Arms export has been and remains for Russia not only a profitable business, but also a very sensitive area of international relations. "Vlast" understood how the process of arms trade had changed in recent years, what was slowing it down, and what, on the contrary, pushed it.
According to Vlast, by the end of the year - presumably in November - President Vladimir Putin will hold a meeting of the Commission on Military-Technical Cooperation (MTC) with foreign states, where he will sum up the preliminary results of the year in the field of arms exports. According to the Federal MTC Service, over the past 11 years, export deliveries of Russian arms have tripled - from $ 5 billion to $ 15.3 billion, and the order book is stable at around $ 50 billion. The rapid growth occurred against the backdrop of a variety of problems. However, there are practically no doubts that in 2015 the indicators achieved earlier will at least remain: the unstable situation in the Middle East and the awareness of the real threat from the actions of the Islamic State terrorists contributed to the intensification of relations with old partners and led to the emergence of new customers.
Today, Russia is bound by agreements on military technical cooperation with more than 90 states, and firm arms contracts have been concluded with at least 60 countries. Despite the impressive figure, most of the revenue comes from only a few of them - the customers of Russian equipment and weapons have traditionally been major players like India, China, Algeria, Venezuela and Vietnam. Recently, they have been joined by countries like Egypt and Iraq. But even such a set of clients makes it possible to relatively calmly hold the second position in the global arms market with a share of 27%, surpassing only the United States - their figure is 31%.
Over the past few years, the arms market has undergone significant changes. A number of friendly states have changed their leadership, which, according to a Vlast source close to the special exporter of Russian weapons Rosoboronexport, is almost always fraught with problems: who knows you personally. The emergence of a new leadership in the country in some cases is really critical, since negotiations have to start virtually from scratch because of his unwillingness to take on the obligations of his predecessors, confirms another top manager of an enterprise in the Russian military-industrial complex.
Under Hugo Chavez (pictured), Venezuela decided to purchase Russian weapons worth about $ 4 billion; his successor as president reduced the scale of military-technical cooperation with Russia
Photo: Miraflores Palace / Handout, Reuters
This, for example, happened with Venezuela after the death of Hugo Chavez and the arrival of Nicolas Maduro. If during the first 12 contracts were signed with a total amount of up to $ 4 billion (for Su-30 MK2 fighters, Mi-17V, Mi-35M, Mi-26T helicopters, as well as for the Tor-M1E, Buk-M2E anti-aircraft missile systems, S-125 "Pechora-M" and the newest - "Antey-2500"), then at the second talk about such a scale was no longer: in 2014, experts were able to identify only one contract - for the repair of ten Mi-35M helicopters. "Under Chavez, we signed a large package contract, and what is now being presented as a decline in relations is just the completion of supplies under this contract," Anatoly Isaikin, general director of Rosoboronexport, said in an interview with the Kommersant newspaper. True, in it he also admitted that cooperation "although not in such a volume," but will continue if Venezuela cope with the difficult economic situation in the country.
With India, the situation turned out to be somewhat simpler: after Narendra Modi came to power, the military-technical cooperation of the two countries seemed to remain at a high level (28% of India's arms purchases in 2014 fell on Russia), but from now on Delhi focuses on diversification of suppliers of military products, without getting hung up exclusively to Moscow. For example, the Indian Ministry of Defense preferred the French Rafale aircraft to the MiG-35 medium fighters, and instead of hundreds of Russian self-propelled artillery mounts "Msta-S" the military preferred the South Korean K9. Egypt, according to Vlast's sources, has become rather an exception: under President Abdel al-Sisi, a package of contracts worth at least $ 3.5 billion was signed (it includes deliveries of several divisions of Antey-2500 and Buk -M2E ", helicopter technology, portable anti-aircraft missile systems" Kornet-E "and other types of weapons), but this was done after high-level talks with the participation of Vladimir Putin.
Due to the high cost of the Russian offer with the AK-103, the Vietnamese military chose the Israeli version with rifles such as Galil ACE-31 and ACE-32
The second problem was the sharply increased competition in the arms market. Top managers of enterprises in the Russian defense industry admit that selling their products has never been easy, but now they regard the previously existing word "competition" as synonymous with "slaughter using the dirtiest techniques." Due to political disagreements between Russia and the United States regarding the situation in Syria and personally its President Bashar al-Assad, Washington repeatedly obstructed Moscow: for example, it took licenses from ships that transported repaired helicopters to Damascus, or blocked dollar payments under signed contracts. Rosoboronexport classified this as "petty pranks," but acknowledged that attempts to put a spoke in the wheel had become "much more concentrated and cynical."
