The transcript has been lightly edited for clarity.
Izabella Tabarovsky: Hello and welcome. I am Izabella Tabarovsky and you are listening to The Russia File. One of the many sectors affected by American sanctions in the wake of Russia's full-scale invasion of Ukraine was Russia's civil aviation. Boeing and Airbus, whose planes comprised 70% of Russia's fleet, announced that they would freeze the delivery of spare parts, causing predictions that Russia's commercial aviation would soon be grounded, a potentially devastating development for a country of almost 7 million square miles and 11 time zones. Analysts were predicting that Russian carriers might cannibalize planes for parts. Two years later, the picture is mixed. Russia's domestic aviation seems to have adjusted to the sanctions, but at the cost of profound restructuring. How that happened and what is going to happen in the longer term is a question we're going to discuss with my guests, Stephen Harris.
Dr. Stephen Harris is a professor of modern Russian and European history at the University of Mary Washington, specializing in the history and present of Russia's aviation industry. But before we get into that conversation, I've asked Dr. Will Pomeranz, the director of the Kennan Institute, to tell us about the overall state of the Russian economy and the impact that the sanctions are having on it.
Well, welcome to the program.
Will Pomeranz: My pleasure.
IT: So what is your assessment of where Russia is economically today?
WP: Russia is really hurting in terms of its economic development, and there are a variety of reasons for that. One, most importantly, are the sanctions. Sanctions are actually working in the sense that it has interrupted trade with China and Turkey and Cyprus and other countries as well.
In addition, other former Soviet countries, including Kazakhstan and Uzbekistan, have said that they are going to implement sanctions as well. So all of this is putting great pressure on the economy going forward. And the final thing that I will say is that Putin's decision to de-privatize Western business and give it to his cronies has also created real problems for the Russian economy, both now and in the future.
IT: So tell us a little bit more about this last part, because Putin laid out a new plan for a Russian economic turnaround earlier this year. But it actually sounds like in some ways, conceptually, he's kind of falling back on Soviet economic policy ideas, in particular the, as you say, de-privatization of nationalization of key industries. There is even a six-year plan, which for many people will sound like the classic Soviet Five-Year Plan. So what is that whole turnaround plan about?
WP: Well, Putin has basically gone back to Soviet first principles, and he is having big projects, national projects, that will take five to six years, if ever, to implement. And he is using that to increase the Russian economy. But whether that is actually a feasible opportunity and plan is very much in question. And, as I said, it really kind of harkens back to Soviet central planning, and we know from that experience that that did not work.
IT: This plan sounds pretty expensive. Do we know how much is supposed to cost, and where will the money come from?
WP: We don't know where the money is coming from. The estimates are in the trillions of rubles, but it is very hard to see how Russia will attract foreign investment going forward to help its economy. Small businesses are in big trouble in Russia for a variety of reasons. But they can't get capital either. And finally, there is the question of foreign investment. All these privatizations has basically involved corporate takeovers of Western businesses and handing them to Putin's cronies. The most notable example is that Kadyrov's nephew, who is all of 32 years old, has acquired and is the head of the Dannon Yogurt company in Russia. I don't know what his business experience is, but I doubt that he has the ability to manage a $100 million company.
IT: You mentioned sanctions early on, and we know that there is a debate going on as to whether they are working. And I think a few months ago there was a conversation about how, in fact, they are not working, and Russia is experiencing something of an economic revival. What is your sense of that? You say they're working. What signs are we seeing?
WP: [We are seeing] difficulties in Russian exports—exports to China, exports to Turkey, and other countries as well. So other countries are now feeling the pressure of sanctions and don't want to go around sanctions, although obviously there are occasional leaks, as it were. And Russia does get access to Western technology. But—and this is a serious but—Russia is not really playing in the international marketplace, and it is not really developing its technology. Indeed, Putin also wants a plan for increased technology. The problem is that he keeps arresting Russia's best scientists on various trumped-up charges. So how can Russia really have a technology upturn if indeed the largest Russian scientists are being arrested on various types of foreign agent charges?
IT: Well, and I understand that the US is now putting pressure on various countries, especially China, and I believe some others, to sever ties with Russia—financial, economic ties. Do we see progress in what China and Turkey and the UAE are doing?
WP: We see progress. The progress is really on the Chinese and the Turkish side. They are simply not trading with Russia and don't want to really aggravate the United States or the EU in terms of continuing to trade with Russia. So clearly there are attempts to get around the sanctions and some of them succeed. But the idea that somehow China, which is potentially Russia's biggest industrial and economic partner, is implementing these sanctions is a big blow for the Russian Federation.
IT: Given all of this, what is the best strategy for the US to influence Russia going forward, in terms of sanctions and otherwise?
WP: The best strategy for the United States is to work in concert with Europe and basically introduce all necessary sanctions and have a united front against Russia and in the war in Ukraine to help Ukraine going forward. I think the passage of the supplemental bill, which gives significant aid to Ukraine, both military and economic, has now put the EU and the United States back together in terms of their strategy towards Russia. And I think that going forward, these two blocs—the United States and the EU—will have a significant impact on Russia and the Russian economy.
