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Domestic Policy #2 (12), 2008 Rites of Spring in the Defense Industry Complex 2 PUBLISHER Urbi et Orbi: Military Parades on Red Square 4 Centre for Analysis of Strategies and International Policy Technologies Recent Evolution of Russian-American Relations 7 CAST Director & Publisher Ruslan Pukhov Nagorno-Karabakh: Shift in the Military Balance 9 Editor-in-Chief The Rise and Fall of Georgia’s UAVs 13 Mikhail Barabanov Advisory Editors Konstantin Makienko International Cooperation Alexey Pokolyavin Thales Group in Russia 15 Researchers Ruslan Aliev Sergey Denisentsev Industrial Policy Polina Temerina Dmitry Vasiliev Maiden Flight of the SSJ-100 17 Editorial Office 3 Tverskaya-Yamskaya, 24, office 5, Moscow, Russia 125047 Arms Trade phone: +7 495 251 9069 Russia on the Arms Market of Sub-Saharan Africa 18 fax: +7 495 775 0418 http://www.mdb.cast.ru/

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Cover Photo: Military parade on Red Square in commemoration of the 63rd anniversary of the Victory in the Great Patriotic War of 1941–1945. Moscow, May 9, 2008

Photo by: Leonid Yakutin

© Centre for Analysis of Strategies and Technologies, 2008 Printed in Russia # 2, 2008 Moscow Defense Brief 1 Domestic Policy

Rites of Spring in the Defense Industry Complex Aleksey Nikolsky, Vedomosti correspondent, special for Moscow Defense Brief

n assuming power as Russia’s President on May 12, Dmitry the wave of appointments announced by Medvedev, who OMedvedev launched a cabinet shuffle with significant maintained his mentor’s tradition of shuffling bureaucrats consequences to the departments and corporations that from one position to another without actually getting rid of make up Russia’s defense-industrial complex. anyone. Sergey Ivanov retained his position as Chair of the It is clear that Cherkesov and Patrushev were demoted Military-Industrial Commission, but lost his title of First to relatively insignificant positions as a result of the sharp Deputy Prime Minster and is now one of several deputy conflict that erupted between the FSB and the FSKN. This prime ministers. The new government now has two first conflict reached its climax with the arrest last month, on deputy prime ministers: former presidential aide Igor evidence presented by the FSB, of Aleksandr Bulbov, an Shuvalov and former Prime Minster Viktor Zubkov. Ivanov’s FSKN officer close to Cherkesov. Cherkesov’s people then deputy in the Military-Industrial Commission Vladislav prepared a brief for Putin on the scandalous “Three Whales” Putilin apparently quit his post before May 12, when his contraband case, which incriminated several highly placed position was eliminated. FSB officers. Baluyevsky’s dismissal follows the same pattern: Later the same day, Medvedev demoted the heads of his opposition to several reform measures advanced by the two special services agencies that had come into sharp Defense Minister was widely known. But for the sake of conflict with one another last fall. Nikolai Patrushev, the maintaining an aura of stability, no reprisals were taken Federal Security Service (FSB) chief, appointed by Boris until after Medvedev’s inauguration. Yeltsin, was replaced by Aleksandr Bortnikov, head of the By way of contrast, the fact that Deputy Prime Minister FSB Economic Security Service, and is now Secretary Sergey Ivanov has kept his position as the curator of the of the Security Council. Meanwhile, Viktor Cherkesov, military-industrial complex is indeed significant. It was Director of the Federal Narcotics Control Service rumored that Ivanov would be offered a new, more political (FSKN), was appointed head of the Federal Agency for position after he lost the backroom struggle to be crowned Arms Deliveries, replacing Aleksandr Denisov. Sergey Putin’s successor, such as governor of a new super-region Ivanov had first spoken of the need for a civilian agency comprising Moscow city and oblast. Indeed, Ivanov may to centralize the procurement of arms for all government yet be appointed to some other position, but for the next agencies in 2006, and the presidential decree creating few months he remains at least formally the highest official it stated that the agency would begin work in 2008. But dealing with the defense industry. In this respect Ivanov at the beginning of this year another decree was issued, remains the principal and for the time being the only effective specifying that the Agency will purchase only serially restraint on the ambitions of Russian Technologies to obtain produced equipment, beginning in 2009. a monopoly over the defense and several “near defense” On June 3, Medvedev effectively dismissed Yury industries as well. Baluyevsky, Chief of the General Staff, for his conflict with That said, the constructive side of Ivanov’s activity Defense Minister Anatoly Serdyukov. Baluyevsky is now is less evident. For lack of any real powers, the Defense Deputy Secretary of the Security Council, and was replaced by Industrial Commission he chairs has proven unable to resolve the former Chief of Armaments, Nikolai Makarov. As for who any of the pressing issues facing the sector, in particular, replaces Makarov, this question is less important in view of the those that involve strong private interests. For example, the incipient activation of the Federal Agency for Arms Deliveries. commission showed no influence over the situation arising Makarov’s old department will retain responsibility for little from the unwillingness of the management of NPO Saturn more than the maintenance of armaments in service, while to integrate their company into Chemezov’s Oboronprom control over military-technical policy will be concentrated in aviation machine building holding. the hands of Serdyukov’s immediate circle. Similarly, there is no evidence of the commission’s There are no grounds to suppose that the rationale contribution to resolving the two largest problems facing of these changes was to increase the efficiency of defense Russian defense exports: Algeria’s rejection of the Mig-29 procurement. Rather, they were simply the consequence of and delays in the modernization of the Admiral Gorshkov

2 # 2, 2008 Moscow Defense Brief Rites of Spring in the Defense Industry Complex Domestic Policy

aircraft carrier for India. When the formation of Russian The role of Rosprom in managing defense industry Technologies is formalized with the signing of a presidential Federal Unitary State Corporations (FGUP) is to be decree, it is likely that Chemezov will overtake Ivanov in transferred not to the Ministry of Industry and Trade, but to terms of real influence over the defense industry. state corporations like Russian Technologies and the United Finally, another influential former Kremlin insider, Corporation, and the FGUP themselves are to Deputy Head of the Presidential Administration Igor Sechin, be incorporated as joint-stock companies. was appointed Deputy Prime Minister. With the departure However, it is unlikely that Sechin himself will spend of Naryshkin to the Kremlin, Sechin was appointed Chair much time managing the United Shipbuilding Corporation, of Board of the United Shipbuilding Corporation, and since he will be preoccupied with the more important task of it is impossible that Yury Yarov will soon be replaced as controlling Russia’s energy sector. Moreover, Yury Kovalchuk, the Director General of this as-yet virtual organization. an influential businessman, is increasing his presence in the Kommersant newspaper has suggested that Andrey Dutov, shipbuilding sector. His ambitious plans to build ships for the Chief of Rosprom, the Federal Agency for Industry (to be oil and gas sector will likely be financed with public funds, dissolved as part of the restructurings announced on May while military shipbuilding will remain at the periphery of 12), is a likely candidate. Indeed, Naryshkin himself had government business. An influential bureaucrat like Sechin proposed Dutov’s candidacy before he left the White House. is unlikely to pay this matter much heed.

