CONTENTS

Industrial Policy #2(8), 2007 The Russian Aviation Industry: From European Option PUBLISHER to National Strategy 2 Center for Russian Defence Procurement in 2007 4 Analysis of Strategies and ’s Space Program in 2006: Some Progress but Technologies No Clear Direction 9

CAST Director & Publisher Ruslan Pukhov War And People Advisory Editor Konstantin Makienko Russian Anti-Armour Weapons and Israeli in Lebanon 13 Editor-in-Chief Ilya Nevorotov Arms Trade Researcher Ruslan Aliev Russia on the Arms Market in 2006 16 Researcher Alexey Pokolyavin Researcher International Cooperation Dmitry Vasiliev The Multipolarity Trap: How Russia Should Make Friends… Researcher and With Whom? 20 Polina Temerina -Technical Relations between Russia and North Editorial Office Korea: Past, Present and Future 25 Leninsky prospect, 45, suite 480 Moscow, Russia 119334 phone: +7 495 135 1378 fax: +7 495 775 0418 Our Authors 27 http://www.mdb.cast.ru/ To subscribe contact phone: +7 495 135 1378 or e-mail: [email protected] Moscow Defense Brief is published by the Centre for Analysis of Strategies and Technologies All rights reserved. No part of this publication may be reproduced in any form or by any means, electronic, mechanical or photocopying, recording or otherwise, without reference to Moscow Defense Brief. Please note that, while the Publisher has taken all reasonable care in the compilation of this publication, the Publisher cannot accept responsibility for any errors or omissions in this publication or for any loss arising therefrom. Authors’ opinions do not necessary reflect those of the Publisher or Editor Computer design & pre-press: ZEBRA-GROUP www.zebra-group.ru The editorial team would like to thank Simon Saradzhyan, News Editor, The Moscow Times, for his insightful guidance and generous advice The editorial team would like to thank Howard Gethin for his contributions in editing and proof-reading Cover photo: Il-96-300 - The flagship of Russia’s civil aircraft industry. Pulkovo airport, St.Petersburg, Russia, June 2006 Photographer: Marina Lystseva # 2, 2007 Moscow Defense Brief  © Centre for Analysis of Strategies and Technologies, 2007 Printed in Russia Industrial Policy

The Russian Aviation Industry: From European Option to National Strategy Konstantin Makienko European Prospects Boeing 787 and ’s A350, Russia’s national air carrier could also be said to have belonged to the Boeing party. In 2004-2006, many observers were convinced that Aeroflot’s top management preferred Boeing and was reluctant the best option for Russia’s civil aviation was to integrate to purchase the A350, which lagged behind its competitor into the European aerospace industry. The emergence of is in development. There are reasons to believe that Sergei perspective coincided with Moscow’s political rapprochement Prikhodko, a deputy head of the Kremlin administration, with Paris, Berlin and Rome, and broad cooperation with is the most influential supporter of the Boeing party in Europe in the energy sector. This approach also signaled an the corridors of power. Economic Development and Trade extreme skepticism regarding the capability of the national Minister German Gref tends to support it as well. In addition aviation industry to overcome its crisis, develop competitive to the Boeing faction, the “national” party was also opposed products and become a serious player, at least on the domestic the Europeans, and was represented mainly by the Ilyushin market. Finance leasing company, which was banking on upgrading The strategy of integration with Airbus seemed logical, and producing the Russian and Russian-Ukrainian Il‑96, given the degradation of the civilian segment of the domestic Tu‑204 and An‑148 aircrafts. Oddly enough, the “national” aviation industry and deteriorating political relations with party has virtually no supporters among governmental the . The ultimate, logical result of this strategy authorities to lobby its interests. would have been for Russia to give up its claims to be a system The implementation of the“European option” manifested integrator; that is, to give up its ambition of re-emerging as itself in the sale of a 10% stake in Irkut Corporation to the an independent, major player in the world aviation industry. Europeans, Vneshtorgbank’s (VTB) purchase of a 5% stake In this case, manufacturing aircraft components for Airbus in EADS, and most importantly, the blocking of Aeroflot’s would generate the bulk of sales. In the best case scenario, purchase of the U.S.‑made Boeing 787. Although the airline Russia could count on becoming a full participant in the management favored Boeing, it was forced by the government development of a new generation of airliners, including the to opt for the European A350. In addition, there is the project possible transfer of an assembly line to a Russian aviation for starting a production facility for converting A320 into plant. In the long term, Russia hoped to take part in the freighters. management of EADS and raise its stake in the corporation Finally, the production of components for the European to 15-20%. Airbus has begun in Irkutsk. The “European party” of the Russian aviation industry consists mainly of the leaders of the “Irkut alliance,” which have long-standing ties with EADS. The most active figure Crisis of the European Option in this party is Vice President of Irkut Corporation Valery Bezverkhny, who initiated the unsuccessful acquisition of the The rapprochement between Russia and Europe was bankrupt Fokker company by Irkut at the beginning of the quite intensive until about the beginning of 2006, when decade, and who later oversaw the sale of 10% of Irkut shares Angela Merkel came to power in as the new to EADS. Igor Shuvalov, Presidential advisor on economic Chancellor. After Gerhard Schroeder stepped down, the issues, was the most active supporter of the European option climate in Russian-German relations became more reserved. in the corridors of power. Moreover, for some time President In bilateral relations, the new Chancellor emphasized Vladimir Putin himself appeared to have toyed with the idea sensitive subjects such as human rights, freedom of speech of Russia joining EADS. and democratic standards. Finally, it was Angela Merkel who, A natural opponent of the European strategy was the in September 2006, frankly and unequivocally stated that “Boeing party,” led by the Sukhoi holding company, which Russia could not be a full-fledged partner in EADS. enjoyed close ties with the American corporation on the The reaction of panic and hostility in the European SSJ-100 regional jet project. At that stage, when Aeroflot press to the news of Vneshtorgbank’s (VTB) purchase of a was holding a tender for long-range aircraft that involved 5% stake in EADS was an important indicator of the attitude

 # 2, 2007 Moscow Defense Brief The Russian Aviation Industry: From European Option to National Strategy Industrial Policy

of European opinion-makers to the prospects of Russian- player on the global market. Indeed, all the necessary European aviation industry integration. And this reaction prerequisites are in place. reinforced the widespread view in Russia that Europeans First, even though the situation in civil aviation openly despise Russia when it is weak, and fear and hate it at remains grave, the outlook is clearly positive. In 2001, not the slightest sign of it growing strong. only old, but even new Russian aircrafts failed to meet The atmosphere of dialogue at industry level also international flight safety and environmental requirements deteriorated. Firstly, it became clear that the main priority for or to be certified internationally. Only a few aircraft were EADS, which was going through a deep crisis, was to resolve being built, and the system of after-sale maintenance did not production problems on the A380, and not the formation exist. Two key civilian aircraft manufacturers – Aviastar‑SP of dubious and risky alliances with Russia. Secondly, Louis and the Voronezh plant – were on the verge of bankruptcy. Gallois, the new co-CEO of the European concern, is known Air transportation plummeted. Russia had over 260 airlines, for his antipathy against Russians, a characteristic generally each so miniscule that none of them could afford to order inherent in French Protestants. Russia remembers well that new aircrafts. The profits of the entire sector totaled a it was Gallois who played a key role in removing Russian mere $300 million. At 2,000 units, the aircraft fleet was companies from the ATR project. redundant. The situation in Russia also changed. A diversification But from 2001‑2006, the situation improved noticeably of the economy and reorientation from a reliance on raw as the debts of key manufacturers were restructured or paid, materials was declared at the political level. The state started and the production of new aircraft meeting international paying close attention to industrial policy in several machine- safety and environmental requirements revived, thanks to building sectors, including aviation. Consolidation of the orders from leasing companies. aviation industry intensified in 2006. The state decided to Secondly, domestic demand for new aircrafts started launch and partly finance large-scale national projects from to soar in 2004. The combination of rapid growth of air the budget: the SSJ‑100 regional jet, the MS‑21 short- and transportation (at about 8% a year except 2005) and the medium-range aircraft and the PS‑12 engine. massive disposal of obsolete Soviet-made aircrafts resulted The political and industrial positions of the national in snowballing demand for modern, cost-effective airliners. party strengthened. Large-scale state financing of the MS‑21 Market volume over the next five years is estimated at 300 project runs inherently counter to the European option. Part aircraft. of the “Irkut alliance” consolidated around Oleg Demchenko, Thus, the basic prerequisites for a strategy to revive General Director of the Yakovlev design bureau and Irkut national production have been established. Corporation President; influential in both political and In fact, the national choice policy boils down to three military circles. Finally, the reputation of EADS was badly simple tasks. First, the combination of customs measures spoiled in Russia by the crisis of A380 production and and leasing mechanisms will supply the needs of Russian especially the overhaul of the initial A350 project, which airlines with upgraded Il‑86 and Tu‑204, as well as new was especially sensitive in Russia from the viewpoint of SSJ‑100 regional jet and An‑148. Second, to unilaterally both forming the fleet of long-range airliners and possible launch the MS‑21 program, if the Europeans refuse to industrial involvement in the program. deliver a line for the assembly of the next generation A320 It now seems that plans for Russia’s involvement in EADS modification to Russia. Third, to intensify talks with had been unrealistic from the very start, or at least premature. on the development of a short-and medium-range jumbo The European corporation is not just a manufacturer of civil jet to replace the Il‑86. It must be stressed that the “national aircraft, but also a dynamic military enterprise, which Russia strategy” is not tantamount to autarchy, and that in any case could hardly joint in the foreseeable future, especially as the new airliners will be developed on the basis of broad the United States is the biggest market for EADS defense international cooperation, as is the case with the Sukhoi products after Europe. regional jet project. The successful implementation at least one program to develop new generation aircraft – with Russia acting as a The National Strategy system integrator – will establish a new baseline for future talks on international alliances, be they with the Europeans The cool stance adopted by European political and or the Chinese. If the Russian aviation industry proves industrial leaders leaves Russia no other alternative than to capable of regaining the status of a global player, on at least implement a purely national strategy of reviving domestic the scale of Embraer or Bombardier, Europe will be more aviation, perhaps as a second-tier, but as an independent inclined to regard Russia as a potential full-scale partner.