IT: Will, thank you so much.
WP: Thank you.
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IT: And now to my conversation with Steve Harris. Steve, welcome to the program.
Stever Harris: Thank you so much, Izabella. Great to be here.
IT: I know you watched that moment when Americans and Europeans shut off their airspace to Russian airlines. What were you thinking and feeling in that moment?
SH: Yeah, that was really quite a dramatic moment. And as a historian of the Soviet Union—right now, I'm writing a book about the history of Aeroflot that goes from the Stalin period all the way to the present under Putin—I guess my first reaction, especially in early March of 2022, when I read about the very last Russian airplane that left JFK Airport (and it was basically a bunch of diplomats and their families on the airline called Rossiya, which is one of the state-owned airlines in Russia)—it was really quite a dramatic moment for me as a historian because I was thinking about it kind of in the grand historical scheme of things, because this was the end, the final moments in this very long history, actually going back to the late 1960s, when the United States and, at the time, the Soviet Union had forged their first direct air links.
So, as you were saying earlier, because of sanctions, because the West, the United States, closed its airspace to Russian air traffic, and then the Russians also reciprocated likewise, this final airplane leaving from JFK to Moscow was, to me, this dramatic unwinding of this aviation diplomacy, if you want to call it that, that went back to the Soviet period. What was also interesting is that the plane was essentially retracing the steps of the original route that had joined Moscow and New York.
IT: And we'll get into that history in a moment. But I want to ask you first: what's interesting is that the sanctions on the air transportation industry are actually something new, because in the wake of Russia's annexation of Crimea back in 2014, lots of Russian industries were sanctioned, including aircraft manufacturing, but not air transportation. Russian carriers continued to fly international routes. So why wasn't the industry sanctioned then and why was it sanctioned in 2022?
SH: That's a great question. One way to answer the question is that back in 2014 and 2015, when those first sets of sanctions were placed on Russia, as you were saying, there was actually some talk at the time, and there were some fears actually in Putin's regime, that the European Union in particular was going to essentially impose sanctions on Russia in retaliation for what they had already done to Crimea and also in the Donbas. And I think the reason why the European Union didn't do that and why the United States didn't do that is the cost-benefit analysis. I think they figured that breaking off those kinds of ties would be too dramatic: it would potentially affect a lot of European and American airlines and leasing companies and also aviation manufacturers.
Now, if I can add one story here, there was actually one airline that the European Union did actually sanction in 2014, and that was this very, very small state-owned low-cost carrier called Dobrolyot, which, I can't resist telling you the background, [the] historical story there: Dobrolyot—that name is actually a reference to a 1920s airline, which was actually the precursor to Aeroflot. But to make a long story short, the European Union—this was the only airline that they actually sanctioned in 2014, and they did so because Dobrolyot was actually flying a route between Moscow and Simferopol, so the idea was, they have to sanction this airline as a way of essentially signaling to Russia that its seizure and annexation of Crimea is not okay.
Now, what's kind of double interesting about what happened there is that Dobrolyot, because it was sanctioned by the EU, had to fold, and it ceased to exist. It didn't have that many airplanes. And actually, what the Russian state did is that they shut down Dobrolyot and then they recreated a new low-cost state-owned carrier with a much more triumphalist name, Pobeda, which in Russian means victory, and that low-cost carrier continues to the present day.
One last thing that I would say, which I think is interesting about the EU sanctions against Dobrolyot: I think in some ways it may have actually raised expectations among European technocrats who manage sanctions that, hey, look what happened in 2014; we applied sanctions to this one airline, and it folded and then that was it. And maybe, and I'm not really quite sure about this, but maybe that contributed to the EU government officials thinking about expanding sanctions in 2022. I think on the Russian side, what the Dobrolyot experience showed them is that they have to be prepared for these kind of sanctions, not only on a very small airline, but perhaps on an industry-wide scale.
IT: Very interesting. So we'll get back to the present moment. But I want to now go back to some history. Tell us a little bit about the history of the Aeroflot and the beginning of Russia's civil aviation.
SH: Sure. Aeroflot, historically, was the only airline in the Soviet Union. It actually traces its roots back to 1923, when there were actually these very small airlines, like the Dobrolyut airline, for instance. And by the way, Aeroflot had a big celebration for the 100-year anniversary of its own history back in 2023. But in the Soviet period, you basically only had one airline called Aeroflot. And by the time you got to the 1960s, it rightfully could claim that it was the largest airline in the world. And it was quite a huge enterprise within the Soviet Union. One thing that we have to keep in mind is that all through what I call the Soviet jet age—so basically from the 1950s, all the way to the end of the Soviet Union—about 98% of Aeroflot’s traffic was always inside the country itself and only 2% of it was international.
