The Unintended and Expensive Consequences of the Anti-Russia Sanctions

Updated July 2017

A December 2016 Department of Defense press briefing on the situation in Afghanistan by General John W. Nicholson Jr., Commander of Resolute Support and the United States Forces in Afghanistan, provides us with a glimpse into the current anti-Russia sentiment that is becoming pervasive throughout Washington.  As you will see, in this case, this anti-Russia sentiment could end up costing American taxpayers a very significant amount of money.

When the Afghanistan war began in 2001, Afghanistan's fledgling Air Force included a number of aging Soviet-era helicopters.  Since the Afghani pilots had experience with Soviet equipment, the United States made the decision to replace this aging equipment with Mi-17 helicopters purchased from Russia and the Czech Republic with the deal being signed in 2011.  The Mi-17 is a multi-use transport helicopter that can operate at high altitudes and the United States had the goal of purchasing at least 80 Mi-17s by the end of the acquisition program.  By 2012, 50 Mi-17s had been purchased and, according to the U.S. Army, by 2011,  an additional 22 Mi-17s had been purchased for use in Iraq and the existing 50 Mi-17s in Afghanistan were being serviced by Northrop-Grumman, a massive U.S.-based military contractor.  In November 2014, the Pentagon announced that the last of 63 Mi-17s had been delivered.

  

Interestingly, the U.S. Government Accountability Office did an analysis of the Department of Defence's decision to cancel competitive soliticitation for the purchase of 21 civil Mi-17s (along with an option to purchase 12 additional aircraft) which would have been refitted with a military configuration after delivery, even though this had never been done previously.   with the necessary materiel.  As well, according to Human Rights Watch, the Department of Defense likely paid too much for the helicopters; between 2008 and 2012, the price rose from $4.4 million to $17,5 million.  Here's a quote:

"The industry documents appear to show that the United States is paying far more than most other countries for similar helicopters.  As was reported in today’s Wall Street Journal, a 2007 letter from the factory in Ulan-Ude, Russia, offered to sell three new Mi-171E helicopters for $8.55 million each. In 2009, the U.S. navy bought two Mi-171s for $10.5 million from a contractor called Defense Technology Inc. The following year, Argentina reportedly paid $12.7 million each for two Mi-171s. In 2011, the United States paid $13.6 million each for 14 Mi-171s destined for Iraq.  The price paid by the United States was 40% higher than four years earlier – an eye-opening markup given that bulk aircraft can usually be purchased at a lower price than small numbers.

The Russian price apparently jumped another 32% in a single year, when DoD bought 12 Mi-17 helicopters for Afghanistan for $18 million each. The Mi-17 V5 is equivalent to the M-171 and the cost is roughly the same, industry sources said.  A July 2013 Pentagon document indicates the Mi-17 choppers are now estimated to cost $19 million each, with annual maintenance costs of $4.8 million, for a total cumulative costs of $1.45 billion for 30 aircrafts over the 30-year lifespan of the helicopter."

With that background, let's go back to the subject of this posting, the recent press briefing by General Nicholson on the situation in Afghanistan.  Here's a question that he was asked by Thomas Gibbons-Neff from the Washington Post during the December 2, 2016 briefing:

"And the second question on the -- the Afghan Air Force, talking about how that's kind of a capability you guys are constantly building and heavy relied on the MI-17 fleet by far, the most experienced fleet in the Afghan Air Force.  And there's been some reports that you'll -- you'll be replacing them with Black Hawks.

How does that kind of factor into keeping this force going forward without taking two steps back?"

Here's is the General's response:

"Right.  So the -- the -- as you know, the decisions on the MI-17s were made prior to Crimea, prior to Ukraine, prior to the international sanctions on that.  So the Afghans traditionally had a core of MI-17 pilots who were trained on the airframe and some of them very experienced.  So early before Crimea, Ukraine, before sanctions, there was international support for continuing with Russian-made airframes.