# 2, 2007 Moscow Defense Brief  The Russian Aviation Industry: From European Option to National Strategy Industrial Policy

Russian Defence Procurement in 2007 Andrey Frolov 2007 Russia’s national defence procurement (NDP) will be devoted to conventional weaponry. In 2007, In amounted to 302.7 billion rubles (app. $11.6 billion), the strategic forces will acquire 17 land and sea-based which marks an increase of 27.9% over 2006. Of this sum, intercontinental ballistic missiles (ICBM) – a post-Soviet $5.6 billion (47.9%) will be spent on purchases of new record, according to published information – finance the equipment, $2.3 billion (19.8%) on repairs and modernization, construction of three ballistic nuclear missile and $3.7 billion (32.2%) on R&D. Appropriations for and acquire new strategic bomber. purchases, repairs and modernization, and R&D grew by There is virtually no information on purchases of 25.5%, 23.6% and 34.4%, respectively. weaponry, for the air force and navy above all. Taking account NDP-2007 includes purchases of new equipment and of the high price of modern weapons systems, which one the continuation of long-term programs begun in the late can estimate on the basis of export contracts, it is likely that 1980s and early 1990s. The latter consists mostly of Navy the share of such purchases in absolute and relative terms projects, given their high cost and relatively long production is quite large. cycles, when compared to the equipment of other services. It is interesting to compare NDP‑2007 with the State Published data tends to support official statements that mass Program of Armaments for 2007-2015 (SPA-2015). The purchases of serially-produced items are planned, especially latter allocates $190 billion, of which the Defence Ministry with regard to the Navy, though the scale of such purchases should provide $173.5 billion, including $109.2 billion. for remains rather low. the purchase of new arms and equipment at constant 2006 Significant sums (41% of the sum, reserved for prices. This sets appropriations for arms and equipment purchasing of the new equipment) have also been allocated in 2007 at 5.1% of the overall spending planned to 2015, to repairs and modernization. Given the Defence Ministry’s or about half of the proportion that would have to be spent tradition of procuring new equipment for its strategic nuclear equally over the next eight years (11.1%) to match the forces, most of funds assigned to repairs and modernization forecast of SPA‑2015. The gap between the relative percentage allocated to purchases of new arms and equipment is evident with 63% for SPA‑2015 and just 47.9% for NDP‑2007. Figure 1. Structure of the Russian Defence These figures could be related to the tendency to reduce Budget in 2005-2007 “inertial” purchases, i.e., the completion of long drawn- Billion rubles out projects, some dating to Soviet times and requiring 350 repairs even before the completion of construction, and the simultaneous growth of “innovative” projects, i.e., the 300 rising number of newly-acquired weapons systems. Indeed, it is clear that purchases of arms and equipment purchases 97,7 250 is set to increase by 2010. The number of long drawn-out 200 72,7 projects will be also be reduced by administrative action; for 60,0 example, the fitting-out of the Project 949AM cruise-missile 150 62,8 nuclear at was rejected in 2006 and not 48,5 11,8 included in NDP‑2007. 100 Finally, NDP‑2007 marks the threshold of a new 145,0 50 112,0 115,5 practice for the arms-procurement system: from 2008 the national defence procurement will be defined for a three- 0 year period. 2005 2006 2007 Year The tables below show only known purchases of New Purchases arms and military equipment for the Russian armed forces, not including purchases for law enforcement and Repair & Modernization security agencies like the Interior Ministry, the Federal R&D Security Service and others. Published orders for repairs and modernization are also included, but R&D contracts Source: Russian press are not.

 # 2, 2007 Moscow Defense Brief Russian Defence Procurement in 2007 Industrial Policy

Table 1. Strategic Nuclear Forces

Name Number of units Notes Producer New Purchases Topol M ICBM 7 4 silo-based and 3 mobile Votkinskiy factory Bulava R-30 SLBM N/A For testing Votkinskiy factory Sineva R-29PMU SLBM N/A Probably 10, considering the quantity of Topol-M ordered out Krasnoyarsk Machine-building of the total of 17 ICBMs purchased this year. Other publications Factory suggest 12

Table 2. Space Forces

Cost per unit, Name Number of units Notes Producer million USD New Purchases Launch vehicle 4 N/A At least one launch, that of the Soyuz-2-1B, was observed in August-September 2007 Satellite 4 N/A Possibly to include one new generation missile attack warning satellite. Launch planned for the second half of 2007 GLONASS-M satellites 5 153.8 In 2007 six satellites, including one prepared in Reshetnev Scientific- 2006, are planned to be placed in orbit Production Association Cosmodromes - 69.2 development Launch pad for the 1 N/A Production began in 2006 Zvezdochka Angara launch vehicle (at Baikonur) Voronezh-DM radar 1 57.7 Second station in a series. Built near Armavir, Long-Range Radio station Krasnodar Region Communications Research Institute (design), NPP Piramida (producer)

Table 3. Air Forces

Number Name Notes Producer of units New Purchases Tu-160 strategic bomber 1 Construction was to finish by the end of 2006 Gorbunov KAPO Su-34 front-line bomber 6 NDP-2007 allocates $65.3 million, though one unit costs $33 million Chkalov NAPO Yak-130 advanced trainer 4 NAZ Sokol Ka-50 attack helicopter 3 NDP-2007 allocates $57.7 million AAK Progress Ka-52 attack helicopter 1 Pilot series AAK Progress Mi-28N attack helicopter 5 Pilot series. VK-2500 engine for the first Mi-28N to be supplied by the Rostvertol Ukrainian Motor-Sich Ansat light helicopter 2-3 Perhaps for the Syzran aviation school Kazan Helicopter Plant Tu-214 passenger aircraft 1 In a VIP version; could be handed over in 2008 Gorbunov KAPO S-400 SAM system 1 Almaz-Antey Air Defence batallion Concern # 2, 2007 Moscow Defense Brief  Russian Defence Procurement in 2007 Industrial Policy

Number Name Notes Producer of units Repairs and Modernization Tu-160 strategic bomber 2 Repairs expected to be completed by the end of 2007 Gorbunov KAPO MiG-31B fighter interceptor N/A Modernized to MiG-31BM version; equipped with Zaslon-AM air-borne NAZ Sokol, MoD RF ARZ radar and LCDs No. 514 Su-27 fighter 6–12 Modernization and modification of the Su-27SM; probably equipped wi th Gagarin KnAAPO Al-31F-M1 engines. Work began in 2006 on 6 planes Su-24M front-line bomber 12 Modernization and modification of the Su-24M2. MoD concluded a 3- Chkalov NAPO years contract for the modernization of the Su-24M. Su-25 attack aircraft 6 Modernization and modification of the Su-25SM RF MoD Aviation Repair Factory No. 121 Beriev A-50 AWACS N/A Increase flight range. Improve radar system to direct aviation to ground Beriev TANTK targets Tu-22M3 long-range bomber 1 Gorbunov KAPO Il-76MD transport plane 1 Remotoring by PS-90A-76 engine. By 2006-2009 12 aircraft should be VASO, Perm Motor Plant modernized Mi-24P attack helicopter N/A Modernized to Mi-24PN version. Possibly began modernization to 24PM Rostvertol version.

Table 4. Navy

Cost per unit, Project Name Notes Producer million USD New Purchases Project 955 Borey SSBN Yuriy Dolgorukiy N/A Laid down in 1996, launched April 2007 Sevmash Aleksandr Nevskiy N/A Laid down in 2004 Project 955A Borey SSBN Vladimir Monomakh N/A Laid down in 2006 Project 885 Yasen SSN Severodvinsk N/A Laid down in 1993 Project 971I Irbis SSN Nerpa N/A Begun in 1986. Might be destined for Amur Shipyard Indian Navy Project 677 Lada SSK Sankt-Petersburg N/A Undergoing testing; hand-over to Navy in 2007 Kronshtadt N/A Laid down in 2004 Sevastopol N/A Laid down in 2006 Project 20380 corvette Steregushiy 192.3 Undergoing testing; hand-over to Navy Northern Shipyards in 2007 Soobraznitel’niy 57.7-69.2 Laid down in 2003 Boykiy 69.2 Laid down in 2005 Stoykiy 69.2 Laid down in 2006 Sovershenniy 69.2 Laid down in 2006 Amur Shipyard Project 11540 Yastreb frigate Yaroslav Mudriy 19.2 million Laid down in 1988 Yantar’ Shipyard to be allocated in 2007

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Cost per unit, Project Name Notes Producer million USD Project 22350 frigate Admiral Gorshkov 423.1 Laid down in 2006 Northern Shipyards Proect 18280 intelligence Yuriy Ivanov N/A Laid down in 2004 ship Project 11661K Gepard Dagestan N/A Laid down in 1992. Hand over to Navy Zelenodol’sk Yard corvette in 2007 Project 11711 landing ship Ivan Gren N/A Laid down in 2004 Yantar’ Project 12441U training ship Borodino N/A Former frigate Novik, laid down in 1997 Project 23100 rescue ship Igor’ Belousov N/A Laid down in 2005 Admiralty Shipyards Project 20180 search and Zvezdochka N/A Laid down in 2004 Zvezdochka transport ship Project 21630 Buyan small Kaspiysk 9.6 Laid down in 2005 Hand-over to Navy Almaz gunboat in 2007 Makhachkala 9.6 Laid down in 2006 Project 02668 ocean Vice-Admiral Zakharin’ N/A Fitting-out, launched in 2006 Sredne-Nevskiy minesweeper Shipyard Project 21820 Dyugon fast- N/A 7.7 (lead Laid down in 2006 SZ speed small landing ship ship) Project 436 target ship N/A N/A Order received in 2005 Amur Shipyard Repairs and Modernization Project 11435 aircraft carrier Admiral Kuznetsov N/A SRZ-35 Project 667BDR SSBN Ryazan’ N/A Mid-life repairs and modernization Zvezdochka Project 667BDR SSBN N/A N/A Probably two more ships. Mid-life Zvezda repairs Project 667BDRM SSBN Karelia N/A Mid-life repairs and modernization, Zvezdochka Novomoskovsk N/A begun in November 2006 Bryansk N/A Mid-life repairs and modernization. Work began in 2002 Project 949A SSGN Irkutsk N/A Repairs. Work began in 2001 Zvezda

Project 949A SSN Probably, Nizhniy Novgorod N/A Certification for repairs began in 2005 Nerpa SRZ Project 971 SSN Pantera N/A Mid-life repairs Sea trials began in early Sevmash 2007 Kashalot N/A Mid-life repairs. Work de facto began in Amur Shipyards 2005 Project 671RTMK SSN Daniil Moskovskiy N/A Mid-life repairs Nerpa SRZ Project 877 SSK Unknown N/A Mid-life repairs and modernization Amur Shipyards Kaluga N/A Mid-life repairs and modernization Zvezdochka since 2002 Project 641B SSK B-380 N/A Repairs since 1992 Lazarevskoe Admiral’teystvo (Sevastopol’)

# 2, 2007 Moscow Defense Brief  Russian Defence Procurement in 2007 Industrial Policy

Cost per unit, Project Name Notes Producer million USD Project 11442 nuclear- Admiral Nakhimov N/A Deployment of reactor’s critical zone, Sevmash powered battlecruiser replacement of anti-ship missile mount, replacement of electronic systems Project 956 destroyer Burniy N/A Repair. Handed over to Navy in 2007 Zvezda Rastoropniy N/A Mid-life repairs Northern Shipyard Project 1155 destroyer Vice-Admiral Kulakov N/A Mid-life repairs and modernization Northern Shipyard Admiral Levchenko N/A Mid-life repairs Armament - Moskit anti-ship missile N/A “Production volumes for the Russian AAK Progress Navy equal exports to China”

Table 5. Land Forces

Name Number of Units Notes Producer New Purchases T-90 main battle 31 Cost of one unit in January 2007 was app. Uralvagonzavod $2.23 million BMPT tank combat fire support vehicle A few vehicles Delivery of pre-production batch Uralvagonzavod BMD-4 airborne infantry fighting 10 Plant vehicle BMP-3 infantry fighting vehicle N/A Possibly about 40, if NDP for Kurganmashzavod Kurganmashzavod maintains 2006 levels BTR-80 armoured pesonnel carrier About 100 Arzamas Machine-building Plant Tipchak unmanned tactical aerial N/A Delivery of pre-production batch Vega Concern reconnaissance system Iskander-M TMD 3 batallions There are 4 launch systems for each Mashinostroenie Design Bureau batallion, with 16 missiles each batallion KamAZ truck About 2000 KamAZ Repairs and Modernization T-72 main battle tank 155 Modernization; probably the T-72B2 Uralvagonzavod Rogatka configuration T-80 main battle tank 31 Modernization Omsk Transport Machinebuilding Plant BMD-3 airborne infantry fighting N/A Modernized to BMD-4 configuration with Shchelgovskiy Val Istrument Design vehicle Bakhcha-U fire system Bureau

