Russia and the Arms Trade

International transfers of conventional arms and related technologies are an important feature of international security. Because few states have an independent, indigenous capacity to develop and produce arms the behaviour of arms suppliers is one factor conditioning the global distribution of military power.

During the cold war the Soviet Union and the United States used arms transfers and military assistance as one element in foreign and security policies that were primarily intended to further a political and ideological competition. With the end of the cold war the international arms trade no longer has the same politico-military underpinning.

The international market for arms and military equipment was changed by the economic impact of the end of the cold war. Apart from the dominance of the Soviet Union, the United States and their respective allies as arms suppliers, the Warsaw Treaty Organization (WTO) and NATO were also important centres of demand for arms transfers and the main centres of arms production. After the WTO dissolved itself its former members reduced their military spending dramatically. The other alliance—NATO—also experienced a significant downturn in military spending.

The Soviet decision making process and its system for executing decisions were destroyed when the political monopoly of the Communist Party ended and the state was dissolved. The new state of Russia had to develop decision-making procedures and executive agencies that were effective and consistent with a democratic political system.

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Key findings

Contents

About the editor

Contributors

Key findings

Market-driven processes

In the late 1980s the changes in foreign policy initiated by President Mikhail Gorbachev and Foreign Minister Eduard Shevardnadze transformed the pattern of Soviet arms exports. After 1992 decisions by Russia about foreign, domestic and economic policy altered the size and pattern of arms exports further.
The Soviet Union accounted for roughly 40 per cent of international transfers (deliveries) for major conventional arms in the late 1980s. By 1991 this share had been reduced to less than 20 per cent. By 1994 Russia accounted for less than 10 per cent of international transfers (deliveries) of major conventional arms. By 1996-97, Russia accounted for roughly 15 per cent of international transfers (deliveries).
According to the Office of the President, in 1996 military-technical cooperation generated $2.5 billion in revenue of which $2.1 billion was in convertible currency and the rest in currencies that could not be freely converted. Russia also delivered arms and military equipment against debts owed to several foreign countries.
Between 1990 and 1994 the volume and value of Russian arms transfers collapsed as military-technical cooperation with countries in Central Europe and with friends and treaty partners in developing countries was sharply reduced.
By 1994 Russian arms exports were concentrated in a small number of bilateral cooperation arrangements. The most important are with China, India and Iran.
After 1994 Russia opened some new markets—including cases where the Soviet Union had never been a supplier. Examples of recent successes include Brazil, Cyprus, South Korea, Malaysia, Turkey and the United Arab Emirates.
Russian manufacturers have begun to restore cooperation with partners in the Commonwealth of Independent States and, on a limited basis, have begun to cooperate with manufacturers in Europe.
Nevertheless, further large increases in the value or volume of Russian arms exports beyond the levels recorded for 1996-97 seem unlikely.
The previous decline in military production is beginning to level out, simultaneously with a continued concentration in the arms industry in most parts of the world, particularly in the United States.

International political processes

While Russia has been willing to participate in the international discussion of conventional arms exports, it has not always been welcome among the group of states conducting this discussion.
Russia participated in talks among the five permanent members of the United Nations (UN) Security Council in 1991 which led to the establishment of guidelines on conventional arms exports in October 1991. Russia also participated in the creation of the UN Register of Conventional Arms.
Members of the Coordinating Committee for Multilateral Export Control (COCOM) decided to initiate a new forum for discussing conventional arms export questions in 1993. However, it was not until 1995 that Russia was invited to participate in these discussions (which subsequently led to the creation of the Wassenaar Arrangement on Export Controls in 1996).
Russia has been prepared to modify its policies and procedures in response to arguments and information received from other countries. National regulations have incorporated guidelines and control lists developed in international discussions. In response to a request from the United States, Russia agreed not to conclude any new agreements for conventional arms with Iran—although existing agreements are being completed and equipment already transferred will be kept in service.

