#13
Moscow News
August 28, 2002-September 3, 2002
BOOMING ARMS EXPORT
Rosoboronexport is snapping up stakes in weapons manufacturers and sinking more cash into production
Sergei Ryabov Vremya MN

The hard-currency earnings of state-owned arms exporter Rosoboronexport will top $ 4 billion this year, its general director Andrei Belyaninov said. He added that this tidy sum pointed to the efficiency of his company, formed in late 2000 through the merger of two state-owned middleman firms - Rosvooruzheniye and Promexport.

Within the two years of its existence, Rosoboronexport has contrived to become the maker of state policy on weaponry exports. Its orders portfolio already exceeds $ 14 billion. Belyaninov says that although Russia's present export potential is largely based on Soviet-era stockpiles, the defense industry has been reforming itself and can count on adequate government funding. Sixty-five to 70% of the orders that the company gets are for aircraft. Customers want to buy not only Russia's traditional export item, namely, fighter planes built by the Sukhoi military aircraft maker, but also Mil helicopters, which Russia supplies to countries of Central and Latin America, Africa and Southeast Asia. These are markets that Rosoboronexport is tapping as a top priority. It also endeavors to restore its markets in the CIS countries, where it feels that its presence is not strong enough. Nevertheless, Rosoboronexport enjoys growing demand for Russian-made weaponry, and to satisfy it the company is investing more money in arms production and acquiring shares in arms manufacturers.

The CIS countries are upgrading their arsenals, nearly 100% of which are Soviet-era weaponry. One big problem in working with the CIS countries is that they remake their armaments without consulting the Russian designers of the items concerned. For example, Georgia has recently upgraded its Su-25 fighters on its own.

Israel is another country resorting to this impermissible practice. It has altered its Su-25s and MiG-24s to its taste. "This is an absolutely illegal act," says the general director of Rosoboronexport, "because it undermines the prestige of Russian brands and violates Russia's rights to its intellectual property."

Other problems that Russian arms suppliers face on the world market include the illegal sale of spare parts for Russian-made weapons, and of second-hand military equipment from Russia. These illegitimate practices seriously damage Russia's reputation as an arms supplier. However, this is becoming less of a problem because nearly all the weapons that were under central control in Soviet times but passed into private ownership with the collapse of the USSR are out of stock. Besides, buyers have become more cautious and are asking for quality warranties for the goods.

Belyaninov also said that there would soon be as many foreign orders for naval equipment as for aircraft. He hopes that over time there will be more Russian state orders too, as this will boost Russia's military-industrial-potential and stimulate the development of new military hardware and equipment.

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