Foreign Arms Sales
In the first half of 1996, defense planners appeared to favor delaying privatization and civilianization and letting the MIC do what it does best: make weapons. Instead of depending upon Russia's armed forces as the customer, Soskovets intensified his pursuit of the international arms market in an attempt to improve the industry's earnings. Russia offered military hardware both for sale as a means to raise capital and in barter arrangements to repay international debts. In April 1996, the State Corporation for Export and Import of Armaments (Rosvooruzheniye) reported fifty-one countries as current customers, with the largest sales totals involving China, India, Syria, and the United Arab Emirates (UAE). Together with lesser customers Algeria, Cuba, Kuwait, Malaysia, Turkey, and Vietnam, those countries accounted for 75 percent of arms sales in early 1996. Arms exports were being produced at more than 500 enterprises in Russia and more than 1,200 enterprises in ten other CIS nations having production-sharing agreements with Russia.
Arms sales and military technology transfers to China expanded rapidly in the mid-1990s, although many defense authorities had strong reservations about sharing advanced technology with such an unpredictable neighbor. For China, Russia is a source of sophisticated, reasonably priced armaments unavailable from the West. For Russia, China is another source of hard currency (see Glossary). Among China's key purchases in recent years were Su-27 fighter-bombers, MiG-31 fighters, heavy transport aircraft, T-72 tanks, and S-300 antiaircraft missile launchers. In 1994 and 1995 agreements, China bought a total of ten Kilo-class diesel submarines, the first four of which cost US$1 billion altogether. Russia received repeated warnings from the United States about the dangers of enhancing China's military capabilities. Such a warning came in May 1996 against the sale of technology for SS-18 ICBMs, which China had requested ostensibly for its space program.
Russia has agreed to repay part of its trade debt to Finland with its modern SA-11 air defense missile system in a deal worth US$400 million. The SA-11 is an army-level, mobile, low- to medium-altitude, surface-to-air missile system that went into serial production in 1979. The SA-11 can successfully engage any aircraft at altitudes from fifteen to 22,000 meters at a range of up to 35,000 meters using its tracking and engagement radar system. It has an on-board identification friend-or-foe (IFF) system and an electronic countermeasures suite. Experts predicted that Finland would employ the SA-11 as its national air defense system. The SA-11 also is in service in India, Poland, Syria, the Federal Republic of Yugoslavia (Montenegro and Serbia), and several former Soviet republics.
In yet another debt reduction arrangement, Russia is furnishing Hungary 200 BTR-80 wheeled armored personnel carriers (APCs) as replacements for the thirty-year-old Hungarian-manufactured FUG APC. The BTR-80 is a modern, lightly armored vehicle with a diesel power plant. It is manufactured at the Gorkiy Automobile Factory in Nizhniy Novgorod and has been in service since the early 1980s. The BTR-80 is a lightly armored amphibious vehicle with a collective chemical-biological-radiological (CBR) protective system. Operated by a crew of three, the vehicle can carry a squad of seven infantry troops.
In the mid-1990s, the Russian defense industry was anticipating the end of the arms embargo against Serbia as an opportunity to generate hundreds of millions of dollars in sales. Russia's long association with the Serbs has established a traditional Russian arms market in the Federal Republic of Yugoslavia (Montenegro and Serbia). However, in the aftermath of an extremely expensive economic embargo, it is not clear that the Ministry of Defense of Yugoslavia has the funds to purchase large quantities of Russian military matériel.
Russia is aggressively promoting its combat aircraft in the East Asian arms market. Russia and India signed a defense agreement in November 1994 during a state visit by Prime Minister Viktor Chernomyrdin. This agreement marked the end of the strained relations that had resulted from India's loss of access to generous Soviet credit terms and low prices when cash-strapped Russia demanded hard currency (see Glossary) after the fall of the Soviet Union (see Other Asian States, ch. 8). During a related visit to India in March 1995, First Deputy Minister of Defense Andrey Kokoshin made a sale of ten MiG-29 aircraft for US$200 million. At the time, Kokoshin asserted that this and future defense deals with India would save several hundred thousand jobs in the Russian defense sector.
India and Russia have a tradition of cooperation in armaments that began in the 1960s; in the mid-1990s, India needed new equipment from Russia to modernize its armed forces in view of ongoing arms imports by traditional enemy Pakistan and persistent suspicion of neighboring China. In early 1996, India and Russia signed a treaty of military technical cooperation, estimated to be worth US$3.5 billion through the expiration date of 2003. Among key purchases are Russian technology for armored vehicles, artillery, and naval systems in addition to aircraft. In early 1996, experts estimated that as much as 70 percent of India's armaments had been purchased from Russia.
In early 1996, MIC chairman Pak astounded the United States Army by marketing the Russian SA-12 surface-to-air missile system in the UAE in direct competition with the United States Army's Patriot system. He directed Rosvooruzheniye to offer the UAE the highest-quality Russian strategic air defense system, the SA-12 Gladiator, as an alternative to the Patriot at half the cost. The offer also included forgiveness of some of Russia's debt to the UAE.