Now, that 2% was really critical for some reasons that we can get into later, especially insofar as its route to New York was concerned. But we really have to keep in mind that Aeroflot as a form of transportation was really internal to the country, to the Soviet Union. And after all, as you were saying earlier, the Soviet Union, and Russia today, is still the largest country in the world. The Soviet Union was even larger, and the jet age was really great for getting around the Soviet Union, because now you could actually go from Moscow to Khabarovsk in just eight or nine hours. And as you probably remember, by train it would take actually, you know, more than a week, in some circumstances. And before the jet age, you could fly—there were some propeller airplanes back in the late Stalin period that you can fly from Moscow to Khabarovsk—but those would actually end up taking you two to three days.
IT: Well, and it's interesting, you talk in some of your articles about how, with the development of Aeroflot in the 1950s and 1960s, there is sort of a consumer edge to it that almost makes it look like they're trying to imitate, perhaps, Western commercial aviation. And what I remember—what came to my mind as I was reading it is, as a child seeing an advertisement that said, “Fly the airplanes of Aeroflot”, «Летайте самолетами Аэрофлота!»—and I remember thinking, well, what other airplanes could I fly? I mean, this is, I was pretty young, maybe I was a teenager, you know, but I already realized that there's only Aeroflot. Tell us about that.
SH: Yeah, that’s great, and as part of my project, I do some interviews with people who flew Aeroflot back in the Soviet days, and this often comes up, especially the advertising component of it. You’re saying, why would they advertise Aeroflot if this is the only airline you could possibly fly? And there are a couple of interesting answers to that question. First of all, Aeroflot advertising is actually really well done, especially their poster ads, which I really love using and analyzing. And I think what they're doing in part is not just selling seats on an airplane, but they're selling the Soviet version of modern life, of the good life. And this is supposed to be essentially—especially in the jet age, starting, again, in the mid to late 1950s—it's the Soviet state communicating, especially to what we would call white collar workers or upper middle class or the Soviet intelligentsia, as it was officially known—they're communicating to especially that group of people that you are going to get to have all the trappings of modern life that they have over in the West. You're going to have your own jet age, and it's going to be sleek, it's going to be modern. The architecture of airports is going to reflect the modernity of Soviet air travel, and you're going to have these cutting-edge aircraft that are completely designed and manufactured only in the Soviet Union. So it's also advertising this sense of how the Soviet Union saw itself as a world power that could actually build, manufacture, design an entire industry from scratch and not depend at all on the West.
Now, there are some interesting issues having to do with technology transfer there that we can talk about. Those were always kept secret, insofar as actually building and designing these airplanes were concerned. But the advertising told this story about Soviet independence, Soviet modernity, and this is going to be available basically to the Soviet population.
Another answer to that is that they are actually in somewhat of a competition with Soviet train travel. And some of the advertisement actually plays upon this. So they say things like: you could travel across the Soviet Union in just one day by airplane or it will take you a number of days if you go by train.
So typically in the Soviet Union, when you had an industry where you had different kinds of products from different enterprises, typically there wasn't an explicit attempt to try to get them to compete against each other. But there was a little bit of that when it came to air travel. And overall, the Soviets did have this notion that eventually, at least insofar as the really long routes across the entire Soviet Union were concerned, they wanted air travel to eventually supplant train travel when it came from traveling from the Baltics all the way to Kamchatka or something like that. And air travel never became, shall we say, as popular or as massive as train travel. Train travel is always the most massive form of mass transportation throughout Soviet history.
IT: So tell me about technology transfer and then also aircraft manufacturing itself. So essentially, the Soviet aviation industry was entirely autarkic—they produced their own planes. They all have names: Antonov, Tupolev, Ilyushin—we all knew the names of the designers. So talk to me about that, and what about the technology transfer that you mentioned?
SH: Yeah, that's a really fun topic to unpack, because as you were saying, in the Soviet Union, the names of these aircraft, the kinds of different brands, were essentially household names, because they were essentially associated with individual designers. So insofar as Aeroflot itself was concerned—and here we're leaving out, like, the military stuff—there were four main designers that everybody knew about. The most famous was probably Andrey Tupolev, and he actually got his start in aviation way back in the 1920s. He was sort of the dean, shall we say, of Soviet aviation designers. He was the most senior member, and it was his design bureau that actually designed the first passenger jet liner called the Tupolev-104. But then there were three others that you mentioned. There was Oleg Antonov. Then there was also Alexander Yakovlev, and then there was Sergei Ilyushin.
The way it was set up was that these were the four main design bureaus. And what was interesting and unique about this is that insofar as actually identifying a product like an airplane with an individual person—this was a rarity in Soviet history. So you have a lot of consumer items in the Soviet Union, but it's actually really rare to find a consumer item that was branded with an individual designer.
People often tell me: well, the major other example is the Kalashnikov—not really, like, a consumer item, but an item that was very well recognized and that was also tied to an individual person. What I find interesting about the design bureaus and the branding in my research is that these were also mini personality cults in a way. And in the 1950s and ‘60s, what I find interesting is that the publicity around these designers is also, alongside the advertising question that we were considering earlier, a way of essentially telling the Soviet population that we have these really good designers, we have this technocratic class of engineers and managers. There are both really cutting-edge engineers, they do all this stuff independently of the West—which is not necessarily true—and there are also really good managers. And these are the airplanes that that you're flying.