# 2, 2008 Moscow Defense Brief 3 Rites of Spring in the Defense Industry Complex Domestic Policy

Urbi et Orbi: Military Parades on Red Square Mikhail Barabanov

he military parade of the Russian Armed Forces on Brezhnev and the policy of “fighting for peace,” the parade TMay 9, 2008, in honor of the 63rd anniversary of the on May 1 was canceled and, as a result, military parades Victory in the Great Patriotic War marked the first appearance from then on were held just once per year on November 7, of military hardware on Red Square in the post-Soviet period. on a much smaller scale. Intercontinental ballistic missiles The parade was intended to signal the restoration of Russia’s stopped being displayed after the mid-1970s. military power and the overall rebirth of Russia. The parade On June 24, 1945, the famous Victory Parade over Nazi also followed the trend established by ’s Germany was held on Red Square. Banners captured from administration of restoring popular traditions of the Soviet the German army were tossed down at the entry of Lenin’s period. Mausoleum. A reenactment of the Victory Parade was held on Although the tradition of military parades is closely the 20th anniversary of this event on May 9, 1965. But this associated with the communist era, the holding of public tradition was not developed further; the third and final Soviet marches of the armed forces dates back to old Muscovy. Peter military parade on took place on May 9, 1985. the Great, having established a modern regular army, also Soviet parades on Red Square were used to demonstrate liked to hold military parades in the style of Ancient Rome new types of armament and military equipment, and for this in both Moscow and St. Petersburg. Military parades became reason they always attracted great interest abroad, including an integral part of Russia’s military traditions in the imperial among the special services of Western countries. However, period. Indeed, military parades in honor of state holidays if under Stalin and Khrushchev the parades displayed the and military celebrations were a common sight in Russia newest types of arms, including even some prototype models, up to 1917. parades of the late Soviet period were more conservative, Once in power, the Bolsheviks had to establish the Red and new types of armaments were shown only a long Army quickly, under the shadow of imminent civil war. Leo time after they were introduced into service. As the Soviet Trotsky, in charge of Bolshevik force creation, considered Union refrained from demonstrating its accomplishments military parades to be an effective demonstration of Bolshevik in the sphere of armament, the significance of the parades achievements in creating their own armed forces, meant to decreased. impress both supporters and opponents of Soviet Power. The last Soviet military parade on Red Square took place The first military parade of the took place on the on November 7, 1990. One year later the ceased Khodynskoye Field at Trotsky’s initiative on May 1, 1918, to exist. During the first post-Soviet years, liberals criticized right after the transfer of the Bolshevik government from the tradition of holding military parades as a throwback to Petrograd to Moscow. A military parade on Red Square next to “Soviet militarism.” After the cessation of military parades the Kremlin took place on the first anniversary of the October in the mid-1990s, a large shopping centre was established Revolution, on November 7, 1918. Since then, regular and ever on Manezh Square and the Chapel of Our Lady of Iver was larger parades on Red Square became one of the main symbols restored at the entrance to Red Square. The Bolsheviks of the Soviet state. From 1924 on, Soviet leaders used the Lenin destroyed the Chapel in 1931 specifically to allow for the Mausoleum as a platform to view the parades. free passage of military equipment onto Red Square, and The parades acquired the most élan during Stalin’s its restoration in 1995 has indeed made it more difficult for time, when they became grandiose processions of steel and military equipment to be paraded on Red Square. engines, involving thousands of pieces of equipment and In order to boost the popularity of his regime during a hundreds of aircraft flying over Red Square. From 1918 to time of political and economic instability, the First Russian 1964, military parades on Red Square were held twice per President began to make appeals to patriotism year: on the day of international workers solidarity (May 1) and decided to renew the practice of military parades, now and on the anniversary of the October Revolution (November to be held on Victory Day, May 9. So as to avoid allusions to 7). The years 1942-1944 mark an exception, when no parades the Soviet past that Yeltsin had explicitly rejected, the first were held due to the war. After 1957, aviation was excluded military parade was held on the 50th anniversary of Victory from the parades for safety reasons. With the arrival of Leonid Day on near the Victory memorial on

4 # 2, 2008 Moscow Defense Brief Urbi et Orbi: Military Parades on Red Square Domestic Policy

Poklonnaya Hill on the outskirts of Moscow. This parade part in the parade was modern, and some were the very involved heavy combat equipment and, for the first time newest articles that have been produced in limited numbers. since 1957, aircraft. US President Bill Clinton joined Yeltsin Thus, the GAZ-2975 Tigr was officially taken into service at the parade. A parade of veterans was held earlier that day at the end of 2006 and manufactured in 2007. The BMD-4 on Red Square. airborne combat vehicles have been produced since 2004, From May 9, 1996, military parades on this day were held and the vehicles that participated in the parade were made in once again on Red Square, but they involved only marching 2007-2008. The 2S25 Sprut-SD and Tor-M2 SAM have been units and did not include military hardware. The parade held series produced since 2007. The T-90A tanks have been in on May 9, 2005, included a small group of aircraft. production since 2004, and the BMP-3 and BTR-80 that took Ultimately, President Vladimir Putin decided to hold a part in the parade were also recently produced. The Buk-M1, full-scale military parade on Red Square on May 9 in the spirit of the S-300PM2 Favorit and Iskander-M were all made in the the Soviet tradition, including the display of military hardware. last two years. Attempts to underplay the significance of the Training for the parade began in late February, including three parade, by characterizing it as a display of old equipment, rehearsals on Red Square (April 29, May 3, and May 5). Military simply do not correspond to reality. Indeed, one could argue hardware was delivered to Moscow on April 22 by rail and that the parade was the biggest display of new armaments gathered on the Khodynskoe Field The parade itself took and equipment since the first military parade on Red Square place on May 9, 2008, just two days after the inauguration of in 1918. the new Russian President Dmitry Medvedev, who took part For the second time (after November 7, 1990), the Topol in the parade as the Supreme Commander in Chief. intercontinental ballistic missile was shown on Red Square. Over 8000 servicemen took part, including 6000 on foot The new Topol-M (SS-27) missiles that will replace them and 2000 in vehicles and aircraft. One division was dressed were probably not shown for lack of available mobile launch in parade uniform introduced in 2008. However, the biggest systems. sensation was of course the appearance of military equipment It is significant that the parade included military on Red Square for the first time since November 7, 1990. hardware that is currently in service with regular units of the A total of 111 units of ground-based military equipment Russian army. The T-90A tanks, BMP-3, BTR-80, and Msta-S took part in the parade, including: self-propelled howitzers and their crews belong to the 2nd 14 UAZ-469 jeeps; Guards Taman Motor Rifle Division of the Moscow Military nine GAZ-2975 Tigr armored reconnaissance vehicles District, the BMD-4 and Sprut-SD to the 106th Guards (wheeled); Airborne Division, the GAZ-2975 Tigr to one of the special nine BTR-80 armored personnel carriers (wheeled); services brigades of the North Caucasus military district, etc. nine BMD-4 airborne combat vehicles (tracked); This was meant to demonstrate that new armaments, even if eight 125 mm 2S25 Sprut-SD self-propelled anti-tank in limited numbers, have entered into service, and the state of guns (tracked); equipment of the Armed Forces is starting to change for the nine T-90A main battle tanks; better, after the long period of decline during the 1990s. eight 152-mm 2S19 Msta-S self-propelled howitzers The aviation part of the parade involved three Mi-8MT (tracked) helicopters and 29 aircraft from the strength of the Russian Air eight 300 mm 9K58 Smerch multiple-launch missile Force: one T-160 Blackjack strategic bomber (with hull number systems; 02 named Vasily Reshetnikov), one Tu-95MS Bear H strategic four 2S6M Tunguska self-propelled anti-aircraft bomber, three Tu-22M3 Backfire S long range bombers, one Su- systems; 24M Fencer D front-line bomber, one Su-34 Fullback frontline four 9K332 Tor-M2 (SA-15) self-propelled surface-to- bomber, four Su-35 Frogfoot ground attack aircraft, seven MiG- air missile systems; 31 Foxhound fighter-interceptors, two Il-78 Midas tankers, and eight self-propelled 9K37M1 Buk-M1 (SA-17) surface- one An-124 Condor heavy transport plane. Of these aircraft, only to-air missile systems; the Su-34, piloted by General Aleksandr Kharchevsky, was four self-propelled S-300PM2 Favorit (SA20-B) surface- a truly new aircraft, built in 2006. Aircraft have not appeared over to-air missile systems; Red Square on this scale since 1957. four self-propelled 9K720 Iskander-M (SS-26) short- Parades of local garrisons with military hardware took range missile systems; place on May 9, 2008, in many other cities of Russia. In some four self-propelled RT-2PM Topol (SS-25) cases, these parades also displayed new or rare types of intercontinental ballistic missile systems. armament. In selecting the hardware to be shown, an attempt was The first post-Soviet full-scale military parade on made to revive the tradition of demonstrating the latest Red Square attracted a great deal of interest and a positive examples of armaments. All of the armament that took response from Russian society. Polls taken after the parade # 2, 2008 Moscow Defense Brief 5 Urbi et Orbi: Military Parades on Red Square Domestic Policy

show that 70% of respondents approved of the inclusion measure to both domestic and foreign audiences. The of military hardware. Rehearsals for the parade drew large parade was clearly welcomed in Russia with satisfaction and crowds. One could say that the authorities were correct to enthusiasm as a sign of Russia’s restoration as a great power. assume that this kind of military parade would be popular It is equally clear that for many outside of Russia the reaction and would increase the ratings of Putin and Medvedev. was negative for exactly the same reason. Those who wish to The military parade of May 9, 2008, in Moscow was see Russia a weak and divided state were disappointed with a persuasive demonstration of the restoration of Russia’s the parade of May 9th, and we can only hope that they will be military power, openly addressed Urbi et Orbi, i.e., in equal even more disappointed in the future.

