In 2010, Russia managed to keep the position of the world’s second largest exporter of home produced weapons and military hardware. According to the forecasts based on the current backlog of orders, in 2011 Russia with $10.1 billion will be behind only the US with $28.6 billion, while being noticeably ahead of other members of the Five – Germany, France and Great Britain.
The 2010 results reflect the general trend of recent years. Both Russian experts and experts of the Stockholm International Peace Research Institute (SIPRI) came to this conclusion regardless of different methods of estimation. Now Russia, which supplies weapons and military hardware to 80 countries, accounts for almost one quarter of the world arms exports while the share of the US is 30 %.
The way towards this leading position was not easy for Russia. It could use its previous experience from the times of the Soviet Union only partially. In the last days of the USSR’s existence arms exports volumes exceeded $20 billion (in prices of that time). However the Soviet Union supplied most of the arms on credit and sometimes even for free. The return to common trade relations was difficult and gradual. According to preliminary estimation, the GDP of Russia’s arms export grew to $10 billion in 2010 from $3.7 billion in 2000.
Over the last ten years, China and India were the main importers of the Russian arms. At the same time Russia was winning back the markets of Syria, Vietnam, Libya, Algeria, Sudan. After a number of countries decided to diversify markets Russia managed to sign big contracts with Malaysia, Indonesia, Venezuela and Iran. Moreover it managed to enter the market of the countries, which earlier tended to cooperate with Western arm producers – Kuwait, Saudi Arabia, Greece and South Korea.
Russia’s aircraft and aviation materiel, which are in great demand among foreign clients, account for almost half of its arms exports.
Large shipments of Su-30MK heavy combat aircraft and MiG-29 medium combat aircraft were supplied to China and India. Algeria, Venezuela. Malaysia, Vietnam, Indonesia, Ethiopia, Sudan, Bangladesh, Myanmar, Libya received smaller shipments of this combat aircraft while carrier-based multirole MiG-29K fighters were supplied to India. China and India acquired not only the finished aircraft but also the technological sets for the licensed assembly of Su-30MK. Besides planes, Russia also exported Mi-35M combat helicopters to Brazil and Venezuela, Mi-17 transport helicopters of different modifications to India and Venezuela.
The share of air-defense means in Russia’s arms exports was smaller but also quite significant. China bought more than 10 divisions of long-range S-300 PMU-1, S-300 PMU-2 systems, Vietnam bought two divisions of S-300MPU-1, Iran bought Tor-M1 complexes and Syria bought short-range anti-aircraft missile Strelets systems.
As for the Navy segment, again cooperation with China was very profitable for Russian arms producers. Beijing bought combat ships, submarines, ship-based missile systems. India has replenished its fleet with new Russian frigates. Several years ago India also bought an aircraft-carrier (former “Admiral Gorshkov” cruiser) which is now being upgraded by Russian specialists. Libya has bought Molniya class missile boats from Russia.
The weapons for the ground forces have been in great demand over the last ten years. Only India alone bought about 700 Т-90С tanks. Big shipments of weapons and military hardware (tanks, artillery systems, small arms) were sold to Venezuela, Libya, Kuwait, United Arabic Emirates and Algeria and a number of other countries.
Experts estimate that Russia has a good backup to strengthen its position on the world arms market in 2011. According to Igor Korotchenko, head of a Moscow-based think tank on the international arms trade, “expected total amount of contracts, to be signed in 2011, will significantly exceed the number of supplies and this will increase Russia’s backlog of export orders”. The think tank expects that in 2011 Russia’s arms exports volume will reach at least $10.14 billion.
Geographically, the Asian-Pacific region will keep its leading position ensuring more than 60% of Russia’s revenues from arms sales. It will be followed by South America and North Africa accounting for 15% and less than 13% of Russian weapons’ imports respectively.
As for the categories, aircraft and aviation materiel comes first accounting for $3.38 billion of the revenues (33.4% of total arms exports volume). This includes fighters, combat training planes, transport aircraft, base patrol aircraft, strike and anti-submarine helicopters and multipurpose helicopters.
The Navy segment will account for 20.7% ($2.10 billion) of the arms exports. Here Russia has signed contracts on selling submarines, combat ships, motorboats and small assault landing ships.
Armored vehicles come third accounting for 17.4% ($1.76 billion). In 2011, Russia plans to export tanks, armored vehicles as well as air-defense systems and small arms.
China, India, Venezuela, Indonesia, Libya, Vietnam, Brazil and some other countries will remain among the main importers of Russian weapons, with a number of new contracts to be signed this year.
Nevertheless it would not be correct to present the things as if Russia’s arms sales always go smoothly. Omitting the competition with other exporters, which has become tougher after Russian arms producers entered the market traditionally controlled by the US, Israel, Great Britain and Germany, we would like to focus on the domestic problems. While the reputation of the Russian weapon is still excellent in the eyes of foreign clients this is not always the case when we speak about suppliers and producers. In recent years contracts’ violations and ruined agreements have become more frequent thing, which is very disadvantageous for Russia.
Let’s take for example the case when Algeria returned MiG-29 aircraft due to poor quality of specific parts or when India rejected the upgraded anti submarine Il-38 aircraft due to its missiles system’s failure. Russia has also failed to upgrade the aircraft carrier it sold to India. The deadline for the upgrade expired in 2008. Under a new contract Russian defense sector companies should complete the work by 2012. Meanwhile the cruiser’s price has already doubled to $2 billion.
Recently Russia has refused to supply S-300 systems to Iran. Moscow and Teheran signed the contract on supplying five divisions of S-300-PMU systems worth about $800 million to Iran back in 2007. But Russia kept dragging on its implementation as if it was waiting for June 2010, when the UN’s Security Council adopted a resolution on new sanctions against Iran.
Russia also has serious difficulties with the production increase and the development of scientific sector of the defense industry complex.
Lack of specialists and slow upgrade of production facilities, which have already been loaded with new orders for years to come, the deficit of fresh and purely Russian design and know-how solutions – all these things threaten the implementation of the contracts and may affect positive dynamics of Russia’s arms sales.