And there's also sort of, in the publicity around these designers, there's a little bit of a sense of choice—which is kind of interesting, in the sense that in the Soviet Union, we don't really think about a lot of choice when it comes to consumer items. And it's not like the average passenger got to choose the specific kind of airplane that they got to fly. But the average passenger, if they were actually flying on a regular basis—they knew that there were different kinds of airplanes. There were different levels of comfort. And I've interviewed some who paid really close attention to this stuff, just like they do in other countries, who become fans and aficionados of aircraft design and what goes on inside and so on and so forth.
Now to the question that you asked about technology transfer. That's really interesting because that identifies one of the Soviet specificities of this whole project, which is that the technology that they depended upon from the West was obviously kept secret from the Soviet population. They would never really admit to the Soviet population that they drew sometimes on the designs of either entire Western aircraft, but particularly engines. Engines are probably the most important technological component of any aircraft. And we know that in the immediate postwar period, actually, that the Soviet aviation industry was actually able to legally purchase British engines from the British aviation industry. That did not make the Americans too happy, and there’s a whole interesting conflict between the United States and the British over that.
So that's one example of technology transfer. Another one is that sometimes you look at some of the Soviet airplanes and they just look like a Soviet version, essentially, of an airplane that you see flying in the West. So, for instance, a really good example later on in the Soviet period is the Ilyushin-86, which was the Soviet Union's first wide-body aircraft, which people say, or designers say, that in some ways this was essentially patterned upon wide-body aircraft that had already been manufactured in the West, particularly the Boeing 747. So the technology transfer question is really interesting because again, it essentially highlights the extent to which the Soviet state would go to hide that information from the domestic population, because they wanted to present to the domestic population this notion that they were doing this completely on their own.
IT: And then at some point, a relationship develops, or a competition develops—I would say an unlikely competition develops—between Aeroflot and Pan Am. And that is a whole chapter of its own. Tell us about that.
SH: Yeah, this is one of my favorite stories. Let's just start at the beginning. Pan Am was obviously a really large American airline that also had its routes, just like Aeroflot, back in the 1920s. What's interesting about Pan Am is that it was the reverse of Aeroflot. Pan Am flew almost all of its routes outside the United States. It was a predominantly international airline, and it had very, very few routes within the United States, and only got those in the 1980s, and that's a whole other story. But what you've got to understand about Pan Am, which is really fascinating, is that Pan Am, starting in the 1930s and throughout World War II and after, became what was known as the “chosen instrument” of US foreign policy. In other words, already back in the ‘30s and during World War II, the US government actually would use Pan Am to do things like build military air bases in Latin America and also help the war effort during World War II and then also after the war. And in fact, Pan Am was even critical in developing Ariana Airlines in Afghanistan and also competing with Aeroflot insofar as Afghanistan was concerned in the 1970s.
Now, insofar as the Pan Am Aeroflot relationship is concerned, what's interesting there is that in the mid-1950s, under President Eisenhower—Eisenhower is very well known for pushing these people-to-people exchanges between the United States and the Soviet Union—and in the mid-1950s, the Americans and the Soviets begin to talk about forging, at some point in the future, some sort of direct air link between the two countries. In 1958 they actually put this down in writing in an exchange agreement—technological and educational exchange agreement—where they say that this is going to be our goal. We're going to have a direct air link between our two countries, this is part of trying to figure out some way of getting along and having some sort of direct exchange.
Now, Pan Am was designated as the American airline that would eventually get that route—again, because it has this already built-in relationship with the American government, as serving US foreign policy interests abroad as its so-called “chosen instrument.” And obviously, Aeroflot was the only Soviet airline. So that would be the one who would actually fly this route.
Now, that was the intention; let's say that was written down on paper in 1958. But it took 10 more years before they actually began the air route, which is a really long time. If you look at the 20th century history of how countries create these bilateral civil air agreements, those are usually done within about a year. But the Soviets and the Americans took a really long time to do this. And the main reason, the structural reason, is that the Americans had a lot, shall we say, less interest actually in creating this air route than the Soviets. The Soviets craved having this air route. So getting to that is actually really interesting, before we eventually get to ’68.
Why did the Soviets want this air route more than the Americans? A couple of really good reasons for that. First of all, for the Soviets, they see a direct air route between Moscow and New York on an ideological level as a way of essentially bringing the capital of global socialism and the capital of global capitalism together and also in friendly competition. So note, for instance, that the air route was not between Moscow and Washington, it was between Moscow and New York.
Another big reason that the Soviets pursued this air route is because it was a way to get the Americans to essentially acknowledge the Soviet Union as an equal on the world stage. In other words, it's a story about parity. And the Soviet leaders, especially Khrushchev, are obsessed with this notion of making sure that the Americans recognize the Soviet Union as a superpower, pay respect to it. And one way to do that is essentially to forge this particular air route.
Another interesting reason is that for the Soviet airline itself and for the Soviet government, flying to New York is a great way of making hard currency. And this is one of the main reasons why already, before they fly to the United States, Aeroflot is actually already flying to a whole bunch of Western European capitals. It's a great way to make money. They're not interested in profit, that's not how the Soviet economy works. What they're interested in doing is using Aeroflot as a source of bringing in hard currency to the Soviet Union.
