The Official Results of Russia’s Arms Export in 2000

Konstantin MAKIENKO

At a session of the Commission on Military - Technical Cooperation (MTC) on March 21, 2001, Russian President Vladimir Putin promulgated an official statement on Russian arms exports for the year 2000. It worthy of attention that this is the first public disclosure of information about the activities of military - technical cooperation by a head of state in the history of Russia. On previous occasions, such statements have been made by either the Minister of Foreign Economic Relations or the Minister of Industry and Trade or even by the deputy minister supervising the MTC.

According to Putin, in the year 2000 Russia exported arms and military equipment with a total value of $3.68 billion. Currency receipts have accounted for $2.84 billion. Eighty four percent of the deliveries were provided by “Rosoboronexport,” the state intermediary on arms exports and imports created on November 4, 2000 as a result of the merger between “Rosvoorouzhenie” and “Promexport”. Sixteen percent of the deliveries were provided by enterprises associated with the MTC system that are entitled to independent delivery of arms and military equipment abroad.

The information promulgated by the President allows for the further specifying and working out in detail of the preliminary forecast made by CAST in December 2000. CAST had independently, by use of open sources, identified those deliveries and their the cost, which, according to our estimations, was $3.7-3.8 billion. The independent CAST estimate also took into account that the final figure might have reached $4.0 - 4.2 billion as we had considered that we might not identify all deliveries. The Center practices extremely conservative estimations of the cost of deliveries.

The promulgated information allows CAST to make the following conclusions:

First of all, the Center’s forecast on the post-Soviet maximum of delivery volumes achieved in 2000 has proven to be true. The previous maximum was fixed in 1996 when the value of deliveries totaled $3.5-3.6 billion. Similar volumes of transfers in Russia were reached in presidential election years of the and in the years preceding these elections.

Secondly, the assumption that the final results would be approximately 10 % higher than our preliminary estimations has not proven to be true. This may indicate that the situation concerning transparency in Russia has improved considerably and that non-governmental organizations can more reliably estimate Russian arms export.

Thirdly, the existence of a significant gap between the value of deliveries and the volume of currency receipts, namely $840 million, draws attention. It is possible to account for this gap by two circumstances. First, Russia carried out rather large deliveries in repayment of the state debt in 2000. Among those it is possible to name the delivery of 8 Su-27UBK (Flanker) battle trainers to the People's Republic of China, $240-250 million face value, as well as the delivery to the same country of an unknown quantity of the “Tor-M1” (SA-15) anti-aircraft missile systems valued at $100 million. Thus, the identified arms-for-debt deliveries alone made $350 million. Second, two extremely large transfers, in monetary terms, which were executed during December 2000, namely, the transfer of 10 Su-30??? fighters and a 956E project (Sovremenny class) guided missile destroyer. The face value of these deliveries is at minimum $800 million, including the possibility that partial payments for these deliveries might be carried over to the year 2001.

Fourthly, the information promulgated by Putin allows CAST to identify more specifically the composition of deliveries on the part of the enterprises associated with MTC. According to the statement made by the President, those defense industry enterprises associated with MTC and entitled to independent export of defense products abroad have accounted for 16% of the total exports, making deliveries for the amount of $588.8 million. Accordingly, “Rosoboronexport” supplied the armaments and military equipment for the amount of $3091.2 million. On the basis of the newly obtained information the exact composition of deliveries for the enterprises involved with MTC is as follows:

Composition of Deliveries made by Defense Enterprises

Associated with the MTC for the year 2000

Source: CAST database

Thus, in comparison with the CAST preliminary estimate, the figure for the deliveries provided by “Rosvoorouzhenie” has been increased by $100 million. At the same time, however, the cost of deliveries by the “Antey” Concern has been reduced by a similar amount. This was clearly caused by the fact that the deliveries of the “Tor-M1” anti-aircraft missile systems (produced by “Antey” Concern) for the amount of $100 million to the People's Republic of China were an arms-for-debt payment and were carried out by the “Rosvoorouzhenie” and not by the “Antey” Concern. “Antey” Concern delivered the “Tor” SAMs independently (i.e. without “Rosvoorouzhenie” as an intermediary) only to Greece. In 2000 the delivery of 17 anti-aircraft missile systems for the amount of approximately $23 million each was most likely carried out by “Antey”.

The 2000 export nomenclature and regional structure

According to the statement of Vladimir Belukov, head of Export Quotas and Cooperation Deliveries

Department of the Russian Ministry of Industry and Science, the nomenclature structure of the Russian deliveries in 2000 was as follows:

Vladimir Belukov also stated that 74% of the deliveries ($2723 million) went to the Asian-Pacific region, 14.2% ($522.56 million) to European countries, including 13.8%, which went to Greece ($507.8 million). Accordingly, all the other regions account for only 11.8% of the Russian arms exports; i.e. they have received the armaments for the amount of $434.24 million.