Russian Air Force jets in an exhibition in China, on Wednesday, Nov. 12, 2014. Bloomberg/Bloomberg via Getty Images
A report by IHS Jane’s released on Sunday found that Russia’s arms exports grew 9% to a record $10 billion last year. The report uses publicly-sourced materials to cover the entire global defense market except for munitions and small arms, meaning that these figures would rise significantly when one factors in the excluded categories and secret deals. In January, Russian President Vladimir Putin said that his country’s arms exports had exceeded $15 billion in 2014, and additional contracts worth $14 billion have already been signed. Furthermore, “the plan for the export of armaments worth about $15 billion this year will undoubtedly be fulfilled,” said Anatoly Isaikin, Director General of the state-run arms trader Rosoboronexport, on February 22.
The higher figures that Russia cites lack transparency and may not be entirely accurate either—after all, it is good domestic P.R. for Russian industries to be seen as thriving despite Western sanctions. Despite the discrepancy, both sets of figures show that Russia, the world’s second-largest arms exporter after the U.S., remains a major player in the global defense market, which grew 13.4% in 2014 and is still increasing rapidly.
In the continuing uproar over Russia’s aggression towards Ukraine, the West has imposed sanctions and closed off the European and North American markets to Russian defense firms. Yet the rest of the world is very interested in doing business with Russian defense firms, and the vast majority of Russia’s arms exports already go to countries in Asia, Africa, and Latin America that are modernizing their militaries. For example, Russia is a main contender for Indonesia’s plans to upgrade its jet fighters, and on March 5 Russia’s ambassador reiterated that it would eagerly comply with Indonesia’s technology-transfer requirements.
The Times of India reported today that India will buy 127 Sukhoi T-50 stealth fighter jets from Russia for $25 billion, and is even willing to accept a lower production-sharing agreement in exchange for expedited delivery. A preliminary agreement was signed in December 2010, implying a 50-50 design and production for an Indian version of the Russian jet, but the deal had been stalled until recently, while India’s parallel potential deal to purchase French Rafale fighter jets has reached a deadlock. New Delhi may replace the Rafale tender (valued at over $20 billion) with a second large Russian purchase, of a corresponding quantity of the Sukhoi-30MKI fighters that are already being produced in India.
However, there are also some factors working to slow down Russian arms exports. Low oil prices have decreased the purchasing power of petro-state customers like Iran and Venezuela. And Western sanctions have restricted the Russian defense industry’s access to imported components of weapons systems. Rosoboronexport admitted that it was necessary to solve this problem immediately, and Russian officials have said that replacing these imports with domestically-produced parts will boost Russia’s national security as well as create new jobs. Furthermore, sanctions have limited credit available to many Russian defense firms, so the government has stepped in to provide financing for earlier loan repayments in an effort to bring them out of debt.
Still, in light of lucrative arms races in the Middle East and East Asia, the defense industry remains one of the few bright spots in Russia’s otherwise battered economy.