Table 6. Distribution of NDP-2007 by select regions

Region Volume of NDP , million USD Nizhniy Novgorod oblast’ 500 Samara oblast’ 180 Vladimir oblast’ 175–188 Ulyanovsk oblast’ 96–138 Primorskiy krai App. 40 million higher than NDP-2006  # 2, 2007 Moscow Defense Brief Russian Defence Procurement in 2007 Industrial Policy

Russia’s Space Program in 2006: Some Progress but No Clear Direction Andrey Ionin ussian space officials have declared 2006 a good year, even program by 2010. Perhaps, by that time, private firms will Rthough the program is still plagued by an obsolescent step into NASA’s role and design new vehicles for delivering industrial base, low wages averaging 12 thousand rubles cargo and astronauts to the ISS. Indeed, NASA held a tender (about $450) per month, and an aging workforce (46 years on worth $485 million for this purpose, in December 2005, and average). They prefer to highlight the following: announced two winners in September 2006: SpaceX and Annual production of the space sector, which includes Rocketplane Kistler, both US companies. Another solution over 100 firms and 250,000 employees, rose by 14%, would be for other ISS partners (US, Canada, Japan and the which is 3.5 times above average for Russian industry; European Space Agency) to take up Russia’s suggestion and Russia remains the world leader in space launches for double the rate of production starting in 2009 of the Soyuz- the seventh year in a row, with 25 in 2006, compared to TMA manned spaceship, at a cost of approximately $150-200 just 18 for its closest competitor, the USA; million per year. But since it takes over two years to build Although the Americans completed three of five planned these ships, and since no additional funding has yet been Space Shuttle missions to the International Space secured, this option could make a difference only in 2010, by Station, Russia once again made the most significant which time here would no longer be any need for new orbiting contribution; modules of the ISS. After all, who would work on them, and Russia’s space industry firms have begun to be for how long? consolidated into holdings; Another, less urgent issue, concerns the terminal date Russia has added new international partners like of the ISS program. The station was originally intended to Brazil, Kazakhstan and , to established be used until 2015, though Russia announced in 2006 that relationships with the US, France and other European this term could be extended until 2025. This is, perhaps, states. just a technical issue, but the fact is that the USA remains According to Roskosmos, the national space agency, the principal investor in the ISS, and without their interest Russia is in a dead heat with the US in piloted space navigation, and active participation no further continuation of the and comes in a firm second if one takes into account the program is possible. And American interest in the ISS, having entirety of systems in orbit, launch sites and ground control decreased now for several years, reached a nadir in 2006. The centers. However, a critical examination points to a more new National Space Strategy signed by George Bush makes complex state of affairs. no mention of the ISS whatsoever. Russia needs new partners now. But which project would be of interest to them? Yet another international station, a Piloted Space Navigation joint piloted lunar program, a journey to Mars? Or should Russia pursue an independent course, including a national, The construction of the International Space Station (ISS) high-latitude space station or its own Mars program? In was originally planned to have been completed in 2004, but brief, there are many alternatives available, but Roskosmos the deadline was extended in 2006 to the end of the decade, has not set any priorities; and until they do so there will be and the eighth and last Russian module will be attached to no progress. the ISS as late as 2011. However, a more significant problem The same lack of clarity bedevils the development of a concerns the size of the crew. According to the original replacement for the reliable, but obsolete, Soyuz spaceship. schedule, there should have been six resident crew by 2005 By the end of 2005, Roskosmos launched a competition to and ten at a later stage. There are presently 2-3 resident crew, create a manned re-usable spaceship – a largely unexpected and they are fully occupied with the task of maintaining their move, since the consensus for almost two years had been life support systems and the station itself, with no time left that Roskosmos was set on developing the Clipper reusable over for scientific experiments – the main purpose for which manned spacecraft, designed by the Rocket and Space the ISS was created. Corporation Energia. It is not at all clear how this problem can be solved, The submission of three competing designs and the especially since the US plans to terminate the Space Shuttle competition itself all took place rather quickly: the results # 2, 2007 Moscow Defense Brief  Some Progress but No Clear Direction for Russia’s Space Program in 2006 Industrial Policy

were to be announced on 3 February 2006 and a contract to Program on Sector Restructuring begin work to be signed 20 days later. However, the declaration of results was postponed by six months, and then annulled. The rocket and space industry began a process of The official explanation for the Clipper’s failure was the lack restructuring in 2006. In July, the Russian government of a national launch vehicle capable of putting a spaceship examined a Roskosmos program for the development of weighing at least 14 tones into orbit (the Russo-Ukrainian the sector to 2015. The program paints a rosy picture for Zenit was considered unacceptable for political reasons). the Russian space industry: for example, average annual Similarly, the Clipper had no clear function in the Federal growth for production is forecast at 8%, and the share of Space Program. But this was all-too clear long beforehand, so rocket and space technology meeting world standards is the only mystery concerns why the tender had to be held in projected to grow from the current 41% to 100% during the the first place. same period. In the end, one might argue that the most illogical decision Integration is seen as the means of reaching strategic was taken: to continue the program of the deep modernization goals. Holdings are to be formed along functional lines, of the Soyuz launch vehicle (project Soyuz 2-3), to meet the as a few select large firms will absorb their suppliers and requirements of the European Space Agency, which apparently related enterprises. The transformation will take place in now remains the main investor in this program. Under this several steps. The first involves the incorporation of joint- scheme the development of a new spaceship (perhaps even stock companies, though no deadline for this process has that very same Clipper) could begin no earlier than 2012, the been set. The second step, due to conclude by 2010, involves date by which the Clipper should already have made its first the establishment of holdings, and by 2015 the number flight. of holdings will be consolidated to just three or four. State Turning to the market of space tourism, all seems well, at financing is not set to increase, but should remain within least at first glance. Russia enjoys a monopoly on this market, the range of existing federal programs. Foreign partners and a long list of clients that have signed up for flights to 2009, are not to participate in the formation of the holdings. This even though the price of a tour has been raised from $20 to program is clearly distinct from the programs adopted for $25 million. However, in spite of all of its natural advantages, other sectors of the military-industrial complex where, for including world-beating positions in biomedicine and rocket example, the formation of a single integrated structure is technologies, Russia is losing its chance to become a leader in envisaged for each of the aviation and sectors. the growing market of sub-orbital space tourism. Two American The program has not yet been approved, but the creation projects have taken the lead over their peers: the nine-seat of holdings has already begun: SpaceShipTwo by Virgin Galactic and the six-seat Dream The Khrunichev State Research and Production Space Chaser by SpaceDev. The inaugural flight of SpaceShipTwo is Center will be the core entity of a holding for the scheduled for 2008. Ticket prices start at $200,000 per head, development of heavy-lift launch vehicles; and will decrease to $25,000 over the course of the planned The Reshetnev NPO PM will be the core entity of the decade of service. Bigelow Aerospace has even launched a “Data Satellite Systems” holding for the development of space hotel project: a prototype was successfully placed in communications and navigation satellites; orbit by a Russian-Ukrainian Dnepr launch vehicle in July The Russian Institute of Space Device Engineering 2006. This market is not sitting still: NASA recently announced Science and Research Institute will be the core entity it will join forces with Virgin Galactic on a feasibility study of of the Russian Rocket and Space Device Engineering supersonic rockets that could take passengers form London and Information Systems holding, and other holdings to New York in less than two hours. as well. For its part, Roskosmos makes the excuse that the risks There is little to suggest, however, that the formation of this business are too high, and would require extraordinary of these holdings will yield any long-term competitive insurance schemes. Everything must be checked and advantages, and that bodes ill for their effectiveness on the re-checked a thousand times, they say, and flippancy and global space market. Moreover, the level of corporate risk and adventurism are severely punished in space. Indeed, suborbital the distortion effects of production monopolies are sure to tourism carries its own risks and these must be dealt with, increase. A successful restructuring strategy would rather but who is in a better position to overcome these challenges adhere to the following principles: than Russia, with its knowledge and experience in manned 1. The principle of “vertical integration” should guide the space-flight? merger of space sector enterprises. Holdings should integrate In any case, there was no articulation in 2006 of not suppliers and related enterprises, which has no bearing any kind of vision for manned programs. Inertia alone is on efficiency or competitiveness, but key elements of the guiding developments, and the future of the program is far market cycle: launch vehicles, satellites, operating services, from clear. and so on. Indeed, this is precisely how all global leaders 10 # 2, 2007 Moscow Defense Brief Some Progress but No Clear Direction for Russia’s Space Program in 2006 Industrial Policy

in the space sector have been structured, from Lockheed Minister Sergey Ivanov made a point of saying that the Martin and Boeing to the European EADS. Russian Space Forces would not pull out of Svobodniy. 2. The formation of space holdings should avoid Nevertheless, in February 2007, President Putin signed the temptation of maximizing the share of domestically a decree liquidating Svobodniy, which, founded in 1996, had produced components. This is not an effective strategy for served a mere eleven years. At the same time, Roskosmos the modern market; where, in order to reduce delays and noted the necessity for establishing yet another cosmodrome, lower production risks, to increase the competitiveness of probably the Kapustin Yar missile testing range in Astrakhan production and to concentrate the holding’s scarce resources oblast (in South Russia), to take over manned launches from on the development of key competencies, the share of foreign Baikonur. In this case Baikonur would be used exclusively production should, in fact, be maximized. Following what as for international commercial projects with Russian long become standard practice abroad, stocks of “external” participation. But then why should Russia have signed a components should be maintained through just-in-time lease to 2050, given the fact that Baikonur, from a purely production contracts, while domestic production should commercial point of view, is among the least competitive be expanded, as required, through transfers of licenses and cosmodromes in the world? The Alkantara spaceport would technical documentation. seem much more suitable, but Russia’s space relations with 3. The process of restructuring should not strictly Brazil have not yet reached that level. Russian participation follow sectoral boundaries. A holding is unable to minimize is limited to important, but private contracts to upgrade the corporate risks and diversify high technology production technical and commercial parameters of the Brazilian VLS-1 if it remains bound to just one military-industrial sector. launch vehicle. Especially since the space sector is characterized by The decision to close Svobodniy runs counter to the extremely high risks, space production as a share of total government’s policy to develop the Far East, not to mention production should be no higher than 20-25% for a multi- regional trends in the space sector. The Pacific is an area of sector holding. In other words, the “vertically-integrated” high growth. Russia’s participation in China’s ambitious and space enterprises should join with larger military-industrial fast developing program is well below potential. Japan is holdings as junior partners, as is the case with such various looking to move ahead. South Korea, with Russian assistance, companies as Lockheed Martin, Boeing, EADS and Saab. is about to establish its first space launch vehicle and construct 4. The question of foreign participation in the ownership its first cosmodrome. Indonesia, together with the Makeyev of space enterprises should be revisited, insofar as the Design Bureau, is developing an aerospace “airborne launch” creation of large multi-sector holdings will in itself facilitate system. But rather than reorient Svobodniy to take advantage control over strategic Russian assets and technologies. The of these strategic regional developments, they decided to broad purpose of such international cooperation should close the base. be not only to increase production, but to secure Russian access to new technologies, including the management of high technology projects, access to new markets, and Conclusions the establishment of strategic alliances. Indeed, if Russia hopes to become an equal partner to Western high-tech The list of overdue decisions and contradictory policies companies like EADS, then where is the logic in shutting with long-term implications for Russia’s space sector could them out of our markets? Regulated access to our space be extended. Why should this be the case? At first glance, it enterprises and technologies should be used to leverage would seem that the sector has everything necessary for Russian participation in their production programs and sustained and even rapid development. Space programs structures. enjoy broad support in society, the attention of legislative and executive authorities, as well as positive coverage in the media and the expert community. State procurement The Choice of Cosmodromes is growing at a steady clip: the budget for the Federal Space Program in 2007 reached 24.4 billion rubles (942 millions Russian authorities have not established a clear position USD) , which is three times higher than in 2002. on how many cosmodromes are required, and where they Perhaps the main problem is the absence of any concrete should be located. A new federal targeted program for the strategy for the development of the Russian space industry. development of Russian cosmodromes from 2006-2015 This was hardly understandable several years ago, when the was adopted in 2005. At that time, of the two cosmodromes dearth of funding precluded any kind of strategy other than in service – Plesetsk, in Archangelsk oblast (in Northern mere survival. But while the funding situation has changed Russia), and Svobodniy, in the Amur oblast (on Far East), in a cardinal manner over the past few years, there have been only the first was to be maintained. However, then Defence no new ideas to match. # 2, 2007 Moscow Defense Brief 11 Some Progress but No Clear Direction for Russia’s Space Program in 2006 Industrial Policy