It should be noted that difficulties in military-technical cooperation arise not only for some political reasons, but also for purely commercial reasons: this was the case, for example, with the tender for the construction of a plant for assembling Kalashnikov assault rifles in the interests of the Vietnamese Ministry of Defense. Due to the high cost of the Russian offer with the AK-103 (about $ 250 million), the Vietnamese military chose the Israeli version with Galil ACE-31 and ACE-32 rifles (about $ 170 million). Sources involved in the arms business urge not to over-dramatize the situation, saying that losing the tender is expressed only in lost profits, and not in real money. In addition, they add, taking into account the increased exchange rate difference in the dollar, income from ongoing contracts will double: if five years ago $ 1 billion was about 30 billion rubles, now it is already over 60 billion rubles.
The third problem, which Russia has not yet particularly felt in the arms market, but in the future there are all the prerequisites for this, was the fall in the price of energy resources - in the second half of 2014, the countries - oil exporters began to calculate defense spending more carefully. Since the money for ongoing projects was pledged in advance, this did not have much influence on the execution of already signed contracts: last year, Algeria ordered from the Russian Federation two diesel-electric submarines of Project 636 worth about $ 1.2 billion, and in April 2015 - another and a batch of 16 Su-30MKA fighters, and a contract is being prepared for several divisions of the Antey-2500 system. Quite recently, Saudi Arabia began negotiations on the acquisition of Iskander-E operational-tactical missile systems, but when it comes to signing a firm contract, Vlast's interlocutors do not presume.
At the end of September, the general director of the state corporation "Rostec" Sergei Chemezov, commenting on the beginning of the air operation of the Russian armed forces in Syria against the "Islamic State", said that "when the situation in the world aggravates, orders (including export orders. -" Vlast ") for weapons always increase. "According to Ruslan Pukhov, director of the Center for Analysis of Strategies and Technologies, the active growth of interest in Russian weapons began after the operation to force Georgia to peace in August 2008, when Moscow showed that it is a sufficiently "independent pole of decision-making."
In fact, the escalation of the conflict really generates, if not a solid demand, then an increased interest among foreign customers, says a Vlast source in the military-industrial complex: better advertising for military equipment than participation in real hostilities, "and even against terrorists." hard to come up with. True, the return on such progress will not be felt immediately: even if someone is interested in acquiring such weapons (Su-30 aircraft or Mi-35 helicopters), then from the moment of signing the contract until the start of the first deliveries (taking into account the production cycle) it can pass not one year. For example, 12 MiG-29M / M2 fighters contracted by the Syrians in 2007 could well participate now in an operation against terrorists from the Islamic State, however, first due to technical problems, and then due to the civil war that began in Syria, the aircraft could not be at the disposal of the pilots of the army of Bashar al-Assad by 2012, and their transfer was shifted to 2016-2017.
During the war of Russia against IS, Russian planes and helicopters are closely watched not only by politicians, but also by the military - potential buyers of weapons for their countries
Photo: Alexander Shcherbak, Kommersant
Many potential customers would like to receive the desired equipment much earlier, if not immediately. In some cases, Russia is ready to meet halfway, transferring military products from the presence of the Ministry of Defense of the Russian Federation to the interested party. According to the director of the Federal MTC Service Alexander Fomin, in 2014 the export of such weapons reached "an incredibly high level" and exceeded $ 1.3 billion. were launched to fight Islamic State militants. Prior to that, they contracted a batch of new Mi-35 and Mi-28NE helicopters to carry out counter-terrorist operations, which are still being supplied to the Iraqi troops. The United States, in turn, through its allies in the region, is supplying the Syrian opposition with its BGM-71 TOW anti-tank missile systems, which, however, are used not to fight the Islamic State, but to the army of President Assad.
In some cases, Russia is ready to meet halfway, transferring military products from the presence of the Ministry of Defense of the Russian Federation to the interested party.
Experts note that by using the slogans of combating terrorism and protecting borders, Russia is able to restore ties in the field of military technical cooperation with countries whose arms market seemed lost for various reasons. These include, in particular, Pakistan, which was supplied with military products during the Soviet era. Due to the promise of President Boris Yeltsin, made in January 1993 during the first official visit to Pakistan's main geopolitical adversary, India, military-technical cooperation with Islamabad was de facto frozen, and the stake was placed entirely on Delhi.
The situation changed only in June 2014, when Sergey Chemezov publicly announced Pakistan's interest in Russian helicopter technology, in particular Mi-35 helicopters. Initially, the Pakistani security forces expected to purchase about 20 vehicles, but later their number decreased to four: Moscow wanted to assess Delhi's reaction to the resumption of military-technical cooperation between the two countries. However, there was no public reaction to this: according to Vlast, the calm reaction of the Indian government is explained by Vladimir Putin's call to Narendra Modi, during which he assured that the equipment acquired by Pakistan is not directed against third countries, but against radical Islamists and companions of the Taliban. The security of Central Asia and the Central Asian republics will depend on the effectiveness of confronting them. "How can anyone be dissatisfied with this?" - Anatoly Isaykin wondered.
