Publication: Monitor Volume: 6 Issue: 203

Hard-pressed Russian arms makers, anxious to penetrate into new markets, appear to have suffered two setbacks this month. One involves a long-standing Russian effort to sell Kilo class diesel submarines to South Korea. The other centers on Russian hopes of winning a competition for a lucrative helicopter deal with Turkey. In both cases the Russian effort appears to have foundered, in part, on two conditions which have proven such a barrier to Russian success more generally in the international arms market: the political ties of many arms customers to the United States and the often well-established defense ties between these same countries and Western arms makers. For Moscow the need for breakthroughs in this area is crucial. To date, post-Soviet Russian arms exporters have had their share of successes, and the country has raised its arms export revenues. But Moscow still depends far too heavily on two major arms customers–India and China–each of which is looking to develop its own military industrial sector in the years to come.

Russian naval sources professed to be surprised last week by a South Korean decision to forego the purchase of three Russian Kilo class diesel submarines. The deal was estimated at US$1.1 billion, and was to have served as partial repayment for Moscow’s US$1.75 billion debt to Seoul. Since 1996, Russia has delivered T-80U tanks, BMP-3 armored personnel carriers and Igla light anti-aircraft complexes to South Korea to pay down the debt. In May of this year, a group of South Korean sailors reportedly visited Russia’s Pacific Fleet headquarters in Vladivostok and took a ten-day trial run on a Project 877 diesel submarine. According to Russian sources, the Korean delegation, which was given a broad exhibition of the subs features and capabilities, was impressed with what they had seen. In the end, however, South Korea’s Defense Ministry reportedly decided that the Russian subs were not necessarily up to world standards. Seoul was said also be concerned about possible problems down the road in acquiring spare parts (AVN, October 24; Vremya MN, October 25).

Russian hopes for a successful conclusion to the sub negotiations may have been inflated to begin with. As early as last summer, government leaders in Seoul were reported to be considering buying the vessels primarily to improve political relations with Russia. Even then, however, there were reports that South Korean military leaders did not want the Russian subs. They were said to consider the Kilo class vessels less advanced than the diesel subs Daewoo is already building in South Korea. What the South Korea military leadership really wanted, reports said, were European submarines and European submarine technology. They hoped to use that technology to improve the quality of subs built in South Korea (see the Monitor, September 1, 1999).

Russian hopes have perhaps not been as high about the possible helicopter deal with Turkey, but government officials have continued to push for the sale because of the large amount of money involved and because they believe it could open to the door to additional Russian arms sales to Ankara in the future. Along with a possible agreement to bring Russian gas to Turkey, the helicopter deal–and broader military-technical cooperation–appeared to dominate discussions during Russian Prime Minister Mikhail Kasyanov’s recent visit to Ankara.

The deal is indeed a big one. At present, the Turks are said to be prepared to spend US$4 billion on the purchase of 145 military attack helicopters. Earlier this year five groups were competing for the tender: Russia’s Kamov (actually part of a Russian-Israeli joint effort), American Boeing and Bell Helicopter Textron, Eurocopter (a European joint venture) and Italy’s Agusta. This past summer, however, three of the groups were eliminated from consideration. Ultimately the Turkish government chose Bell Helicopter Textron’s King Cobra. Ankara nevertheless kept Kamov’s Ka-50-2 Erdogan, which would be produced in conjunction with Israel Aircraft Industries in the running. That situation will prevail until the deal with Bell is finalized and is approved by the U.S. Congress. Russian observers attributed Bell’s success to the intense pressure exerted on Turkey by the U.S. government. Experts also pointed, however, both to longstanding U.S.-Turkish defense ties and to the fact that Turkish forces already use Bell’s model 205 helicopter, which is similar to the King Cobra (The Russian Journal, July 29).

Despite the fact that the United States clearly has the inside track on the helicopter deal, Kasyanov appeared during his visit to Ankara to play up the chances of Russia’s Kamov and to suggest that Russian-Turkish defense ties more generally might soon get a big boost. Following a meeting with Turkish Defense Minister Sabahattin Cakmakoglu, for example, Kasyanov was quoted as saying that “Russia has a very high potential for developing military-technical cooperation with Turkey. Russia may sell to Turkey not only helicopters, but also other types of armaments” (Itar-Tass, October 24). Russian sources suggested that Moscow might be particularly interested in a Turkish tender for some 1,000 new tanks by the year 2013, a deal estimated to be worth US$8 billion (Reuters, March 6).

Several Russian newspaper reports on the talks in Ankara, however, contradicted Kasyanov’s public optimism on the question of defense cooperation with Turkey. Both Izvestia and Kommersant suggested that Moscow’s chances of overcoming the U.S. advantage in the helicopter competition, and Izvestia even claimed that talks on military-technical cooperation between the two countries had not taken place. Kommersant, meanwhile, made the obvious point that Turkey’s failure to name a winner in the helicopter tender is aimed at exerting pressure on both Moscow and Washington and, presumably, at pushing down the prices at which they are offering their helicopters.

With regard to the Russian Erdogans, at least, the pressure appears to be bearing fruit. Aleksei Ogarev, the director of the Russian state arms trading company Rosvooruzhenie, suggested to reporters that the Russian side had lowered its price for the 145 Kamov’s roughly by half, and had also expanded the scope under which it would grant Turkey licenses to produce Russian helicopter technology. The Russian bargaining suggested that Moscow is continuing to press the fight for the helicopter contract, and raises the possibility that the United States may have to respond in kind (Izvestia, October 25-26; Kommersant, October 24; Russian agencies, October 23-25).

Russian General Staff chief Anatoly Kvashnin, meanwhile, may soon be heading to Ankara for additional talks on Russian-Turkish defense cooperation. Assuming that the U.S. sale will not yet have been finalized, the helicopter deal will presumably be high on his agenda as well. In addition, talks in Ankara reportedly touched on a possible visit by President Vladimir Putin to Turkey sometime next year. Earlier this year Putin intervened personally in Kamov’s effort to win the helicopter tender. The Russian president reportedly pushed a package of benefits which would sweeten the deal Kamov is offering (Russian agencies, October 24; The Russia Journal, July 29).