That all changed after 2014 and after those sanctions were imposed.  So the issue now is the sustainment of that -- of that fleet to continue while we field a new fleet.  President Obama forwarded to the Hill a request and the supplemental for purchase of UH-60 alpha model helicopters.  So these helicopters will be modified with an improved drivetrain transmission so to enable them to operate better in the environment up there.  But it will involve a transition for the pilots.

So in addition to the equipment that's being purchased -- so it's not just the UH-60, it's also more A-29s, more MD-530s.  So an increased close air support capability, an increased lift capability and then a transition program for the pilots and for the maintainers.  So I already mentioned in my opening remarks about the -- fielding 120 Afghan tactical air controllers, so they're out in the field able to start doing this.

So it's a -- it's a comprehensive program to not only get the airframes there, but the -- but the pilots trained, the maintainers trained, the -- the attacks trained so that we'll field a complete capability.  And then -- and then during this period, we need to sustain the MI-17s long enough to bridge through this period.  So we're getting help from some allies on this and partners on the this, the Australians, others are helping to fund maintenance on the MI-17s to -- to enable them to bridge this period until the UH-60s are fielded." (my bold)

Here's the followup question:

"But ideally, they'd want to keep the MI-17s, correct, because this is a step back as far as having to retrain pilots?"

Here again is the General's response:

"Well, the MI-17s are a great airframe that the Afghans use and they're comfortable with.  The -- the issue's gonna be the ability to maintain them.  And so this -- so maintaining the airframe -- you know, keeping the airframe in the inventory but not being able to maintain it was not -- would not be positive.  And so the -- the Afghan government has gone to the Russians and asked for their assistance in this.  The Russians have not provided it.

And -- and so the Afghan government solicited from them help with maintaining these airframes.  They haven't -- they have not agreed to do it.  And because of the sanctions on Russia, the maintenance of this fleet's gonna be very difficult." (my bold)

Apparenlty, this is yet another fine example of unintended consequences of questionable political policies and, as you will see, a very expensive example.

Let's summarize.  The American military picked the Mi-17 as the helicopter of choice for Aghanistan (and let's not forget Iraq) because it was most suitable for the existing pilots in the Afghanistan Air Force, closing the purchase in November 2014 which was actually seven months after the residents of Crimea voted to declare independence from Ukraine and rejoin the Russian Federation.  The first round of American sanctions against Russia were invoked on March 6, 2014 followed by a second round which banned business transactions with Russia on April 28, 2014 and a third round which was imposed on July 17, 2014.  Despite that, the United States continued with its purchase of Mi-17s despite the sanctions and now finds itself in a situation where it can no longer get parts necessary for maintenance because of sanctions that Washington imposed on Russia.  To get themselves out of this mess, the Department of Defense plans to replace the Russian-built Mi17s with the Blackhawk UH-60 which is manufactured by Sikorsky Aircraft, an American aircraft manufacturer located in Stratford, Connecticut which is now a unit of Lockheed Martin, America's largest defense contractor.  According to Aeroweb, the unit cost of a Sikorsky UH-60M in fiscal year 2015 was $16.96 million (flyaway cost) without armament.  If the existing Afghani fleet of 63 Mi-17s were replaced one-for-one with UH-60s, it would cost U.S. taxpayers a total of $1.07 billion not including armament costs and the cost of retraining the Afghanistan Air Force pilots. 

In closing, let's look at how much Lockheed Martin has spent on lobbying since 1998:

In its last full year, Lockheed Martin has spent $3.615 million on getting Washington to see things its way, putting it in 13th place out of 3,623 lobbyists.  As well, it contributed an additional $6,103,241 to political campaigns during the 2016 cycle, putting it in 51st place out of 18,184 contributors.

One really doesn't have to think too hard to gain an understanding why Washington is suddenly changing course mid-stream when it has just finished taking delivery of hundreds of millions of dollars worth of new Russian-built helicopters at the end of 2014.  Looking at the acquisition dates in relation to the dates that Washington imposed sanctions on Russia makes one realize that American voters have a very good reason to be cynical about their political leadership who is quite adept at speaking out of both sides of their mouths....at the same time.