Grigory Pasko: Billions in Russia-Venezuela Arms Deals

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Russia’s main business – arms

Grigory Pasko, journalist

Not too long ago the magazine Kommersant-Vlast published a detailed article about the volumes or Russian arms export in the years 2004-2008.  According to the data of the publication, in the year 2008, the volume of shipments attained yet another record number — $8.35 bln, having exceeded the result of the previous year by about $700 mln. The economic crisis and the absence of new contracts could make this indicator unattainable for the Russian arms-industry complex (AIC) in the next few years.

The publication notes that the main transformations in the structure of military-technical cooperation ended last year. The integrational idea of “Rostekhnologii” director-general Sergey Chemezov about the creation of a single military-industrial corporation on the basis of “Rosoboronexport” and its industrial assets has received factual formalization. Currently in the corporation “Rossiyskie tekhnologii” are numbered 180 unitary enterprises and state stakes in 249 joint-stock companies. Among the largest assets — subsidiary companies of “Rosoboronexport” such as “VSMPO-Avisma”, AvtoVAZ, KamAZ, “Russpetzstal”, “Oboronprom”.

In March of the year 2007, president Vladimir Putin signed an ukaseabout granting FGUP “Rosoboronexport” the exclusive right to export thefinal output of military designation. A second export monopoly after”Gazprom” was founded in such a manner.

The economic crisis touched all the enterprises of the MIC to oneextent or another. “Rostekhnologii” were forced to ask for money fromthe state. Access to the credit resources of the state was drasticallyreduced. Large-scale investment projects were forgotten. Of the overallsum for anti-crisis support of industry (629 bln rub. for the year2009), defense enterprises were allocated 50 bln for increasingcapitalization and 100 bln — for state guarantees on credits. Inconsideration of the fact that “Rostekhnologii” and other defense”champions” will get money in first order, for the entire MIC this sumturned out to be very modest indeed.

The publication cites the following numbers. The portfolio of ordersas of the end of the hear had achieved $34 bln, of which $16 bln is dueto Indian contracts. At the same time, the main point of tension in thearea of MTC became precisely Russo-Indian relations. After longnegotiations, the Indian side agreed to additional financing of acontract for the restoration of the heavy aircraft-carrying cruiser(TAKR) “Admiral Gorshkov”, which was supposed to have been handed overat the end of last year. However, this term, at the insistence of theRussian side, was carried over to the year 2012. According to thedeclaration of the management of “Sevmash”, the TAKR “Admiral Gorshkov”is half-ready.

For the first time in many years, China did not enter the list ofthe largest importers of Russian arms and military hardware by value ofcontracts signed over the year. For a long time already, the Chineseare insisting on the transfer to them of military high technologies, inwhich the Russian side invariably refuses them. In the main,Russo-Chinese cooperation comes down to scientific-research andexperimental-and-design works on special orders or deliveries ofsupplementary units and assemblies for military hardware alreadypurchased.

As concerns agreements already entered into with the eccentricpresident of Venezuela, colonel Hugo Chavez (overall sum $4.4 bln),nearly all the large contracts were fulfilled last year. This isdeliveries of 24 multi-functional Su-30MK2V fighters, 34 Mi-17V-5transport helicopters, ten Mi-35M and three Mi-26T. Likewise completedis a transaction for Kalashnikov machine-guns — a hundred thousandAK-103 and AK-104, and all that’s left in accordance with the contractis to build a plant for their production. Besides this, a delivery toVenezuela of “Tor-M1″ and “Pechora-2M” anti-aircraft missile systems ispossible. Negotiations were being conducted last year, howevercontracts for the delivery to this country of BMP-3M and similar boatsof design 636 never were entered into. But now, taking intoconsideration the low prices for oil and the frailty of the position ofpresident Chavez, to expect new serious arms deals with Venezuela israther complex.

From this publication I, as just an ordinary reader and taxpayer, canreach a conclusion about how the leadership of my country is activelypromoting on the world market, in essence, just one kind of exportoutput – arms. It is obvious that such a business, first, is notlong-term (sooner or later, any importer country will want to acquirefrom a supplier country a license for the independent manufacture ofkinds of arms, as China has already done). Second, such a businessinevitably leads to the arising of conflicts in the regions of deliveryof Russian arms. Third, speaking about the non-long-term nature of thearms business of Russia with Venezuela, for example, is also the factthat many are sensing the frailty of the position of president Chavez.Many, only not the leadership of Russia.