A new Russian space strategy is necessary to drive The USA published its fifth National Space Strategy development forward, and it should answer the following in October 2006, which articulates the needs of American key questions. What benefits should Russia derive from a society as priorities for the national space program. This national space program? How will the space program benefit is clearly the correct approach, as the US taxpayer foots the ordinary Russians, Russian businesses and government bill for the majority of American space production. In this agencies, including those in charge of national security? manner, the space policy serves to set long-term goals and What projects should the national space program focus allows society to exercise some oversight over the space on, and what project should be excluded? To what extent bureaucracy, and NASA in particular. should the program participate in the global space market? Similarly, a Russian space policy would help to establish Where should the line be drawn between national security strategic goals and provide society with some say in how they and commercial space projects? Who should Russia take on are pursued. After all, since the bulk of the sector’s assets are as strategic partners? Does Russia need a large-scale space owned by the state, Russian society is the main investor in project? Should it pursue this project on its own or with the federal space programs and the main shareholder of the international partners? national space industry.

12 # 2, 2007 Moscow Defense Brief Some Progress but No Clear Direction for Russia’s Space Program in 2006 War And People

Russian Anti-Armour Weapons and Israeli Tanks in Lebanon Mikhail Barabanov he military conflict that unfolded from 12 July – 14 regular army, even if it displayed some peculiar methods of TAugust, 2006 between Israel and the Hezbollah, the warfare. Lebanese Shiite Islamist Resistance group, marked the first Hezbollah made a special effort to confront Israeli time in several years that the Israeli army has confronted armour with a huge number of anti-tank weapons, including a well equipped opponent in a large-scale confrontation. the Soviet Malyutka anti-tank guided-missile complex (NATO Military observers paid particular attention to the use of code AT-3) with 9M14 series guided-missiles (including Israeli armour and the outcome of battles between Israeli licensed Yugoslav versions and the Iranian Raad and Raad-2T main battle tanks and Hezbollah’s anti-tank weaponry. tandem warhead “clones,” the Fagot (AT-5), Konkurs (AT-5, All in all, four headquarters and 17 Israeli Army including the licensed Iranian Towsan-1 version), the French brigades (six armoured, seven infantry and four airborne) MILAN, the American TOW (including its Iranian Toophan took part in battle, though not all were up to full combat and tandem warhead Toophan-2 copy), recoilless guns and strength. Over 30,000 Israeli servicemen and up to 400 main several versions of the Soviet RPG-7 hand-held anti-tank battle tanks were directly engaged in battle on Lebanese grenade launcher. Iran and Syria were the main suppliers soil, and the tanks were all Merkava models made in Israel. of these weapons, with some western systems apparently Of the six armoured brigades, two brigades (7th and 847th) reaching the Shiites from the arsenal of the Lebanese Army. were equipped with the Merkava Mk 2 model, three brigades Aside from that, Hezbollah used a small number of (188th, 434th and 673rd) with the Merkava Mk 3 model, and modern 9K115-2 Metis-M (AT-13) and 9K129 Kornet-E (AT- one brigade (401st) with the most advanced Merkava Mk 4 14) portable anti-tank guided-missile systems, and RPG-29 model. Of the seven infantry brigades, two (1st and 609th) Vampir anti-tank rocket launchers, delivered by Russia to were equipped with Achzarit heavy armoured personnel Syria in 1998-1999. These three new systems penetrated carriers, converted from Soviet T-55 tanks seized from Arab armour exceptionally well thanks to their tandem High- forces in the wars of 1967 and 1973. Explosive Anti-Tank (HEAT) warheads. The close-range Since 2000, Hezbollah has turned the expanse between Metis-M system have a range of up to 1500 meters and are the Israeli border and the Litani river into a heavily fortified armed with 9M131 guided-missiles weighing 13.8 kg with line of defence, known as “Nasser.” Practically every wire-guidance. The heavier Kornet-E fires 9M133 laser- settlement was equipped with temporary or permanent guided missiles weighing 29 kg up to 5500 meters. Both fortifications (including concrete bunkers, steel doors, systems are made by the Tula Instrument Design Bureau etc), a large number of underground tunnels and heavy and were equipped with 1PN86V1 Mulat thermal sights. camouflage. However, although Hezbollah fighters made The hand-held RPG‑29 Vampir anti-tank rocket launcher is use of these fortifications, they did not engage in positional one of the latest products of Moscow-based Basalt. Weighing warfare, but mounted mobile military operations. Fighters 11.5 kg, it fires rocket-propelled grenades that weigh 6.2 kg were mobilized in groups of no more than 20 people (often up to 500 metres from a telescopic pipe. just five or six), based, as a rule, on detachments of anti- Hezbollah’s defences were structured around these anti- tank missile systems. It appears their strategy was to expose tank weapons, which were used in great numbers. According the advancing Israeli units, and tank units in particular, to to Israeli estimates, the fighters launched over 500 anti-tank guided anti-tank missiles fired at a fairly long range, often guided-missiles in July alone, and about 1000 through the changing their positions, using a network of tunnels and course of the conflict. Moreover, the anti-tank guided-missiles bunkers. were used not only against armoured objects, but also against Hezbollah deployed up to 2500 fighters, of which a Israeli infantry. The fighters sought generally to employ the core of a thousand “regular” troops were well trained and weapons from the maximum possible range. equipped to the best western standards. These zealous, On the whole, both the scale of Hezbollah’s use of anti- professional fighters were well supplied with arms, and tank systems, as well as their possession of modern systems strictly followed orders. One could not say that Israel was with superior armour penetration capability, came as a fighting with “partisan” formations in the conventional sense surprise to the Israeli command. Nevertheless, measures to of the term, but in reality with a well equipped and organized reduce losses of armour were taken from the very beginning. # 2, 2007 Moscow Defense Brief 13 Russian Anti-Armour Weapons and Israeli Tanks in Lebanon War And People

It is indicative that on Lebanese territory the Israelis used It appears that non-modernized second generation anti- only their heavily protected APCs on main battle tank chassis: tank guided-missiles produced in the 1970s (Fagot, Konkurs, the Achazarit (on the T‑55 chassis), the Nagmahon, a few of MILAN, TOW) were used in battle. The Kornet-E and Metis-M Nemerah prototypes(on the Merkava chassis), the Puma systems, with their much higher level of effectiveness, were combat engineering vehicle and the Nakpadon, all based on clearly present in very small numbers, but accounted for the the old British Centurion tank chassis, while the standard majority of Israeli losses. This allows one to conclude that M113 APCs, even those modernized with a great deal of Israel made an issue of the possession of these new systems extra protection, where hardly used at all, and then only as by Hezbollah mostly for political, rather than strictly military, engineering, support and convoy vehicles. reasons. On the other hand, if Hezbollah had a large number According to various Israeli and Western sources, during of Kornet-E and Metis-M systems, the Israeli tank attack the course of battle in Lebanon, between 46 and 50 Merkava in Lebanon could have been completely repelled. Modern main battle tanks (of the 400 deployed) and 14 APCs were Russian weapons proved to be quite effective against the hit by anti-tank weapons, including 22 incidents where tank newest Western equipment. armour and 5 cases where APC armour was penetrated. The old types of anti-tank guided-missile systems have Another six tanks and at least one APC were blown up by shown themselves to be extremely ineffective. And since the mines and IDEs. majority of anti-tank forces in the world are equipped with Of those tanks hit by anti-tank weapons, 18 were the precisely this old generation of missile systems, the results of newest Merkava Mk 4 version (from the 401st armoured recent warfare in Lebanon should sound an alarm, and provoke brigade), and six of these had their armour penetrated. considered reflection regarding the purchase of modern anti- Twenty-three tank and five APC crew members were killed. A tank weapons, such as the Kornet-E. large number of anti-tank guide-missiles and RPG grenades Nevertheless, from their experience in Lebanon the hit the tanks, but in most cases these did little damage. It was Israelis themselves concluded that armour itself cannot in reported that one of the Merkava Mk 4 tanks survived 23 hits principle provide full protection from anti-tank guided- from anti-tank guided-missiles before it was finally disabled missile systems, and that all of their tanks would be equipped and its armour penetrated. All penetrations of Merkava with active protection systems such as the Rafael and armour, according to Israeli statements, were achieved by the the IMI Iron Fist systems. Konkurs, Metis-M and Kornet-E anti-tank guided-missiles, They decided in early 2007 to equip the entire fleet of and the RPG-29 rocket-propelled grenades. If one considers Merkava tanks and the Nemerah APCs yet to be built with that 22 of 50 tanks had their armour penetrated, that gives Trophy active protection systems by the end of 2008. Passive a penetration rate of 44% (and only 33% for the Merkava electronic countermeasures are also now held in high regard. Mk 4). According to Israeli Army statistics, the penetration Apparently, none of the four tanks equipped with experimental rate for tanks during the 1982 Lebanon War was 47%, and electronic countermeasures system was hit by even a single 60% during the 1973 War. The crew casualties rate was also anti-tank guided-missile. much higher in 2006 at 0.5 crew member for each damaged However, the importance of heavy “conventional” armour tank, while the rate per disabled tank in 1973 War is one full (including explosive suites) was also proven crew member. on the battlefield, and the Israelis decided to continue the The number of irrecoverable tank losses among those production of Merkava Mk 4 main battle tanks, and to launch damaged, according to recent Israeli publications, was the serial production of heavily armoured Nemerah APCs on five altogether, of which two (a Merkava Mk 2 and Mk 4) the chassis of these tanks. Two hundred such vehicles have were destroyed by IDEs and three tanks were completely been ordered. burned out after hits by guided anti-tank guided-missiles. Thus, the war in Lebanon has proven the Soviet and This attests to the high degree of protection afforded by the Russian approach to the development of protection for main most modern Merkava Mk 4 tanks, which could be damaged battle tanks, as established in the 1970s, to be very well. In only by the most modern anti-tank weapons with powerful the 1980s the USSR created the first comprehensive passive tandem HEAT warheads hitting, it would seem, weakened (Shtora) and active (Drozd, ) protection systems, which armoured zones. are still being developed today. Israel and the West are only now The extremely low percentage of missile hits and the catching up to Russia. Meanwhile, we can see that the newest low percentage of armour penetration clearly shows that the Western tanks (included the well-protected Merkava) burn up vast majority of anti-tank guided-missiles were of the old when hit by modern anti-tank weapons in just the same way as type, most likely the completely obsolete Malyutka (and its the old Soviet T-72 tanks deployed in Chechnya and Iraq. many copies), with clumsy guidance systems (manual, on the Russia avoided the Western fashion of dismissing heavy oldest models), with no modern sights and a relatively small armour and explosive reactive armour as “unnecessary” and warhead, by modern standards. continued to develop a balanced configuration of armour, 14 # 2, 2007 Moscow Defense Brief Russian Anti-Armour Weapons and Israeli Tanks in Lebanon War And People