Now, on the American side, there was a lot less incentive to forge this route. And it was it was mostly political: from the Eisenhower administration all the way through the Johnson administration, which is when the first flights began in 1968, the Americans are mostly interested in forging this air route as a way of trying in some ways to normalize relations with the Soviet Union. But it's not going to be a source of profit for Pan Am. And what's interesting is that Pan Am executives realize that, and they feel that “we were kind of obligated to do this because we are here to basically look after [the] foreign policy interests of the American government.” So Pan Am itself got into this rather reluctantly because they realized this was not going to be a massively lucrative route for them the way that it would be to other parts of the world. But they decided to do it nonetheless. And they were in part inspired by this notion of opening up the Soviet Union to the American population and seeing themselves as, again, the chosen instrument of US foreign policy.
Now, one last thing I'll say before we get into 1968 itself is that between 1958 and 1968, there were all these incidences of the Cold War that kept on intervening in setting up this particular air route. We all know the familiar ones: the Cuban Missile Crisis, you have the Berlin Wall going up, you have the U-2 affair. There are all these Cold War flare-ups that constantly marginalize the air route negotiations. But the Soviets and the Americans would eventually come back to this issue after things would calm down and they would start working on it again. And they finally finished negotiations in 1967. And what's interesting is that in 1968—I mean, this was not a calm year for the Cold War, you have the Vietnam War that's raging. And then, of course, you have the Prague Spring and the Soviet invasion in 1968. And even though those things were going on, the Soviets and the Americans decided, no, this time we're going to forge ahead, and let's actually open up this air route, which they do in mid-July of 1968.
IT: So they opened this air route in 1968. And how does this relationship develop?
SH: Okay. The [short version] of the story is that it's terrible business for Pan Am and it's great business for Aeroflot. The long answer to the question is that over the course of the late 1960s and throughout the 1970s, Aeroflot is just doing great business in the United States. They're constantly asking the Americans for more air routes. They get one to Washington, DC, then they get into the charter business in the United States, and they start flying Americans and Europeans to all kinds of cities in and out of the US. And what I find really kind of fascinating is that the Aeroflot personnel who were sent to New York, they really do enjoy working in a capitalist country, learning how to be a good airline corporation. But for Pan Am, it just doesn't work out for them in the Soviet Union.
Just to tell you, like, a couple interesting stories: Pan Am goes into the Soviet Union in 1968, and I think they're really naive about how the Soviet economy works. So one thing that they do is they're like, okay, we're going to fly to the Soviet Union. So what do we do? We need to start advertising our flights to the Soviet population. So they go to their advertising agency and they say, develop for us, like, a big advertising program so we can get Soviet citizens to board flights to New York; it'll be great. And what's interesting about this story is that they actually come up with this advertising program. But what happens is that hardly any of it actually ends up in Soviet newspapers. I've only found one Soviet newspaper—it’s a local newspaper in Moscow—that ran one small advertisement for Pan Am. But Pan Am had this vision somehow that they were going to advertise throughout the Soviet Union, starting in Moscow, and it never went anywhere. And I think it's just that they didn't really realize that the Soviet state was going to stick to all its restrictions on Soviet citizens not being able to leave the country. And they certainly weren't going to allow Pan Am to freely advertise in the Soviet Union.
In contrast, Aeroflot is going gangbusters when it comes to advertising, not only in American newspapers, but a whole bunch of newspapers in the West and other parts of the world. And they're very much able to do that in the United States in particular.
A couple more anecdotes I think that help to illustrate the Pan Am-Aeroflot relationship and why it was such an advantage to Aeroflot and not so much to Pan Am. First of all, the Soviets, or rather Aeroflot, was constantly able to get more and more of the traffic in between the two countries over the course of the 1970s. And sometimes they did this in really cutthroat ways. One of my favorite stories about this, which really angered Pan Am and eventually the State Department, is that Aeroflot would turn to Intourist, and they would basically tell Intourist: go ahead and cancel the hotel reservations of Americans who are flying to the Soviet Union on Pan Am and then make it difficult for them.
IT: And I just want to cut in and say that Intourist, of course, was the state tourist agency, the monopolist on all of the tours of the Soviet Union.
SH: That's right. So they're basically coordinating with Aeroflot, and the scheme that they came up with, which the Americans were really upset about, is that they would basically cancel the hotel reservations of people who flew in on Pan Am. This would get back to the tourist agencies back in New York City. And what they were told by Aeroflot was, well, these hotel reservations won't be canceled if you just make sure that your passengers buy tickets on Aeroflot and not on Pan Am. So Pan Am is like, how can we do business in this country if we're facing this kind of unfair playing field? That was something that really upset Pan Am and that also upset the State Department.
The way that things then happened in the late ‘70s and early 1980s is that basically because of the war in Afghanistan and also the Soviet crackdown in Poland, first under the Carter administration and then the Reagan administration, the U.S. government scales back the routes and they eventually, in the early 1980s, break off the commercial air routes between the two countries up until around 1986.