6 # 2, 2008 Moscow Defense Brief Urbi et Orbi: Military Parades on Red Square International Policy

Recent Evolution of Russian-American Relations Ivan Safranchuk

ussia’s relationship with America has gone through Russia wanted to return to the situation of 1999. It would Rseveral stages. At the very start of the 1990s, Russia have been to no party’s strategic benefit, and would have been trusted the United States and strove to establish the best politically wrong-headed, for it was only in 2002 that highly possible relations. However, the Russian elite and society at placed American and Russian officials had been proclaiming large soon came to believe that the US was taking advantage the “end of the Cold War.” of this trust. What they needed was some kind of formula that would Differences between Russia and the US began to allow the two sides to disagree, while keeping disputes under emerge in the mid-1990s, reaching a peak in the spring control. The proposed solution was that Russia and America of 1999, when NATO conducted military operations in would “agree to disagree” and this formula has proven Yugoslavia. Out of the public eye, Russia and the US did a lot successful, for it has allowed the US and Russia to disagree to prevent a deterioration in relations: for example, Russia on serious issues without leading to conflict. sent emissaries to Milosevich demanding that he make Russia, whose opinion was ignored for the previous 15 concessions to NATO. Nevertheless, exactly one month years, now got the chance to be heard. The US was now ready after this war was launched, Boris Yeltsin signed a decree to listen to the Russian point of view under normal, friendly requiring changes to Russia’s strategic documents – the circumstances, rather than under nuclear targeting. This suited National Security Concept and the Defense Doctrine – to Russia’s ambitions and thinking at that time. The Russian elite reflect the new geopolitical situation. thought that if only it would have the chance to express its In the second half of 1999, Russia suffered an attack point of view and to participate in general discussions with from international terrorists, who assumed control of Western partners, then the Russian position would be given the Chechen separatist movement. In December 1999, real consideration and accepted on its merits. The problem had during Yeltsin’s last foreign visit, relations with Western always seemed to be that Russian views were not being taken partners stabilized. Several defense agreements were into account. Now Russia would have a normal mechanism reached in Istanbul, and political tensions eased. The fall through which it could present its position. of 1999 was a difficult period for Yeltsin and his circle. The Yet another problem was solved. Putin had begun to Administration was working literally around the clock conduct an extremely active foreign policy, especially in to arrange for a controlled succession. Meanwhile, they Europe, but also in Asia, the Middle East, Latin America, had to fight against an onslaught from the regional elite and, of course, in the post-Soviet space. It became clear that which had joined forces with the political opposition at the many countries heed the American position even if they federal level led by Evgeny Primakov. The Duma election disagree with it. In general, it is much easier to work on campaign was fiercely fought, and the second Chechen several continents with various partners if you are not an war took place at the same time. The President had enemy of the US. Of course, there are those like Iran and serious health problems. But even under these difficult Venezuela who base their strategies on an anti-American conditions, Yeltsin still devoted substantial time and effort policy, but Russia was playing for larger stakes. And for that to normalizing relations with the West. it was necessary to neutralize the US factor, so that problems From the very start of his presidency, Putin made with Washington would not interfere with Russia’s policy in efforts to move closer to the West, and he achieved concrete other directions. results in 2001, after the terrorist acts in New York and The US also got what it wanted. Washington saw Washington. However, this period, when Russia and the Russia’s new activism in several regions of the world. The US were united against a common enemy, did not last US did not want Russia to become a center of gravity for long. Mutual suspicion, and real tactical and strategic anti-American forces, to whom it could offer the protection disagreements, led Russia and the US to a new dispute over of the UN Security Council. The US also wanted to maintain the war in Iraq in 2003. a certain level of cooperation with Russia’s special services. Of course, on this issue Russia was not alone, but of The US hoped that Russia would help the US with several one mind with France and Germany, and neither the US nor complex problems, ranging from Iran to North Korea and

# 2, 2008 Moscow Defense Brief 7 Recent Evolution of Russian-American Relations International Policy

to the Middle East, or at least not to provide assistance to formula when Russia turned it around to insist that the US America’s opponents. not interfere in its internal affairs. In general, Russia and the US had a common interest Thus, the formula “agree to disagree” stopped working in not falling on opposite sides of the barricades on any toward the end of 2006, but no new formula has taken its place. international issue. Actual cooperation was good, but not An enormous number of disagreements have accumulated essential. The main thing was not to fall on opposite sides over the past five years, and in the last year of his presidency, of the barricade. The formula of “agreeing to disagree” Putin could no longer simply gloss over them. Thus the responded to this requirement. “Munich Speech.” But Moscow still has no intention to enter However, the devil is in the details, and as it turns out, into open conflict with Washington. neither Russia nor the US got exactly what they wanted. For the past fifteen years, Russian-American relations For Russia, it soon became clear that just because its voice have displayed the following constants. could be heard, this did not mean that anybody was actually The elites of Moscow and Washington do not trust listening. Georgia had a revolution in 2003. Russia was not each other. This has been clear for at least ten years. But in committed to Shevardnadze, but it counted on being consulted on recent years these elites have even begun to lose respect for the selection of a replacement. Likewise, in 2004, Russia and the each other. This loss of mutual respect is a relatively new US were on opposite sides of the political struggle in . phenomen, and it is extremely dangerous. In response to the American offensive against Russian In order to maintain friendly relations among the interests in Eastern Europe and the Caucasus, Russia put highest leadership, it is essential to make personal efforts. If pressure on American interests in Central Asia. In 2005, the no efforts are made, the relationship starts to skid. US was forced to withdraw its military base from Uzbekistan, Most importantly, all attempts to come up with a joint and the US base in Kyrgyzstan is to this day under constant project for the two countries have completely failed. The pressure. question of raising a positive agenda for Russian-American The US was also dissatisfied. It thought that Russia relations has been raised several times over the past eight would limit itself to speaking out against American policy years. Some said right away that it was impossible, while but not actually make any moves against American interests. others have attempted and failed. Only the most stubborn So they were amazed when Russia did not support US policy now continue to think of “joint projects.” in Lebanon, in political terms at the Security Council, and in To rephrase a well-known saying: “it’s nothing personal, military terms with deliveries of air defense systems to Syria, just no business.” Putin and Bush had no problems with each and by refusing to put pressure on Iran. Russia even provided other personally; the problem was that Russia and the US a degree of support to Venezuela and put pressure on the pro- had no common business. Declarations of a common fight American regimes in Eastern Europe and in the Caucasus. In against terrrorism, proliferation of WMD, and the like did general, Russia showed that it would not give automatic right not grow into a common business. of way to American pursuits. But the danger lies elsewhere. The geopolitical and This contradicted the American understanding of the geostrategic interests of Russia and the US are becoming formula of agreeing to disagree. In 2006–2007, the US tried to sharply divergent. Each country is developing an incompatible adjust the formula for the relationship and started to demand set of interests in the sphere of energy, and in a number of that even if Russia disagreed with US policies, it not oppose geographic areas. So in the near future the applicable phrase them. may be simply “it’s nothing personal, just business.” This formula of “disagree but do not oppose” would be In all likelihood, Russia and the US will make attemps of interest to Russia only if there were some agreed division to temper their disagreements. But the real opportunity of spheres of influence and responsibility. They could then for aligning interests and reaching a strategic decision disagree with each other’s behavior within that zone, but for partnership and joint projects was lost sometime in would not interfere. But the US does not want to divide the 2004–2005. From now on, it is each nation for itself. The world into spheres of influence. Russia also does not really mere change of administrations in the US means little want to do this. Russia currently has substantial flexibility to in this context, because the formation of the long-term be active all over the globe, and there is no reason to impose interests of the Russian and US political elites is nearly any artificial limits on itself. complete. This is especially true for Russia, and future But without any division of spheres of influence and administrations will to a large extent simply implement responsibility, the American formula of “disagree but do not the established strategic plan, rather than make any oppose” makes no sense. The US also did not appreciate the changes to it.

