Russia has sold fewer weapons to India, Egypt, and Algeria, who have begun to prefer Western, usually American, weapons for their reliability and high performance. These nations have come to realize that American weapons are worth the price if they can be maintained. They can do this by purchasing maintenance contracts to keep the weapons operational.

Meanwhile, Ukraine's innovative drone exports will bring in over a billion dollars in sales this year. This came after NATO nations supplied Ukraine with so much military aid that it accounted for ten percent of imports.

Russia has had problems with arms exports in the past. Russian arms exports rose only 2 percent in one year [Editor – identify the year], to $8.5 billion. The following year, Russia sold $15 billion in weapons, plus $40 billion in items yet to ship. While sales to China are down, Russia has found new customers in South America (not just Venezuela). Vietnam, seeking an ally against its ancient enemy, China, has become a major customer for aircraft and warships. Sales are returning to the Middle East, especially North African countries. India, however, remains the major export customer.

Another example: in 2008, Russia exported $8.35 billion in weapons-related sales, up from $8 billion in 2007. In 2005, analysts hoped sales would reach $10 billion in 2008. The stall in Russian arms sales growth comes from problems with the two largest customers: China and India. Russian arms exports had grown rapidly for years. From 2005 to 2008, Russian arms exporters received orders for $6 billion worth of military items per year. In 2004, Russian arms sales were $5.6 billion, rising to $6 billion in 2005 and $7 billion in 2006. Russian arms sales were only $4.3 billion in 2003, and they expanded as the economies of India and China, its two major customers, grew. That, along with escalating oil prices driven by demand from China and India, has pushed international arms sales from $29 billion in 2003 to over $60 billion now. Oil-rich countries, particularly those in the Persian Gulf, want to buy more weapons to defend their assets.

These sales matter greatly to the Russian government. The defense industry employs nearly three million people and accounts for about 20 percent of Russia's industrial jobs. At the end of the Cold War in 1991, the defense industry was more than three times larger than it is now. The size of the defense industry played a major role in the Soviet Union's bankruptcy. The Russians were never quite sure (cost accounting wasn't a communist favorite) what proportion of their GDP went to military spending, but estimates suggest it was over 20 percent. That was more than four times the figure for Western nations.

The new Russian defense industries are trying to compete with Western ones, but that has proved difficult. For example, India is unhappy with Russian sloppiness in handling large projects, like refurbishing a decommissioned Cold War-era carrier. This project has been a financial disaster for India. Worse yet, India is buying more Israeli, European, and American weapons and notes the differences in performance and service. If Russia cannot quickly change many old habits, its flourishing arms export business will slide back into the cellar. Eventually it did just that. This was in part due to the Ukraine war, where Russian weapons were destroyed, abandoned, or captured shortly after reaching the combat zone. It was efficient, but it cost Russia any chance of victory in Ukraine.

James F Dunnigan