Another important flare-up in relations was, of course, the Soviet downing of the Korean Airline plane in 1983. What's interesting about that is that the Americans really react badly against that. And they say absolutely not, we're not going to reopen any kind of aviation links with the Soviet Union after it's done something like that. More interestingly, the European countries—they only imposed sanctions against Aeroflot for about two weeks or more, but not for a very long period of time, because of the Korean Airline disaster (or shoot down, rather), and then they reopen their airspace to Aeroflot.
Now, to bring the story all the way up to the end in 1991, Aeroflot and Pan Am begin flying routes back and forth in the Gorbachev period, roughly starting in 1986. But then the relationship finally comes to an end in 1991. And the great irony here is that it all comes to an end in December 1991—not only when the Soviet Union collapses in that month, but December 1991 is also the month in which Pan Am collapses and goes out of business. So that's sort of these two large empires, very different empires—the Pan Am Empire, if you want to call it, like, an empire, and the Soviet Union—both collapse at the same time. Now, Aeroflot itself, you could say, also collapses and becomes a very different airline. But at least the name and the legacy and the nostalgia around Aeroflot has lasted all the way up to the present.
IT: So you could say that they could claim victory; you could say that in the end, they outlived their main American rival. So [then] the USSR falls apart, and that's when a whole bunch of other airlines appear. And the industry then is really restructured. Is it privatized? What happens to it?
SH: It's a complete restructuring of the Soviet aviation industry—from everything—from manufacturing, safety and its regulation, and then obviously to the commercial aspects of actual passenger flight. Just to take the latter one: basically, soon after 1991, you have the breakup of Aeroflot into almost hundreds of new airlines, which were called at the time the baby Flots. And the best way to think about that is that basically Aeroflot in the Soviet period was organized in discrete administrative units all across the Soviet Union. And a lot of these in the privatization process of the [1990s] essentially became airlines in and of themselves, based upon the administrative unit where they were actually particularly located. Some of these have actually—for instance, the private airline called Ural Airlines—if you look at their own history, they trace their history back to the Aeroflot administrative unit that they were carved out of. They privatized, and they're one of the few large remaining private airlines in Russia today.
So what happens over the course of the 1990s is, again, the main story there is that you have the breakup of Aeroflot into all these private airlines. And then over the next, let's say, 10 to 15 years, what you have is a longer story of consolidation. Most of these airlines cease to exist. They get bought up; there are tons of mergers. In Russia what you have today is five main airlines. In terms of passenger traffic, most of the traffic is flown by three state airlines. So here we're talking about Aeroflot, Rossiya, and Pobeda. And they're part of what's called the Aeroflot Group. And then you have two main private airlines: that’s S-7 and Ural Airlines. Now, in addition to those total airlines in Russia today, there are about 30 to 35, depends on who's counting. Many of those are actually owned by regional parts of the Russian government, like administration. Some of them are private; they're really small. You have various charter airlines. These are all small-scale. But the five big ones are the ones that we pay the most attention to.
IT: So let's move into the present, or, rather, two years ago, when the sanctions were imposed. What happens then? And particularly, the question that interests so many people right now: it seems that Russia has managed to get around the sanctions that were imposed then. How has it happened?
SH: That's a great question. As a lot of people have been studying this particular issue, I guess the short answer to it is that in some ways the Russian state has very effectively managed sanctions and adapted to sanctions not only in aviation, but aviation is like a great window onto the broader question of how well the Russian state has actually dealt with sanctions—not only since 2022, but since 2014. And then the other part of the short end of the story here is that there are some aspects, some rather important aspects, of the aviation industry that the Russian government is not doing so well in terms of adapting to, insofar as sanctions is concerned.
Let's talk first about the successes, shall we say, of how the Russian state dealt with sanctions. They've done two main things. Soon after sanctions hit in early March of 2022, the Russian state very quickly realized, oh my God, we have an airline industry where most of the traffic is actually flown on Airbuses and Boeings and other foreign aircraft that are leased to Russian state-owned and private airlines, so they don't actually own these airplanes. And they realize that the sanctions now are basically calling for all these foreign-owned airplanes to go back to the West, to go back to their owners, whoever they were back in the West. And the Russian state very quickly realized, if they do that, then we're not going to have an aviation system to speak of. There's going to be no more commercial aviation. And I would argue that the Russian state acted really quickly, and they were motivated by both political and economic ideas. The political one is they need to have a viable commercial aviation industry, because this is part of Putin's whole message to the Russian population, that life can go on as normal while we are fighting this terrible war in Ukraine. Therefore, ordinary people's lives, especially those who expect air travel to be a thing in their life, that will not go away.
The most immediate thing that the Russian state did was basically to force all their airlines, both state-owned and private, to hold on to all of their foreign-owned airplanes. The second major thing that they've done is that they've actually spent a lot of money to begin buying up these airplanes. By my count, they have actually successfully bought up about 170 of the 400 airplanes that the Russian state seized back in March of 2022. They have about 230 more to go. But they have this large fund known as the National Wealth Fund that they're dipping into—this is the state, again—and they're buying up these aircraft and then they're turning around and they're leasing these aircraft back to Russian airlines, again both public and private.