8 # 2, 2008 Moscow Defense Brief Recent Evolution of Russian-American Relations International Policy

Nagorno-Karabakh: Shift in the Military Balance Mikhail Barabanov

hile the international media focuses on the the republic is de facto a part of Armenia, and the armed Wconfrontations in Abkhazia and South Ossetia and forces of the NKR are merely the extension of the Armenian Georgia’s rapid rearmament, the forgotten dispute over armed forces. Nagorno-Karabakh continues to smolder. Indeed, it seems It is perhaps indicative that Robert Kocharian, President only a matter of time before the conflict between Azerbaijan of Armenia from 1998–2008, was earlier the President of on the one hand, and Armenia and Nagorno-Karabakh on the the NKR. Like other unrecognized republics in the post- other, bursts into flames again. Soviet area, the NKR has become a kind of “black hole” in Back in 1988, the demands of the autonomous oblast terms of international law, and with respect to the Treaty on of Nagorno-Karabakh, inhabited mainly by Armenians, to Conventional Armed Forces in Europe (CFE) in particular. secede from Azerbaijan and join Armenia, was the first of the Armenia lost eight thousand lives in the conflict. Azerbaijan interethnic conflicts that would shake the USSR and lead to lost 25 thousand, and took in 417 thousand refugees from a crisis of Gorbachev’s policy of perestroika. After the final territories occupied by Armenian forces. extinction of the USSR toward the end of 1991, Armenia and Since then, a kind of brittle truce has endured in the Azerbaijan fought tooth and nail for the disputed region, South Caucasus for 14 years, punctuated occasionally by deploying all manner of armaments of the Transcaucasus military incidents. In spite of the truce, the standoff between Military District of the Soviet Armed Forces that were either Armenia/NKR and Azerbaijan is comparable to the front “privatized” or gifted from Moscow. lines during the First World War. For Azerbaijan, the issue of Thanks to the higher level of combat readiness of “restoring its territorial integrity” is a key issue of domestic their armed formations, the Armenians maintained the and foreign policy. Azeri politicians have been promising to high ground in this battle. Towards the spring of 1994, the “defeat the Armenians” and to “take back Karabakh” for years, Armenians not only kept control over almost all of Nagorno- but in the past few years they have actually accumulated the Karabakh, but also managed to capture a wide “buffer zone.” resources necessary to accomplish this task, thanks to the Most importantly, the Armenians took almost all of the large revenues accruing from sales of Caspian oil. territory that separated Nagorno-Karabakh from Armenia Indeed, the Azeri economy has grown rapidly since itself, in effect “engulfing” the territory in question. In May 2000, outpacing all other post-Soviet republics, reaching a 1994 the war concluded through the mediation of CIS leaders record of 29.3% growth in 2007 and 15% in the first quarter with the signing of the Bishkek truce, which enshrined of 2008. Government expenditures have increased by a factor the status quo. This signified the complete victory of the of ten over 2002-2008. The sharp growth of oil revenues to Armenians and the undisputable defeat of Azerbaijan. the budget has allowed Azerbaijan to increase its defense The Armenian armed forces continue to control over 8% expenditures by a factor of nine since 2004: from 144 million of the territory of the former Azeri Soviet Socialist Republic. USD in 2003 to 1.2 billion USD in 2008, which accounts The so-called Nagorno-Karabakh Republic is not recognized for about 4% of Azerbaijan’s GDP. Moreover, according to by any other country, but it rules over this territory with a a recent announcement of President Aliyev, total defense rather powerful army. In theory, the NKR exists independently expenditures for 2008 will reach $2 billion. This figure is of Armenia. However, this independence is clearly a fiction, comparable to the entire state budget of Armenia, which is

Table 1. Main Economic Indicators for Armenia and Azerbaijan

Country Area in square km Population in 2007, Gross Domestic Product 2007 thousands Volume, Growth from 2006 Volume per capita, billion USD in % USD Azerbaijan 92 8120 26 29.3 3187 Armenia 30 2972 9.2 11.1 3080 # 2, 2008 Moscow Defense Brief 9 Nagorno-Karabakh: Shift in the Military Balance International Policy

Table 2. Defense Budgets of Armenia and Azerbaijan, mln USD

Country 2003 2004 2005 2006 2007 2008 (projected) Azerbaijan 144 247 321 662 941 1211 Armenia 81 100 144 187 312 382 projected at 2.5 billion USD for 2008. While Aliyev may be (23rd, 60th, and 295th) and the 75th motorized rifle division exaggerating Azerbaijan’s defense expenditures, the general in Nakhichevan, and half of the armaments of the 104th tendency is clear enough. airborne division in Ganja. High levels of defense spending have supported a broad Moreover, Baku received part of the Caspian navy with program for the modernization and reequipping of the Azeri its entire coastal infrastructure, including some aviation armed forces, which is beginning to affect the balance of and air defense assets. By mid-1993 Azerbaijan possessed forces between Azerbaijan and Armenia. 458 tanks, 1264 armored vehicles, 395 artillery and mortar The armed forces of Azerbaijan originated as informal launchers, 63 multiple launch rocket systems (MLRS), up to groups of anti-Armenian fighters in 1989–1991, but they 100 air defense systems, 53 military and 52 training aircraft, assumed the character of regular forces of the National Army 18 combat and 15 transport helicopters, and up to 30 ships of Azerbaijan after December 1991, with the dissolution of and cutters. Azerbaijan acquired over 100 thousand pieces of the Soviet Union. From 1991–1993 Azerbaijan acquired most small arms and over 11 thousand carloads of ammunition. of the armaments of the 4th Army of the Soviet Transcaucasus A significant proportion of these armaments was lost Military District, including three motorized rifle divisions during the Karabakh war. According to published sources,

Table 3. Reported deliveries of military equipment to Azerbaijan 2000 – 2007

Type Amount Supplier Year of Delivery T-72 main battle tank 45 Ukraine 2004 – 2006 60 Belarus 2005 – 2006 1 Slovakia 2002 BMP-1 armored personnel vehicle 2 Ukraine 2005 BTR-3U armored transport vehicle 3 Ukraine 2006 M-46 130-mm towed cannon 36 Bulgaria 2002 MT-12 100-mm antitank cannon 72 Ukraine 2002 9RK58 Smerch 300 mm MLRS 12 Ukraine 2004 – 2005 PM-38 towed 120 mm grenade launcher 85 Ukraine 2005 – 2006 MiG-29 fighter 12 Ukraine 2006 – 2007 MiG-29UB combat trainer 2 Ukraine 2006 Su-25 assault plane 12 Georgia 2002 – 2005 Su-25UB combat trainer assault plane 1 Georgia 2005 L-39 trainer 12 Ukraine 2006 AB-25 patrol cutter 1 Turkey 2000 Point patrol cutter 1 USA 2003 Small patrol cutters 2 USA 2001 30 Turkey 2001 – 2005

Note: in 2007 Azerbaijan also acquired a number of T-72 tanks

10 # 2, 2008 Moscow Defense Brief Nagorno-Karabakh: Shift in the Military Balance International Policy

186 tanks, 119 armored vehicles, and 59 artillery systems the training of Azeri military in Russia, and repair services were completely destroyed, and a significant amount of for military equipment. equipment was damaged and could not be returned to service, As for NATO, in spite of Azerbaijan’s fairly active including 43 tanks, 114 armored vehicles, and 51 main guns. assertions of its intentions to join the alliance, to meet NATO The Azeris lost much of their armor on territory captured by standards and the like, cooperation with Western countries the Armenians, who proceeded to repair the equipment and has been limited to relatively modest military assistance and put it back into service. The Armenians also took down 20 training. Turkey has provided the greatest amount of aid, Azeri aircraft and 21 helicopters. reaching a total of 170 million USD in 2005. Azerbaijan has For their part, the Azeris captured 23 T-72 tanks, 14 also purchased small arms and modern communications armored vehicles, and nine main guns. To make up for equipment from American and Israeli firms on a purely their losses, the Azeris had already begun during the war to commercial basis. purchase arms from Ukraine, including 150 T-55 tanks, eight Azerbaijan is now putting the emphasis on acquiring MiG-21 fighters, and two Su-17 fighter-bombers. new aviation equipment for its air force. in 2005, it signed a After the signing of the truce in 1994, Azerbaijan still contract with Ukraine for the delivery of 12 MiG-29 fighters, had enough armaments to equip its army. Indeed, some of two MiG-29UB aircraft, and 12 L-39 training aircraft. It its armor had to be scrapped to comply with the CFE Treaty. bought 12 Su-25 assault planes (probably Czech) and one No significant procurement had been made for almost a Su-27UB from Georgia. Negotiations with Ukraine for the whole decade, until oil revenues began to take hold. And acquisition of Su-27 fighters and Su-25 assault planes have when Azerbaijan began once again to procure armaments, also been reported, along with modernization in Ukraine it sought relatively modern, heavy weapons from the former of Azeri Mi-24 combat helicopters by the South African USSR, notably Ukraine, which became the main source of ATE company’s Super Hind Mk-III program. Azerbaijan is weapons to Transcaucasus, including the powerful 300 mm reportedly looking to acquire 24 of the new Chinese FC-1 light 9K58 Smerch MLRS with a range of 70 km. fighters. It is also purchasing UAVs from Israel, all of which From 2007, Azerbaijan also began to acquire arms from attests to the clear intention of the Azeri military leadership Russia. In particular, Azerbaijan was the first to place an to achieve air superiority as a top priority. order for the new Russian BTR-90, signing a contract with In late 2005, Azerbaijan established a Ministry of Defense the Arzamas Machine Building Plant for delivery in 2008 of Industry, endowed with significant resources. In 2007, the a few BTR-90s and 70 BTR-80A. One of the conditions of the ministry announced the launch of series production of 29 agreement reached in 2002 over the status of the Gabalina weapons systems along with parts and ammunition. The state radar station was the provision of military assistance to defense procurement order for 2008 included the creation modernize Azerbaijan’s air force and air defense systems, of 80 new types of military items and the production of 444.