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2 Comments

  1. DanielB
    Posted April 18, 2009 at 12:56 pm | Permalink

    I think you are a bit missinformed about Russo-Venezuelian weapon deals , venezuelan politics and the role a MIC in general .1- France ( EADS ) , Spain ( CASA ) and Brazil ( EMBRAER ) were eager to sell weapon systems to Venezuela .Because of an Us embargo on some technologies , these sales were not completed .So Venezuela turned itself to a country able do developp technologies which not include Us components .http://www.lemonde.fr/cgi-bin/ACHATS/acheter.cgi?offre=ARCHIVES&type_item=ART_ARCH_30J&objet_id=931494&clef=ARC-TRK-NC_012- Russian weapons are a reliable source of technologies unable to be easily jammed by ” worms ” or which could be easily neutralized . Venezuelian army uses Israeli made communications equipements and guess what could happen in the case of a conflict between Venezuela and a western friendly country like Colombia .Do you think western made air defense systems are reliable against a western agression ?3- Licensing weapons is a lever of diplomatic influence in the aerea of the ” soft power ” . It means cultural influence for decades .Read Norberto Ceresole on this issue .4- As a Russian tax-payer you should be happy of billions of foreign hard currency pourring in your country .As i am as a Franco-Brazilian tax payer for EADS and EMBRAER .5- Russian weapon sales are not much more prolilferative than western ones . Do you think selling Harpoon missiles to the Chilean Navy is less proliferative than selling Su-30 to Venezuelan Air Force ?Latin America was always a place for “N-1″ or ” N-2 ” generation of weapons since France sold the Etendart IV- Exocet missile system to Argentina which was employed against UK in the war of the Malvinas .By arming Venezuela and other countries with ” N ” generation weapon systems Russia gives only to these countries a true deterrent power in preventing foreign agressions .The same thing for Brazil when it buys Scorpene submarines from France .5- The MIC employs ” High-End ” technologies and highly qualified people . Building a 5th generation fighter or a nuclear strategic submarine with MIRV ICBM’s means that you are mastering complex industrial , technological and intellectual skills .A 5th generation fighter eg is the summit of an industrial , technological and intellectual pyramide which begins with the elementary school and ends at the University , which comprises the modest machine tool worker ( a very qualified job in fact ) to the highly diplomed physicist . You should be proud that your country has developped such capacities as i am for France .I realized it when i worked for the French Marine Nationale on the SNLE program . Mastering a ” simple ” CNC 5 axis lathe is the result of at least 10 years of education from the kindergarten to the technical school .6- State control is essential on weapons sales . It’s a part of the diplomacy of a state and its interaction with other states even in the economic field .Behind MacDonnell Douglas there is Mac Donalds and behind Sukhoi there is Gazprom ! I woulnd’t let the control of the diplomacy of my country to ” Big Gun ” as it was common in the beginning of the XX th century ( Schneider for France – Krupp for Germany – Amstrong Vickers for UK ) . I ‘m much more confident on the Russian state control of ” Rosoboronexport ” than the British governement attitude towards Vickers-Amstrong on the eve of WWI .7- Times of crisis leads to much more geopolitical volatility . I don’t think weapons sales will drop by a large amount the following years as ” flash points ” will increase due to this volatility .8- I attended to a conference of Eva Golinger two weeks ago in Marseilles . She is much more confident on the popular support of Hugo Chavez than you are .9 – As you i belong to those who prefers his country sales ploughs instead of guns . But i see the world as it is . And it’s not the world of the Tv Tobbies ……………….10 – According to Hans Morgenthau’s standarts ( great gains for small problems ) , Russian diplomacy and ” weapon diplomacy ” in Latin America is rather successfull .But not everybody is obliged to agree with Morgenthau on international relations and interaction between states .

  2. Posted July 3, 2009 at 4:20 pm | Permalink

    When you look at the figures talked about here it just makes you think – how many weapons does a country need?. It was pretty clever of the Venezuelan government to make its own technology that did not contain US components, it cant be that hard with the expertise around today!