In Soviet days, superpower Moscow spent substantial sums shipping weapons, ammunition, and other military hardware to aligned regimes across the globe. It's no secret that Russia can no longer afford the expense. Instead, the Kremlin prizes its military-industrial complex as a major profit-making enterprise. But experts warn the short-sighted pursuit of profit is undermining Russia's stated commitment to the U.S.-led war on terrorism by distributing arms to "rogue" states and groups. They say it is putting Russia's own national security interests at risk as well.
Moscow, 12 February 2003 (RFE/RL) -- Russia may be having a tough time selling its chiefly low-quality manufactured goods abroad, but the defense industry -- which profited from massive cash injections under communism -- is increasingly seeing its products snapped up worldwide.
The growing arms trade netted Russian companies record sales of $4.7 billion last year, keeping the decaying military-industrial complex alive at a time when the cash-strapped Russian military has virtually stopped buying new hardware.
Ruslan Pukhov is director of Moscow's Center for Analysis of Strategies and Technologies. He said that unlike the United States, Russia is no longer in a position to put political concerns ahead of the quest for profit. "Only a superpower or superpowers -- like during the Cold War, or the United States now -- can afford to behave reasonably. That means to pursue first of all big political goals, not financial gain. In this particular case, the United States is the only country to do this -- its behavior is quite unusual for the major [arms-trade] players on the world market," Pukhov said.
According to the Stockholm International Peace Research Institute (SIPRI), Russia overtook the U.S. in arms sales last year after U.S. exports fell by 65 percent from their 1998 levels. But the United States still dominates: from 1997 to 2001, it exported $44.82 billion in arms -- compared to Russia's $17.35 billion.
Russia actively seeks to sell its arms in the West, but with many Western forces dismissing Russian products as inferior, traditional customers China and India remain the biggest buyers. Those two countries are also the world's first- and second-largest arms importers, respectively.
The Kalashnikov automatic rifle may be Russia's best-known export, but planes, helicopters, and other aviation exports top the list of money earners at 60 percent of sales. The Sukhoi jet-fighter plant alone generates about a quarter of total arms-export profits. Ships, submarines, and other naval hardware come second, followed by armored vehicles and air-defense systems.
Most sales of Russian-made arms abroad are made through intermediary Rosoboronexport, the country's main arms exporter, which monopolizes 87 percent of defense-enterprise deals.
President Vladimir Putin created the enterprise in 2000 by combining two separate agencies. Rosoboronexport Assistant Director Sergei Chemizov, who drafted the president's decree, is a former KGB officer like the president and said to be a member of Putin's innermost circle.
Only five state-controlled defense enterprises have export licenses to sell arms abroad independently.
Deputy Defense Minister Mikhail Dmitriev, head of the government committee for military and technical cooperation with foreign countries, which regulates Rosoboronexport's contracts, said the merger has increased the efficiency of "cooperation" with foreign countries.
In a recent interview published in "Russkii predprinimatel" (Russian Entrepreneur) magazine, Dmitriev said Moscow -- which is entering new markets in South America and Southeast Asia -- views the long-term future of arms export with optimism.
But defense-industry producers complain that Rosoboronexport's tight grip on sales and unbeatable connections hurt their own interests.
Pavel Felgenhauer is an independent military analyst. He said the arms trade is seeped in corruption "at the highest levels" and that debate over Rosoboronexport's monopoly represents a struggle over who can appropriate more cash.
Felgenhauer said hundreds of millions, even billions, of dollars earned by the sale of defense-industry products -- many of them "repainted items" left over from the Soviet Union -- end up in offshore companies. "In general, Russia gets practically nothing [out of the arms trade] except for harming itself, inasmuch as virtually nothing makes it into the budget. The money is stolen on a massive scale. So there's little benefit -- to the contrary, it's quite harmful," he said.
Others warn Moscow is ignoring the threat of weapons proliferation and carrying out an arms-trade policy that threatens global security.
Moscow says it is allied with the United States in its war on terrorism, but simultaneously sells military materiel to countries Washington deems "rogue states," including the most vilified -- the "axis of evil" nations of Iran, Iraq, and North Korea.
Russia has also engaged in proliferation of nuclear technology. It is helping build a reactor in Iran with plans for more, and has helped India's nuclear program.
Arms deals meanwhile often underscore Moscow's underlying opposition to overwhelming U.S. global military superiority.
International security affairs analyst Stephen Blank, writing last month in "Asia Times," said Russia is deeply involved in the proliferation of arms lying at the heart of most international crises. "Russia proliferates not merely because its factories need money or because their officials are just corrupt thieves who have no concern for the national interest," Blank wrote. "[Moscow] appears to use arms sales as an all-purpose foreign policy tool."
Blank added that the "unreformed and unrepentant" defense industry is seeking to maintain a Soviet-era aura of supremacy to retain its privileges and protect itself from market forces -- and that Putin buys the argument.
Neither Rosoboronexport nor the committee for military and technical cooperation with foreign countries responded to repeated requests from RFE/RL for comment.
To obscure deals with countries or groups deemed pariahs by the international community, Russia often uses middlemen in states like Belarus and Ukraine that are deemed even more corrupt than Russia.
Sales of Russian arms abroad appear to harm not only Western interests. Critics say the pursuit of arms-sale profit undermines the country's own long-term national strategic interests by putting weapons in the hands of potential adversaries. One such example is China, which buys around 60 percent of Russia's exported arms while Moscow's own military is verging on collapse from lack of funding.
Felgenhauer, meanwhile, said arms sales will increase in the near future, but may fall toward the end of the decade or later. Other experts warn the upswing in arms sales will end much sooner because of a lack of research and development. Pukhov of the Center for Analysis of Strategies and Technologies is one of them. "If in the next one to two years, investment in the development of new military technology does not begin, the $4 billion that Russia now earns will fall first to $3 [billion] and then $2 billion," Pukhov said.
Another analyst, Aleksei Khazbiev, writing in "Ekspert" magazine last October, said profits will start to fall next year, when India and China start to produce Russian-designed aircraft themselves under license.
He accused Rosoboronexport of dropping the ball by offering futile bids to compete with Western exporters in countries such as Turkey, a NATO member, while ignoring traditional customers such as Malaysia, which last year opted to buy U.S. F-18 fighters instead of Sukhoi aircraft.
Defense Minister Sergei Ivanov recently said Russia would develop new types of weaponry as part of a new security doctrine being drafted in the wake of Moscow's hostage crisis last year.
But according to a study published last September, around half of the country's directors of defense enterprises say their technology is already obsolete.