Deals, Corruption, and Leader Involvement in Arms Sales

There have been a number of interesting stories piling up in my reader over the past few days.  I have wanted to get to them, but have also been trying to finish up the last chapter of my dissertation.  Priorities are fun.  This is what I'm doing on my break.

India

As a follow up to my post last week (here) about Russian corruption is an interesting story out of India.  India made a deal for helicopters with Finmeccanica (Italian firm), which now appears to be the result of bribes paid.  Now the Indian government is threatening to cancel the rest of the contract if the allegations prove true. (Read more here)

(And more here)

More from India.  India wants to start producing more of its own arms, particularly aircraft.  However, it is having difficulty because the firm that could potentially produce arms is so inefficient as to make this an untenable prospect.

James Hardy, an analyst at the defence consultancy IHS Jane's, says that HAL is "overextended", expressing an opinion largely shared by observers at home and abroad.

More here

Russia and Syria
Russia is continuing to supply the Syrian government with weapons from contracts that were already in place.

The head of Russia's arms exporter Rosoboronexport, Anatoly Isaikin, said Russian deliveries to the Syrian regime of President Bashar al-Assad included air defence systems but not the advanced Iskander missiles sought by Damascus. 

"We are continuing to fulfill our obligations on contracts for the delivery of military hardware," Isaikin was quoted as saying by the Interfax news agency.

Link

But Russia is not smuggling tank parts into Syria. (Link)

France and India

As part of my dissertation I am looking at the involvement of state leaders in arms deals.  I got a special gift from France's president Hollande on Valentine's Day.  The French President led an entourage to India to "clinch the world's biggest defense deal" in India.  The deal is a $12 Billion sale of 126 aircraft.  Along with this deal there are negotiations about French involvement in to help build a nuclear power plant in Maharashtra.

Link

The Enemy of my Friend - India Pakistan and Russia

This article popped up in my news feed this morning.  It is about Russia's anger that India is purchasing fighters from France. The gist of the argument is that Russia has been India's "true strategic partner" since the 1960s.  The evidence for this is that Russia has voluntarily abstained from selling weapons to India's primary enemy, Pakistan.

Russia now feels betrayed that India is not rewarding that loyalty. India is still the largest customer of Russian arms.  However, if India continues to seek alternatives, Russia could find a lucrative source of income drying up or at least becoming more difficult to assure.

Here is the money quote from the head of Rosoboroneksport:

“We do not sell military equipment to Pakistan, only because of our loyalty to India. But all other nations, with whom India does business, sell their weapons and systems to Pakistan. We are India’s true strategic partners.”

I had the data for arms networks laying around (for my dissertation) so I quickly put together graphs for both India and Pakistan.  These are the ego networks for the two states, which means that these are not the full world arms network, only those states involved in sales to either India or Pakistan.

Neither of these two graphs shows much difference in the composition of states selling weapons.  In the Pakistan network, shown at the bottom, Russia is located at the edge of the graph and is not selling directly to Pakistan.  In all other respects, though the networks are very similar.

I guess the question is now to what extent Russia has deliberately not sold to Pakistan.  If Russia has made a decision not to sell that is one thing.  If Pakistan has not tried to buy because it was being supplied by the US and its allies and wanted to maintain that source for its weapons, then this is a different conversation. The idea that Russia is engaging in a deliberate version of Heidegger's rule (The enemy of my friend if my enemy) is what is most fascinating to me about this entire episode.

Russia's Defense Fraud is Larger than Most States' Defense Budges!

File this under horrifying comparisons.  A report today from Moscow (link to news story) about the amount of fraud in the defense industry is simply staggering.

The Russian Audit Chamber has identified waste and misappropriation totaling almost 117.5 billion rubles – just over $3.9 billion at today’s rate – in the area of national defense, the first deputy head of the State Duma's Defense Committee, Viktor Zavarzin, told reporters, after a closed-door committee meeting attended by officials from the Defense and Finance Ministries, the Prosecutor General’s Office and other agencies.

That is a lot of money.  In order to put this into context I put together a quick visual using 2011 defense spending data from SIPRI. I had to download the data in an excel file and clean it up a bit.

Russian corruption in the defense sector is more than the median military spending by most states in the international system.  Average military spending is highly skewed by the US and China, which are not included in the graph above because of the way they ruin the scale.

What does all of this mean?  It means that it can be very lucrative to be involved in the defense sector in Russia!

None of this information by itself is really surprising and I've alluded to problems of corruption in previous posts.  The sheer scale of that corruption when put into context is simply staggering.

*NOTE:
Click on this link to obtain a zip file that has the SIPRI data for 2011 in a CSV file along with the STATA .do file I used to create the graph.    -Replication Materials-

Russian Government Priorities

The Russian government is being even more explicit in its priorities.  "Competitive serial products" is a good phrase for arms exports.

“The military-industrial complex will receive a serious impetus. It should become a source of technological innovation, both in the military and civilian sectors,” Medvedev said at a government meeting. 

