Leadership: The Russian Secret Weapon

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February 19, 2010:  Russia has made it official; that the Russian defense industries will remain state owned. For a while, during the 1990s, many defense related operations were privatized. That has been reversed (by economic conditions, or force) in the last decade. Most of the defense firms were renationalized to keep them from going bankrupt. That would have put a lot of people out of work. The defense industry employs nearly three million people (nearly five percent of the workforce) and account for about 20 percent of industrial jobs in Russia.

At the end of the Cold War in 1991, the defense industry was more than three times as large as it is now. It was the large size of the defense industry that played a major role in bankrupting the Soviet Union. The Russians were never quite sure (cost accounting not being a communist favorite) what proportion of their GDP was devoted to military spending, but it is estimated that it was over 20 percent. That was more than four times figure for Western nations.

The new plan in Russia is to apply Western manufacturing and management practices to the state owned arms industry, and thus remain competitive. What Russia is not mentioning in all these bubbly press releases, is that there is a secret weapon. And that is Internet based espionage and theft of technology from more advanced nations. China and Russia remain the two biggest sources of industrial espionage, all in the name of national defense, and making a few more bucks.

 


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