Link-O-Rama: Russia's Domestic Market & Russian Arms Exports

Today I am sharing a number of links I keep saving in my Google Reader to get to later.  They deal with Russia and arms transfers primarily.  It is a mix of positive (for Russia) developments, negative developments, and some weirdness.  The weirdness is that Russia continues to fight against the rest of the world community on the arms to Syria issue. While it is true that arms sales to Libya have not yet been banned (primarily because of Russia's adamant opposition to the possibility), the consensus of the world is coalescing against the regime.  That is potentially long-term bad news for Russia's arms sales to that state.

However, the arms deal to Iraq (see below) is a sign that Russia may be able to regain some of its lost ground in the region.  The items from Libya are a bit confusing.

The bad news for Russia's arms industry is that it is losing past customers (even present allies) for its radar systems.

The last point I want to make before I get to the links is that Russia is really playing the embattled and encircled card on the issue of arms in general.  There is no doubt that the arms industry is a key component of Russia's foreign policy portfolio.

Putin wants to Re-arm Russia 

“In June, we in particular discussed implementation of a state armament program regarding aviation,” he said. “We will keep the issue under constant control.” 

“We will have no other historic chance to solve these ambitious tasks the country is now facing to ensure its defense capability in due time and with due quality when [the required] funds are available, thank God,” Putin said. “Tomorrow we will have none of these funds, and time will be lost.”

Part II

Russia will continue to build up its own defense capabilities according to foreseeable threats stated President Vladimir Putin at a meeting at the Defense Ministry, reports the Voice of Russia's correspondent from the session.

There are multiplying and expanding zones of instability on the planet: with non-stop armed conflicts in the Middle East, Central Asia, and the danger of radicalism and chaos being exported to Russia from neighboring regions. 

"At the same time there are methodical attempts being carried out to undermine the strategic balance," President Putin said.

Russia at War over Arms Sales

MOSCOW, March 2 (RIA Novosti) – Russia is facing a ‘real war’ aimed at hampering the country’s legal deliveries of weapons to Syria, the head of the Federal Service for Military and Technical Cooperation has said. 

“A real war has been declared against us,” Alexander Fomin told Ekho Moskvy radio on Friday without specifying who has declared the war. 

“The [Russian] ships are lured into ports and arrested there under various devised pretexts. When the ships are at sea, any insurance is canceled,” Fomin said adding that any attempts to deliver the contracted goods are being thwarted.

Libya and IRAQ
Iraq 

Indeed, when it became known that Iraq had problems with the Russian deal, there was widespread speculation that Washington had pressured Maliki to stop buying from Moscow to keep him dependent on the United States. 

That and the widespread accusations of corruption in the deal... 

Libya

There were denials all round at the time but the Americans, like the Russians, need hefty exports to keep assembly lines running amid massive cutbacks in domestic defense spending [1]. Libyan Prime Minister Ali Zeidan said Feb. 27 he will shortly ask the U.N. Security Council to lift the arms embargo imposed in 2011. 

Russia's U.N. Ambassador Vitaly Churkin said Monday that Moscow had reservations about that, given the Tripoli government's lack of authority and multiple security threats but he said Russia was ready to help the new Libya "facilitate the possible acquisition of arms." 

Russia's RIA Novosti new agency reports Algeria, another Cold War client, is another target, but Algiers has quarreled with Moscow on the quality of its arms and isn't expected to be a major buyer of Russian systems.

More on Libya

The Libyan authorities should do everything possible to stop the spread of Libyan weapons in the region and beyond, Russian Foreign Ministry spokesman Alexander Lukashevich said on Wednesday. 

Rebels in Libya, some of them from Islamist groups, ousted and killed long-standing dictator Muammar Gaddafi in October 2011 after a months-long uprising, in which they received assistance from NATO forces. Government arsenals across the country were looted during the conflict.

Wouldn't arms leakage present an opportunity for more sale to Libya in the long-run if they get the contracts?

Russia and Vietnam

Moscow will proceed with plans this year to help Vietnam launch a new submarine fleet and train the crews, Russian Defense Ministry Sergei Shoigu said on Wednesday.

Vietnam ordered six submarines in order to counter Chinese expansion in the area. 

Estonia (and Belarus)

TALLINN, March 7 (RIA Novosti) - Estonia’s Air Defense Forces have dismantled their last obsolete Soviet-made radars, the General Staff of the country’s armed forces said on Thursday. 

One P-37 type radar will be installed as a monument at the Amari military base, while another will be sent to an aviation museum. 

At present, two radar stations monitor Estonia’s airspace - a TPS-77 at Kallavere, in western Estonia and an ASR-8 at Amari, not far from Tallinn. 

In late March, a new radar station will be opened on Muhu Island featuring a medium-range Ground Master 430 3D air-defense radar [2] with an effective range of up to 470 kilometers (295 miles) and an altitude of up to 30 kilometers (100,000 feet). 

Another post-Soviet republic, Belarus, said in mid-February it would replace a Russian radar station with an indigenous one and dispose of its Russian-made Sukhoi Su-27 fighters.

The fact that even Belarus (Russia's erstwhile ally) is moving away from Russian-produced radar does not bode well for the reputation of Russian defense products.  This is a serious problem for Russia given its priority of exporting weapons.
__________________________________
[1] One of the assumptions I make in my dissertation is that both the US and Russia can use arms transfers as foreign policy tools because their domestic markets can support the arms industry.  This assumption does not seem to be holding up well.

[2] These are manufactured by the Thales group, a French firm.

Soviet Soldier Found Alive in Afghanistan

This story from RIA Novosti is pretty amazing.  It reminds me of the Japanese soldiers that they kept finding long after WWII had drawn to a close.  As someone who has lived through the ravages of war, the idea that this young man simply walked away from that and found a life for himself is inspiring.  If I had the proper linguistic skills and hadn't been married at the time, I may have done the same thing during my first tour in Iraq.  Living among the Kurds in northern Iraq was very appealing to me.

MOSCOW, March 5 (Alexey Eremenko, RIA Novosti) – There is a traditional healer living in the Shindand District in Afghanistan, known as Sheikh Abdulla, an elderly-looking, impoverished widower with a wispy beard leading a semi-nomadic life with a local clan. 

His real name is Bakhretdin Khakimov and he is a Soviet soldier who has been missing in action since the first months of a nine-year-long bloody war that began when the Soviets invaded Afghanistan in late 1979. 

Khakimov, an ethnic Uzbek, was tracked down two weeks ago by a search party of the Warriors-Internationalists Affairs Committee, a nonprofit, Moscow-based organization, operating under the aegis of the Commonwealth of Independent States (CIS), whose activists spent a year following the missing soldier’s decades-old trail.

I am glad that there are still those in Russia who are trying to find those that were so cruelly treated by their government.  A government, which for a long time refused to acknowledge the extent of the sacrifice that so many young men were asked to make.

The committee’s operations are funded by countries of the CIS, a confederation comprising most former Soviet republics. Though the expenditures are a mere 12,000 rubles ($400) a year per missing soldier, some countries, such as Ukraine and even oil-rich Turkmenistan, dodge the financial support responsibility, Lavrentyev said.

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.