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The War In Ukraine And The Western Response Could Destroy Russia's Civil Aviation Industry

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In November 2006, nine months after signing a decree creating United Aircraft Manufacturing Corp (UAC), Russian President Vladimir Putin invited the state-controlled conglomerate’s newly chosen CEO, Aleksei Fyodorov, and top cabinet officials overseeing the industry to the Kremlin to discuss future plans.

“We are all aware that our biggest problems are in civil aviation, and so we will be focusing particularly on this area,” Fyodorov told Putin at the meeting. “Our main focus will be on new projects.”

Putin had combined Russian warplane and commercial aircraft producers, including Sukhoi, Ilyushin, Tupolev, and Irkut, under the roof of UAC --an effort to strengthen state control over the crucial sector, which was struggling 15 years after the Soviet Union’s collapse, and improve efficiency.

Another 15 years later, Russia’s civil aviation industry is at risk of collapsing under the weight of Western sanctions over the invasion of Ukraine. Despite billions of dollars pumped into the sector with much fanfare, there’s been little to show for it -- and reliance on Western planes, technology, and spare parts remains sky high.

At the meeting in 2006, Fyodorov told Putin that development of the Sukhoi Superjet 100 (SSJ-100), a short-range plane seating up to 98 passengers and set to become the first post-Soviet, Russian-designed commercial aircraft to go into mass production, was “going ahead quite well.”

He then told Putin about UAC’s “biggest and most important” commercial project: the development of the MS-21, a medium-range plane designed to replace the aging Soviet Tu-154 fleet and to compete with the Boeing 737 MAX and Airbus A320.

“This is one of the company’s most complex and strategic objectives today,” Fyodorov said.

As of today, after plowing more than $3 billion into the project, UAC has yet to deliver a single MS-21 to customers. It has promised to transfer four this year to the state-controlled airline Rossiya, but that is now in doubt due to the sanctions. Mass production at a profitable level is still at least five years away.

As for the SSJ-100, two deadly crashes -- including one on a promotional trip to Asia -- and a persistent lack of spare parts have sapped domestic and international interest.

As of mid-2021, there were only 155 SSJ-100s in operation, according to UAC CEO Yury Slyusar. The demand stemmed largely from government pressure on Russian airlines to buy them, according to industry analysts.

Western-made planes, including Boeing and Airbus, accounted for about 80 percent of Russia’s fleet at the start of the year, according to Cirium, an aviation data and analytics firm. It is a larger proportion than when Putin first came to office.

Many of those planes will be grounded in the coming months after Western nations banned the export of aviation technology, including spare parts, to Russia following its invasion of Ukraine on February 24.

Russia’s airlines will be forced to cannibalize their existing fleets for spare parts, analysts said.

Even the SSJ-100 could be grounded, as most of its components are foreign made, including the engine.

In a potential sign of concern in the Russian government about the situation and how it plays out in public, a senior official of Rosaviatsiya, the nation’s federal air transport agency, was immediately fired after he told an industry conference on March 10 that China had refused to supply Russia with spare parts, the business daily Kommersant reported.

Since the United States and Europe first imposed sanctions on Russia in 2014 for its seizure of Crimea, Russia has been seeking to move away from Western imports, including in the aviation industry.

However, UAC isn’t expected to deliver fully Russian made SSJ-100s until 2024 at the earliest, Slyusar said in October. Russia is still developing an engine for the SSJ-100 to replace the one made by a joint venture with France’s Snecma.

“The reality is that they are in deep, deep trouble unless they can find a way to get these export controls lifted,” Chris Miller, a professor at Tufts University in the United States who has written books on the Soviet and Russian economies, told RFE/RL.

“Russian civil aviation today is just very heavily reliant on components from the U.S., Europe, and Japan, and there's no easy way to replace them in the short term,” he said.

'Failure Of Policy'

That wasn’t always the case.

The Soviet Union produced commercial planes with fully domestic parts. But some of those key components -- especially avionics and engines -- were inferior to Western equivalents.

Soviet aircraft suffered from severe maintenance and reliability problems, including -- like today -- a lack of spare parts. Some airports in Europe banned them for failure to meet regulations and noise emissions.

