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Russia cranks up arms production, sales

A revamped weapons industry looks to boost exports. Algeria, Libya may

Washington, already concerned about reports of abuses against civilians by Russian forces in Chechnya, may now have cause for alarm over another byproduct of the war - the revival of the Big Bear's arms industry.

Despite the end of the cold war, the two powers are still rivals in the tight world weapons market. And some nations unfriendly to the United States - Libya, Iran, and Syria - are knocking on Moscow's door looking for sophisticated arms.

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Russia's three-month campaign against Islamic separatists in the breakaway Chechen republic has fattened the defense ministry's budget this year and next. The result is the oiling up of an arms industry that has been rusting since the 1991 collapse of the Soviet Union, with $1 billion allocated for procuring and developing new weapons alone.

This year, state defense export agency Rosvorouzhenie expects total Russian foreign sales of more than $3 billion. Officials

with Rosvorouzhenie report orders worth $9 billion through 2005. About half of these are for aircraft and helicopters, but increasing interest has been registered in Russia's naval- and air-defense systems.

"Before the Chechen war, the military industrial complex and the Army had the public image of a monster devouring the people's money. But public opinion has shifted dramatically," says Valentin Rudenko, an arms trade expert with the state-linked Military News Agency in Moscow. "The war has highlighted the necessity of ... developing high-precision weapons that can be used without threatening civilian lives. So the process of modernizing weapons has been intensified."

This is good news for a sector that nearly collapsed after accounting for 80 percent of industrial production during Soviet times. The decline coincided with the fall of the Berlin Wall, when Russian armsmakers stopped producing for Eastern European countries and other cold war allies and had a brusque entry into the competitive international market.

Boosting the revival, a weak ruble makes Russian arms seductively cheap. Currently, Russia's main weapons customers abroad - China, India, Iran, Algeria, and Greece - are looking at increasing business. They purchase mostly aviation hardware, such as Sukhoi and MIG fighter planes and helicopters, as well as missiles. The Asian market especially is expanding as Russia actively courts non-Western clients.

The interest is not solely in buying hardware, but also in pursuing technological military cooperation. Over the past five years, Rosvorouzhenie has signed such collaboration deals with Malaysia, Singapore, Sri Lanka, Bangladesh, Vietnam, and Ukraine.

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Sales to Libya, Syria

Another market that appears to be expanding for Russia is Libya, thanks to the suspension of United Nations sanctions in April. Rosvorouzhenie reports that negotiations are under way to repair and modernize Soviet-era military hardware operated by the Libyan Army. Such maintenance and repair work is something that Russia is trying to promote actively. Experts say the total volume of this kind of work in foreign countries totaled more than $425 million this year. Major clients are China, India, and former cold war proxy Ethiopia.

One more potential shopper is Syria, which wants to replace the old Soviet equipment that makes up the bulk of its Air Force fleet. The US has voiced stiff objections to Russia selling to what it sees as a rogue state, but Russian military analysts believe Moscow will dismiss Washington's opposition.

"Russia does not like when it is dictated to by the US. Syria is our traditional partner and these projects are extremely profitable for Russia," says Rachik Faramazyan, of the state-linked World Economy and Foreign Relations Institute Moscow.

Stimulating arms sales was a presidential decree signed in September that greatly simplified the Byzantine process of obtaining arms export authorization. Now, permission can be granted within 20 days, Rosvorouzhenie says.

Most of the weapons being sold were developed during the 1980s. In order to further boost foreign sales and modernize the outdated equipment of the Rus-sian Army, military authorities have set aside an undisclosed sum for research and development, a government source says.

Much-needed upgrades

According to Ilya Klebanov, deputy prime minister for military industrial matters, only 30 percent of military hardware currently in use by the Russian Army is of the latest technology. Millions of dollars have been earmarked for upgrading strategic missiles and conventional weapons this coming year - also increasing Russia's export potential.

This is not to say sales will skyrocket. Obstacles remain in keeping Russia's place in the big league. For political as well as commercial reasons, other major arms sellers the US - the world leader, with new deals worth $7.1 billion in 1998 - France, Britain, and Israel are doing what they can to push Russia out of an already overcrowded market. Even Moscow admits it has lost the battle in its former Baltic and Eastern European markets, which now look West in their bid to cooperate with NATO and the European Union.

Obstacles in selling arms are also local. Qualified scientists increasingly seek work overseas due to low salaries. Military specialists point to another weakness - competition among Russia's three main state organizations that are authorized to sell weapons abroad. Rivalry has built up between Rosvorouzhenie (established to sell new weapons), Promexport (in charge of selling off old weapons), and Rossiiskiye Teknologii (entrusted with exporting know-how).

Authorities are attempting to streamline their activities to make the sales process more efficient but it will take some time, analysts say.

(c) Copyright 1999. The Christian Science Publishing Society

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