including detachable and built-in protection, and in this The tank battalion of this brigade, pushing forward with turned out to be justified. The Lebanese conflict of 2006 and no infantry, fell into a fire trap of anti-tank guided-missile the war in Iraq have once again proven allegations of the systems (mostly Kornet-E, according to Israeli sources), obsolescence of the main battle tank to be absurd. The modern losing eleven Mk 4 Merkava tanks damaged and eight crew MBT with its powerful heavy armour and large combat weight killed, including the battalion commander. The Israeli will continue for some time as the core of the land forces. armour troops were clearly not well prepared for action As for the tactical application of armour troops, it is against modern anti-tank weapons. clear that the Israelis used their tanks in small groups almost On the Israeli side, it is also clear that the armoured exclusively for immediate support of line infantry. It was reserve units were insufficiently prepared, especially in the precisely this well equipped and trained infantry that played use of countermeasures (smoke screens, advancing fire to the decisive role in battle. Attempts to use armour troops disturb aiming, reverse gear withdrawal, etc). As such, the to achieve a breakthrough without infantry support and quality of the training of the armour troops and the ability reconnaissance inevitably led to senseless losses, as befell of the commanders to effectively combine tanks and other the forces of the 401st Israeli armoured brigade at Vadi Saluki forces remain the key elements for the successful use of main on 9 August. battle tanks on the field.

# 2, 2007 Moscow Defense Brief 15 Russian Anti-Armour Weapons and Israeli Tanks in Lebanon Arms Trade

Russia on the Arms Market in 2006 Konstantin Makienko, Dmitry Vasiliev

he year 2006 was Russia’s most successful on the arms of exports went to just two countries: China and India. Now, Tmarket in the post-Soviet period. Records were set beginning with 2007, the geographic distribution of deliveries in each of the four principal categories used to measure is more balanced, with Russia boasting as many as five major developments in the industry: clients: China, India, Algeria, Venezuela and Malaysia. Value of executed transfers. The total price tag on good delivered amounted to $6.46 billion, up $334 million from $6.126 billion in 2005; Contracts Volume of payments received. Revenues peaked at $8 billion, according to official figures. Data on currency Contracts worth $14 billion were signed in 2006, receipts are not always published; for example, official which is an absolute record not just for the post-Soviet figures are not publically available for 2005, the last era, but probably for the whole modern history of Russia, data known is $6 bln in 2004; including the Soviet period as well. In spite of the fact that The value of signed contracts, the most significant it enjoys a quasi-monopoly on arms exports from Russia, indicator, reached an unprecedented $14 billion, over Rosoboronexport accounted for just 64% of new contracts, twice the previous record of $6 billion set in 2004; while the independent arms exporters accounted for over one The current backlog of orders has reached an third (36% or $5 billion) of the value of new contracts. unprecedented $30 billion, more than double the figure Algeria was the indubitable leader in purchases of at the close of 2005. Rusisan arms in 2006. During President Putin’s visit in March, The most important events of the year were the signing a grandiose package transaction worth $7.5 billion was of a grandiose $7.5 billion Algerian package transaction, signed (see table 1). The agreement included the forgiveness which included writing off $4.7 billion worth Algerian of a $4.7 billion debt to Russia. Russia’s Finance Ministry debt, together with a series of contracts entered into with objected, but Putin’s personal intervention saved the deal, Venezuela. These two major deals created a qualitative shift which could be characterized as the conversion of bad in the structure of Russian arms exports. Previously, 70‑80% Algerian debt for the purchase of Russian arms.

Table 1. Structure of the Algerian package

System Producer and Design Engineer Number Cost Notes Su-30MKA fighter Sukhoi Corporation, Irkut 28 $1.5 billion Design based on Corporation Indian Su-30MKI and Malaysian Su-30MKM MiG-29SMT/UBT fighter MiG 34 $1.8 billion Contract includes trade- in of Algerian MiG-29 Yak-130 advanced trainer Yakovlev Design Bureau, Irkut 16 $200 million First export contract of Yak-130 S-300PMU-2 (SA-20) SAM system Almaz-Antey Concern 8 batallions About $1 billion T-90S main battle tank Uralvagonzavod 180 Up to $1 billion Other sources indicate 300 tanks Pantsir-S1 (SA-22) air-defence gun-missile Tula Instrument Design Bureau 38 $600 million system Project 636 conventional submarine Rubin Design Bureau, Admiralty 2 Probably $600 Shipyards million Repair and modernization of T-72 main battle tanks, BMP-2 AIFV, Project 877EKM submarines, surface warships

16 # 2, 2007 Moscow Defense Brief Russia on the Arms Market in 2006 Arms Trade

In June, during Venezuelan President Hugo Chavez’s company Rosoboronexport accounts for only $18 billion. The visit to Moscow, contracts valued at over $3 billion were independent arms exporters account for $12 billion worth of disclosed. Although the Venezuelan package is smaller than contracts, primarily MiG Corporation (at least $2.5 billion the Algerian, the two have much in common. First, both are at the end of 2006 and $4.5 billion as of March 2007) and considerably larger than the usual Russian export deal. Only the Tula Instrument Design Bureau ($4 - $4.5 billion). The the program for the licensed production of the Su‑30MKI composition of the national backlog as a whole is not known, by India of probably $3.5 billion can compare. Second, both but Rosoboronexport’s portfolio is made up of arms and deals expand the traditional geographic sphere of major equipment for air (42.5%), sea (23%), air defense (22%), Russian importers, which to date has been limited essentially and land forces (9%), with the remaining 3.5% for other to China and India. And while Algeria, though it has not been products. a significant customer of Russian arms, did indeed import The Algerian and Venezuelan deals signal a qualitative large volumes of arms from the , Venezuela was shift in Russia’s position on the international arms market. not a Russian arms client before this year. Third, each package Russia has moved beyond the plain commercial sale of contained a wide range of items, including weapons for the individual types of arms that characterized its trade in the air force, army and very likely for the naval and air defense 1990s, to more complex, political arrangements with better forces. heeled customers for comprehensive packages that meet their Russia’s traditional customers also placed large orders their defense and security needs. Very few states are capable for arms and military equipment. China purchased a new of providing this kind of dependable and long-term security, batch of 8 batallions of S-300PMU-2 (SA-20) SAMs for and it seems clear that Russia has joined this club, along with $1 billion in addition to the eight batallions ordered in 2004. the US, UK and France, just two or three years ago. Indeed, India signed a contract worth $1.6 billion for three new Venezula was looking for a comprehensive security package Project 11356M frigates in addition to those ships of the in 2002, but at that time Moscow decided against dealing with same class received by the Navy in 2002 and 2003. Vietnam a regime rallying against the US. Four years later, Russia is acquired two Project 11161 Gepard-3.9 class light frigates more sure of its ability to develop military-technical relations and one Bastion (SS-N-26/SSC-5) stationary shore-based with Carracas in spite of Washington’s disapproval and the anti-ship missile system. inevitable application of State Department sanctions. The overall backlog of orders reached $30 billion by Important arms buyers now see Russia as a power at the end of 2006, of which the official state arms-trading least the equal of France or the UK. Indeed, as distinct from

Table 2. Structure of the Venezuelan orders

System Number Cost Producer and Design Engineer Confirmed Contracts Su-30MK2V fighter 24 $1.5 billion* Sukhoi Corporation Mi-17 transport helicopter 3 $26 million Mil Moscow Helicopter Plant, Kazan Helicopter Plant Transport and attack helicopters 6 Mi-17, 3 Mi-35M, $120 million Mil Moscow Helicopter Plant, Kazan Helicopter Plant, Rostvertol 1 Mi-26 Attack helicopters 5 Mi-35M $81 million Mil Moscow Helicopter Plant, Rostvertol Attack and transport helicopters 2 Mi-35, 2 Mi-26, $484 million Mil Moscow Helicopter Plant, Rostvertol 34 Mi-17 AK-103 assault rifles 100 000 $54 million Factory to producce AK-103, factory to $474.6 million produce 7.62 mm ammunition Possible and Future Contracts Tor-M1 (SA-15) air defense missile 12 $290 million Kupol system An-74 transport plane 6 $72 million Antonov ASTC, Omsk Polyot Project 677E Amur conventional 2 $600 million* Rubin Design Bureau submarine *estimate # 2, 2007 Moscow Defense Brief 17 Russia on the Arms Market in 2006 Arms Trade

China, which has practically no alternative supplier aside arms – China and India – fell from 74% to 62% over one year, from Russia, both Algeria and Venezuela could have easily while the share of the Middle East and North grew turned to European exporters to satisfy the majority of their to 22%, due largely to the Algerian package. needs. In this manner, a positive dynamic of political factors accounts for the most significant jump – from 0.5% to 7.7% is compensating for the innovational, technological and of total exports – thanks to Venezuelan purchases of fighers commercial problems plaguing Russia’s defense industry. and helicopters. In all, Russia exported arms to 64 countries, These include the increasing obsolescence of Soviet-era compared to 61 in 2005 and 57 in 2004. technology, the saturation of the Chinese market and the Rosoboronexport delivered $5.3 billion worth of arms growth of competition on the Indian. However, the stable in 2006 (up slightly from $5.23 billion in 2005), accounting growth of delivery volumes and, more importantly, the for 82% of all Russian deliveries. Deliveries from MiG growing value of contracts, suggest that Russia’s growing Corporation grew substantially from $306 million to $390 political and economic clout continues to balance out these million, as did those from the Tula Instrument Design Bureau negative tendencies. The value of Russia’s brand is growing, (from $230 million to about $320 million). and is being successfully converted into new arms deals. Independent exporters, including the Reutov Machine- Building Scientific & Production Organization and the Kolomna Machine-Building Design Bureau accounted for Deliveries 12.6% of deliveries worth $814 million. The 18 Russian companies licensed to export spare parts delivered $350 The structure of Russia’s arms trade resumed its million worth of goods, or 5.4% of total deliveries, up 16.7% traditional pattern in 2006, with aviation deliveries from the year before. Sukhoy Corporation was the leader accounting for about half of all exports. Naval deliveries took with $235 million, with Salyut and Admiralty Shipyards in the lead in 2005, but this was due to the substantial delivery second and third place with $50 million and $23 million of submarines and a destroyer to China. Meanwhile, there respectively. were no deliveries of heavy fighters, a traditional mainstay The largest transfers last year were deliveries of Su‑30 of Russian arms exports. Aviation deliveries returned to fighters, together with kits for their licensed assembly. “normal” in 2006, at 49.9% of total exports, with 27.3% Two Su-30MK2V fighters were delivered to Venezuela, and for naval deliveries, 11.4% for land forces and 9.2% for air between 13 to 15 kits for the assemble Su-30MKI fighters defense. On the whole, the composition of deliveries was were delivered to India’s HAL Corporation, according to similar to that of 2004 (see figure 1). the terms of the 2000 contract for the licensed production The geographic distribution of deliveries has also of 140 fighters in India. Two MiG‑29SMT fighters and two changed. The share of the “big two” customers of Russian MiG‑29UBT twin-seat fighters were delivered to Algeria. The Figure 1. Composition of Russian arms deliveries 2004-2006 2,4 3,2 2,2 100% Misc. Equipment 5,8 5,1 9,2 10,1 Air Defense Systems 12,9 11,4 80% Land Forces 18,8 Naval Forces 27,3 60% Air Forces 48,1

40% 60,1 49,4 20% 33,5

0 2005 2006 2007 Year

18 # 2, 2007 Moscow Defense Brief Russia on the Arms Market in 2006 Arms Trade

Figure 2. Geographical distribution of Russian arms exports, by regions

Misc. countries 0,4% CIS 1,1% Principal partners: Europe 3,8% Asia: India, China, Vietnam and South Korea; Middle East and North Africa: Algeria; Latin America 7,7% Latin America: Venezuela and Mexico; Europe: Greece; CIS: Azerbaijan, Armenia, Belarus’ and Uzbekistan.

