Vladimir Putin’s attempted invasion of Ukraine has been dealt yet another heavy blow after one of Russia’s most important factories for the war effort was forced to close because of crippling debts.
Optron-Stavropol, located in the city of Stavropol in the south of the country, was responsible for producing microelectrics for aircraft and military equipment, and supplying power semiconductors for MiG, Su, Tu, Sukhoi Superjet and MS-21 aircraft.
However, the factory has ceased operations due to losses totallying 149million roubles, around £1.3million, from fulfilling state orders and mounting debts, reports The Moscow Times.
The losses are claimed to be due to the Russian government’s unwillingness to pay the going rate for military tech – sometimes offfering less than it actually costs to build the item.
Optron-Stavropol CEO Pavel Bondarenko revealed how despite one diode costing 3,600 roubles (£34) to make, the Ministry of Defence would only pay 2,600 roubles (£24).
As a result, Optron suffered heavy losses while waiting for more than 230million roubles – an estimated £2.13million – in unpaid orders.
This led to the suspension of production in March, then its accounts were frozen by June as arrears started piling up due to salaries, taxes and utility bills.
Optron cannot set prices independently, as pricing is determined by the military under the law on state defence orders. Other manufacturers have also reported losses due to similar practices.
The inability to set prices independently has seemingly led to the company’s collapse, with other Russian manufacturers also reporting losses due to similar practices.
Despite nine official meetings with the Ministry of Industry and Trade, and a full-scale inspection by the Prosecutor General’s Office, authorities claim they’ve uncovered no wrongdoing in the company’s conduct.
But behind closed doors, the situation is dire. The beleaguered plant has been in a state of crisis since 2016 — and back in 2021, it sounded the alarm, warning of a potential shutdown.
Meanwhile, US President Donald Trump has affirmed his commitment to the Nato alliance’s mutual defence guarantee in the face of Russian aggression as he attended its summit in the Netherlands.
Before landing in the Netherlands on Tuesday, Mr Trump cast doubt on whether the US would abide by Article 5 of the Nato treaty, which calls on all members to defend one another in case of an attack. But on Wednesday, the US president said he stood with that promise.
“That’s why I’m here,” Mr Trump said as he met with Dick Schoof, the prime minister of the Netherlands. “Why would I be here?”
Meanwhile, the alliance on Wednesday enacted one of the Republican president’s chief priorities: a pledge by Nato member countries to increase, sometimes significantly, how much they spend on their defence.
“I’ve been asking them to go up to 5% for a number of years,” Mr Trump said, “I think that’s going to be very big news.”