And by many measures, they have reason for optimism.
In a stagnant market, the world's second leading arms exporter posted a significant gain in 2004, with $6.1 billion in agreements -- accounting for 16.5 percent of the market -- compared to $4.3 billion in sales in 2003. Russia maintained that level in 2005 -- again exceeding expectations and exporting about $6 billion worth of military equipment to more than 60 countries.
Russia's state-owned arms export agency Rosoboroneksport, announced in Nizhny Tagil on July 11 that it has orders in hand worth about $17 billion. Deals for naval equipment headed the list, but orders through 2010 for Russian air-defense systems accounted for a major share ($3.5 billion). Rosoboroneksport Deputy Director Ivan Goncharenko also predicted a major turnaround for the much-maligned military-aviation sector, saying aviation equipment will be Russia's top seller in 2007.
Movement is afoot on the domestic front as well. Defense Minister Sergei Ivanov recently said Russia will spend 237 billion rubles ($8.8 billion) this year to upgrade its military equipment -- and that figure is to rise to 300 billion rubles in 2007. In addition, the country is mulling a proposed program that would increase defense procurement by 20-25 percent a year.
But some say serious flaws remain in Russia's arms industry, claiming it depends too much on Soviet-era designs and that the failure of the industry to adapt to economic realities threatens to torpedo the entire endeavor.
Detractors include Defense Minister Ivanov, who last year expressed fears that by 2011 the Russian arms industry would be incapable of re-equipping its own military.
In an attempt to address such fears, Russia has embarked on a large-scale effort to consolidate its defense enterprises -- an exercise in "state capitalism" that at the same time harkens back to the Soviet Union's oversight of a massive defense industry.
Aleksandr Goltz, a defense expert for the Moscow-based "Yezhednevny zhurnal," says this effort is steering the industry in the wrong direction.
"All these plants, all these enterprises, will again, as in Soviet times, be put under strong bureaucratic control," Goltz says. "And as [a] result, the level of bribes, the level of corruption, will rise and it's obvious that it will make this process much more complicated, not easier."
The direction of Russia's arms-sales policies has attracted controversy in the United States.
In April, Russia inked a deal for the sale of 100,000 Kalashnikov assault rifles and 15 military helicopters to Venezuela, which says it needs the weapons to defend itself in case of a U.S. invasion.
The Latin American country is also seeking to purchase 24 Sukhoi fighter jets -- a deal that Washington has asked Russia to reconsider out of fears that it could upset the balance of power in the region.
Missile sales to Iran have also raised the ire of Western countries, particularly the United States, and sales to Sudan and Syria have been criticized.
Russia maintains that such sales break no international regulations, and that if it doesn't sell to these countries, somebody else will.
So, are Russia's efforts to expand its arms sales based on politics, or business?
Both, says analyst Goltz.
"Such countries as Iran, or Venezuela, or Syria have no other sources of military equipment," Goltz says. "It's profitable, but at the same time it is politics because Russia positions itself as the supplier of these -- as the people in Washington say now "problematic regimes."
But given the position Russia is in, it may have no choice. Goltz says he is skeptical of the Russian arms industry's chances of survival. And other analysts have noted that -- given the intense competition in the industry and the United States' dominance as the world's largest arms exporter -- Russia is in no position to turn away business.
Russia And The West
COOPERATION, CONFLICT, CONFRONTATION: Relations between Russia and the West are notoriously volatile. "To see the kind of relationship that presidents Bush and Putin have developed and to see Russia firmly anchored in the West, that's really a dream of 300 years, not just of the post-Cold War era," then-national security adviser Condoleezza Rice said in May 2002.
But observers have increasingly called into question the extent of the shared values between Russia and the West, particularly on issues relating to the transformations going on in other former Soviet countries.
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