Russian Defense Recapitalization Threatened by Financial Meltdown

Vladimir Putin committed to major new spending on the Russian military. He has committed to 1 trillion rubles ($30.5 b) on new procurement, upgrades, and R&D.(paid subscription required)

Notwithstanding this spending, the Russian defense industry is still not in great shape, as commercial credit has largely dried up:

Putin met with industry leaders recently at Tactical Missile Corp. headquarters in Korolev, a Moscow suburb. The package unveiled by Putin includes the injection of 35 billion rubles in additional capitalization and the allocation of 100 billion rubles as a state guarantee on bank loans. Along with the loan guarantee, there is a further 15 billion rubles to compensate for high interest rates.

(emphasis mine)

Additionally, there is likely to be further rationalization (mergers and tighter integration) among manufacturers, as is evidenced by the continuing submergence of MiG in United Aircraft Corp. (UAC) with Sukhoi firmly in the lead.

In terms of likely purchases, the Russian air force is looking for upgraded Su-27s (SU-35 shown) in the near term, and the Indo-Russian PAK-FA in the long term.