Russia expects to sell $6 billion
worth of weapons this year. But Russia exported $8 billion worth of weapons
last year, and there were hopes that sales might reach $10 billion this year.
The sudden fall in Russian arms sales comes from problems with the two largest
customers; China and India.
arms exports had been growing rapidly during the last few years. In 2005
Russian arms exporters had already booked orders for six billion dollars worth
of sales per year through 2008. In 2004, Russian arms sales were $5.6 billion,
and that went to $6 billion in 2005 and $7 billion in 2006. Russian arms sales
have been rising sharply (they were only $4.3 billion in 2003), as the
economies of their two biggest customers (India and China) grew larger. That,
and the escalating price of oil (driven largely by increased demand from China
and India), has sent international arms sales from $29 billion in 2003, to over
$60 billion now. Oil rich countries, particularly those in the Persian Gulf, as
eager to buy more weapons, with which to defend their assets.
States and Russia are the largest exporters of weapons, together accounting for
about 70 percent of world sales. Traditionally, the U.S. sold nearly three
times as much as Russia, and that ratio seems to be holding. There is more
effort by the Russians to not just sell on price, but also on service and
warranties. Most of the cost of a new weapon comes during the lifetime (often a
decade or more) of use. In the past, Russia had a bad reputation for support,
and lost a lot of those "after-market" sales of maintenance services
and spare parts. The U.S. was much better in that respect, but much more
expensive. Now the Russians not only have the price advantage (often half, or
less, the cost of equivalent American weapons), but an improving reputation for
providing good service. The Russians are also selling more high tech, and
expensive, warships. For many years, warplanes comprised about two thirds of
Russian sales, but now, about half the sales were for warships.
last decade, about 40 percent of Russian arms exports went to China. But that
is now at risk, as Russian manufacturers feud with the Chinese over stolen
technology. The Chinese have been quite brazen of late, as they copy Russian
military equipment, and then produce their own versions without paying for the
technology. Worse, the Chinese are now offering to export these copies. The Russians
are trying to work out licensing deals with the Chinese, but are not finding
much interest. The Chinese say their generals are angry over how Russia sells
technology to potential Chinese enemies, like India. The Russians don't
understand that, as they have been selling weapons to India for decades. Russia
fears that the Chinese have just decided that they don't need to buy Russian
technology, or equipment, any more, and can just steal what they need.
again, all this could just be a lot of posturing, as the Chinese negotiate to
get the best deal they can for Russian military technology. It is cheaper to
build under license, because that way you get technical assistance from the
developer of the technology.
unhappy with Russian sloppiness in handling large projects, like refurbishing
an unfinished Cold War era carrier. This project has been a financial disaster
for India. Worse yet, India is buying more Western (Israeli, European and
American) weapons, and notes the differences in performance and service.
cannot change a lot of old habits real quick, their flourishing arms export
business is going to slide back into the cellar.