About 70 percent of Russia’s $4-$5 billion in arms exports last year went to China and India. For President Vladimir Putin, that is not enough eggs in not enough baskets. Putin pushes market expansion and diversification at every opportunity.
During a trip to Vienna in February, Putin tried to swap MiG-29s to Austria, offering to take Russian debt securities in payment. That was no deal. He had better luck in South Korea in March, reaching preliminary agreement to sell at least $500 million in military equipment–transport aircraft, air trainers, hovercraft, helicopters and possibly the vaunted S-300 anti-aircraft missile system–for a mix of cash and debt. Arms sales figured also in recent talks with Vietnam and Nigeria, and most dramatically last week with Iran.
Iran bought about $5 billion in arms from Russia in 1989-1995, when Moscow entered an agreement with the United States not to conclude new arms contracts. Russia repudiated that agreement late last year, and during President Mohammad Khatami’s visit to Moscow last week, there was talk–but apparently no deals–about a wide range of spare parts for military aircraft and armored vehicles. Anti-aircraft systems–perhaps including the S-300–are also in the mix, as are licenses for production in Iran of cargo aircraft. Final agreements could be signed by midyear.
These possible transactions are in addition to a renewed Russian commitment to complete work on two nuclear reactors under construction at Bushehr. The United States has criticized Russian involvement in the project, which may contribute to an Iranian nuclear-weapons program.