Will Russia Import and Export More Arms to NATO?

By Richard Weitz

For the last few years, the Russian government has made the unprecedented decision to purchase expensive Western military equipment.

This has been done partly to fill gaps in Russian military capabilities and partly to use the threat of foreign competition to induce its military industrial complex to modernize its means of production and contain its costs.

The most well-known recent Russian purchase of Western military equipment was the signing in June 2011 of a $1.7 billion contract to buy two French-built Mistral class amphibious assault ships for the Russian Navy.

In addition to the Mistral-class ships, Russia’s Ministry of Defense (MOD) is buying armored vehicles from Italy, personal combat systems from France, and defense technologies from Israel.

One overlooked fact is that Russia has been selling weapons to NATO members for years.

Russian arms dealers broke into the Greek and Turkish markets in the early 1990s. During the 1993-1994 period, Turkey purchased 19 HiP helicopters and 70 armored personnel carriers from Russia, Meanwhile, Greece signed an intergovernmental agreement in 1993 to purchase Russian anti-missile batteries and infantry fighting vehicles (BMP).

More recently, Russian enterprises have helped repair and upgrade some Soviet-era weapons (especially aircraft) in the inventories of former Warsaw Pact countries, many of which have joined NATO since the Soviet bloc’s dissolution.

Nevertheless, Russian officials have complained that they have been displaced from most of their former Soviet bloc markets. Many of these countries have joined NATO and have sought to make their militaries more interoperable with other NATO countries by replacing their Soviet-made weapons systems with those manufactured in Western Europe and the United States.

Furthermore, Russians criticize NATO companies for missing mutually beneficial opportunities for “military-technical cooperation” with Russian firms. They maintain that NATO governments have pursued discriminatory practices aimed at excluding Russia’s defense goods from their markets, even when the Russian companies offered superior technology and lower prices.

Russia’s five-day war with Georgia in 2008 revealed weaknesses in Russian military technology.

The Russian government responded by introducing further defense reforms, increasing spending on military equipment, and acquiring foreign military technologies not available from domestic suppliers.

Buying NATO weapons systems became an important element of this approach.

The purchase of French Mistral-class amphibious warships fits into this plan.

Putin has indicated he will continue the government’s recent policy of buying a few advanced weapons systems from foreign (Western) suppliers. He argued this was common practice throughout the world and recalled that the Soviet Union had purchased Western weapons during the 1930s.

Putin explained that the government wanted to help the Russian defense industry, but considered it “unacceptable” to supply Russian soldiers with inferior or overpriced equipment. He argued that such purchases can “quickly solve the most pressing defense problems and, let us be frank, to stimulate domestic producers.”

In this regard, one reason the government has sought to purchase Western defense products is to use the threat of foreign competition to induce Russia’s military-industrial complex to modernize its means of production.

Although Russian designers can still develop first-class weapons, Russian defense companies, which have yet to recover from the Soviet military-industrial complex’s traumatic disintegration, remain unable to manufacture large numbers of the most advanced systems.

Putin also argued that such foreign weapons purchases would include the transfer of sophisticated technology to Russia’s own defense industry, which would then strengthen its competiveness on the international arms market.

But the extent to which, for example, the Mistral deal involves the transfer of sensitive technology is unclear. The Commander of the Russian Navy, Adm. Vladimir Vysotsky, said in February 2012 that the two Mistrals constructed in France would be equipped with Russian-made weapons.

Putin concluded his comments by insisting that the Russian government only saw such foreign purchases as an exception and would continue to support the development of the Russian defense industry. “I am convinced that no amount of ‘pin-point’ purchases of military and scientific equipment can replace the production of our own weapons; these purchases can only serve as a source of technology and knowledge.”

Yet, the need to sustain Russia’s defense industry through domestic contracts as well as foreign sales will likely lead the Russian government to continue to rely primarily upon indigenously manufactured equipment.

In mid-February 2012, Rogozin abruptly reprimanded Russia’s most senior general after Nikolai Makarov, the Chief of the General Staff of the Russian Armed Forces, had said the previous day that the MOD would cease buying Russian-made armored vehicles — such as T-90 main battle tanks (MDT), BMP-3 infantry fighting vehicles, as well as BTR-80(82) and BTR-90 armored personnel carriers (APCs) — for five years due to their poor quality.