Middle East Asia 65,3% and North Africa 21,7%

fact that the deliveries of Su‑30MK2V fighters to Venezuela first recipient of this lighter and less expensive system which began just 4 months after the contract was signed suggests promises to remain in high demand. that the Komsomolskiy factory, which was largely idle in 2005, remains in good working condition. MiG Corporation was also in good form, disproving sceptics who thought it was Preliminary forecast for 2007 not capable of producing new multirole aircrafts. As usual, Russia’s helicopter plants had a good year, According to the Federal Agency for Military Technical producing 90 aircraft, including 70 Mi‑8/17 helicopters (in Cooperation, Russia will export over $7 billion worth of arms several different versions), with the majority going to foreign in 2007. Mikhail Dmitriev estimates that 75% of this total, or customers, first of all Venezuela and China. The Moscow $5.5 billion, will be exported by Rosoboronexport. The past few Salyut and the Ufa engine building production associations years have shown these estimates to err on the conservative continued to work on two large Chinese orders for 280 side, with actual deliveries consistently turning out higher AL‑31F/FN turbofan engines for the Su‑27SK fighters, the than predicted. In view of the large expected transfers of Su‑30 Su-30 fighters and the national J-10 fighters. fighters to Malaysia (between 9 and 12 planes), Venezuela In the sphere of naval armaments, Russia transferred a (at least 10 planes), Algeria (8‑10 planes) and India (15‑20 second Project 956EM destroyer to the PLAN for $700 million planes, include kits), one might expect the value of deliveries and one (last) Project 636M Kilo-class submarine to the for the current year to reach something in the order of PLAN for a probable $250 million. The transfer to Iran of 29 $7.3 ‑ $7.5 billion at current prices. A high volume of deliveries Tor‑M1 (SA‑15) SAMs, including 12 towed systems, was the will also be supported by the transfer to China of S‑300PMU‑2 most sensational delivery. The Islamic Republic became the (SA‑20) SAMs, as per the contract signed in 2004.

# 2, 2007 Moscow Defense Brief 19 Russia on the Arms Market in 2006 International Cooperation

The Multipolarity Trap: How Russia Should Make Friends…and With Whom? On Russia’s Foreign Policy Orientation Vladimir Frolov, Andrey Seregin

he problem of identifying Russia’s potential allies in increasing the nation’s foreign policy capacity, making full Tthe global arena is made all the more difficult by the use of Russia’s competitive advantage, particularly in the area absence of any domestic consensus regarding Russia’s chief of fuel and energy. foreign policy goals. The MFA seeks to diversify Moscow’s This policy has borne fruit in Gazprom’s impressive international economic and political relations, but the tactical capitalization of over $300 billion, making it the world’s third emphasis placed thus far on energy policy does not fully largest company after Exxon-Mobil ($392.94 billion) and account for the strategic goal of supporting stable relations General Electric ($355 billion). The stated goal of Gazprom with Russia’s key foreign policy partners and neighbors. chairman and First Deputy Prime Minister Dmitry Medvedev Clearly, the system of international relations is on the to reach the level of $1 trillion seems realistic. In this area verge of a profound change, arising from the forced (and the goals and tasks of Russia’ foreign policy are clear and perhaps long-term) retrenchment of the hegemonic reach of understandable, and the policy of establishing pragmatic the USA; its eventual withdrawal from Iraq and Afghanistan, relations with energy transit states is on the whole justified. along with attempts to shift responsibility for the fate of the Clearly, in the 21st century the principle of realpolitik world on to other centers of power, etc. is making way for the rebirth of messianism. Moreover, For over 50 years US hegemony has distorted it is not only the United States that sees itself following a international relations to such an extent that America has predetermined ideological mission, but China, and many become the main focus of the foreign policy orientation of other powers. It is no coincidence that the Russian MFA’s the vast majority of states. And no matter how prominent Survey of Foreign Policy recognizes a dangerous tendency alternative centers of power may appear, the architecture towards the “re-ideologization” of international relations, of international relations is still based primarily on the and calls for careful consideration of this new development “vertical” principle. States are not free to act on a purely at a doctrinal level. “horizontal” basis among themselves, but are always looking As distinct from the Soviet Union, Russia has no edge up to Washington. A weakening of American hegemony thus over the West in the sphere of ideology. In the vast majority of entails a sharpening of “horizontal” competition in certain situations, Russia’s foreign policy does not contest Western, regions leading to a marked weakening of stability. primarily American, principles, but rather makes reference At the urging of the Russian President and foreign policy to the same system of liberal values and, for this reason, finds leaders, Russia has sought to weaken the hegemony of the itself compelled by degrees to toe the line set by Washington USA and foster an equitable and genuinely multipolar world and Brussels. For this reason, any attempt to break the order. But an ad hoc policy of “multipolarity” will not lead paradigm, and offer the world Russia’s proper vision of its inevitably to the just and stable multipolar world order that mission (and not just oil, gas and armaments), is greeted in Russia, China and India, among others, are striving for. There the West with unconcealed disdain. For the West, “democratic are several issues that need to be addressed by Russian foreign Russia” is unequivocally a state with limited sovereignty, policy, first among which concerns the choice of partners and subscribing to Western standards of liberal democracy and allies. market relations. Thus, it becomes clear why the West was so quick to exploit the isolated “excesses” of Russia’s energy policy in the Pragmatism or Idealism? near abroad from 2004-2006. Although Russia presented well- grounded arguments in favor of pragmatic trade at market Russia’s foreign policy has acquired a pragmatic (some prices with transit states, this policy undermined trust in would say mercantile) character over the past few years. Russia’s ability to play a constructive role in international It provides support to Russian exports with the aim of affairs. In essence, because Russia overplayed its energy card, 20 # 2, 2007 Moscow Defense Brief The Multipolarity Trap: How Russia Should Make Friends… and With Whom? International Cooperation

our largely well-justified criticism of American hegemony conclusion invites skepticism: “As a result, the equilibrium is increasingly being misrepresented as the “neo-imperial and competitive environment lost at the end of the Cold War ambitions of the Kremlin,” and not as a natural and logical are being reestablished.” Not surprisingly, the authors qualify policy meant to establish an equitable system of international this dubious conclusion with the more realistic statement that relations. Today, unfortunately, it is hard to imagine a state “in a globalizing world there can be no islands of stability.” “under Russia’s influence” that would engage in relations The colonizing states, having withdrawn from the Third with Russia without constantly glancing back at Washington, World during the middle of the last century, left the “curse of Brussels and other key regional players like Beijing, Delhi, civilization” behind in the form of monoculture resource- Tehran or Ankara. based economies, elite education in Western as opposed Moreover, in the age of the rebirth of foreign policy to local traditions, and the like. Today, one might speak of idealism, Russia’s wager on the energy card not only repels the “damned American hegemony” and its legacy for the its “natural” allies (with centuries of cultural, social and rest of the world. Even with the partial retrenchment of US ethnic ties to Russia), but also, paradoxically, weakens its power, the entire system of international relations, built one integration with Europe, provoking growing opposition way or another on cooperation with or resistance against from the principal consumers of Russian energy. Urged Washington’s policy, shall cease to provide stability. by Washington, and for exclusively political motives, the At the same time, the development of new, equitable European Union has already de facto adopted a policy of and competitive international “rules of the game” (strongly reducing its energy dependence on Russia, a policy that is promoted, among others, by the head of the Russian MFA), much more costly than the development of a partnership is failing to make any headway, due to the simple inertia of based on objective realities, such as the mutual dependence American domination. Experts on both sides of the Atlantic of supply and demand, Russia’s objective need for advanced are convinced that the preponderance of US economic and European technologies for production, and so on. military-industrial capacity means that it will retain its After the Brussels summit the EU is deliberately going dominant position for the next few decades. Thus the majority around Moscow to draw the states of Central Asia and the of states, including Russia, will keep US considerations at the Caspian into a tighter embrace. Even the most innocent core of their foreign policy. attempts by Russia to negotiate with consumer states on a Hence the frequent reproach of Russia for its “anti- bilateral basis is seen by Brussels as an attempt to undermine American” line, along with the groundless suspicion that European unity. Russia understands the construction of a multipolar world The basic elements of the strategy to shield European in an anti-American light. Similarly, a key obstacle to the consumers from “Moscow’s energy imperialism” can already formation of real multipolarity lies in the inertial foreign be distinguished: to put energy security on NATO’s agenda, policy thinking of the majority of Russia’s potential allies: to divert Central Asia’s energy resources from Russia through from the countries of the CIS to the EU, China and India. the development of new transport routes, the creation of a They all persist in “calibrating” their foreign activities to transit union among Ukraine, Belarus, Poland and Lithuania the position of the USA, to marshal their long-term foreign and, possibly, a consumer cartel meant to raise the price policy strategies with a view to the US retaining primary of access for Russian companies to European markets, responsibility for dealing with majority of today’s global including a demands for controlling blocs of shares in issues, from the fight against terrorism and support for global Russian corporations. stability, global resource distribution and the elimination of Clearly, energy policy on its own cannot adequately poverty. serve Russia’s national interests. It should be an important, The sad fact is that in spite of their ambition to regional but by no means exclusive element in Russia’s system of leadership or to increase their influence in global affairs, the international relations. alternative “poles of power” do not yet think of themselves as “hegemons” and are not ready to take on even a part of the responsibility that the US administration has adopted Stability or Multipolarity? as its own, even as Washington encourages China, Russia, India and Brazil to shoulder their share of the burden of At the jubilee meeting of the Foreign and Defense Policy maintaining global stability. Council, Foreign Minister Lavrov stated that the “unipolar Meanwhile, multipolarity, in the form that it is taking world has not come to pass.” The above-mentioned Survey today, as a result of the expected weakening of American of Foreign Policy asserts that the “myth of a unipolar world hegemony and in the absence of any generally accepted has come to a final end in Iraq. The very model proved to be rules of the game or mechanisms for maintaining global unworkable, as it does not offer an ethical basis for modern stability, is a threat to Russia’s national interests and a poor civilization.” This argument is strong, but the following environment for the promulgation of its policies. In the words # 2, 2007 Moscow Defense Brief 21 The Multipolarity Trap: How Russia Should Make Friends… and With Whom? International Cooperation

