Russia’s arms industry now employs 4.5 million, says RUSI report

Defense Express writes about this.

RUSI’s analysis highlights how Moscow shifted its existing industrial base to wartime production, giving it a key advantage. Although Russia did not create a new industrial base, timely decisions to convert existing industry bought time and created a resource advantage, the report notes.

As of May 2022, 75% of the 1,400 defense enterprises were focused on production, with the remaining 25% dedicated to research and development. Most of these companies are state-owned, with major portions controlled by Russia’s Ministry of Industry and Trade, Defense Ministry, and corporations like Rostec, Roscosmos, and Rosatom.

Defense spending in Russia has grown by at least 227% since 2000, allowing it to maintain a significant share of its Soviet-era industrial capacity. By contrast, Western defense budgets declined over the same period.

The report states that 25% of all Russian state-owned enterprises are tied to defense, which enabled the Kremlin to enforce harsh Soviet-style mobilization tactics during 2022. These included criminal penalties for missed contracts, forced labor schedules, and price controls on military goods.

To support this shift, the government provided generous financial incentives. Defense firms received funding from the state budget and bank loans at just 6% interest — far below the 18% rate for the civilian sector. Even civilian programs were used to secretly fund the defense industry.

One result: defense giant Rostec boosted its revenues by a third in 2023, hitting $30 billion — though its net profit remained low at just 2.68%.

These measures gave Russia what RUSI calls a four-month time advantage over Western countries, reinforcing the Kremlin’s belief that it could win a long war in Ukraine.