During the period 1990-2000 the Russian government has launched four state conversion and restructuring programmes. A privatisation process comprising large parts of the military-industrial complex (MIC) has been completed. Despite large defence spending cuts, decreased military-industrial production, conversion and privatisation there was no peace dividend for Russia. This report argues that almost all of the factors that have hampered successful large-scale conversion in Russia can be referred to the Soviet heritage of structural militarisation of the economy and its system of industrial mobilisation preparedness. This system is partly still existing and governs the activities in the defence industry sector. Because of this, two concerns has been of overriding importance and to a large extent shaped the federal conversion policy instruments: national security and employment. Apart from the formal objectives of using the military-industrial resources to enhance the quality and quantity of civilian products, thereby contributing to increased Russian welfare, the Russian government wished to keep a nucleus of the MIC´s companies, effectively use the work force, R&D and production potential in the MIC, minimise weapons production costs etc. During the years of transition a majority of the companies has adopted some kind of survival strategy rather than a constructive long-term reformation strategy. The overall picture is one of survival through exports, military-technical co-operation, limited state orders and partial conversion (diversification). Only in a few cases has conversion been successful. This in turn means that Russia has retained a larger part of the Soviet military-technological capabilities than was predicted by many Western experts in the beginning of the 1990s. Entering the era of high technology warfare will, however, be much more difficult.