The problems plaguing Russia’s shipbuilding sector, both military and civilian, run so deep and widespread that even Moscow’s decision to award a contract to Turkey to build a giant floating dry dock in the Russian High North (The Barents Observer, June 15) will do relatively little to overcome them. However, the contract does represent a crack in the sanctions regime, which had been contributing to the decline in shipbuilding in Russia over the last seven years (Svobodnaya Pressa, May 7, 2018). Moscow’s decision to turn to a foreign supplier, in this case, is itself an indictment of its domestic shipbuilding industry, which has seen the number of vessels launched in recent years decline to new lows. Besides, the industry has suffered an increasing number of embarrassing disasters, including but not limited to wharves sinking, boats turning over in the yards, and the delivery of new ships whose shortcomings are quickly discovered (Meduza, March 30, 2021).
The Turkish KuzeyStar shipyard won the contract after a Russian-only competition failed: no Russian shipyard could meet Moscow’s requirements and price, and earlier hopes for a new shipyard in Russian-occupied Crimea collapsed (Kommersant, August 5, 2019). Turkey will build a floating dry dock with a 30,000-ton capacity, large enough to construct the new generation of icebreakers the Russian government plans to service the Northern Sea Route. (The only existing dock presently available in the Russian High North is too small to handle these new Arctic-ready craft.) The need for such a dock has been under discussion in Russia since 2015, but no Russian yard was capable of building it. Now, a Turkish one will replace an older Russian floating dock that ingloriously sank three years ago (Twitter.com/KovtunM, October 30, 2018; see EDM, November 1, 2018). The giant PD-50 floating dock’s demise has blocked both icebreaker construction and the refitting of other naval ships, including most of its larger vessels, since that time. The Turkish firm will be paid some $70 million for the work, and it is supposed to deliver the facility by next summer.
The Turkish dock may help Russian shipbuilding capabilities, but it will not solve the sector’s chronic, systemic problems. Three years ago, Russian officials acknowledged that Russian yards could not handle the construction of blue-water naval vessels and would concentrate on smaller shore-defense and search-and-rescue ones instead (see EDM, April 18, 2018). At the same time, Russian shipbuilders have tried to hide just how bad things are by even lying directly to President Vladimir Putin, journalists reported last year (Nezavisimaya Gazeta, August 7, 2020). But research by the Higher School of Economics in Moscow reveals some of the extent of the difficulties within the domestic shipbuilding sector (Dcenter.hse.ru, March 6, 2018; Iq.hse.ru, May 18, 2018; Thinktanks.by, June 22, 2018). That study found that while Russian yards produced 252 vessels larger than 20,000 tons in 2014, that number declined to only 108 in 2018, with planned production having been reduced to 79 in 2019. Actual production in both that year and during the COVID-19 pandemic year of 2020 was almost certainly smaller than that. The number may increase if the pandemic eases, but it is unlikely to reach 2014 levels anytime soon, even with the Turkish dry dock.
The Higher School of Economics study also found that the number of civilian ships fell at an even more rapid rate than that of military ones, a serious bottleneck considering Putin’s recent order that all vessels traversing the Northern Sea Route must, henceforth, be domestically manufactured and travel under the Russian flag. For now at least, that law seems unlikely to be enforced, and analysts are already pointing out the ways exceptions are certain to be granted. Yet if those loopholes become phased out, the sudden need for more home-built shipping vessels will mean that other shipbuilding projects will have to be postponed, including some widely publicized military projects, such as three (fanciful) new aircraft carriers (Kommersant, Moscow Echo, May 18; see EDM, March 11). Barring that, the amount of cargo carried on that route will likely decline (Military Review, June 5).
Russian analysts, like Konstantin Makiyenko of the Center for the Analysis of Strategy and Technology, say that Russia’s naval shipyards are a disaster, with money coming into them in ever-increasing amounts but nothing coming out. (Nuclear submarines are the only part of production that has not collapsed, he says). He blames this on the Kremlin’s decision to unify all shipbuilding into a single corporation and install corrupt and incompetent managers there (Nezavisimaya Gazeta, December 17, 2020). At present, Makiyenko writes, “practically all” shipbuilding projects are behind schedule and far over budget, with no one confident when deliveries will happen or what the costs of the finished product will be. Disturbingly for Moscow, the larger and the more important the vessel, the greater both of these problems have been.
The holding company the Kremlin established, the Unified Shipbuilding Corporation, keeps running up debts to the banks, and the government has no choice but to bail out the corporation. Still, most of the new money goes to servicing old debts rather than building anything new. The holding company was created to prevent this from happening; however, it remains, Makiyenko argues, “a collective farm of various factories” under its aegis but hardly under its control. The situation today, he argues, is more or less what it was 10–15 years ago, all government and corporation promises to the contrary. He concludes that the Unified Shipbuilding Corporation is likely “the most ineffective government corporation of those created as a result of the government’s ‘holding arrangements’ for the Russian military-industrial sector.” That it and Moscow have now had to turn to Turkey only underscores that sad reality.
Turkey’s construction of a new dry dock in the Russian High North will do nothing to address these underlying problems. Indeed, it may even allow the Russian yards to limp along, unreformed, for some time. But unless Moscow makes fundamental changes there—something Putin has given no sign of wanting to undertake—the decline of Russian shipbuilding will continue, possibly forcing Moscow to change its policies or buy ships constructed elsewhere. The latter is an expensive proposition financially and in propaganda terms. Nor is it a step Putin’s Russia appears ready to take.