For a number
of historical, political, and ideological reasons, military
production and the needs of the Soviet armed forces were for decades
the chief concerns of the national economy. Direct and indirect
defense expenditures accounted for no less than 50 percent of
the country’s budget. Defense ministries
oversaw the construction of railways and defense plants, airports,
and secret spacecraft launching sites.
secret closed towns were set up that specialized in designing and
producing sophisticated weapons systems. Millions of qualified
workers and engineering staff worked in the companies of the
military-industrial complex. Most of the think tanks of the USSR
Academy of Sciences conducted research for the interests of the
defense industry. The standards and quality of production in the
Soviet defense industry were comparable to those of the defense
sector in the West. The problem, however, was that these high
standards were achieved by crippling the civilian branches of the
economy and diverting most of the resources into the military field.
radical reformist approach ignored the huge gap, inherited from the
Soviet Union, between the highly advanced space and military systems
and the underdeveloped consumer industries and agricultural sector.
The end of the cold war presented the reformers with a unique
opportunity to implement a large-scale conversion of the defense
sector and to transform Russia’s military potential into economic
might. The implementation of a defense conversion program of such
magnitude required a substantial degree of centralized planning,
investment, and management. “Shock therapy” methods were hardly
compatible with a conversion of this kind.
At the same
time, the government, starved of cash, made drastic cuts in military
procurement. The blow to the defense industry was shattering. As a
result, the civilian branches of industry failed to benefit from the
resources, the know-how, and the skilled labor force of the
converted military-industrial sector. Many enterprises of the light
and machine-building industries were unable to modernize production
and compete successfully with Western companies.