Delusions V. conversion

Abstract

Russian defense conversion is a gloomy story, punctuated by only a few isolated successes. Overall industrial production in the first quarter of 1994 fell 27.4 percent below 1993 levels. Additionally the defense industry has been afflicted by the government`s failure to pay its debts to the industry, which, in the first quarter of 1994 grew from 2.1 trillion to 4.7 trillion rubles. Some members of government realize that the overmilitarized economy is burdensome and wasteful, and that post-Cold Ware reality necessitates a rapid reorientation to civilian purposes. Defense conversion has been called the first and foremost element in Russian economic reform. A converted defense industry must manufacture high-priority equipment in oil, gas, telecommunications, and space ventures. Russian economists estimate that modernization and conversion of the military-industrial comples will cost from $150 billion to $300 billion, which, Russia does not have. The lamentable state of Russia`s defense conversion projects reflects the disarray of the overall economy. The government can turn the defense industry into an asset, both the task will require time, patience, money and innovation.