Instead, he implied the MOD would sign more contracts like its January 2012 deal  with the Italian firm Iveco to co-produce 60 armored vehicles at a plant in Voronezh. Rogozin insisted that the MOD would fully implement the SAP, which includes purchases of these items.

In principle, increasing the sales of defense items between Russia and NATO countries as well as promoting direct cooperation between their defense industries could yield certain mutual benefits. For example, such exchanges could enhance military interoperability between Russian and NATO forces, allowing them to work more effectively together in actual contingencies.

From the perspective of Moscow, Russian defense firms could gain better access to NATO armaments markets. Russia might sell more defense goods to more NATO countries, though whether greater access would result in more sales depends on a wide variety of other factors, including the skills of Russian businesses, the nature of their competition, and the procurement policies of NATO governments.

Russia sold $13.2 billion worth of weaponry to foreign customers in 2011, head of the Federal Service for Military-Technical Cooperation Mikhail Dmitriyev said in February 2012.

Although Russia’s state-run arms export monopoly, Rosoboronexport, has a massive backlog of orders, and its annual sales continue to grow, military purchases from China have experienced a sharp decrease in recent years. And at the same time, Russia’s position in its other traditional major market, India, is under threat due to growing competition from India’s own defense firms as well as Western defense companies that, backed by their governments, are eager to expand their presence in the Indian defense procurement market.

Expanding Russian sales to NATO countries could also help compensate for a possible decline in purchases from Venezuela, Iran, and other buyers.

Buying defense products from foreign countries expands the MOD’s weapons capabilities and options, potentially saves the MOD research and development costs, and in some cases can accelerate defense acquisitions that domestic manufactures would take longer to provide. Most of the world’s largest weapons manufacturers are based in NATO countries, so that is a natural focus of any foreign acquisitions.

From the perspective of NATO, defense industrial cooperation would enhance military interoperability between Russian and NATO forces, improving Russia’s ability to support NATO operations. In addition, NATO countries would have more potential sources of defense equipment, possibly with superior technologies, and most likely with lower prices.

The defense spending cuts imposed in many European counties recently as part of their austerity programs has decreased the sales opportunities for their NATO defense companies.

Sales to Russia could help them sustain their work forces, achieve economies of scale, and recoup R&D expenditures through larger production runs.

These considerations are also driving some European defense firms and governments to call for an end to the EU embargo on arms sales to China.

NATO arms sales to Russia could also make the Russian government more reluctant to pursue policies Western governments oppose for fear of NATO retaliating by curtailing these sales.

Finally, it is publicly difficult for NATO countries to refuse to engage in defense industrial cooperation with Moscow when their leaders are describing Russia as their new partner in the fight against mutual threats emanating from third parties.

That said, a robust arms trade between Russia and NATO is not without problems.

Russian policy makers undoubtedly understand how relying on foreign sources for weapons exposes a country to the risks of supply disruptions. These risks increase when, as in the case of NATO and Russia, the parties have a history of antagonism and one could easily imagine future tensions that could lead to supply cut-offs.

Even in the absence of formal supply suspensions, the recipient country will experience pressure to respect the other’s political wishes. For example, Russian policy makers will need to assess how their policies towards Georgia could affect their access to NATO weapons and markets. Buying more foreign weapons could serve to galvanize domestic defense manufacturers to improve the quality of their goods, but it would also deprive them of the revenue they might need to upgrade their production lines, finance R&D efforts, or potentially even remain in business.

Selling weapons to Russia presents problems for NATO as well.

The sight of NATO governments selling large quantities of weapons to a potential adversary, with little consultation with other NATO members and often in commercial competition with their firms, makes the alliance look incoherent. And the increased dependence engendered by NATO-Russia arms sales works both ways.

NATO governments could become more reluctant to challenge Russia on disputed issues for fear of Moscow’s curtailing its purchases of Western weapons.

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http://en.rian.ru/mlitary_news/20120215/171331930.html

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