It's been well known since the end of the Cold War that the Russian military establishment has gone through some rough patches. Not only are their troops discontented, but their equipment is rapidly becoming obsolete, according to Defense Minister Anatoly Serdyukov. The military campaign in Georgia and South Ossetia last year also revealed serious flaws in terms of equipment, coordination, and intelligence.
This is to be expected, I suppose. At the height of the Cold War in the 1980s, the Soviet Military boasted manpower of around 4.5 million soldiers. Now, that number is significantly lower at around 1.2 million. Granted, it's only Russia as opposed to the entire Soviet Union, and there has been significant population drops in Russia since the end of communism, but those numbers are striking.
In addition, since Russia still heavily relies on conscription, the quality of soldiers is lower because they end up being less motivated, less educated, and stay in the services for less time. If you needed any evidence that the quality is poor, this article talks about how Russia fired several of its senior military officers because they failed an aptitude test.
On the equipment side, the things Russia is buying are not even effective at fighting small militaries like Georgia's. The Russian air force lost 4 aircraft in the South Ossetian operation, all shot down by inferior Georgian anti-aircraft equipment. The operation also revealed that Russia has not changed its military strategy since the Soviet days. The victory was based on overwhelming manpower strength compared to Georgia, not precision guided weapons or any type of "Shock and Awe" campaign. Moscow's planning, which used to be reknowned for its complexity and detail, is now an impeding force because it is extremely unflexible, something that will impede your ability to adapt to modern warfare. Mobile dispersed warfare is now dominant, engagements between nations will not resemble the conflicts Russia built its military for.
Serdyukov and Medvedev have both supported the modernization of Russia's forces by 2011, but the fall of the price of oil and the global economic crisis (which has hit Russia especially hard) will make this goal fairly hard to achieve. Unless the leadership in Moscow dramatically shifts its thinking, then its armed forces will continue to rot for the next several years. We will know the extent of the damage by the time their defense budget for FY2011 is released, because the decay will have taken full effect by then.
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