Publication: Monitor Volume: 7 Issue: 81

Russian press reports published over the past month have highlighted what they say is a new push by the Kremlin to diversify the country’s arms export client base. Current estimates place total Russian arms export revenues for last year at between US$3.68 billion and US$4 billion. That is a gain over the 1999 figures, which Russian sources put at approximately US$3.4 billion. Those sales have gone overwhelmingly to India and China, however, which over the past decade have been by far the largest purchasers of Russian military hardware. According to one report, Russian arms exports to India and China last year amounted to approximately 90 percent of Russian arms exports overall. Given that arms exports to these countries are not expected by Russian experts to remain at these high levels over the medium and longer term, Moscow now faces the urgent task of finding new customers for its military hardware.

If Russian reports are to be believed, this need will take Russian arms merchants to the far corners of the globe, where they will seek not only to renew military-technical cooperation with former Soviet client states, but also to peddle arms in earnest for the first time to a host of Asian, African and Latin American countries. With respect to Latin America, this policy could bring Russian arms into the backyard of the United States, and exacerbate tensions between Moscow and Washington. More generally, Moscow is said also to be willing to consider arms dealings with countries considered by the United States to be “rogue states”–another move likely to set Russia and the United States at odds.

And the push could be an aggressive one. Russian sources have long made it clear that a restructuring of Russia’s arms export hierarchy, which President Vladimir Putin launched late last year, is aimed to a significant degree at improving the sector’s ability to peddle weapons abroad. And one top Russian defense official, Boris Kuzyk, director of the New Programs and Concepts industrial holding company, has said recently that Russian defense firms could increase the total value of their exports to US$6 billion if they clawed their way back into markets lost after the collapse of the Soviet Union. Kuzyk called for building a long-term foundation for Russian arms sales by maintaining cooperation in this area with China and India while also stepping up military-technical cooperation with Iran, Egypt, Algeria and Syria. In a new book published by a group which includes Kuzyk, Russian authors reportedly argue that the export of arms is one of the sole niches in the world high technology market in which Russia can compete in effectively, and that the government should therefore invest in the sector accordingly.

Other analyses of likely Russian arms export policies point to a new push by Moscow to sell arms in Africa and Asia. One report suggests that in Africa, the targeted markets are Nigeria, Angola, Libya and South Africa, while attention in Asia will be focused on South Korea and Vietnam. It was with this strategy in mind, the reports observes, that Russia’s president used a host of recent bilateral meetings to push arms deals with the leaders of Nigeria, South Korea and Vietnam. Those deals have not been finalized, but could provide a significant boost to Russian arms export efforts.

Moreover, according to articles published in recent days, Moscow has launched a new push this month to increase arms sales to Latin American countries. This effort is apparently keyed to the LAD-2001 arms fair near Rio de Janeiro in Brazil, where the Russian state arms trading company Rosoboroneksport intends to display a wide variety of Russian weaponry, including helicopters and fighter planes. According to one Russian source, sales to Latin America currently total between US$80 to US$140 million per year, and make up only 3-4 percent of total Russian arms sales. Russian arms experts suggest that the region could become fertile ground for Russian arms dealers, and point especially to what they say have been promising talks with Brazil, Argentina and Chile. Moscow also held arms talks earlier this month with Venezuela during a visit to Moscow by that country’s Defense Minister. Moscow apparently sees tensions between Venezuela and the United States as a potential opening for sales of Russian weaponry to Caracas (The Russia Journal, April 6; Nezavisimaya gazeta, April 21; Vremya MN, April 18, 24; Reuters, April 17; Military News Agency, April 18).

Whether these stepped up Russian efforts to peddle arms will bear fruit is another question. Poor organization and a failure to control competing interest groups have hampered Russian arms sale efforts over the past decade, and the degree to which the Kremlin recent reforms are successfully at rooting out these problems will help determine Russia’s future success in the arms export arena. But those were not Moscow’s only problems, and the others may be harder to overcome. They center particularly on the government’s financial difficulties, which have constrained its ability to invest in the development of new military technologies while simultaneously precluding it from offering attractive credit terms for arms purchases. The last has been a particularly serious impediment to increased arms sales. The Russian government’s currently more healthy fiscal situation could help to overcome some of these obstacles, but is no guarantee that Moscow will make inroads into what has been a contracting and increasingly competitive international arms market. But the stakes for Russian arms producers is high: Procurement and research and development funding in Russia is set to rise only modestly over the next few years, which means that the survival of many of Russia’s hundreds of defense concerns could depend in large part on their ability to make money abroad.