When the Soviet Union collapsed in 1991 and Russia opened its economy to the world, its airlines sought to acquire better-made and more reliable Western planes.

Russian manufacturers, some now in private hands, suffered financially in the 1990s as orders dried up, raising questions about whether the domestic civil aviation manufacturing industry even had a future.

When Putin came to power in 2000, he faced a formidable uphill battle in turning the sector around.

At a meeting in the Kremlin in 2001, he called on officials and aviation executives to move quicker in carrying out the government's strategy to revive the industry.

It was one of many meetings Putin would hold over the next two decades with policy makers and aviation executives to discuss investments and reforms.

For all the talk, however, analysts say he did not give civil aviation the attention and money it needed to overcome its problems, setting the country up for the crisis it now faces.

“The government did not focus enough on diversification of the economy and spent far too much time living off hydrocarbons,” Chris Weafer, the founder of the Moscow-based consulting firm Macro Advisory, told RFE/RL, highlighting civilian aircraft manufacturing as one casualty of that policy.

Russia is one of the world’s top three producers of oil and gas, which together generate about one-third of budget revenues. Putin benefitted from surging oil prices during his first two terms in office, from 2000 to 2008, and again from 2012 to 2014, early in his third term.

Peter Wilson, an adjunct senior defense analyst at the RAND Corporation think tank and a professor at Georgetown University, who has written about Russian military aviation, said Putin blew an opportunity to use surging oil and gas revenue to modernize the nation’s plane manufacturing industry, including by tackling the age-old problem of avionics and engines.

Putin stockpiled the excess revenue from energy sales to fortify his country against potential Western sanctions instead of investing it to enhance living standards and modernize industry, Wilson said.

Russia’s reserves were the fifth largest in the world prior to the invasion of Ukraine, reaching about $630 billion.

“There was a lot of talk inside the Russian aerospace and defense industry about how they were going to develop their indigenous capabilities…and some of it kind of happened. But fundamentally, it was a failure of policy and investment,” Wilson told RFE/RL.

Some $300 billion in reserves are now frozen by Western sanctions.

'Where Are The Planes?'

UAC initially designed the SSJ-100 and MS-21 with Western components, including avionics and engines, putting Russia’s commercial plane industry in the vulnerable position that it is now seeking to desperately overcome.

But UAC’s problems, including its inability to produce more planes, go deeper than dependence on the West, Russian analysts say.

In a series of articles for the military-focused news agency website Voyenno-Promyshlenny Kuryer analyzing UAC, Igor Semenchenko, a former top adviser to Russia’s upper parliament chamber, the Federation Council, slammed current and past managers and government officials for poor policy decisions, lack of experience, and mismanagement of funds.

He criticized the decision to develop the Sukhoi's SSJ-100 when a Soviet-designed alternative by Tupolev already existed. Tupolev had decades of experience building passenger planes while Sukhoi -- a designer of military jets -- did not, he said, suggesting that was a reason why the plane had so many technical problems.

The SSJ has been haunted by two deadly accidents, including a crash into an Indonesian mountainside during an exhibition flight with 45 people on board in 2012, and has been hobbled by performance issues and lack of spare parts.

According to Semenchenko, the government had to pour so much money into the SSJ-100, including to overcome its problems, that there was little left over for other civilian projects.

“UAC became a highly effective tool for consuming state budget funds” and has turned “into almost a laundering firm,” Semenchenko wrote in a November 2020 article.

Valentina Matviyenko, the head of the Federation Council, raised similar concerns about mismanagement in 2013, saying some state corporations, including UAC, had turned into black holes.

“Huge state investments, hundreds of billions of rubles, were pumped into the UAC. Can someone answer the people: Where are the planes? Where's the money?" he said.

Russia initially planned to build from 60 to 72 SSJ-100s a year with a target to sell 1,000 jets over a two-decade period, including 700 for export. The sales figures were revised lower to roughly 600 jets by 2031 as UAC struggled to find sellers. The coronavirus -- which decimated travel over the past two years -- and now sanctions have made that target optimistic.

Since 2008, UAC has produced about 220 SSJ-100s with just 159 currently in operation, nearly all of them in Russia.

The weak sales left UAC mired in debt, forcing the government to step in with a $4 billion bailout package in 2019. UAC has been loss-making nearly its entire existence.

