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Russia Says It’s Ready to Arm Saudi Arabia
Lyuba Pronina
Moscow is preparing its first major defense contract with Saudi Arabia, the world’s largest arms buyer that has traditionally spent its petrodollars on U.S.-made weapons.
The deal is part of a strategy aimed at diversifying Russia’s arms buyers away from China and India, Sergei Chemezov, general director of state-owned arms exporter Rosoboronexport, told reporters Wednesday.
Russia also signed an arms contract with Morocco last month, he said, the first since the breakup of the Soviet Union.
Chemezov refused to give any details, but said that Russia is stepping up negotiations with Middle Eastern countries for jointly developing air defense systems on the basis of the domestically produced S-300, Buk and Tor-M1 systems.
“If a contract with Saudi Arabia is signed, it will be a landmark event in Russian arms exporting,” said Marat Kenzhetayev, an expert with the Center for Arms Control.
From 1991 to 2002, Saudi Arabia imported $93 billion worth of weapons, Kenzhetayev said, while Morocco imported $1 billion.
In that same period of time, Riyadh signed $40 billion worth of arms contracts, of which $28 billion flowed to the United States and not a penny went to Russia, he said.
After U.S.-Saudi relations dampened following the Sept. 11, 2001, terrorist attacks, the situation now seems to be swinging in Russia’s favor, Kenzhetayev said.
While Moscow already sells arms to Middle Eastern countries such as the United Arab Emirates, Yemen, Iran, Kuwait and Algeria, a deal with the Saudis could push its neighbors Jordan and Oman to sign Russian contracts as well, Kenzhetayev said.
For Moscow, which sells arms to 59 countries, finding new customers is important as it tries to diversify away from major clients China and India, which account for 80 percent of Russian arms sales.
“We have reached the ceiling of $5 billion to $6 billion in annual arms sales abroad,” Chemezov said. “We have to change something drastically.”
Last year, Rosoboronexport, which mediates over 90 percent of the country’s arms deals, delivered $5.1 billion worth of arms out of $5.8 billion exported by Russia as a whole.
Rosoboronexport has orders of $12 billion through 2007, but Chemezov said that this year Rosoboronexport can expect to make $1 billion less in revenues.
“The reason? Our companies cannot produce more modern weapons. [The industry] is in need of investment either from private companies or from the state,” he said. “Today we sell weapons that were designed in the late 1970s and early 1980s.”
Rosoboronexport plans to boost control over defense production by placing its directors on the boards of arms makers and buying stakes, Chemezov said.
Chemezov said that all sales are strictly in line with international agreements and do not violate any United Nations sanctions.
“However, if some country, including the United States, makes its own decision [on sanctions], pardon us, we are not obliged to do as America says,” Chemezov said.
Last month, Israel and the United States expressed concern about the possible sale of SA-18 surface-to-air missiles to Syria.
Asked whether any such contract was discussed during Syrian President Bashar Assad’s recent visit or is planned, Chemezov said: “No.”
By: star49 - 10th February 2005 at 22:20
5.1. $6 BILLION FOR WEAPONS
that’s what Russia made last year
Author: Alexei Nikolsky
Source: Vedomosti, February 2, 2005, p. A3
[Russia’s arms exports are rising steadily, but the unprecedented revenue is mainly coming from sales of spare parts and maintenance. Experts hope the situation will change within the next few years; otherwise, Russia’s defense enterprises will have to seek new markets.]
<> AN ARMS SALES RECORD: THE LEVEL OF $6 BILLION REACHED
The Russian defense sector set an export record last year: arms sales revenues reached $6 billion. Only in the Soviet era were arms exports greater than this. The current portfolio of orders will suffice to keep exports around the $5 billion mark for the next two years, experts note.
Mikhail Dmitriyev, director of the Federal Military Technology Cooperation Service, reported to President Vladimir Putin yesterday on the achievements of the Russian defense sector. According to Dmitriyev, in 2004 Rosoboronexport brought in $5.1 billion out of a total of $6 billion in arms sales. RSK MiG, the Instrumentation Design Bureau, and the Machine-Building Design Bureau, as well as NPO Mashinostroyeniya, which have independent licenses to export finished systems, earned at least $450 million more. The rest of the revenue was brought in by 14 enterprises which export spare parts, Sukhoi Aviation and the Salyut Plant of Moscow being the largest of them (with revenue of $135 million and $38 million respectively).
Earnings of $6 billion may boost Russia to second place among the world’s arms exporters, after the USA, notes David Mulholland of Janes Defence Weekly. Besides, this is an absolute record for the post-Soviet history of Russia.
However, it was mainly achieved thanks to a rise in exports of spare parts and services; and these sources will soon prove insufficient for Russia to maintain sales at the level of at least $5 billion per annum, says Konstantin Makiyenko, an expert at the Strategy and Technology Analysis Center.
Exports will not decline within the next couple of years, adds Marat Kenzhetayev from the Center for Disarmament Studies at MFTI; according to Dmitriyev, the sales portfolio of Russian enterprises includes contracts to the amount of $14-15 billion. Russian arms producers will have to seek new markets after that, says Makiyenko. Sales to North Africa and the Middle East could be promising, as well as supplying strategic systems to China and India. According to Makiyenko’s calculations, China and India accounted for 65-75% of Russia’s exports in 2004. Dmitriyev promised Putin that Russian enterprises “are expecting orders from Saudi Arabia and, for the first time, from the Sultanate of Oman.”
Thus far, Russia is mainly selling aircraft abroad. According to a source at Rosoboronexport, aviation exports account for about half of total exports, and almost 60% of Rosoboronexport’s sales (that is, about $2.5 billion). Overall, India, China and Vietnam received 38 Su-30 fighters of various models. Almost all of 70 Mi-8/17 helicopters constructed at Russian plants were exported as well. At the same time, about 20% of Rosoboronexport deliveries are made up of vessels – China received the first Project 636 diesel submarine (out of eight ordered in 2002), while India acquired the last Project 11356 frigate. The share of air defense systems in Rosoboronexport sales was about 6% ($300 million). Besides, part of the revenue of the Tula Instrumentation Design Bureau ($242 million) probably came from Pantsir missile and artillery systems. Within the next couple of years, the share of air defense systems in Russian arms exports is expected to grow, says Kenzhetayev.
A major contract was concluded last year with China, for the supply of S-300 PMU-2 systems to the value of around $1 billion; these systems will also be supplied to Vietnam. Contracts for sales of Tor and Pantsir systems to the Middle East and India are also likely.
Translated by Andrei Ryabochkin
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February 10, 2005 at 10:15 pm