia would likely “run out of ammunition,” there seems no letup of Russian artillery barrages in the Donbas, and a recent examination of the remains of Russian cruise missiles that have been raining down on Ukrainian infrastructure targets found that some of them have been made quite recently.

The baneful effects of war on public speech and freedoms in Russia have been well recorded. Analysts say that the impact of subordinating Russia’s fledgling market economy to state orders and military priorities is yet to be felt, but it is not likely to be healthy for the country’s long-term economic development.

“In order to get some short-term results, Putin is opening a Pandora’s box of economic consequences, including a reduction of economic efficiency,” says Nikolai Petrov, an expert on Russia with Chatham House in London. “Any kind of military mobilization leads to more pressure on private business, in the direction of a command economy. It will increasingly be the Kremlin, not the market, that decides what goods are to be produced, in what quantities and at what price.”

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