On paper, Russian military modernisation should have produced a force that could overmatch the Ukrainian army. For more than a decade, funds for modernisation were allocated to State Defence Orders for everything from next generation aircraft and tanks, to new communications and battlefield control systems.
Russian R&D did its part (mostly), turning out systems that won attention and praise at trade shows, while commentators steadily built the Russian army up as an example of a dangerous foe that proved you could achieve more with less in the military procurement space.
Then they invaded Ukraine, and the image was shattered. I’ve previously explained this by looking at the Russian Defence budget and their priorities in the lead up to the invasion, but in doing that I refrained from focusing on one key issue.
Corruption in Russia is endemic, corruption in the Russian defence sector (like many around the world) is a catastrophe. From the highest levels of procurement fraud, down to the level of the enlisted personal hawking diesel, copper, and even explosives for petty cash, corruption has been a constant thorn in the side of all efforts to modernise the Russian army and mould it into an effective fighting force.
In this video In this video, I try to take a somewhat light hearted look at how corruption in a military context can (and sometimes does) work, citing examples of actual cases and using hypotheticals to demonstrate the kinds of actions that can rot an institution from head to tail. For those of you in countries that face this problem, it should all seem a little familiar.
Examples are taken from the sources listed below and I make no independent representations on the veracity of any claims. I don’t know exactly how much is stolen from the Russian defence budget, I doubt anyone does. But what I can do, is help us understand how a nation capable of producing some of the most advanced defence equipment in the world would be running out of fuel on day 3, and be rolling out museum piece tanks less than three months into a major conflict.
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Key sources: Corruption in the Russian Defence Sector (Beliakova and Perlo-Freeman) https://sites.tufts.edu/wpf/files/201…
Russian statements (albeit old) on defence budget theft
Russian corruption ranking https://www.transparency.org/en/count…
- Corruption is possible because a person is capable of selling/stealing something without paying the cose of doing so.
- They are not acknowledging the externalities of their actions
- Because of this — price is not “efficient”
Catch-up is how economists explain the success of China and other fast-growing developing economies. Not having to invent the wheel, the microchip or the theory of continuous improvement is a distinct advantage over having to invent them.
This is not a small part of the Huawei story. Its rise in 32 years to be the world’s largest telecom-equipment manufacturer and the second largest maker of smartphones is a story of catch-up—of learning from the West, but also stealing from the West. Or to put it more politely, Huawei has taken advantage of the fact that Beijing is not interested in enforcing the intellectual-property rights of foreigners under Chinese law.
An early Huawei router design was shown to have been filched from Cisco, right down to copying the typos in the instruction manual. This week a U.S. criminal indictment piggybacking on a successful private lawsuit by T-Mobile shows persuasively that Huawei stole the design of a robot, known as Tappy, for testing the durability of cell phones.
Nobody in his right mind thinks these episodes are exceptions. Nobody even needed these episodes to suspect that Huawei’s spectacular success has not been the product entirely of its own ingenuity and hard work (though these have been considerable). U.S. and other Western companies also vigorously “learn” from each other right up to the limit prescribed by our patent laws. In China, there is no limit. Stealing is regarded as a national development strategy and patriotic duty. The U.S. indictment alleges that Huawei even offered bonuses to employees who successfully purloined a competitor’s trade secrets.
This might seem clever, but it points to a problem for China’s own development—and not only because it antagonizes trade partners. China wants higher-order technology and investment from the West. It won’t come if trade secrets aren’t honored and enforced. China’s own firms cannot develop to their potential, at home or globally, if their own intellectual property isn’t secure even as they are distrusted abroad as agents of Chinese spying.
Ex-CEO is highlight of second day of trial in which Google’s parent alleges Uber stole trade secrets
.. Mr. Levandowski previously has indicated he will invoke his Fifth Amendment right against self-incrimination. Mr. Kalanick has denied any theft in depositions.
.. Waymo attorney Charles Verhoeven showed December 2015 meeting notes from former Uber executive John Bares, then the head of the self-driving program, in which Mr. Kalanick appeared to be singularly focused on lidar, as well as intellectual property.
.. Mr. Bares said the company was burning through about $20 million a month trying to develop reliable autonomous vehicles. Relying on Mr. Levandowski’s assistance would help pare the costs by speeding up development
.. Kalanick’s goal of getting 100,000 driverless cars on the road by 2020
.. Autonomous vehicles are essential to Uber’s business, Mr. Bares said, given human drivers account for 70% to 80% of the cost of operating a vehicle in ride-hailing.
.. Still, he acknowledged Google was and remains the leader in self-driving vehicle technology. “That’s the general perception right now,” he said.