Russia has endured and expanded its war effort in ways that defy early Western predictions. A new report by the Royal United Services Institute (RUSI), a leading British defense think tank, has revealed that as early as May 2022, Russia had 1,400 enterprises tied into its military-industrial complex. These facilities, which now employ roughly 4.5 million people, form the backbone of an industrial strategy that has kept the Kremlin’s war machine running, even under crushing sanctions.
The figure is more than symbolic. It highlights a vast mobilization effort that has sustained Moscow’s military edge in the face of Western support for Ukraine. But beneath the surface of this mobilization lies a more fundamental question: How did an economy considered fragile before the war transform into a production powerhouse in the span of months?
The answer is a mix of historical legacy, industrial pragmatism, financial reengineering, and geopolitical adaptation. It’s a story of how old Soviet infrastructure, once deemed outdated, became the bedrock of a modern war campaign.
Russia didn’t build its military-industrial infrastructure overnight. The foundation was laid during the Cold War when the Soviet Union invested heavily in military manufacturing as a hedge against NATO. Although much of this infrastructure decayed following the USSR’s collapse in 1991, it was never dismantled. Warehouses full of dormant machinery, blueprints, and tank hulls were mothballed rather than destroyed.
After the annexation of Crimea in 2014, Western sanctions and the recognition of long-term confrontation with NATO prompted Moscow to begin revitalizing these assets. The full-scale invasion of Ukraine in 2022 merely accelerated this trajectory. According to RUSI’s report, 75% of the 1,400 enterprises are dedicated to production, while the remainder focus on research and development.
One emblem of this approach is the T-72 tank, a Soviet-era design that has become central to Russia’s war in Ukraine. Though technologically inferior to newer Western tanks like the American M1 Abrams, the T-72’s simplicity and volume of existing stockpiles make it ideal for large-scale refurbishment. The International Institute for Strategic Studies estimates that 80% of Russia’s tank deployments since 2022 have been refurbished T-72s and other legacy platforms.
In stark contrast to Western military procurement, which emphasizes cutting-edge systems with high costs and long production timelines, Russia has focused on quantity over quality. A refurbished T-72 costs under $1 million, whereas a new M1 Abrams can exceed $10 million. Similarly, Russian artillery and drones prioritize mass production over precision engineering.
The RUSI report shows that this strategy has paid off. By 2023, Russia’s defense industry output had increased by at least 50%, fueled by a wartime economy that diverted public funds from civilian sectors like healthcare and education. Defense spending is expected to reach 7.5% of GDP by 2024. Moscow’s financial maneuvers included state-backed loans to defense firms and reallocating budgetary priorities to sustain the military surge.
This approach resembles wartime quantitative easing, where liquidity is injected into a targeted sector to stimulate rapid output. It’s a model that Western democracies, with their checks and balances and public scrutiny, have struggled to emulate.
Western sanctions were expected to cripple Russia’s high-tech capabilities, especially in areas like missile guidance and drone components. However, the Kremlin’s pivot to alternative suppliers has dulled the impact.
Evidence from Ukrainian battlefields indicates that Russian drones and missiles now include parts sourced from China, Iran, and North Korea. A 2024 report by the Center for Strategic and International Studies confirms that China, in particular, has emerged as a crucial supplier of dual-use components, including semiconductors and optical systems.
Conflict Armament Research has documented these substitutions extensively, noting that even sanctioned components often enter Russia via third-party nations. This shadow supply chain has kept Russia’s assembly lines running, despite a Western embargo that was supposed to halt production.
While Russia and Ukraine operate with centralized coordination, Europe’s defense industry remains fractured. The RUSI report criticizes Europe’s inability to match Russia’s industrial tempo, attributing the lag to disjointed national strategies, competition between defense contractors, and a fixation on long-term, high-tech programs.
Projects like the Franco-German Future Combat Air System are years from deployment and drain resources that might otherwise go toward urgently needed ammunition and armor. Germany’s Leopard 2 tank, for example, is technically superior to the T-72 but is produced at a rate of fewer than 100 units per year.
This disconnect has tangible consequences. While Russia pumps out an estimated 2.5 million artillery shells annually, the U.S. goal of producing 100,000 155mm shells per month by 2025 still leaves a significant gap. Europe, meanwhile, is not expected to catch up unless it overhauls its procurement processes.
Ukraine’s defense industry was nearly dormant prior to the invasion. But like Russia, it too has drawn from its Soviet past to restart production. Drones, refurbished artillery systems like the 2S1 Gvozdika, and mobile repair shops have played a vital role in sustaining Ukrainian forces.
Ukraine has also leaned heavily into innovation. Long-range drones that strike Russian oil facilities have shown the ability to bypass conventional defenses. Yet as the RUSI report notes, Kyiv’s reactive approach and smaller industrial base make it difficult to scale these solutions without massive external support.
Despite appearances, Russia’s wartime economy faces significant risks. Many of the 1,400 enterprises depend on outdated Soviet-era machinery. A 2024 Carnegie Endowment analysis warned that current loss rates could exhaust Russia’s stockpiles of legacy tanks and artillery by 2026, forcing a shift to more expensive and slower new production.
The T-90M, Russia’s most advanced tank, illustrates this problem. While superior to the T-72, only about 100 are produced annually due to cost and resource constraints. Scaling up would require modern factories, skilled labor, and access to high-tech components—all areas where Russia is still vulnerable.
Morale is another issue. Investigations by Russian independent media, including Meduza, suggest that factory workers are burning out from relentless shifts and mandatory overtime. Reports of declining productivity and increased error rates point to an unsustainable tempo.
Russia also remains dependent on foreign inputs. RUSI’s July 2024 commentary highlighted how Moscow continues to obtain key materials from NATO countries via intermediaries. Should the West close these loopholes, the impact on Russian production could be severe.
Russia’s industrial strategy offers hard lessons for the West. It demonstrates the importance of preparation, centralized coordination, and production resilience over reliance on advanced but scarce technologies.
The Pentagon’s Replicator Initiative aims to develop thousands of cheap, expendable drones as a response. However, this program has yet to reach the scale or speed necessary to shift the strategic balance. Rethinking the West’s approach to production—including accepting more “good enough” systems and streamlining procurement—may be unavoidable in the long run.
There’s also a geopolitical dimension. Russia’s success undermines the idea that authoritarian economies can’t adapt under pressure. With defense now consuming up to 40% of Russia’s national budget, according to a 2024 Institute for the Study of War assessment, Moscow has made its priorities clear.
Russia’s wartime mobilization is real, but it’s also brittle. Built on aging infrastructure, foreign parts, and a labor force nearing its limits, it risks peaking before the conflict ends. Yet its existence exposes critical flaws in Western assumptions about deterrence, industrial capacity, and the efficacy of sanctions.
As the war grinds on, the West must decide: Can it adapt to a long-term, high-volume conflict without sacrificing the values and standards that define its societies? Can democracies compete with autocracies in a test of industrial endurance?