of British historian Niall Ferguson, a world without American the US defense budget has practically doubled; the share hegemony would become a “world of multiple centers of of military spending has risen to 4% of its GDP and now power, none of which could seek to lead on the global scale.” accounts for half of world spending on defense. In 2005 The world is already witness to increasing competition American defense spending rose to about $505 billion, among regional powers and the qualitative expansion compared to $28.8 billion for Russia in 2007 (821.1 billion of military expenditure. The majority of regional rubles). Russia spends less than the majority of leading “mini-superpowers” taking part in the construction of states, including China ($67.5 billion), Japan ($45.8 billion), “multipolarity” are already engaged in arms races, including France ($45 billion), the UK ($42.8 billion) and Germany nuclear. The number of nuclear-weapon possessing states ($35.1 billion). The military capability of the European (thanks to the increasing availability of relatively primitive members of NATO alone (that is, not counting the US) is technology dating to the 1960s), and the resulting temptation many times greater than Russia’s. to use them to advance practical foreign policy objectives, The multilateral non-proliferation and arms control will only grow. Within the next five to seven years the nuclear treaty regime is in a deep crisis. The majority of negotiating club could expand to include North Korea (if the Six-Party forums are stalled, while accepted norms are being eroded talks fail), Japan, Taiwan, Iran, South Korea (if North Korea (for example, on missile defense), or living out their last days does not abandon its nuclear weapons), Brazil, Turkey, Saudi (SNF-1 (The Treaty on Reduction and Limitation of Strategic Arabia and Egypt. Offensive Arms) expires in 2009, the Moscow Treaty expires The “crystallization” of new power centers has set in 2012). off a chain reaction: at the urging of the United States, the In the near future we could witness the collapse of the number of “mini-regions” with their own “mini-hegemons” concept of nuclear deterrence (founded on the principle of has grown considerably. This process is inevitable and mutually assured destruction or irreparable damage). The cannot remain within the control of the US or the “first order US has adopted a nuclear policy of first use, and in its nuclear regional powers.” The interests of the “second” and “third” policy review of 2002, American strategists underscore the order powers are so varied and contradictory that regional necessity of using nuclear weapons against emerging threats and world stability will be threatened if they were allowed to to national security. Meanwhile, the effectiveness of strategic come into contact. missile defense has improved considerably. Up to $1.7 trillion will be spent in the long term (to 2030‑2040) on a global missile defense system. Russia has no allies except its army and navy? Under such conditions, it is obvious that Russia cannot rely on its army and navy alone as “allies” in the defense of its Russian experts and media are fond of quoting national interests. Given the current scale of global defense Alexander III to the effect that Russia has no allies aside from spending, Russia’s armed forces are simply not up to the task its army and navy, by which they understand that Moscow of responding to the threats that arise from the blurring of should focus on developing its domestic political-military the role of nuclear weapons and the development of strategic capacity rather than seek to cultivate “eternal friends” abroad. missile defense. The argument has merit to the extent that in their current state, Russia’s armed forces are not exactly what one would describe as a reliable ally. What does Russia seek from the Moscow-Delhi- In his last address to the Federal Assembly, the Russian Beijing axis? President took note of the rampant arms race that has broken out in the world. This race today has truly reached a On the surface, Evegeny Primakov’s long-cherished qualitatively new level and taken on a multifaceted character. (since 1999) idea of creating a military-political axis among Its scale exceeds the peak of the Cold War. In the decade Moscow, Delhi and Beijing, with the possible inclusion of beginning in 1995, CIS military spending has grown by Brazil, is alluring, as it would create a block including over more than 50%. Significant growth of military spending is 40% of the world’s population, 20% of global GDP and over occurring in even the poorest countries of the world: Congo, half of all nuclear warheads. The cumulative GDP of India Rwanda, Sudan, Botswana and Uganda have all doubled their and China, at purchasing power parity, is already higher than defense spending from 1985 to 2000. that of the United States, and the GDP of Brazil, Russia, India According to Russia’s Defense Minister, Russia spends and China is higher than that of the European Union. The just 2.6% of GDP on defense, while the Soviet Union spent up combined spending of Beijing and Delhi on R&D has already to one third on defense needs. Defense spending in Russia reached 80% of US levels. today is one sixth of the US defense budget and less than The leaders and diplomats of the three aforementioned that of the majority of G8 countries. Over the past five years countries have been active over several years now, working 22 # 2, 2007 Moscow Defense Brief The Multipolarity Trap: How Russia Should Make Friends… and With Whom? International Cooperation

on the deepening of cooperation with a view to establishing summit of 48 African states recently took place in Beijing), a qualitatively new level of relations that would ensure the Iran and Venezuela. However, it is clear that Beijing has been creation of new poles of power to counterbalance the US forced to recast its foreign policy in light of its competition and the EU. with the US, and it is constantly seeking to bring North Korea, However, it seems that Russia faces a problem that Pakistan, Afghanistan, Iran, Kazakhstan, the countries of mirrors that troubling Moscow’s relations with CIS capitals. Central Asia and Latin America and, in the future, Iraq, into While Russia seeks, in its relations with Beijing and Delhi, its orbit. The Shanghai Cooperation Organization, of which to address strategic issues and to build a truly equitable Russia is a founding member, is the main instrument of and multipolar world order in place of the current “chaotic this policy. The US has already de facto identified China as multipolarity,” Beijing and Delhi appear to reciprocate with a potential opponent: about half of the National Security a more “pragmatic” approach. The declarations of China and Strategy is dedicated to China, and a recent report of the India on the goals of a multipolar world, the democratization congressional Joint Economic Commission makes strong of international relations, the strengthening of the role of the economic demands, including yuan devaluation, on China. UN and of international law do not in fact guide their actions. Against this background, the geopolitical and strategic China and India continue to “calibrate” their foreign policy interests of Delhi in relation to Beijing and Moscow are not in relation to the US. Their policy towards Washington seeks obvious. It is likely that the aspiration, largely irrational, to mainly to extract investment and technology, and neither raise the international status of India, is the main driver. China nor India are prepared to sacrifice their good relations Delhi’s “new partnership” with Washington opens many with the US for the sake of the Russian idea of equitable possibilities, and Russia’s value to Delhi as a member of the multipolarity. G8 would fall considerably should the club expand to include Moreover, the recent turn of the Bush Administration ten members. Moreover, Moscow’s reliance on the “axis” of towards India (that some have already compared to Nixon’s military-technical and energy cooperation with Beijing and “opening” of China in the 1970s) has launched a profound Delhi will require further concessions from the Russian side recasting of relations between the US, India and China. for the foreseeable future. India already intends to increase Following President Bush’s historic visit to India, Washington its share of -1 (currently 20%), and to participate in has removed sanctions against India, which opens the Sakhalin-3 and other projects in the Far East. The removal door to military cooperation and the transfer of advanced of sanctions against India by the US and the EU, imposed as military and civilian technologies, and introduced legislation a result of India’s self-proclaimed entry into the nuclear club on nuclear cooperation with Delhi. It is clear that this is all eight years ago, will pose additional problems for Russia- done with the aim of undermining the position of China, India relations. to contain its expansion in Asia and to restrict its global The call on Beijing and Delhi to “think strategically” in ambitions. Washington does well to wager on the integration terms of an “axis” sounds hollow coming from Russia, as it is of India into the “concert” of western democracies. As distinct in fact the weakest link. As the expansion of the nuclear club from Moscow and Beijing, Delhi’s inclusion into the latter and the development of strategic missile defense continues, does not pose any particular problems for the American Russia’s nuclear arsenal plays a role of decreasing importance, establishment. exposing the asymmetry between Russia’s economic capacity China’s India policy, in turn, is taking on an anti- and that of its allies. American character. Following the historic (the first in 10 In 2007 Russia’s GDP has simply re-attained the level years) visit of President Hu Jintao to India, it became clear of 1990; during this time that of the US and other leading that Beijing is ready temporarily to put aside its territorial powers like China and India have marched far ahead. While disputes with Delhi, if only to throw a wrench in the works Russia hopes to double its GDP over the next 10 years (an of the US. The fifth plenum of the XVI session of the Central unrealistic goal according to many economists), China’s is Committee voiced a new policy on the attaining of “global forecast to triple by 2020, accounting for 20% of the world harmony,” which China understands as the attainment of a economy. Russia’s GDP now accounts for just 2% of the world “worthy place” for the Chinese in the world. China no longer economy, and even a doubling would not necessarily suffice seeks to fill the role of the “younger brother” in the family of to maintain this share over time. By 2020, India will assume superpowers. China has long “grown up” and is tempted to third place, behind the US but far ahead of Japan and the abandon its customary role of “watching the tigers fight in EU. the valley,” which it has followed for the past 50 years. In economic terms, Moscow has much less to offer Beijing Beijing’s ambitions are thus far limited to securing or Delhi than does Washington, and less even than these two regional leadership through the Shanghai Cooperation countries have to offer each other. Russia’s trade with India Organization, ASEAN+3, the Six-Party Talks and the like, was $3 billion last year and the goal is to reach $10 billion by to secure energy supplies from Central Asia and Africa (a 2010, that is, the amount traded between the Soviet Union # 2, 2007 Moscow Defense Brief 23 The Multipolarity Trap: How Russia Should Make Friends… and With Whom? International Cooperation

and India during the 1980s. By way of comparison, China’s and also China and India will soon preclude the exercise trade with India today is six times higher, at $18 billion, and of the traditional Soviet tactic of using force to solve US trade with India is ten times higher, at $28 billion. China political problems (as the bottom falls out of Russia’s is forecast to become India’s main trading partner sometime nuclear deterrence), and limit the ability of Russia to between 2007 and 2009. Our trade turnover with China is deploy economic means in support of foreign policy about $30 billion, which is seven times less than the trade goals. deficit between Beijing and Washington – over $200 billion. The threat of a north-south conflict between civilizations China is increasingly competing with Russia on energy is growing as a result of the deepening ideologization of issues. In particular, the Chinese have secured contracts international relations. In this context, Moscow’s tactic for substantial volumes of cheap energy supplies from of seeking temporary “partners” to address shifting Kazakhstan and Turkmenistan, beginning in 2009, eroding goals, (or, in the words of Minister Lavrov, “network Russia’s monopoly on the transit of Central Asian fuel. diplomacy”) will produce only short-term gains. The Meanwhile, Beijing and Delhi are gradually reducing their proposal to raise the status of Russia through a close mutual competition for energy supplies in favor of a kind alliance with Beijing and Delhi is in need of a serious of consumer pool. In 2005, national oil companies of each rethink. Russia will be forced in the medium term to country (first of all Sinopec and ONGC) invested jointly in limit its ambitions to more attainable objectives. It the Syrian Al-Furat Petroleum Company, and recently jointly would be advisable for the MFA to exchange approaches acquired 50% of the Colombian Omimex. to relations with the CIS and the “axis” respectively. It should revive the idealist approach to Moscow’s relations with the former Soviet Union, and to put dealings with Conclusions India and China on a more pragmatic footing. Russia should once again demonstrate to the world The growing unpredictability of “multipolarity” in its that it has a vision of its proper mission, one that is, present incarnation presents a threat to the national moreover, comprehensible and attractive to the majority interests of Russia at the regional and global levels. of world states; to demonstrate that it is capable of being The weakening of American hegemony is promoting a a reliable partner, with a view to maintaining long-term sharp rise of competition in all problematic regions and (50-100 year) neighborly relations, even at the expense the growth of the Islamic threat. Russia’s foreign policy of short-term interests. The highest priority for Moscow departments are thus tasked with developing “global should be to eliminate the misalignment of its policy rules of the game,” promoting the role of existing in the post-Soviet space, as a kind of testing ground instruments such as the UN and regional forums, and for a new foreign policy mission. It should concentrate the creation of new international institutions capable its efforts on the formation of a “core confederacy” putting order to the chaos of multipolarity. including Russia, Belarus(once the problem of Under these conditions Russia must increase its Lukashenko has been dealt with), Kazakhstan, Armenia, cooperation with the US. Facing similar threats Uzbekistan (with the gradual democratization of the to security and increasing globalization, Moscow regime), Kyrgyzstan and Tajikistan. It is also important and Washington are doomed to pursue a “difficult to create an appropriate system of incentives to deter relationship.” Nevertheless, mutual mistrust between Ukraine, Azerbaijan, Moldova and Georgia (although the elites of both countries is also bound to increase. this would probably require a change of the Saakashvili The growing asymmetry in the economic and political- regime) from participating in the integrative projects of military capacity of Russia compared to the US, the EU the West.

