Publication: Eurasia Daily Monitor Volume: 4 Issue: 42

Russian President Vladimir Putin, having successfully centralized the country’s energy companies, is now pursuing similar structural reforms in the country’s armaments industry, seeing great opportunities for expanding exports worldwide in 2007.

First Deputy Prime Minister and Minister of Defense Sergei Ivanov said that in 2006 Russian arms exports were worth $6.4 billion, with a projected value for 2007 of 7.5 billion. Ivanov noted that while India and China together account for 80% of Russia’s arms exports, that share is shrinking as the country diversifies its export markets. China currently receives about 90% of its arms imports from Russia, at a cost of up to $3 billion annually; Beijing thus makes up 40% of Russia’s total arms exports (, February 26).

Russia currently supplies weapons to more than 60 countries, and Russian exports of spare military parts and services in the last four years has increased 1,000%. In 2006 Russia’s military industry grew by 110%; broken down by sector, this raise would be: aircraft increased 125%, missiles by 114%, weapons production by 108.7%, ammunition and military chemistry by 110.7%, and shipbuilding by 84% percent (RIA-Novosti, February 20). Ivanov added that all 2006 contracts were recently finalized (Interfax, February 20).

Russia’s rising weapons exports are a stunning turnaround from the disorganized state of the Russian military-industrial complex following the 1991 collapse of the USSR, when a lack of internal orders combined with rising inflation and inefficiency to idle many massive factories. Last autumn, a U.S. Congressional study reported that the United States is no longer the world’s largest supplier of arms to developing countries, having been overtaken by Russia and France. Russian sales to Tehran as increased, as the Iranian economy was strengthened by rapidly rising oil prices (Radio Netherlands, October 29, 2006).

The most striking sign of Russia’s newfound confidence in the international arms market is Rosoboroneksport’s attendance at the IDEX 2007 International Defense Exhibition and Conference in Abu Dhabi, February 18-22. More than 900 exhibitors from 50 countries attended IDEX 2007, the world’s largest tri-service defense exhibition (Maktoob, February 25). Rosoboroneksport’s display included more than 500 defense and dual-use state-of-the-art Russian military products, including T-55, T-62, and T-72 main battle tank upgrades and components specifically designed for Middle Eastern climatic conditions, the Kornet-E anti-tank missile system, the S-300PMU-2 Favorit surface-to-air missile systems, helicopters, and information about Project 636 low-noise submarines carrying the Club-S missile system (Rosoboroneksport press release, February 16). On the last day of the exhibition Rosoboroneksport head Nikolai Dimidyuk said that more than 15 delegations had visited the Russian exhibition, with the United Arab Emirates and other Persian Gulf nations showing particular interest.

According to Dimidyuk, Rosoboroneksport currently has bilateral arrangements with Saudi Arabia, Kuwait, Yemen, Morocco, Libya, Egypt, and Qatar, because “products of the Russian defense sector have always attracted our partners by high technical and battle standards, reliability and affordable prices. Air defense systems, anti-tank systems, armor, fighters, helicopters, and small arms are in high demand” (Kazinform, February 22).

Russia is also advancing its arms sales into traditional U.S. Middle Eastern markets. Federal Service for Military Technical Cooperation director Mikhail Dmitriev said that the Middle East represents 17% of Russia’s defense export market, adding that Moscow has reported $6.5 billion in arms exports for 2006. Dmitriev added, “Previously, Russia didn’t pay much attention to this region.” KPB Instrument Design Bureau chief Alexander Rybas said that Russia will export 50 Pantsir missile systems to the United Arab Emirates by 2009 (Kazinform, February 20). At IDEX, Russia’s KBP won $96 million in new contracts for various military systems (Khaleej Times, February 23).

Putin’s decrees now mean that Rosoboroneksport is Russia’s sole state agency for Russian exports of defense products, technologies, and services. Of the principal armament export companies, only the Sukhoi and MiG aircraft design bureaus remain outside of Rosoboroneksport’s growing empire.

Russia is expanding its footprint among its traditional allies. Last month the Russian-Indian Intergovernmental Commission on Military-Technical Cooperation in New Delhi agreed to license production of the aircraft engine RD-33 series 3 for India’s MiG-29 jets (Rosoboroneksport press release, January 24). Rosoboroneksport is also looking at Latin America; last year’s Russian-Venezuelan arms agreement for Kalashnikovs and aircraft provoked a stiff rebuke from Washington.

The monopoly’s influence is even expanding into NATO. In December during the sixth meeting of the Roundtable on Weapon System Modernization, attendees at the Russia-NATO Council discussed potential research and industrial cooperation with Russia, with topics including modernization of Russian-Soviet-made armaments and military equipment operational with some recent NATO member states (Rosoboroneksport press release, December 5, 2006).

Russia’s rosy arms export picture may be about to hit a significant international snag, however, as United Nations Security Council members convene in London to consider intensified sanctions against Iran, possibly affecting arms imports. In late 2005 Rosoboroneksport signed a $700 million contract to supply Iran with 29 Tor M1 missiles. The Almaz Antei Tor M1 system can engage aircraft and cruise missiles at a range of up to six miles (RIA-Novosti, November 25, 2005). Russia recently finished fulfilling the order, and Iran successfully test fired the system last month (Deutsche Presse Agentur, February 26).

Whatever Washington’s response to Russia’s exports to Iran, the recent IDEX show provides convincing evidence that foreign markets seeking rugged, reliable, and relatively inexpensive military equipment are increasingly looking eastwards, as Putin expands military sales, a trend that seems inevitable for the foreseeable future.