Table 4. Actual military balance between Azerbaijan and Armenia in early 2008

Number Azerbaijan Armenia Nagorno-Karabakh Russian forces in Armenia Active personnel, thousands 73 40 25 4 Tanks 220 + 98 old 114 316 74 Armored combat vehicles 382 288 324 224 Armored tractors 393 about 100 n/a 107 Self-propelled artillery 37 38 24 12 Towed artillery systems 156 121 254 60 MLRS 56 51 44 8 120 mm grenade launchers 22 19 about 100 4 Operational/tactical missile systems – 8 – – Combat aircraft 70 18 – 14 Combat helicopters 15 14 – –

Note: Figures for armored combat vehicles for Azerbaijan and Armenia include those possessed by the border and interior troops # 2, 2008 Moscow Defense Brief 11 Nagorno-Karabakh: Shift in the Military Balance International Policy

The national budget for 2008 allocated 66 million manat to Nevertheless, the rapid growth of Azeri defense the Ministry of Defense Industry. New production will be expenditures, driving the strong rearmament of the Azeri established primarily in cooperation with Western states. armed forces, is putting into question the ability of the By 2008, the Azeri armed forces have overtaken the Armenians to maintain the military balance with Azerbaijan. Armenian once in terms of active personnel (73 thousand) This is particularly pertinent with respect to Azerbaijan’s and armament. However, this numerical superiority is buildup of its air force and projected acquisitions of modern compensated by the army of the unrecognized NKR, which and high-precision weaponry. Official figures probably has about the same amount of arms as the official land forces of understate the volume of Armenian defense spending, but either Armenia or Azerbaijan. Moreover, over the past 14 years several Azeri estimates put the actual defense spending the Armenians have worked constantly to improve and fortify of Armenia and the NKR for 2008 at about 800 million their line of defense in Nagorno-Karabakh, reaching from the USD, which seems likely. But the overall trend is clearly in Mrav heights to the Araks river. Furthermore, Armenia is part Azerbaijan’s favor, and it seems that Armenia will not be of the Russian-led CIS Collective Security Treaty Organization able to sustain an arms race with Azerbaijan’s oil-fueled (CSTO), and about four thousand Russian troops are deployed economy. And this could lead to the destabilization of the in Armenia, mostly at the 102nd base in Gyumri. frozen conflict between these two states.

12 # 2, 2008 Moscow Defense Brief Nagorno-Karabakh: Shift in the Military Balance International Policy

The Rise and Fall of Georgia’s UAVs Denis Fedutinov

eorgia and Abkhazia have produced a startling amount transmission system. The video shown by the Georgians Gof news this spring. Indeed, before the Abkhazians shot was ostensibly captured in real time, since the UAV was down the Georgian unmanned aerial vehicle, few had any destroyed, and the low quality of the video does not allow for idea that the Georgian army was equipped with the Israeli the identification of the type of plane, let alone the country made Hermes 450 UAV. to which it belongs. Arguments to the effect that “the aircraft has a twin rudder and is therefore Russian” simply do not stand up to examination. The Incident The first UAV was shot down on March 18 over Abkhaz Consequences territory, and the pieces were shown to journalists and the UN observer mission in Georgia. The second Georgian UAV The UAV incident could have several consequences. was shot down on April 20 over the Gali district of Abkhazia. Russian-Georgian relations are already at a low state, so the Georgian authorities claimed that the UAV was shot down by political consequences of the incidents are not as serious as a Russian plane, and showed a video fragment transmitted they might otherwise have been. by the destroyed UAV itself as proof. Military-technical relations between Russia and Israel, In the wake of this incident, the Georgians increased on the other hand, may feel the impact. The Caucasus is clearly the number of UAV flights over Abkhazia, and reports of in Russia’s sphere of national interests, and Russia is very yet another incident involving Georgian UAVs were issued sensitive about weapons transfers to the region, especially almost daily. in the current context of heightened tensions. Elbit Systems However, the information circulated by both the Georgian has probably spoiled its prospects on the Russian market for and the Abkhazian sides are replete with inconsistencies several years to come. and are clearly motivated by political considerations. The Of course, while Elbit has been pushing its military and Abkhazians claim that they have defeated seven UAVs, while dual-use products across the CIS, paying little attention to the Georgians attest to only two losses. the possible consequences of some deals for its relations with The Hermes 450, built by Elbit Systems, one of the main Moscow, the Israeli state company IAI has followed a different defense suppliers to the Israeli Ministry of Defense, is a policy, distancing itself from such deals and placing its stake medium sized UAV. It has a relatively long flying time and can on the development of cooperation with Russia. carry a fairly substantial payload, including stabilized optical- Finally, the incident has damaged the image of UAVs as electronic observation equipment and a synthetic aperture one of the best-known products of Israeli high-tech industry. radar, making it an ideal vehicle for reconnaissance flights. After all, who would wish to purchase equipment that is so Georgian President Mikhail Saakashvili claims that easily defeated? his armed forces possess 40 UAVs. This would seem like an One of the chief advantages of UAVs is that they are excessive number, and the cost of that many Hermes 450 thought to present a difficult target for air-defense systems. units would probably be beyond Georgia’s reach, even if Elbit They are much smaller than piloted aircraft, built mainly supplied them at dumping prices. from composite materials, and leave only a very small trail As for the video provided by Georgia, there are several of heat in their wake. reasons why their authenticity is in doubt. First, UAVs are One explanation for why the Georgian UAV was so easily made to observe objects on the earth, not in the air. Their defeated relates to the relatively noisy engine on the Hermes cameras are housed in a semisphere on the underside of 450. In order to reduce the acoustic profile of the vehicle, the the vehicle, which makes it extremely difficult to focus on Georgians could either fly it at higher altitudes, reducing the another flying object. The chances that this sort of camera quality of observation, or employ some contrivance to reduce could have caught another flying object at the very moment the noise of the engine. Of course, the use of a “silencer” when it fired a missile are simply nonexistent. inevitably leads to increased production of heat, making the Second, as a rule, high-definition photos and video are UAV an easier target for air-defense systems. It is possible stored on board the UAV, while only low-quality pictures that this sort of modification to the Hermes 450 is what led are sent in real time, due to the restricted bandwidth of the to its destruction.

# 2, 2008 Moscow Defense Brief 13 The Rise and Fall of Georgia’s UAVs International Policy

In connection with Georgian assertions that the vehicle after another to its demise along the same flight path second UAV was not shot down but lost due to some and using the same tactics. Either the Abkhazians inflated technical problems, several questions arise. First, the their achievements, or the Georgians were incredibly inept supplier asserts that the vehicle is reliable, and this in their operation of the UAVs. statement is backed up by data derived from over 65 000 flying hours for this model. In this case, it is possible that the Georgian UAVs are not new, but rather sold from the Conclusion operational stock of the Israeli Air Force. It is hard to say in what condition such vehicles would have been sold. The Hermes 450 is used extensively in Israel and in other Moreover, it is not known to what extent the Georgians countries. This UAV has been delivered to the USA for patrols may have modified the system to suit their needs. Finally, it along the US-Mexico border, and to the armed forces of is unclear to what extent the UAV operator or maintenance Singapore, which has invested heavily in this technology. crew were trained to use the system. In principle, UAV One of the latest project for which the Hermes 450 has been operation requires highly trained specialists. used is the UK Watchkeeper program, to replace the Phoenix If Georgia really did lose seven UAVs in such a short UAV by 2010. The UK and other Elbit Systems customers period, as claimed by the Abkhazians, then the Georgians will undoubtedly have been following the UAV incidents in would have had to be incredibly stubborn to have sent one Georgia-Abkhazia with redoubled interest.

