Our Failure to Convert Russia’s Arms Industry

In the midst of one of the most difficult social, political, and economic times of its turbulent thousand-year history, Russia is snuggling to shed the vestiges of communism and establish democracy. ‘The success of that endeavor may well depend on the ability to shift to a market economy, the key to which, according to many Russian and Western experts, is converting the massive, state-run defense industry to the production of consumer goods. There is considerable merit in this argument and, in fact, the nature of U.S. assistance and many Russian economic policies are built on this belief.

Defense conversion seems to be an attractive method to jump-start the Russian economy. When the Soviet Union dissolved in 1991, Russia inherited 75 percent of the production and research and development (R&D) facilities in the massive military-industrial complex (MIC). The MIC, which had a long history of employing the best and brightest personnel, was generally regarded as the most efficient of Soviet industries, employing as many as 6.5 million people in some two thousand enterprises?

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