The Need for Greater U.S. Assistance in Promoting Russian Defense Conversion

By Poncy, Mark P., Jr. | Law and Policy in International Business, Winter 1997 | Go to article overview

The Need for Greater U.S. Assistance in Promoting Russian Defense Conversion


Poncy, Mark P., Jr., Law and Policy in International Business


Since the collapse of the Soviet Union in 1991, the West has struggled to integrate the Commonwealth of Independent States (CIS) into the various economic, political, and military security regimes that shape international relations in the post-Cold War era. Throughout this process of redefining the relationship between East and West, the progress and policies of Russia have drawn particular attention, simply because Russia has inherited the bulk of the former Soviet Union's political, military, and economic power.(1)

Perhaps the most important and challenging task facing Russia and the West is the transformation of the Russian economy. Russia has committed itself to breaking from a Cold War command economy focused on the production of military power to a post-Cold War market economy dedicated to the development of commercial industries. Russian defense conversion refers to the process by which former Soviet defense industries may be converted into Russian commercial industries or otherwise constructively realigned in this new economic environment.

Thus far, defense conversion in Russia has failed to improve the Russian standard of living or provide an engine for economic growth. In fact, economic indicators from 1990-1994 reflect a staggering Russian depression. The Radio Free Europe and Radio Liberty Research Institute (hereinafter RFE/RL) has estimated a forty to fifty percent shrinkage of Russian gross national product (GNP) over this four-year period, a figure greater than the total decline of U.S. GNP during the Great Depression.(2)

Much of this failure can be attributed to ineffectual and even detrimental U.S. policy, in both the public and private sectors. In this Note, I will argue that the United States can and should provide critical assistance to ensure greater future success in Russian defense conversion projects.

My criticisms of U.S. policy and behavior, as well as my recommendations for future U.S. action, are generally applicable to any of the industrialized democratic states. My reasons for focusing on the United States rather than industrialized democracies in general are numerous. For one thing, the United States, more than any other Western state, is also wrestling with conversion issues as it attempts to downsize and restructure its defense industry. In addition, the U.S. economy is still the largest in the world and thus presents the greatest opportunity for Russian firms and interests seeking foreign support. Perhaps most importantly, as the only remaining superpower, the United States is the leader of the post-Cold War world; any U.S. efforts to assist the process of Russian defense conversion are therefore likely to be followed by other industrialized democracies. Conversely, U.S. failure to assist in Russian defense conversion may discourage other states from offering assistance.

In arguing that the United States can and should provide greater support to Russian defense conversion efforts, I have divided this Note into four parts. First, I will discuss the importance of defense conversion in Russia not only for Russians themselves, but for U.S. and global interests as well. Second, I will disclose some fundamental problems that have impeded Russian defense conversion thus far, including problems created by U.S. policy. Third, I will present current U.S. efforts to overcome these problems and measure the progress made by these efforts. Finally, I will conclude by recommending changes in U.S. policy for improving Russian defense conversion in the future.

I. The Importance of Russian Defense Conversion

Defense conversion in Russia is extraordinarily important because its success or failure will produce significant economic, political, and military consequences for both Russia and the world community. In order to truly appreciate the depth of these interests at stake, one must first understand the enormous economic role that the Russian defense industry inherited from the former Soviet Union. …

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