Domestic political processes

Russia has not agreed primary legislation on arms exports in the form of a parliamentary decision or law. A draft law introduced in 1997 was vetoed by President Boris Yeltsin. This reflects the lack of consensus in Russia on issues such as the proper role of government vis-à-vis industry, the proper role of the different branches of government and the proper role of parliament.
In the absence of a law, Russian arms exports and military-technical cooperation have been regulated by decrees issued by the President or by the Chairman of the Council of Ministers (the Prime Minister).
Since 1991 the Russian Government has made many changes to decision-making procedures in an effort to find an optimal approach. Authority has been placed under the Council of Ministers and under the President at different times. It is not certain that the latest changes (introduced in mid-1997) represent a lasting arrangement.
1992-94. The initial procedures stressed a commercial approach. Manufacturing and trading enterprises required licences issued by the Ministry for Foreign Economic Relations after inter-agency consultation.
1994-95. Decision authority was brought under the Presidential apparatus through a State Committee on Military-Technical Policy that reported to the President. New regulations strictly limited the number of industrial entities that could engage in foreign military-technical cooperation and a state agency—Rosvooruzheniye—was given the main authority to engage in foreign military-technical cooperation.
1996-97. The Presidential apparatus dealing with arms export issues was abolished and decision authority was returned to the Government, with the Prime Minister charged with coordinating an inter-agency decision-making process.

Domestic economic processes

The Russian defence industry was mainly developed to meet the demand of the Soviet armed forces and WTO allies. After the end of the cold war the dramatic reduction in orders for equipment from the Russian Ministry of Defence created a crisis in the defence industry and dependence on exports—previously relatively low—increased dramatically.
According to Russian defence industry spokesmen, in 1996 exports accounted for around 65 per cent of total production and in 1997 this share is expected to have grown.
The profitability of exports to industry is contested. Exports are the main means of obtaining payment for production because the Ministry of Defence is habitually late in paying for equipment and sometimes does so with a substitute for money. Others argue that even exports are only profitable for a small number of participants because no equitable payments system has been developed. Proceeds from foreign sales are, it is alleged, retained in the banks which finance transfers and the prime contractors which assemble finished products.

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Contents

1. Introduction

Ian Anthony

2. Trends in post-cold war international arms transfers

Ian Anthony

3. Conventional arms transfers during the Soviet period

Yuriy Kirshin

4. Economic dimensions of Soviet and Russian arms exports

Ian Anthony

5. The influence of external factors on Russia's arms export policy

Sergey Kortunov

6. The process of policy making and licensing for conventional arms transfers

Peter Litavrin

7. The role of the Ministry of Defence in the export of conventional weapons

Yuriy Kirshin

8. Russian defence firms and the external market

Elena Denezhkina

9. Military-technical cooperation between the CIS member states

Alexander A. Sergounin

10.Military-technical cooperation between Russia and countries of East-Central Europe

Irina Kobrinskaya and Peter Litavrin

11. Sino-Russian military-technical cooperation: a Russian view

Alexander A. Sergounin and Sergey V. Subbotin

12. Illicit arms transfers

Ian Anthony

Appendix 1. The Guidelines for Conventional Arms Transfers, 1991

Appendix 2. The OSCE Criteria on Conventional Arms Transfers

Appendix 3. Russia's conventional arms export regulations

Index

About the editor

Ian Anthony (UK) is Leader of the SIPRI Arms Transfers Project. He is editor of the SIPRI volumes Arms Export Regulations (1991) and The Future of Defence Industries in Central and Eastern Europe (1994) and author of The Naval Arms Trade (SIPRI, 1990) and The Arms Trade and Medium Powers: Case Studies of India and Pakistan 1947-90 (1991). He has written or co-authored chapters for the SIPRI Yearbook since 1988.

About the contributors

Dr Elena Denezhkina (Russia) is a Research Fellow at the Centre for Russian and East European Studies at the University of Birmingham.

Dr Gennadiy Gornostaev (Russia) is Head of Department in the All-Russian Institute for the Study of External Economic Relations in the Russian Ministry of the Economy.

Academician General Yuriy Kirshin (Russia) is Vice-President of the Academy of Military Sciences in Russia.

Dr Irina Kobrinskaya (Russia) is a Senior Research Fellow at the Institute of US and Canada Studies of the Russian Academy of Sciences in Moscow.

Dr Sergey Kortunov (Russia) is Deputy Head of Staff and Head of the Strategic Assessments and International Policy Department of the Defence Council of Russia, part of the staff of the President.

Dr Peter Litavrin (Russia) is a senior civil servant in the Russian Ministry of Foreign Affairs.

Prof. Alexander A. Sergounin (Russia) is Professor of Political Science at the University of Nizhniy Novgorod.

Dr Sergey V. Subbotin (Russia) is Assistant Professor of Political Science at the University of Nizhniy Novgorod.

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