14 # 2, 2008 Moscow Defense Brief The Rise and Fall of Georgia’s UAVs International Cooperation

Thales Group in Russia Sergey Denisentsev

ew Western companies can boast of the same experience Aside from Sukhoi, Thales technologies have been installed Fof broad and productive cooperation with Russian on other fighting aircraft, like the ship-borne MiG-29K fighter, aerospace and defense enterprises as the Thales Group of equipped with the TopSight helmet-mounted sight/display. France. Thales’ success in providing Russian aircraft with Thomson-CSF, the precursor to Thales, entered the avionic systems led to cooperation in other areas. In 2005, Soviet market in the 1970s with the delivery of several aviation the Indian Ministry of Defense decided to equip its Russian trainers to the Ilyushin design bureau. With the end of the T-90S tanks with the Catherine FC thermal imager made by Cold War, many new areas of bilateral cooperation emerged, Thales. In November 2007, Russia received a new order for and the equipping of Russian aircraft with advanced French 347 tanks from India, and Thales announced at Defexpo 2008 avionics was one of the most promising ones. Through the the delivery of 400 Catherine FC units meant primarily for 1990s, Thomson-CSF participated in a range of such projects, installation on Russian-made tanks. including thermal imagers and multifunctional displays The thermal imaging devices made by Thales are for the new Ka-52 attack helicopter, and radio navigational significantly superior to analogous Russian products, equipment for the advanced MiG-AT trainer aircraft. and they endow the T-90 tank with much broader range However, Thales reached a qualitatively new level of of applications at night and in any weather conditions. relations with Russian firms through its participation in the Not surprisingly, the Russian MOD has also expressed Su-30MKI project. The Indian Air Force made it a condition its interest in the Catherine FC system. News that Thales of their purchase that the fighters be equipped with French and Rosoboronexport had signed an agreement on the avionics. In particular, the Su-30MKI was equipped with delivery of 100 thermal imagers for installation on T-90 Thales multifunctional liquid crystal displays. The resulting tanks for the Russian Ground Forces was made public in vehicle, combining the maneuverability of a Russian fighter mid-2007. with the quality of French avionics, quickly proved itself on On March 20, 2008, negotiations between Rosoboron- international markets. export and Thales were disclosed on the near term joint When Malaysia decided to purchase the Su-30MKI establishment of servicing centers for thermal imaging for the first time, the Malaysian Air Force requested that devices, and the longer term transfer of technologies and the vehicle be equipped with another Thales product: the joint production of the Catherine FC in Russia. Damocles multifunction targeting pod. To fill this order, Aside from defense programs, Thales participates in designers from Sukhoi and Thales specialists had to work several civilian projects in Russia. The Group’s participation through 2006 – 2007 to integrate the French system with the in the Sukhoi Superjet100 regional aircraft is key. At the very aviation electronics. early stages of this project, Thales was chosen as the supplier The high combat qualities demonstrated by Damocles and integrator of the Superjet’s avionics systems. The contract during testing attracted the attention of an unexpected for the development and delivery of avionics was signed at Le customer: the Russian Ministry of Defense, and Thales is Bourget in 2005. Thales is responsible for the delivery of the now negotiating technology transfer agreements and full majority of the navigational and piloting equipment, radio localization of Damocles production in Russia. If these communications, equipment panels, and multifunctional negotiations prove successful, Damocles will be the first displays. In July 2006, the English subsidiary Thales Service Western defense technology in a very long time to have been signed a contract with Sukhoi Civilian Aircraft to deliver licensed for Russian production. The decision to purchase three training systems, including the joint development of a foreign technology was controversial, since Russian design maintenance program. The trainers will be delivered in late bureaus were developing an analogous device. However, 2008 and early 2009. the superior combat qualities and the fact that the French In May 2006, Thales’ entry into another promising product was already in series production tilted the issue in its Russian aviation project was announced. The company favor. The production of Damocles in Russia will most likely was selected together with the Russian Transas company to be established at the Urals Optical Mechanical Plant. Russian supply avionics for the Mi-38 medium transport helicopter, aircraft slated to be equipped with the French system include developed in the framework of the Euromil joint enterprise the modernized Su-27SM, Su-24M2 as well as the new Su-35-1 with the Moscow Mil and Kazan helicopter plants. Thales and the Su-34 assault plane. will supply autopilot systems, navigation and radio

# 2, 2008 Moscow Defense Brief 15 Thales Group in Russia International Cooperation

communications for the helicopter. The Russian companies develop a new satellite platform: the Express-4000, and involved in the Mi-38 project consider western participation will be accepting civilian and military orders in Russia and to be important to assist with the certification of the vehicles Europe. according to EASA standards and the penetration of external Thales products are also used by many enterprises markets. throughout Russia outside of the aerospace and defense The Thales Group may also participate in another industries. For example, Thales provides Gazprom with civilian aviation project: the creation of the MC-21 short- to control systems for its long-distance pipelines and Russian mid-range airliner. Railways with control systems for trains. Air control systems Thales Alenia Space, a joint venture between Thales and supplied by Thales are used in several airports, including the Italian Finmeccanica, is working with Russian companies Moscow’s Domodedovo, one of the largest and most modern on space technology development. Thales’ main partner in airports in Russia. Thales remote sensing and geodesic this area is JSC Information Satellite Systems (the former equipment is also well known in Russia. Applied Mechanics Science-Production Association). The The experience of Thales shows that cooperation between French company has for some time now supplied payload large Western and Russian companies can be successful and modules for Russian satellites, and Thales Alenia Space beneficial when the interests and competitive advantages of and Information Satellites Systems have agreed jointly to each party are made constructively to interact.

16 # 2, 2008 Moscow Defense Brief Thales Group in Russia Industrial Policy

Maiden Flight of the SSJ-100 Konstantin Makienko

he Russian regional aircraft Sukhoi Superjet 100, The maiden flight of the SSJ-100 highlights the special Tdeveloped by the Sukhoi subsidiary Sukhoi Civil Aircraft, place of Sukhoi in the Russian aviation industry. Other Sukhoi made its first flight on May 18, 2008. The date of the maiden accomplishments include: flight is traditionally considered to be the birth date of a a series of new contracts for the Su-30MKI fighter and new aircraft. This event took on even greater importance for a new statement of acquisition of the Su-30MKI(A) from Russia since the SSJ-100 is the first civil aircraft project begun foreign buyers; and completed in the post-Soviet era. the maiden flight of the new Su-35 fighter on February Of course, a faultless maiden flight alone does not 19, 2007; assure the success of the project. Future milestones progress in recent years on the fifth-generation fighter include further testing, confirmation of the technical program (PAK-FA); and economic characteristics of the vehicle, and then the the apparent decision to develop a light fifth-generation launch of series production and operation of the aircraft fighter on the basis of the heavy Sukhoi project following the by airlines. The project will be considered an economic example of the Lockheed Martin F-22 and F-35 projects. success once all expenses have been recouped. In line Against the background of the MiG fiasco in Algeria, with the current SSJ-100 business plan, this means sales the stagnation of the Military Transport Aircraft program of at least 800 units. and the anemic state of Ilyushin projects, as well as the Once the SSJ-100 program received full political collapse of the United Aircraft Corporation initiative for support from the government, solid financing, and a Russian participation in the A-350, Sukhoi comes across strategic foreign partner, attention focused on the as the undisputed leader of the sector not only in terms of technical risks of the project. And here the successful innovation and production, but also in terms of its managerial maiden flight has shown that the technical side of the competencies. project is proceeding apace, putting paid to the claims of Indeed, of all Russian aircraft manufacturing projects skeptics that Sukhoi’s first civilian project was doomed that have any chance of success, only the Yak-130 trainer and to failure. Indeed, the future of the project looks bright, the Tu-204 mid-range airliner projects are being developed since it has become clear that the delay of the first delivery outside of the Sukhoi industrial system. It seems likely of the aircraft to Aeroflot, its main customer, from the that future Russian aviation platforms, including civilian fall of 2008 to the end of 2009 and beginning of 2010 ones, will be developed on the Sukhoi industrial base. In will not entail serious commercial losses. Strong state any case, there is a good chance that the SSJ-130 will be support and the precedent set by the slippage in the completed before the MC-21 program, which has yet to original schedule for deliveries of the Airbus A-380 are clarify its conceptual basis. important mitigating factors. Similarly, Boeing intended In this situation, the overwhelming superiority to roll out the Dreamliner last July, two months before the of Sukhoi’s innovative, productive, technological, and SSJ-100 was initially scheduled for delivery, but this date managerial capacities puts into question the very raison has been put off to at least two years from now. So while d’être of the United Aircraft Corporation. Aside from the the SSJ-100 project has seen some delay, it nevertheless one real aircraft-manufacturing project it has in the Tu-204 contrasts sharply with the complete stagnation of the Tu- family, the UAC is preoccupied with little more than the 334 program and the stupor into which the Ukrainian An- senseless nationalization of efficient companies and real- 148 project fell during the transition to series production estate development projects on the sites of former design in both Kiev and Voronezh. bureaus and aviation plants in Moscow.

