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Last Updated:  Friday, 28 March, 2003, 07:50 GMT
Russia's race to export arms

By Alexander Koliandre
BBC Russian service

Sukhoi-35, one of the most popular export models
One of Russia's most popular export models
For decades, the Soviet Union supplied Iraq with firepower, tanks and aircraft. Now the US is accusing two Russian firms of selling banned equipment to Iraq.

President Vladimir Putin is at pains to prove that Russia has not supplied banned weapons to Baghdad.

But after a decade of retreat, Russia is indeed regaining its position as a leading exporter of arms and military equipment.

In 2002, Russia's export of military hardware rose to $4.8bn (3.1bn) - a post-Soviet record.

Arms sales have tripled during the past eight years and the state officials hope that it won't stop there.

"We see Russian exports on the rise as demand is high," says Mikhail Dmitriev, who heads the Committee on Foreign Military and Technological Cooperation.

Russia is already the top arms exporter in the world, according to the Stockholm International Peace Institute, although the institute's calculation methods are questioned by experts in both Moscow and Washington.

Even by more conventional estimates, Russia is the world's third or fourth-largest exporter.

And for the first time in almost a century, Russia's arms exports are not a political game but a valuable source of business.

Political export

Almost every regional conflict during the Cold War was fought with Soviet arms.

Sergey Berets, who served with the Soviet military mission in Ethiopia in 1981-83, recalls that almost every piece of equipment in the African country was made in the USSR.

A T55 Tank in Ethiopia
Ethiopia fought with Soviet tanks
Ethiopia's foes - Eritrea's rebels and Somalia - had Soviet weaponry too.

The supply of arms was generous, not least because the government of Ethiopia proclaimed Communism as its goal.

But the Soviet arms exports were hardly profitable.

"Senior officers and engineers were trying hard not to sell more arms for higher prices, but to keep their places and wages, paid in hard currency," recalls Konstantin Eggert, now a BBC correspondent in Moscow, who was serving in Yemen in the 1980s.

And the vast majority of buyers were not paying at all. Some African and Asian countries still owe hundreds of millions to Russia and the chances of calling in those debts are slim.

Only oil-rich Iraq and Libya were paying in full.

But now Russia cares more about money than about the politics.

Although the country's arms exports were worth almost $5bn in 2002 - a far cry from $20bn the USSR was charging each year three decades ago - at least those billions are now getting paid.

Limited markets

However, even though the current rise in sales is impressive, it may be short-lived.

Just two countries, India and China, account for almost three-quarters of all Russia's arms exports.

MIG29 fighter, the backbone of East European Air Forces
We are about to loose the market because our technology and people are ageing
Russian military engineer

Both are rearming and are ready to pay not only for existing arms but also for development of new ones.

Engineers from India are working with the Russians on a new version of Sukhoi-30MKI fighter, as well as naval equipment.

But leading military analyst Ruslan Pukhov, who heads Russia's Centre for Strategy and Technology Analysis (CAST), doesn't believe that sales to India and China will last long.

This is because both countries' rearmament is close to completion, he said.

Russia is trying hard to gain new markets, eyeing even Nato states like Greece, to which it has sold several landing ships.

It is also helping to upgrade Soviet-made Mig planes for Poland, Slovakia, Hungary and Bulgaria.

But Moscow is careful not to upset its Western partners by selling arms to rogue states in the Middle East.

"If we were operating only on the basis of sales, we could have sold a lot more to this area," Mr Dmitriev says.

Getting older

Another problem is ageing products.

Much of the military hardware was developed more than 10 years ago when the Soviet Union was handing its military industry as much money as it wanted.

MIG's MFI fighter
The MFI fighter is one of the most modern combat planes in Russia
Russian planes are still relatively modern and cheap. A Sukhoi-27 fighter costs about $35m, while its competitor, the F-15, costs more than $50m.

But as a Russian military engineer has admitted privately, there simply is not enough money to construct new models on the scale of yesteryear.

"It's a vicious circle - we are about to loose the market because our technology and people are ageing [although] we have now money to catch up," he said.

Russia's leadership is also pressing ahead with reform in its over-crowded and under-funded military, which is still dependent on state subsidies.

But CAST's Mr Pukhov is pessimistic. "Time has been already lost, and as such reform is rather painful, we hardly can expect it before Vladimir Putin is re-elected as president next year."

This might be too late for Russia to remain a leader in the arms market.

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