Ukraine Conflict Could Cost Russia Nearly $1 Billion

Russian President Vladimir Putin looks over plans for Vostochny. (Credit: Roscosmos)
Russian President Vladimir Putin looks over plans for Vostochny. (Credit: Roscosmos)

Russia’s annexation of Crimea and support for the military conflict in eastern Ukraine are having a ripple effect on the nation’s military-industrial complex, which remains heavily dependent on imports of components from abroad.

Faced with impending EU sanctions on Russia’s defense industry, President Vladimir Putin on Monday urged the Defense Ministry to redouble its efforts to wean the defense sector off foreign suppliers, Interfax reported.

Russian firms currently make their own versions of just 58 of the 206 types of defense products that the country imports, but state development programs should add another 40 to their repertoire by 2020, said Alexander Shilov, deputy head of the Federal Space Agency, or Roscosmos.

The defense industry has already been waylaid by Ukrainian President Petro Poroshenko’s June decision to prohibit military-industrial cooperation with Russia amid the escalating crisis in Ukraine, blocking Russia from importing the Ukrainian equipment that its defense industry sorely needs.

Roscosmos, which operates several spacecraft that rely on Ukrainian components, last week estimated that Russia needs to spend about $940 million through 2018 to offset losses from the cutting of Ukrainian ties, with most of the cash to be drawn from federal investment programs in the space and defense industries.

President Putin is urging defense and space officials to wean themselves off foreign suppliers as soon as possible regardless of cost.

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