# 2, 2008 Moscow Defense Brief 17 Maiden Flight of the SSJ-100 Arms Trade

Russia on the Arms Market of Sub-Saharan Africa Konstantin Makienko

Main Feature of the African Arms Market The presence of conflicts naturally leads to a demand for armaments, with the priority on the fastest possible delivery of low- he African arms market is influenced by the following cost weapons, especially those that are simple to use and maintain Tfactors: and which have been either used by the army in question or which Economic weakness. Most states in the region belong to could be supplied along with personnel from abroad to maintain the poorest category of countries of the world, which precludes the equipment. These factors encourage repeat purchases from the development of an arms market of any significant size. In the same suppliers. Since the main arsenals of arms and military the majority of cases, demand is concentrated on the most equipment readily available for sale originates from the CIS and inexpensive, used armaments and equipment. When new Central and Eastern Europe, these states have become the main equipment is purchased, priority is given to obtaining the cheapest suppliers of arms to the conflict zones of Africa. models available, which are usually Chinese. The low financial Weak state institutions, including the collapse standing of African importers encourages the use of alternative of centralized state power. The collapse of central means of financing deals through barter arrangements, debt governments, significant demand for weapons from nonstate swaps, concessions, and payment by installments. actors (including private military companies), and extremely Local conflicts.After the end of the Cold War, the main high levels of corruption have led to the wide proliferation of source of conflict in the area has been small inter-tribe and illegal arms exports. Such deliveries are made by nonstate inter-clan conflicts in the context of a weak, and in many dealers, often in contravention of international embargos. cases artificial state. Angola, Zaire (now the Democratic One of the manifestations of the illegal arms market in the Republic of Congo), Sudan, Somalia, Chad, Burundi, and region, the phenomenon of “blood diamonds” whereby arms Rwanda are involved in interstate conflicts. In some cases, deliveries are paid with unfinished diamonds, is widespread such as Somalia, Liberia, and Sierra Leone, the conflicts have in Liberia and Sierra Leone. led to the collapse of the state. In the Great Lakes region, internal conflicts have taken on a cross-border character, giving birth to a difficult, regional war involving almost ten Russia on the African Arms Market regional states and many intrastate armed formations. There have also been “classic” interstate armed conflicts, such as The USSR began to deliver arms to Africa in the mid sixties, in the Ethiopia-Eritrea war, and the conflict between Eritrea the form of military assistance to left-wing and anti-Western and Yemen. The situation in the Horn of Africa has signs of regimes. The first truly large recipient of Soviet armaments transborder conflict with the participation of both state and was the federal government of Nigeria, during the war against nonstate actors. In recent years, severe internal crises have the separatists of the self-proclaimed Biafra. Later, most affected several states previously thought to be stable, such deliveries of arms went to states that chose the “socialist as Cote d’Ivoire in 2004 and Kenya in 2008. path” of development under leadership of a “revolutionary-

Table 1. The main features of the African arms market

Market forming factor Specific feature of the market Dominant exporters Economic weakness of the state of the region Concentration of demand in the lower CIS, Central and Eastern Europe, China market segments, especially for previously used equipment High levels of conflict Demand for the simplest, cheapest offers Deliveries from existing stocks or excess with the fastest delivery times supplies from CIS or Central and Eastern Europe Weakness of state institutions, corruption, Proliferation of illegal arms sales Nonstate, black-market dealers collapse of central government 18 # 2, 2008 Moscow Defense Brief Russia on the Arms Market of Sub-Saharan Africa Arms Trade

democratic” party. Especially large deliveries were made for regional war in the Great Lakes region. In each of these cases, obvious reasons to countries involved in civil or interstate deliveries of aviation from the existing strength of the Air conflicts, such as Angola, Ethiopia, Somalia (until it broke off Force or factory stocks played a large role. In the fall of 1998, relations with the Soviet Union in 1977) and Mozambique. Promeksport concluded a contract with Ethiopia to deliver With the growing economic crisis in the USSR and eight Su-27 fighters. The entire process from the start of accompanying efforts at reform, the political rationale for negotiations to the delivery of the fighters in December lasted providing gratuitous military-technical assistance steadily only 62 days. Since one aircraft was lost in a demonstration decreased. During the first half of the 1990s, Russia made flight, Promeksport delivered one more Su-27UB to Ethiopia just a few small deliveries of armor to Angola. A sharp rise in January 1999. At the same time, six MiG-29 were delivered in demand for Russian arms occurred in 1997–1998, in to Eritrea. All fighters took an active part in the combat of relation to the civil war in Angola, the beginning of the armed 1999–2000. A UN embargo was placed on arms deliveries conflict between Ethiopia and Eritrea, and the large-scale to the combatants from 2000–2001, but when the embargo

Table 2. Russian arms transfers to Africa 1992 – 2006

Year Importer Arms Category Number 1992 Sierra Leone Armored combat vehicles 4 1993 Angola Main battle tanks 20 1993 Angola Armored combat vehicles 35 1993 Angola Large caliber artillery 14 1994 Angola Main battle tanks 10 1994 Angola Armored combat vehicles 138 1996 Eritrea Combat helicopters 4 1998 Angola Armored combat vehicles 65 1998 Ethiopia Large caliber artillery 12 1998 Angola Combat aircraft 6 1998 Eritrea Combat aircraft 6 1998 Ethiopia Combat aircraft 8 1998 Chad Combat helicopters 2 1999 Ethiopia Large caliber artillery 20 1999 Ethiopia Combat aircraft 1 1999 Zimbabwe Combat helicopters 6 1999 Rwanda Combat helicopters 2 2000 Ethiopia Large caliber artillery 307 2000 Ethiopia Combat aircraft 4 2000 Angola Combat helicopters 2 2000 Nigeria Combat helicopters 6 2001 Sudan Armored combat vehicles 22 2001 Eritrea Combat aircraft 2 2001 Angola Combat helicopters 2 2001 Sudan Combat helicopters 12 2002 Sudan Armored combat vehicles 8 2002 Angola Combat helicopters 2 # 2, 2008 Moscow Defense Brief 19 Russia on the Arms Market of Sub-Saharan Africa Arms Trade

Year Importer Arms Category Number 2002 Sudan Combat helicopters 4 2003 Ethiopia Large caliber artillery 18 2003 Sudan Combat aircraft 3 2003 Ethiopia Combat aircraft 3 2003 Uganda Combat helicopters 3 2003 Ethiopia Combat helicopters 7 2004 Sudan Combat aircraft 9 2004 Sudan Combat helicopters 4 2004 Ethiopia Combat helicopters 3 2005 Burkina Faso Combat helicopters 2 2005 Sudan Combat helicopters 12 2006 Sudan Combat helicopters 4 Source: UN Register ceased to be in effect in May 2001 both countries continued to fiasco surrounding its attempts to penetrate the largest market place orders. Ethiopia acquired a second batch of seven Su-27 of the region: that of South Africa. From 1995 to 1999 the South fighters, which were delivered from 2002–2003. Eritrea also African authorities held a series of tenders as part of the Strategic purchased a second batch of four MiG-29, and in 2004-2005 it Defense Package program, for comprehensive purchases of received another two MiG-29SE, and two previously delivered aviation and naval equipment for a total of 3.9 billion USD. Russia fighters were modernized to the MiG-29SMT standard. was unable to secure even one contract out of this package. The Eritrea thus became the second country after Yemen to main cause of this failure lay in the inability of Russian industry employ this most advanced modification of the MiG-29. In and exporters to put together an offset program that would 2000, Russia also delivered two Su-25T ground attack planes satisfy the extremely complex offset requirements of South and two Su-25UB to Ethiopia. Both sides received Russian Africa. Moreover, it would seem that the traditional ties between combat helicopters: Ethiopia got ten Mi-25V, and Eritrea got the predominantly white military leadership of South Africa four. Aside from aviation equipment, Ethiopia also imported and British foreign services played a role, along with similar ties a large number of artillery systems from 1998 – 2000. between the ruling ANC and the Swedish political elite. The war in the Great Lakes region led to a rise in demand In addition, Russia was unable to penetrate the for Russian combat helicopters and aircraft. The main aviation market of Nigeria. Towards the end of the 1990s, purchasers were Angola and Zimbabwe. Angola purchased negotiations for the sale of Su-27 or MiG-29 took place, and 12 MiG-23MLD fighters, six Su-22M4 fighter-bombers and also for the modernization of Nigeria’s fleet of MiG-21. The Mi-24V combat helicopters, while Zimbabwe purchased negotiations failed, and Nigeria ended up purchasing 12 six modernized Mi-24V and Mi-24P helicopters. Among Chinese F-7NI and three FT-7NI. Finally, MiG Corporation the other combatants Uganda purchased six modernized was unable to expand into the African market beyond the Mi-24PN combat helicopters (the sole foreign customer of initial advances it made in the late 1990s. As mentioned this modification), and Rwanda received two Mi-24V. above, MiG was able to sell from excess stock a relatively Among the warring states of the Horn of Africa and the large batch of MiG-29 to Sudan and Eritrea for low prices. Great Lakes, Sudan stood out as an important purchaser of By early 2000 it was negotiating the sale of MiG-29 to Chad Russian arms after 2001. In 2003-2004, it received ten MiG- (four units), Uganda (six) and Tanzania (six fighters). And 29SE and two MiG-29UB, as well as 20 Mi-24P and 60 BTR- it signed a formal contract with the Democratic Republic 80A armored personnel carriers. A small batch of combat of Congo for the delivery of four MiG-29. However, for and airborne transport helicopters was sold to other African a number of mainly financial reasons, not one of these countries: two Mi-24V to each of Burkina Faso and Chad, two projects was implemented, and the market has gradually Mi-24P to Senegal, and six Mi-24P to Nigeria. come to be dominated by Chinese production. Russia’s main failure on the African arms market is the