Analysts have said UAC’s initial forecasts for SSJ-100 sales were unrealistic because the market for short-haul planes isn’t that large. They speculated UAC made the outlandish projection to receive more government funding.

As relations with the West worsened and the threat of more sanctions loomed, Putin in 2020 approved new measures to subsidize the purchase of SSJ-100 jets by domestic operators.

Under that program, the leasing arm of Rostec, the state-owned defense conglomerate that controls UAC, agreed to buy dozens of SSJ-100s, as did other Russian airlines, for delivery in the next few years.

Rostec is run by Sergei Chemezov, 70, a longtime friend and associate who worked with Putin when both were KGB officers stationed in Dresden, East Germany, in the 1980s. He has been accused of enriching himself in that position, a charge he denies.

Chemezov last year tapped himself as chairman of UAC. He will now oversee Russia’s efforts to break the aviation sanctions stranglehold by producing fully domestically made planes.

Aviation experts have said that the tendency to hand high-level jobs and responsibilities to people close to Putin is part of the problem, not the solution to Russia’s aviation troubles.

UAC is “incapable of innovation and adaptation” because its directors are largely “handpicked yes-sayers” who lack skills as industrial managers, Tom Cooper, a military aviation analyst who follows Russia, said in a 2017 article.

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"Military-related part" of investigation into AZAL plane crash in Grozny was hidden

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The "military part" of the investigation into the AZAL plane crash in Grozny has been hidden, APA's Moscow correspondent reports citing "ВЧК-ОГПУ" Telegram channel.

Reported that despite the visit to the Chechen Republic by the head of the Russian Investigative Committee, Alexander Bastrykin, and experienced investigators from the Committee's central office, in fact, all investigative actions related to the military are being carried out by investigators from the 505th Military Investigation Department of the Russian Investigative Committee located in Chechnya.

"The crew of the Pantsir combat vehicle that fired the missile at the plane was interrogated by the head of the department. As for the dispatched investigators, some of them went to Aktau, where they were allowed to work at the crash site, while others work in Grozny. They interrogated the dispatcher and the airfield flight director. So far, the investigation has no questions for the dispatcher and the flight director.

An analysis of other circumstances that could have influenced the plane crash is also underway. For example, before GPS technology became widespread, aircraft landing was carried out using the CGS system (a radio beacon system for aircraft approaching the landing. This is the most common radio navigation system in aviation for aircraft landing using cockpit instruments). This method is still widespread and is used all over the world, but for some reason, during the large-scale reconstruction of the Grozny airport, this system was dismantled," the Russian source emphasized.

Noted that on December 25, an Embraer passenger plane operated by Azerbaijan Airlines, operating a Baku-Grozny flight, crashed near the city of Aktau, Kazakhstan. There were 67 people on board, including 5 crew members. As a result of the accident, 38 people, including citizens of Azerbaijan, Russia and Kazakhstan, lost their lives.

Initial investigations revealed that the Azerbaijani plane was shot down by the Russian Air Defense System while it was in the airspace of Chechnya. At the same time, the plane was hit by Radio Electronic Warfare and the aircraft lost control. Traces of shrapnel from a missile fired from an anti-aircraft missile complex were recorded on the fuselage of the plane.

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The Downing of Flight 8243 Could Jeopardize Russia-Azerbaijan Relations

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Vladimir Putin cannot survive another year like 2024

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As 2025 begins, pessimism about Ukraine’s fate hangs in the air and the stench of appeasement on the wind. I find myself confused as to why, for it should be clear that the conflict has so far been an ignominious failure for President Vladimir Putin.

Unable to achieve the objective of subjugating his far smaller neighbour, he has instead inflicted enormous suffering on his own country and devastated its economy while undermining Russian prestige and strategic influence around the world.

Lest we forget that what was planned as a three-day “special operation” has turned into a three-year nightmare. Russia has made only limited territorial gains and has been incapable of capturing even the whole of Donetsk Oblast in the east. Last year’s grand offensive to establish a buffer zone at Kharkiv to protect Russian territory only seized a few kilometres along the border. Missile attacks aimed at plunging Ukraine into near-constant cold and darkness have clearly failed.