24 # 2, 2007 Moscow Defense Brief The Multipolarity Trap: How Russia Should Make Friends… and With Whom? International Cooperation

Military-Technical Relations between Russia and North Korea: Past, Present and Future Artyom Sanzhiev orth Korea and Russia/USSR have maintained In spite of the cooling of relations during this period, some Npolitical, economic and military relations for over fifty Russian military equipment was nevertheless transferred to years. Military-technical cooperation has always figured the DPRK, including 260 units of the 9K310 Igla‑1 (SA‑16) prominently in this relationship, and has evolved during the man-portable surface-to-air missile system and a license for post-Soviet era in two major stages: its production. The DPRK also produced Malyutka (AT‑3) and 1991-2000 was a period of sharp decline, due largely to Fagot (AT‑4) anti-tank guided-missiles and other weapons the shift of Russia’s foreign policy in the early 1990s; systems under Russian license. Moreover, in 1994 Russia Since 2000, military-technical relations between the acquired the Malakhit air surveillance system with ten Shmel two states have resumed its traditional pattern. UAVs. This contract was signed and executed by the Kulon Research Institute. Incidentally, North Korea was the first country to purchase this system from Russia. First Stage (1991-2000) The low volume of the aforementioned deals suggests that substantial deliveries of military equipment to the The collapse of the Soviet Union led to a deterioration in DPRK had ceased, although some Russian sources maintain relations between Russia and the DPRK that affected all areas that deliveries of spare parts for Soviet-made equipment of activity, including military-technical. Russia’s change of continued Leonid Ivashov, Chief of the International Relations course was driven first of all by a domestic economic crisis Department of the Russian Defence Ministry, confirmed and resulting inability to sponsor the North Korean regime in May 1997 that Moscow continued to pursue military- financially. Secondly, Russia sought to improve relations with technical relations with Pyongyang, though at a restricted the Republic of Korea, and signed a basic treaty in 1992. level and consisting of spare parts deliveries, for equipment The new political situation, as well as the chronic inability delivered in Soviet times. Russia considered maintaining at of North Korean to pay its debts, led to the cancellation of the least a minimal level of cooperation essential to maintaining majority of defence programs initiated in the Soviet era. Thus, a strategic foothold on the Korean Peninsula. after the delivery in1994 of up to18 MiG-29 fighters kits, the Meanwhile, other former Soviet republics began to assembly of these fighters in the DPRK was wound-up. sell not only parts, but complete weapons systems that they However, Russia did not wish to sever ties entirely and had removed from active service. North Korea apparently sought to maintain a minimal level of military-technical acquired 50 tanks from Belarus between 1994 and 2000. cooperation with the country that remained, after all, a From 1995‑1999 34 old MiG-21bis fighters, 24 obsolete formal ally. The Russian leadership made attempts to recast 100 mm KS‑19 anti-aircraft guns, together with four SON- its relations with the DPRK in a variety of formats, for 9 fire‑control radars to match, and other miscellaneous example, at the level of the CIS – DPRK. In March 1992 the military equipment was acquired in Kazakhstan, for a grand Chief of the General Staff of the CIS forces Viktor Samsonov total of up to $176 million. visited Pyongyang and signed several agreements on military Military-technical relations between Russia and the relations. These agreements led to a fairly active exchange of DPRK also included some illegal transfers of excess military delegations, navy and air force in particular. An agreement goods from the Far Eastern Military District. For example, on military cooperation was worked out in August 1995, but five Mi-8T military transport helicopters were seized by was not officially signed until 2001. During the visit of Deputy customs at Kraskino in Primorskiy Krai. Officials found that Foreign Minister Grigoriy Karasin to Pyongyang in January the classified systems had not been removed, and that the 1997, Russia and the DPRK agreed to expand their trade helicopters had been repaired (at the expense of the military) and economic relations, including steps to renew military- just before sale. The delivery had been approved by high technical ties. military officials.

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The ensuing investigation uncovered prior illegal technical relations with Pyongyang are no different than transfers mediated by front companies. In 1995, three Mi‑8T those with Seoul, signalling a balanced approach to the two helicopters were to be retired from service and given to use Koreas, with the added proviso that Russia has no intention of by law enforcement, civil defence and health care services. “providing gifts to the DPRK without at least some repayment However, they were sold instead to the “Rosa” airline based of loans.” Indeed, North Korea’s debt to Russia is one of the in Nakhodka. A year later, this airline purchased another main obstacles to further cooperation. five military helicopters. Following a media outcry, the Far North Korea has shown great interest in purchasing Eastern Military Procuracy conducted an investigation that Russian Su-27/30 fighters, submarines and escort ships. ascertained that all of the aforementioned helicopters had The North Korean military is especially keen on naval been repainted, their engines replaced, refuelled and their armaments. In November 2005 a North Korean delegation lubricants replenished on an unscheduled basis, shortly before led by Rear Admiral Han San Sun attended an international they were sold. Aside from these accounts, is impossible to arms exhibition in St. Petersburg. The delegation seemed determine how many such helicopters and other military to be most interested in long range torpedoes capable of equipment may have been sold illegally to the DPRK. defeating the newest South Korean destroyers equipped with the Aegis system. The North Koreans may also be looking to replenish their fleet of armoured vehicles, missiles, Second Stage (2000 – Present) and air defence systems. Russia may choose to pursue military-technical The signing in February 2000 of a “Friendship, Good relations with North Korea by modernizing its obsolete fleet Neighbourliness and Cooperation Treaty,” together with of aircraft and military ships. A relatively small number President Putin’s visit to Pyongyang that same year, marked of new systems could also be delivered with the support of a certain revival in bilateral relations. And while this was long-term credits. largely confined to the political sphere, there was some spill- The DPRK clearly cannot afford to pay for deliveries of over to the military-technical. In 2001-2002, 32 armoured Russian arms or the services of Russia’s defence industry, personnel carriers BTR-80A were delivered. It is likely that and so alternative strategies for promoting bilateral ties some automobiles were also sold during this time, including must be devised. For example, Russia could participate in UAZ jeeps. In April 2001, the North Korean Minister of Defence the development of North Korean natural resources. For Kim Il Choi signed an intergovernmental agreement on defence instance, the DPRK has significant deposits of magnesium, industry and military equipment cooperation, as well as an coal and uranium. Russia could also make use of the country’s interdepartmental agreement on military relations. infrastructure, including its many ports. The current state of bilateral relations is closely related On the other hand, North Korea’s nuclear test has to the economic situation in North Korea. According to then generated an extremely negative international environment Defence Minister Sergei Ivanov, “Russia’s military-technical for such cooperation. Although Russia will probably not find cooperation with Pyongyang has an exclusively utilitarian it necessary to halt its current level of military-technical character and is limited first of all by the economic capability cooperation (spare parts deliveries), it is equally unlikely to of North Korea.” He went on to add that Russia’s military- expand these relations in the near term.

Table 1. Deliveries of Russian Arms to DPRK 1990-2005

Description Quantity Delivered Comments Ka-32 helicopters N/A 2001 Civilian BTR-80A armoured personnel carriers 32 2000-2001 MiG-21 fighters N/A 2000 Not confirmed Malakhit surveillance system with Shmel’ UAVs 1 (10) 1994 Kulon Fagot 9M111 anti-tank guided missiles 3250 1992-2004 Produced under license

Igla-1 9K310 MANPADS system 1250 N/A Malyutka 9M14M anti-tank guided missiles 20 000 1976-1995 Mi-8T helicopters at least eight late 1990s Not confirmed Sources: SIPRI database (www.first.sipri.org); Korean Republic MoD 2004 (www.mnd.go.kr); Russian media.

26 # 2, 2007 Moscow Defense Brief Military-Technical Relations between Russia and North Korea: Past, Present and Future Our Authors Mikhail Barabanov. Graduated from the Moscow State University of Culture. Currently employed by the Moscow city government. Independent expert on naval history and armaments. Andrei Frolov. Graduated with honours degree from the Faculty of Foreign Affairs of State University and in 2003 from French-Russian Masters’ School of Political Science and International Relations. In 2003-2004 – researcher at the Center for Policy Studies in Russia (PIR-Center), executive editor of Yaderny Kontrol magazine (in Russian). In 2004 – project manager of Export control system transformation in Russia in 1999-2003 programme. Vladimir Frolov. Ph.D. (Political Sciense), graduated from the Military Institute decorated with the Order of the Red Banner and Diplomatic Academy of the Ministry of Foreign Affairs of the Russian Federation. Vladimir Frolov is a director of the National Center for Foreign Policy. Andrei Ionin is a graduate of the Mozhaisky Institute of Military Engineering. He served as a researcher at the Baikonur Aeronautical Facility from 1983 to 1988. Since 1988 he occupied different scientific positions within the Ministry of Defense Scientific Research Institute. He received his PhD in 1995. His contributions to MDB in the capacity of an independent expert. Konstantin Makienko. Graduated from the Oriental Department at the Moscow State Institute for International Relations in 1995 and the French-Russian Masters’ School of Political Science and International Relations in 1996. Head of a project on conventional armaments at the Center for Policy Studies in Russia (PIR-Center), 1996-1997. Since September 1997, Deputy Director of CAST. Author of numerous articles on Russia’s military-technical cooperation with other countries. Artyom Sanzhiev. Post-graduate student of Far Eastern National University. He is an analyst of the Center of Korean Studies of Far Eastern National University. Andrey Seregin. Graduated from the Moscow State University. Ph.D. (History), senior research fellow at the National Center for Foreign Policy. Dmitry Vasiliev. Graduated from the State University – Higher School of Economics with a Master’s Degree in Strategic Management in 2004. From 2003 to mid 2004, worked as an analyst at Absolut Bank in the Department of Risk Evaluation. Currently working since July 2004 as CAST researcher and editor-in-chief of the Eksport vooruzheniy (Arms Export) journal.

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