Russia’s wartime defense production system has become a mechanism of coercion rather than coordination, with criminal law enforcing industrial output. 

The self-immolation of Vladimir Arsenyev, head of the Volna Central Scientific Research Institute, illustrates how rigid pricing, legal threats, and administrative pressure converge inside Russia’s arms sector. 

Arsenyev, 75, set himself alight on Red Square on July 26, 2024, after his firm fell into financial distress while fulfilling Ukraine war contracts, according to Reuters interviews and court records.

Since February 2022, when President Vladimir Putin ordered the invasion of Ukraine, defense manufacturers have faced mandatory output increases under contracts priced by the defense ministry. 

Failure carries criminal liability. A 2017 law, expanded in September 2022, allows prison terms of up to 10 years for disrupting state defense orders. Reuters found at least 34 people charged under these provisions since the war began, including 11 company heads.

“They Are Always Right”

Volna specialized in electronic modules for helmet-mounted tank communication systems. 

Before the war, it produced no more than 5,000 units annually. In September 2022, it signed contracts to deliver more than 50,000 modules within one year, a tenfold increase. 

Although advances covered about 80% of some contracts, Arsenyev said state-set prices failed to cover costs.

By April 2023, Volna had fallen behind schedule. A minority shareholder, Sergei Mosiyenko, warned authorities. 

“The defence ministry is the customer,” he told Reuters. 

“They are always right.” His letters triggered inspections by Rostec, the defense ministry, and security services. Arsenyev said these probes disrupted production even as his firm attempted to meet deadlines.

Stalin’s Shadow Returns

The punitive tone was reinforced publicly. In March 2023, Dmitry Medvedev, deputy chair of Russia’s Military-Industrial Commission, quoted Josef Stalin threatening that weapons producers who failed to deliver would be “smashed like criminals.” The signal was unambiguous. By January 2023, Putin urged prosecutors to “strengthen scrutiny” of defense contracts.

Reuters identified at least five defendants sentenced to prison terms of up to six years. Fifteen others were detained pre-trial. One, Sergei Kryuchkov of GES-Montazh, received five and a half years for misusing contract funds, including leasing three BMW SUVs, court records show.

Supply Gaps and Fallout

Volna’s dispute escalated in September 2023 when the defense ministry cut nearly half the price paid for its modules, citing automation-driven cost reductions. Luch Factory, which assembled the final devices, is seeking to recover more than 65 million roubles ($824,900) in advances. A judge later ruled the price cut disrupted the 2024 defense procurement program.

After weeks in hospital with severe burns, Arsenyev returned to work. His firm downsized and lost major orders. The only official response to his protest came in October 2024, when a court fined him for staging an unauthorized demonstration near the Kremlin.