Meanwhile Putin has lost control of parts of Kursk Oblast to Ukrainian forces in the first invasion of Russian territory since the Second World War, failing to retake it despite enlisting North Korea as an ally in the conflict. Putin’s much-vaunted air defences have proven unable to halt Ukrainian strikes on airfields, oil depots and ammunition warehouses inside Russia. Even the capital, Moscow, has been penetrated by locally-produced Ukrainian explosive drones. The Russian navy has been humiliated, losing control of the Black Sea and unable to strangle Ukraine’s grain exports. Upwards of 15 of its ships have been sunk by sea drones with many more damaged and the remainder of the fleet forced to retreat from the Crimean peninsula and the shores of Ukraine.

The human toll from Putin’s sclerotic campaign has also been immense. Ukraine estimates that Russian forces sustained 427,000 casualties in 2024 alone. The Institute for the Study of War, a US think tank, assesses that during the same period Russia seized 4,168 square kilometres; that means each square kilometre captured has cost more than 100 casualties.

The financial outlay on those casualties, with 6 per cent of the entire federal budget promised to support the wounded and compensate the families of the dead, is just one contributor to Russia’s increasingly precarious economy. Interest rates have hit 23 per cent with inflation at 9 per cent, driven by an unsustainable war economy badly damaged by global sanctions. The Russian financial system may not be on the verge of collapse, but no matter how much the Kremlin talks up its prospects, long-term economic stagnation seems inevitable even if the conflict ends in 2025.

Further afield, the war has severely damaged Russian credibility in the Middle East. Putin’s intervention in the Syrian civil war in 2015 kept Assad in power. But the scaling back of his forces there to stoke the meat grinder in Ukraine together with the withdrawal in 2023 of the Wagner mercenary force – another casualty of the war – meant he was unable to save the dictator at the end of last year. Whether or not Moscow retains its bases in Syria, its reputation as a tough and dependable ally compared to the vacillating West will have been badly ruptured. Added to that, Russia’s weakness in Syria has inflicted damage, perhaps irreparable, on its chief regional accomplice and arms supplier, Iran. If Syria becomes a support base for jihadists set on terrorism inside Russia – a distinct possibility – it could be disastrous.

Contrary to Putin’s dream of resurrecting a Russian empire, he has risked turning the country into a dependency of the Chinese. Western sanctions have already made Russia more reliant on China for economic support and commerce than ever before. As Moscow’s economic situation worsens, the trade inequity will only deepen. Russia also depends on the Chinese supply of dual-use technology that is essential for its war production and North Korea would not have sent 10,000 troops to help fight Putin’s war without a green light from Xi Jinping. The conditions are being set for Moscow’s subordination to Beijing.

Despite Russia’s woes, we should not make the mistake of believing that Ukraine and the West are near victory in this conflict. Unfortunately the opportunity for that was lost at least two years ago by a combination of lack of resolve in Europe and fear of escalation in the US, which denied Ukraine the weapons it needed to drive Russia back. Ukraine has been unable to halt the steady Russian advance and is not going to be able to do so without substantially increased support, which is unlikely to come. Kyiv’s allies have become increasingly war-weary since the failed counter-offensive in 2023 and many are resigned to a peace deal. Recent comments by President Zelensky suggest he too is now prepared for that, even if it means territorial concessions.

Putin is playing hardball, rejecting a reported proposal by the US president-elect, which involved a 20-year delay to Ukraine’s Nato membership, Western security guarantees and a European-manned buffer zone. His stance may soften depending on how he sees the future of the Russian economy and how concerned he is over an unpredictable Donald Trump in the White House.

For now, we must kill the idea that Putin is “winning” the war. It has been a colossal failure. The tragedy is the West may be about to reward Putin with enough territory for him to claim otherwise, turning defeat into victory.


Colonel Richard Kemp CBE is a retired British Army officer who served from 1977 to 2006

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Ukraine will no longer allow transit of Russian gas, Zelenskyy says

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Volodymyr Zelenskyy has ruled out the possibility of allowing the transit of Russian-made gas under the label of Azerbaijan.

Ukraine will no longer allow the transit of Russian gas through the country's territory after the end of this year, Volodymyr Zelenskyy announced on Thursday after meeting with leaders of the European Union in Brussels.