Now, a couple of things that I wanted to add before I get to the problems that they're facing in the long term. I think another way to think about the motivation here for the Russian state does actually go back to the Soviet period, which is, again, they want to ensure that the population, especially the population that flies frequently, knows that they're always going to have a commercial aviation industry. And in a way, this really does go back to the Soviet period, because what I found in my research for the Soviet period is that over 50% of people who actually regularly flew on Aeroflot were from the Soviet intelligentsia. In other words, they were what we would consider white-collar workers. So it was a form of public transportation that through its advertising, but also in reality, tended to serve what we could call the Soviet middle class or the Soviet intelligentsia. And that has definitely continued on into the present. When I look at the frequent fliers, the flying public in Russia today, what we're talking about are the middle managers, the businessmen, the technocrats that make up what the political scientist Bryn Rosenfeld calls the autocratic middle class. According to Bryn Rosenfeld—she's a political scientist—her argument is that the Putin regime essentially gains a lot of its support from a middle class that it ties to itself very effectively through all kinds of businesses and state-owned corporations that the Russian middle class tends to work for. And according to her, this is one of the reasons why the middle class in Russia doesn't really gravitate towards democracy. Instead, it gravitates towards autocracy. What I would only add to that is that this so-called autocratic middle class also needs to have essentially a commercial aviation industry. So to make a long story short, Putin's regime is very attuned to that. And they understand that and they go out of their way to make sure that this industry is going to stay afloat for as long as they need to and for as long as sanctions are on the books.
Now to the question about where things are not going so well, shall we say, for Putin's regime insofar as its approach to aviation is concerned. In the long run, [what] the Putin regime has said it's going to do is to basically replace all of the Boeings and Airbuses and other foreign aircraft that Russian airlines fly. They're going to replace all those with completely Russian aircraft. So basically, in summer of 2022, they started, at least on paper, to mount what they call essentially, like, a manufacturing plan that by 2030, the idea is to manufacture 1,036 completely Russian-designed and completely Russian-manufactured aircraft, primarily to replace the narrow-body jets that the Russian airlines have grown dependent upon by using Airbuses and Boeings. When I've been researching that particular manufacturing plan—and they have put some money into it; actually so far, they've put about $3 billion into doing the design and the import substitution and the manufacturing of these aircraft—to me, as the Soviet historian, I was like, wow, this is such a throwback to the Soviet era, because it speaks to this notion of autarky. And Putin has actually explicitly lamented the fact that the Soviet aviation industry collapsed after 1991. So this is part of his whole nostalgia for the Soviet past. And what he often speaks about is that he says, yes, in the 1990s, we became very dependent upon Boeing and Airbus aircraft. And he acknowledges that that was a good thing for airlines at the time. But, he says, times have changed and these sanctions are permanent, so we need to go back to what worked in the Soviet era, which is to make our own airplanes, design them ourselves, and therefore, we will be completely independent of the West, we will be completely independent of Airbus and Boeing, and we will never have to worry ever again about our commercial aviation industry being subjected to these kinds of things.
IT: And how realistic is it for them to get there and to become fully autarkic?
SH: This is such a great question, and it is so fun to think about. The immediate answer to that question is that it's not very realistic, and the Russian state itself admits this, because they keep on issuing these delays to the manufacturing plans. So the plan is actually really well organized, but they're not actually meeting any of the short-term goals of the plan. So there are no new aircraft that are actually being manufactured. The reasons behind that is that it's actually really hard to either build or even revive an aviation industry. When I talk to aviation engineers and others in the field, they say, look, the most critical part of the technology are engines, and they just don't have the engine technology to replace the Western engines that they had been using, obviously, on Airbuses and Boeings. But even on the Russian aircraft—like, the most one that a lot of people know is the Sukhoi Superjet 100. They were actually manufacturing about 10 to 12 of those a year before 2022. But most of the technology inside that aircraft was actually Western technology. Having to replace all of the technology in an airplane, everything from engines to avionics, navigation equipment, [and] landing gears is actually a really, really daunting task.
So my immediate answer to your question is that it's not going to happen. They're definitely not going to build a thousand aircraft by 2030, which is in only six years’ time. And they're going to run into all kinds of problems. I think the biggest problem is that whatever money that the Russian state throws at this, a lot of it is going to end up becoming a victim of corruption. It's not going to go where it has to go is also a problem. I see an emergence of secrecy around aviation manufacturing that's going to make it difficult for the Russian state to actually know what's going on on the ground.
So yes, the prospects are dim. But Izabella, I have to also approach this question as a Soviet historian, and I would also say this…yes, the immediate goals of the plan may not be reached, but I also think about back to the Soviet past—that they would also set out on these grandiose plans; they would not meet them in the short term. But in the long term, they were actually able to establish, shall we say, the infrastructure, the foundations for what, way down the road, they were actually able to build.