“We should boost our research and development to build advanced specimens of armaments and military hardware and conduct technical retooling of enterprises so they can roll out competitive serial products,” he said.

And Now Corruption in Arms

Transparency International has come up with a new index of corruption in the defense sector.  I haven't had a chance to dig too deeply into the details yet.  Unsurprisingly Russia ranks high (low?) on corruption in the study.

The report can be found here.
A press release can be found here.

This critical passage comes from the press release:

The Index shows that only 15 per cent of governments assessed possess political oversight of defence policy that is comprehensive, accountable, and effective. In 45 per cent of countries there is little or no oversight of defence policy, and in half of nations there is minimal evidence of scrutiny of defence procurement. 

The study also finds that citizens are frequently denied basic knowledge about the defence sector. Half of the countries’ defence budgets lack transparency entirely, or include only very limited, aggregated information. In 70 per cent of the countries, citizens are denied a simple indication of how much is spent by their government on secret items.

The patterns of corruption from the front page of the report are not entirely unexpected.

 I am surprised there was not data on Canada in the study. Australia and Germany are the exemplar states for openness in defense reporting and relations.

I'll need to dig into this a bit further as a factor in arms transfers.  The ability of certain actors in society to enrich themselves through arms deals that are notionally being used to enhance the defense capabilities of the state is an interesting variant of the principal agent problem.

This is definitely an area that could use some further examination.

Arms Export Strategy as a Cause of Russia's Military Decline

Dmitry Gorenburg writes on Russia's military and does a great job of following the developments in that sphere.  In a recent blog post he discusses one of the implications of Serdyukov's prosecution for corruption and ouster as defense minister.

It seems that the new leadership team at the MOD has decided to stop using the threat of importing armaments from abroad to get Russian defense industry to improve the quality of its products. 

One of the interesting implications of the whole affair is summed up in the last paragraph of his post.

In the meantime, however, the defense industry’s defeat of Serdyukov reduces the likelihood that the military will get the equipment it needs. It will take time for the MOD to amass the political capital to fight back against the industry and its allies. The result will be that the industry will get its money, while the military will be promised new equipment that in many cases will not arrive on schedule. In a few years, the military’s situation will get even worse, while the MOD will have rebuilt some of its lost political capital.

One of the primary reasons that the US and Soviet Union (and now Russia) are the world's largest arms exporters is that there has been a large internal demand for those weapons.  If Russia's military collapse continues will it be as a result of a focus on using domestic weapons?  Those weapons slated for the Russian military (that are not delivered to domestic customers for various reasons related to the export focus of the industry) could lead to a lack of development of new weapons systems for the internal market.

This particular internal dynamic could lead to an interesting shift in the overall patterns of arms sales. 

The Power of Prisoners - A Brief note on Ratios

This post is a break from my usual obsession with arms transfers between states.  One of my side projects (and eventually hopefully more than that) is a project in which I examine the role of detainees on the military success of the surge in Iraq.  One of the arguments that I make in my working paper (link) is that one of the stronger signals that the US sent during the surge was to begin treating Shiite insurgents more like Sunni insurgents had been treated throughout the conflict.  One of the ways that this was done was through detention.

Detention was a strong signal - above and beyond rhetoric - that the US in connection with the government of Iraq was not going to play favorites.

Over the past few weeks protests in Iraq have increased. Sunnis are protesting what they perceive to be as uneven application of laws against the Sunni minority by the majority Shiites.  I found it interesting that one of the main areas of contention is detention policy.

Iraqi premier Nuri al-Maliki looked to head off protests in Sunni areas of the country on Tuesday with a prisoner release even as he threatened to use state resources to "intervene" to end the rallies. 

The move came as powerful Shiite cleric Moqtada al-Sadr voiced support for the demonstrations and predicted an impending "Iraqi spring" as ongoing rallies blocked off a key trade route connecting Iraq to Syria and Jordan for a 10th successive day. 

Maliki, who is Shiite, ordered the release of more than 700 female detainees, a key demand of demonstrators, the official appointed to negotiate with protesters, told AFP. 

"The prime minister will write to the president to issue a special amnesty to release them," Khaled al-Mullah said. 

Mullah said of 920 female prisoners in Iraqi jails, 210 had been accused or convicted of terrorism-related offences and could not be released. But, he said, they would be transferred to prisons in their home provinces. 

The remaining detainees, convicted on lower-level charges, would be released, he said. He did not give a timeframe for the process. (source)

Because my modus operandi is to throw a graph in to illustrate whatever news tickles my fancy, I will conclude this post with a graph from my paper referenced above.  It shows the ratio of Sunni to Shiite detainees in US custody during the course of major US operations in Iraq.

The most striking aspect of this graph to me is the huge imbalance of Sunni detainees that occurred in the aftermath of the major sectarian fighting within the country.  The ratio was more than 50 Sunnis detained for each Shiite.  By the time the surge was announced this ratio moved down into the 5:1 and 4:1 range where it held steady.

It would be interesting to have these same data for the Iraq government prison system.