The ban, he added, will apply to any gas flow "coming from Russia" to avoid the risk of having Russian gas sold to Europe under the guise of Azerbaijan-made gas.

"We're not going to extend the transit of Russian gas," Zelenskyy told reporters.

"We won't allow them to earn additional billions on our blood. And any country in the world that can get something cheap from Russia will eventually become dependent on Russia – whether it happens in one month or one year. That's their policy."

The statement is set to go down badly with Robert Fico, the prime minister of Slovakia, a landlocked country that remains highly dependent on Russia's pipeline gas.

Slovakia imports three billion cubic metres from Gazprom, Russia's gas monopoly, every year, covering most of its domestic demand.

A major transit agreement between Ukraine and Gazprom, from which Kyiv earns constant revenue, is set to expire at the end of this year. The agreement accounts for half of Russia's pipeline gas exports to the EU, according to Bruegel.

Although Russia's pipeline gas exports to the bloc have plunged since the start of the full-scale invasion, a share of supplies continues moving unabated, freed from sanctions.

With the end of transit fast approaching, Slovakia has stepped up diplomatic efforts to ensure the country's energy flows are not disrupted.

As an alternative, Bratislava might resort to Azerbaijan, a small country in the Caucasus that has positioned itself as an affordable option for Europe to replace Russian gas. Deals with Azerbaijan are controversial due to the country's poor human rights record.

Under the scheme, Bruegel explains, Russia would supply gas to Ukraine labelled as "Azeri gas" while Azerbaijan would buy gas from Russia labelled "Russian gas" using the same infrastructure.

"In simple terms, there would be no change in the gas flows: EU traders would buy gas from Azerbaijan, which would buy gas from Russia," Bruegel said in an October study.

But on Thursday, Zelenskyy made it clear he would not tolerate such a deceitful operation, arguing the Kremlin would still earn money and, as a result, retain a key source of revenue to finance its costly and brutal invasion. He did not mention Azerbaijan by name but the Financial Times journalist who asked the question did.

"We don't want to play a game where this other country receives gas from Russia and then transits it. This is the same as continuing to profit from this war and sending money to Russia," Zekenskyy said in his reply.

The Ukrainian leader offered one exemption to the ban: Ukraine would allow the transit of Russian gas if the European buyer agreed not to pay Russia until the war ended. Doing so, though, would most likely result in a breach of contract and a halt from Gazprom.

"We will think about that," he said. "But we would not give Russia any chance to make additional billions that would be put into the war."

Slovakia's main gas buyer SPP has warned the loss of Eastern supplies would cost an additional €150 million in higher fees. According to Zelenskyy, Ukraine also stands to lose money from ending the transit of Russian gas. (Bruegel puts the number at 0.5% of GDP.)

"To be honest during the war, it's a bit shameful to talk about money because we're losing people," Zelenskyy said.

The news is expected to further sour ties between Kyiv and Bratislava.

Zelenskyy and Fico have had strained relations since the Slovak populist returned to power in October last year. Fico has gradually aligned himself with Hungary's Viktor Orbán to adopt a position deeply sceptical of military support for Ukraine.

"Ukraine won’t be invited to NATO. It will lose a third of its territory. There will be foreign military forces there," Fico said the day before the summit in Brussels.

Slovakia is in contact with both the Ukrainian government and the European Commission, which advocates the complete phase-out of Russian gas, to find a solution before the transit agreement between Ukraine and Gazprom ends.

"We are holding very intense talks at an international level on gas supplies in 2025," Fico said last week. "There are many hurdles, such as political statements by the Ukrainian side, the pressure on the suspension of supplies from the East to the West, proposals on gas deliveries that are much more expensive, including transit duties, which we reject. We see no reason to pay for gas more than required due to geopolitical reasons."

The halt in transit of Russian gas through Ukraine could also affect Austria and Hungary, although to a different extent. Earlier this month, Austria's OMV utility terminated its long-term contract with Gazprom after Russia cut off supplies, an incident that Chancellor Karl Nehammer denounced as "blackmail."

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After Moscow lost in Syria, Russian-Ukrainian war enters new phase

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