20 # 2, 2008 Moscow Defense Brief Russia on the Arms Market of Sub-Saharan Africa Facts & Figures

Export Contracts of Warships From Russian Shipyards 1992 – 2007

Category Project Western Year of Country Ouantity Cost, Design Shipbuilder Year (s) of designation contract mln USD Bureau deliveries Submarine 877EKM Kilo 1991 Iran 3 800 Rubin 1992 – (St. Petersburg) 1996 Submarine 877EK Kilo 1991 China 2 500 Rubin Krasnoe Sormovo 1994 – () 1995 Submarine 636 Kilo 1994 China 2 500 Rubin Admiralty Shipyards 1997 – (St. Petersburg) 1998 Submarine 877EKM Kilo 1997 India 1 250 Rubin Admiralty Shipyards 1997 (St. Petersburg) Submarine 08773 Kilo 1997 India 1 250 Rubin Admiralty Shipyards 2000 (St. Petersburg) Submarine 636M Kilo 2002 China 8 1 600 Rubin 5 – Admiralty 2004 – Shipyards 2006 (St. Petersburg) 2 – (Severodvinsk) 1 – Krasnoe Sormovo (Nizhny Novgorod) Submarine 636M Kilo 2006 Algeria 2 500 Rubin Admiralty Shipyards 2008 – (St. Petersburg) 2009 Aircraft 11430 Admiral 2004 India 1 970 Nevskoe Sevmash 2011 Carrier Gorshkov (moderni- (actual (Severodvinsk) sation) ~ 1 600) Destroyer 956E Sovremenny 1998 China 2 885 Severnoe 1999 – (completed) (St. Petersburg) 2000 Destroyer 956EM Sovremenny 2002 China 2 1 400 Severnoe Severnaya Verf 2005 – (St. Petersburg) 2006 Frigate 11356 Talwar 1997 India 3 1 000 Severnoe Baltiysky Zavod 2003 – 2004 Frigate 11356M Talwar 2006 India 3 1 560 Severnoe Yantar 2011 – (Kaliningrad) 2012 Light 11661 Gepard 3.9 2006 Vietnam 2 300 Zeleno- Zelenodolsk 2009 – Frigate dolskoye Shipyard 2010 (Zelenodolsk) Light 1241RE Tarantul I 1994 Vietnam 2 Unknown Almaz Vympel Shipyard 1996 Corvette (Rybinsk) Light 1241RE Tarantul I 1996 Vietnam 2 Unknown Almaz Vympel Shipyard 1999 Corvette (Rybinsk)

# 2, 2008 Moscow Defense Brief 21 Export Contracts of Warships From Russian Shipyards 1992 – 2007 Facts & Figures

Light 12418 Tarantul V 2006 Vietnam 2 120 Almaz Vympel Shipyard 2007 – Corvette (Rybinsk) 2008 Large Patrol 10412 Svetlyak 2001 Vietnam 2 40 Almaz Almaz Shipyard 2002 Craft (St. Petersburg) Amphibious 12322 Pomornik 2000 Greece 1 66 Almaz Almaz Shipyard 2001 Landing (St. Petersburg) Craft Amphibious 12322 Pomornik 2002 Greece 1 66 Almaz Almaz Shipyard 2004 Landing (St. Petersburg) Craft Small 12061E Tsaplya 2002 South 3 100 Almaz Khabarovsk 2005 – Amphibious Korea Shipyard 2006 Landing Craft Small 11770 Serna 1994 Estonia 1 Unknown Alekseev Volga Shipyard 1994 Amphibious (Nizhny Novgorod) Landing Craft Small 11770 Serna 1994 United 2 Unknown Alekseev Volga Shipyard 1994 Amphibious Arab (Nizhny Novgorod) Landing Emirates Craft Fleet Tanker 15966M Jyoti 1994 India 1 Unknown Izumrud / Admiralty Shipyards 1996 Baltsudo- project Research Unknown Zhaik 2007 Kazakh- 1 Unknown Unknown Astrakhan Shipyard 2008 Vessel stan (Astrakhan)

Source: Russian press

22 # 2, 2008 Moscow Defense Brief Export Contracts of Warships From Russian Shipyards 1992 – 2007 Facts & Figures

Russian Arms Trade in the First Half of 2008

Major Identified Contracts for the Delivery of Russian Arms

Recipient Weapon Designation No. ordered Year (s) of Contract Notes deliveries value, mln USD India MiG-29 fighters 64 2008–2014 964 Aircrafts will be equipped with RD- 33 ser. 3 jet engines and “Zhuk-ME” radars Libya S-125 “Pechora” (SA-3) and n/a n/a 300 Overhaul and modernization “Osa” (SA-8) SAM systems, T-72 MBTs, corvettes and patrol boats Turkey “Kornet-E” (AT-X-14) ATGMs 80 systems and 2008–2009 80 800 missiles Turkmenistan “Smerch” MLRSs 6 2008–2009 70 The deal is probably tied with the construction of a natural gas pipeline along the Caspian Sea bed Jordan RPG-32 “Hashim” AT grenade n/a n/a n/a launchers China Ka-32 and Ka-226 helicopters 6 n/a n/a Major Identified Deliveries of Russian Arms

Recipient Weapon Designation No. Year of Year (s) of Delivered in the first half of Delivered Notes ordered contract deliveries 2008 by the first half mln USD units of 2008, units Algeria Su-30MKA fighters 28 2006 2007–2009 200 4 8 Contract value – 1.5 bln USD Venezuela Mi-17V-5 / Mi- 14 / 2 / 2 2006 2007–2008 n/a 14 / 0 / 0 complete Contract value – 35M2 / Mi-26T2 300 mln USD helicopters India “Smerch” MLRSs 38 2005 2007–2008 n/a n/a complete Contract value – 450 mln USD Malaysia Su-30MKM fighters 18 2003 2007–2008 300 6 12 Contract value – 910 mln USD Croatia Mi-171Sh 10 2006 2007–2008 13 2 complete Contract value – helicopters 65 mln USD (offset of Russian debt to Croatia) Germany Launch of SAR-Lupe 5 2003 2006–2008 8 mln euros 1 4 Contract value – reconnaissance 40 mln euros sattelite

Source: Russian press # 2, 2008 Moscow Defense Brief 23 Russian Arms Trade in the First Half of 2008 Our Authors Mikhail Barabanov. Graduated from the Moscow National University of Culture, then worked for the Moscow City Government. Editor-in-Chief of MDB since 2008, he is an expert on naval history and armaments.

Sergey Denisentsev. Graduated from the Masters program in Geography at Moscow National Univeristy. Currently a Ph.D. candidate at the Institute of World Economy and International Relations of the Russian Academy of Sciences. A Centre for Analysis of Strategies and Technologies (CAST) researcher since January 2007.

Denis Fedutinov. Graduated from the Moscow Stankin National Technological University in 2000, then worked for the National Scientific Research Institute for Aviation Systems. Since 2003, editor of the specialized webportal uav.ru on unmanned aviation. Author of several articles on the development of modern technologies.

Konstantin Makienko. Graduated from the Oriental Department of the Moscow National Institute for International Relations in 1995 and the French-Russian Masters’ School of Political Science and International Relations in 1996. He was head of a project on conventional armaments at the Center for Policy Studies in Russia (PIR-Center) in 1996–1997. Since September of 1997, he has been Deputy Director of CAST. He is the author of numerous articles on Russia’s military-technical cooperation with other countries and advisor to the head of the Russian Federal Agency on Industry since 2007.

Aleksey Nikolsky. Graduated from the Moscow National University of Economics, Statistics and Informatics in 1995. Worked as a correspondent for several newspapers and for Vedomosti since 2001.

Ivan Safranchuk. Ph. D. Political Science. Dr. Safranchuk graduated from the Moscow National Institute of International Relations (MGIMO), then worked at the PIR Center for Policy Studies. Dr. Safranchuk headed the Moscow Branch of the Center for Defense Information (in 2006 renamed into World Security Institute – WSI) from 2001 to 2007. Now Dr. Safranchuk heads the private consulting firm LaTUK, providing services on foreign policy, energy, and security issues. He is publisher of the analytical magazine The Great Game: Politics, Business and Security in Central Asia. Dr. Safranchuk also lectures at MGIMO.

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