France and Russian Ship Deal - Russia not to Build its Own Ships

Here is the story:

Russia's new Defence Minister has made the decision that Russia will not build Mistral class helicopter-carriers, the Vedomosti newspaper reports with reference to sources in the Defence Ministry. 

According to earlier agreements, France was to build two such ships, with the costs totalling more than a billion euros, while Russia was to build two more ships at its own shipyards. 

But, according to the periodical, the concept of using Mistral class ships by the Russian Navy has turned out to be questionable, while the building and maintenance costs, too heavy. 

France is already building two helicopter-carriers for Russia, with the first one due to be commissioned in 2014, while the second one, in 2015.
Both naval ships will be based in Vladivostok.

My question on this particular case is whether or not Russia is backing out because it just doesn't have the capacity to build enough advanced ships for its own navy while maintaining its ship export commitments.

Russia and India Arms Relations Redux

Vladimir Putin spent some time in India this past week.  One of the primary deals struck between the two states during the visit, was the sale of $3 Billion worth of Russian helicopters - a tender, which was rumored to be going to the United States earlier in the month.

The Russian Ambassador to India had this to say about plans for further cooperation between the two states: (source)

...the deals that have been struck as part of the ten-year programme of military and technical cooperation between India and Russia are estimated at $30 billion. 

On Monday, during the Russian President Vladimir Putin's visit to India, several important agreements in the military area were signed in New Delhi.

The helicopter and other aircraft deal looks like this:

Under one contract, India will buy 71 Mi-17B-5 Hip helicopters worth $1.3 billion, while the other provides for the delivery of assembly kits for 42 Su-30MKI Flanker fighters, worth $1.6 billion. 

The two countries also signed a number of cooperation agreements in the defense and technology sector, notably between Russian Helicopters and Elcom Systems Pvt Ltd.

Here is the blurb from a BBC story that really highlights the personal role that Putin is playing in getting these deals signed:

In an article in India's Hindu newspaper, Mr Putin described as a "historic step" the declaration of strategic partnership between the two countries signed in 2000. 

The Russian leader also said that the military co-operation between the two nations has reached an "unprecedented level". 

Russia's currently accounts for some 70% of India's arms purchases, the BBC's Sanjoy Majumder in Delhi reports. 

But India has recently signed a number of big defence contracts with the US and other countries, including France and Israel, our correspondent says. 

Russia is concerned, he adds, that its traditional position as India's main arms supplier could be under threat.

And that's the rub.  As I have already pointed out on this blog (11/30/2012 "Are they Related?"), India is one of Russia's primary partners.  China has gained ground recently, but India is still number one or two in all years since the early 1990s - and essentially helped keep Russia afloat in the arms export world in the 1990s.  The fact that Putin is soliciting arms deals and spending his time indicates that to the Russian government (in the form of Putin), arms sales are an important aspect of foreign policy.  This is mostly likely due to the domestic implications of losing the ability to produce arms and shutting down the factories that produce Russia's most sophisticated export materials.

Aggressive Tactics or Business as Usual?

RIA Novosti carried this story the other day: (link here)

MOSCOW, December 20 (RIA Novosti) - Russia’s Vnesheconombank (VEB) will provide Indonesia with a total of $399.5 million in credit to finance purchases of aircraft and related equipment from Russia’s state-run arms export company Rosoboronexport. 

credit will be provided for a seven-year term, Rosoboronexport said.
This is the second credit agreement between VEB and Indonesia’s Finance Ministry in the past two years. 

Last week VEB's deputy chief Alexander Ivanov said VEB won the Indonesian Finance Ministry’s tender to finance the purchase of six Russian-made Su-30MK2 Flanker multirole fighter aircraft.

After looking at aggregate numbers for arms sales, I am still not sure of how specific transactions go down most of the time.  Is this a fairly common practice, or is it unusual?

Here is a look at Indonesia's arms imports for the past 20 years (give or take) created using STATA and data from SIPRI:

Russia is the second largest supplier (By cost) of weapons to Indonesia in the period from 1991 to 2010.  However, the total amount of arms sales has been around $700 million dollars.  Here's a breakdown of Russia's sales (by year) over that same period:

The relationship between Russia and Singapore only began in 2001- and although it has been relatively steady, the maximum amount per year has been just over $200 million dollars.  My guess is that Indonesia is still not considered to be a reliable customer, and this financing deal is meant to try to lock Indonesia's government into longer-term deals that can bring them more fully into Moscow's arms corner.

When Cooperation, Competition, and Politics Collide

The world of international arms transfers is a complicated one. The more I study the complex interactions of states in this arena, the more complexity I see.  The US and Russia are the world's largest arms exporting states.  In most arenas they are competitors.  The reasons for this are both historical  and current.  The reasons are historical in the sense that there is path dependence in arms patterns established during the Cold War. They are current in that Russia's own domestic political weakness is a factor in its anti-US foreign policy decision-making (See Ortmann 2011).

The US has problems with Russia's arms export agency, Rosoboronexport:

Rosoboronexport was subject to US sanctions from 2006 to 2010 for allegedly providing nations including Iran and Syria with equipment that could be used to develop weapons of mass destruction. (Source)

The Pentagon, in its Afghanistan mission, has turned to Russia's export agency to provide ammunition for the Afghan forces as well as to supply the reconstituted Afghan army with helicopters.  The first batch of helicopters has been delivered and a new contract is in the works.  The US Congress (both the Senate and the House) are working on legislation to prevent US agencies to work with Rosoboronexport:

In mid-June, US Senator John Cornyn called on the Pentagon to take action against Rosoboronexport, but the Pentagon dismissed his claims, saying that dealing with Russia’s arms exporter was the "only legally available method" to supply the helicopters to Afghanistan.

In this transaction the US is essentially acting as an agent for the Afghan military, which has a preference for the Russian helicopters.  This preference is probably based more on historical considerations than current events, but it is their preference.  The Pentagon is caught in the middle.

This transaction - and others like it in Iraq - show the limits in my current research on the arms trade.  When the sale of helicopters is completed it will show that Russia sold arms to Afghanistan.  The US involvement in the transaction - including paying for the equipment with US taxpayer money is not accounted for.

While such transactions are not the norm, they do highlight weaknesses in the way we code arms transfer data and limitations in the ways we can make inferences from such data.

References

Ortmann, Stefanie. 2011. “The Russian Network State as a Great Power.” In Russia as a Network State: What Works in Russia When State Institutions Do Not?, eds. Vadim Kononenko and Arkady Moshes. Palgrave Macmillan, p. 139–163.