I mean, go back to an airplane that I was talking about earlier—the wide-body aircraft known as the Ilyushin-86. It took them a really long time to design and actually manufacture that airplane. It was not as good as the 747. It actually was very inefficient. But they were eventually able to build it. And what I’m essentially trying to say here is that what the Soviet past tells me is that, even though they're not going to be able to manufacture airplanes according to their own schedule and not according to the quality of, let's say, Boeing and Airbuses in terms of range and efficiency and so on and so forth, I do think that if the Soviet past tells us anything, they are going to be able—if they actually stick to this plan—they are going to be able to, at the very least, establish some infrastructure, some funding, some foundation for something that will actually produce some sort of completely Russian-built aircraft at some point, let's say, in the 2030s. It's all going to depend, in some way, on how this war turns out, how long the sanctions remain on the books. But also, even if the sanctions go away tomorrow, what I find [to be] an interesting question is, how willing is the Russian aviation industry going to be to reopening the doors to Western aviation manufacturing? Because right now, they don't have to compete with Western aviation manufacturing companies or technology companies. So there are all these Russian state-owned companies that are working on import substitution, and they're getting steady funding from the state. They're not going to want to lose that and go back to depending upon Western technology. But I think they're going to face some pressure, probably from the Russian airlines themselves who are going to probably want to fly newer Western aircraft again at some point in the future, rather than what's going to end up being not as well-advanced Russian aircraft.
IT: And I have to ask you: we are mostly talking about civil aviation, but what about the Sukhoi? That's obviously military aircraft. Is the know-how there transferable to whatever they're going to do with the civil aircraft, or is that a completely different story?
SH: Yeah, my reading of that is that that tends to be kind of a different story. There is some technology transfer from military to commercial, and this is actually something that worries the US Treasury Department as it's trying to figure out how to essentially enforce sanctions. They're just worried about any kind of technology that can be sort of repurposed for military purposes. I would say that insofar as funding is concerned—like I said earlier, the Russian state has begun to earmark and spend money on trying to essentially build up their own domestic civil aviation industry again. But most of the funding that the Russian state spends on aviation goes to the military sector. So they do build not only fighter aircraft, but they also have quite a lot of manufacturing that's done on heavy transport aircraft. That's actually something that, again, goes back to the Soviet period; they were actually quite good at producing these rather enormous military transport aircraft. So that part of the aviation industry is actually getting a lot of priority funding. And that obviously has to do with the war in Ukraine, for however long that's going to last. I don't see that changing any time soon. And again, that's also a holdover from the Soviet past. In the Soviet past, the Soviet Defense Ministry and the Air Force always had first dibs on the funding when it came to aviation. And Aeroflot was always in second place.
IT: Just to wrap up this conversation, what can the US do to measure the effect of the sanctions and to make sure they are working, if that is our policy priority; what kind of pressure points do we have?
SH: There are lots of different kind of pressure points that the United States can actually turn to. One is that the Russian state has actually turned to other countries to get spare parts for Russian airlines. For instance, they've gone to Turkey, China, Iran, and also the United Arab Emirates in order to find spare parts for a lot of the Russian airlines, because they need these spare parts in order to keep these Boeings and Airbuses afloat. So that's been a question—to what extent is the United States sort of able to kind of put pressure on those countries to prevent the spare parts, and there’s kind of a mixed story going on there. Another example, which actually just came into the news just this past week, is that this past week the United States Treasury Department and the State Department came up with a whole new package of sanctions to essentially retaliate against what they say is the Russian army's use of chemical weapons in the war in Ukraine. So there's a whole bunch of new sanctions that have come on the books specifically in retaliation against the use of chemical weapons in Ukraine.
And what's interesting is that there's one particular set of sanctions that have been levied against the Russian state-owned low-cost carrier Pobeda that we were talking about earlier. Now, this is the first Russian airline that has been specifically sanctioned. And what's interesting about the statement that the State Department came up with, if you read the tea leaves, is that basically what seems to have been happening is that Pobeda was not only going to these other countries to find spare parts for itself, but it seems, at least from the State Department's perspective, that Pobeda was also essentially the main conveyor of spare parts from outside of Russia to the entire Russian airline industry as a whole. So what I see happening here is that the United States figured this out and they decided, okay, if we can really go after this one airline, then maybe we can choke off the source of spare parts that the whole Russian airline industry is getting as a whole.
And another wrinkle to this has to do with the really complex relations between the United States and India, because what it seems has been happening is that Pobeda was actually getting some of its spare parts from Indian manufacturers, and it was doing so because Pobeda was actually relying upon its relationship with Mahan Air, which is the Iranian airline. And so what I think is actually going on here is that the State Department is essentially signaling to India, as much as it is to Russia—it's basically signaling to India, please stop dealing with the Russian state insofar as allowing their industry to purchase spare parts is concerned.
IT: Fascinating story. Obviously, to be followed and to be continued. Steve, thank you so much for joining us today.
SH: Thank you so much, Izabella. It was great.
IT: I am Izabella Tabarovsky. Thank you for listening, and we look forward to having you with us on the next episode of The Russia File.
