CONTENTS #1(7), 2007 Official View Point Russia’s Relations with Europe in Aerospace, Shipbuilding PUBLISHER and Defense Industries 2 Centre for Analysis of Strategies and Technologies War And People North Korea: the Bush Administration’s Strategic Fiasco 4 CAST Director & Publisher Ruslan Pukhov The Globalization of NATO: Prospects and Consequences 6 Advisory Editor Konstantin Makienko Industrial Policy Researcher Ruslan Aliev Challenges to the Reform of Defense R&D in Russia 9 Researcher Russia’s Defense Industry in 2006 14 Alexey Pokolyavin Researcher Dmitry Vasiliev Arms Trade Researcher Polina Temerina The Venezuela Contracts 16 Researcher Russia-India Military-Technical Cooperation: Current Ilya Nevorotov Issues and Perspectives 19 Editorial Office Leninsky prospect str., 45, suite 480 Moscow, Russia 119334 International Cooperation phone: +7 495 135 1378 The Indo-Russian Transport Plane Project: Background, fax: +7 495 775 0418 Status and Perspectives 21 http://www.mdb.cast.ru/ To subscribe contact phone: +7 495 135 1378 Facts & Figures or e-mail: [email protected] Moscow Defense Brief is published by the Centre for Analysis of Structure of Russian Ministry of the Interior 23 Strategies and Technologies Structure of Russian Ministry of Defense 24 All rights reserved. No part of this publication may be reproduced in any form or by any means, electronic, Major Events in Russian Arms Trade and Defense mechanical or photocopying, recording or otherwise, without Industry in the Second Half of 2006 25 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 Our Authors 27 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 # 1, 2007 Moscow Defense Brief © Centre for Analysis of Strategies and Technologies, 2007 Official View Point Russia’s Relations with Europe in Aerospace, Shipbuilding and Defense Industries Vladimir Vasiliev he past decades have seen a remarkable rise in the Fincantieri and the Rubin design bureau have launched R&D Tscale and cost of aviation, space and defense projects. on the development of a next generation submarine. For example, R&D for the Boeing 787 or the Airbus A380 These examples demonstrate a positive development, costs over ten billion euros, and such investments take whereby politically-motivated programs initiated by the many years to recoup. Similarly, it costs billions of euros to state are being replaced by pragmatic, business-oriented develop fighting aircraft, helicopters and missile systems. projects initiated by business, which are only subsequently As a result, the internationalization of both civilian and accorded political support. Other examples include the joint military programs to develop the next generation of high- project to develop SaM-146 engine for the Superjet 100 tech products is inevitable. Even the US, with the largest regional jet, the creation in Russia of a centre for the defense, space and R&D budgets in the world, has been forced conversion of A320 aircraft to transport versions, the project to take this path. Europe launched on this process with the to use Russian booster rockets at the Kourou cosmodrome creation of the Airbus consortium three decades ago, and has in French Guiana, and possible Russian participation in the since integrated several large defense and aerospace holdings A350 project and in the development and production of the into EADS. Shipbuilding, missile manufacturing and even medium class aircraft series to replace present European armour, the most conservative of industries, have been best-sellers – Airbus A320/321. subject to the same process of international integration. On the European side, EADS and Safran are most Russia and Europe have begun over the past fifteen active in joint projects, along with Russian companies that years to work together on high-tech projects, first of all in comprise the United Aircraft Corporation, and the Saturn the aviation, helicopter and space sectors. These efforts have Scientific Industrial Association. met with some challenges. For example, the MiG-AT training Several factors that promote the integration of Russian aircraft and the Mi-38 transport helicopter programs and European aviation, space and other high-tech machine- were launched during an era that was extremely difficult building sectors will continue to grow in importance over the for Russia, with precious little financing, and inadequate next few years. market research. However, even such relatively unsuccessful First, Russia and Europe already have a strategic programs helped to lay the foundation for future cooperation, relationship on energy issues. In spite of all of the problems by creating networks and promoting understanding of that have arisen, cooperation in this sphere will only increase, different work methods and cultures. and it is only logical to expect such cooperation to extend to Several Russian-European programs are proceeding high technology sectors. successfully, particularly on joint projects for third countries. Second, the rapid growth of the Russian market, while For example, French companies are providing navigation and it cannot be compared to the Chinese or Indian markets, display systems for Su-30MKI fighters destined for India. The will nevertheless continue, making Russia into one of the Indian naval forces have chosen to equip Russian MiG-29K major markets of the world. The expansion of Aeroflot’s carrier-based fighters with French helmet-mounted targeting plans to acquire long-range carriers is symptomatic of systems, and French equipment also graces the Malaysian this potential. If Russia’s national carrier first intended to Su-30MKM. purchase 12 aircraft, it is now considering a purchase of 44, Russia and Italy are working together to create a new which brings it into the same league as the largest airlines generation of training aircraft. Due to the close relations of Asia or Europe. between the Yakovlev design bureau and Aeromacci, each Third, the predicted weakening of the US dollar will country now boasts a highly effective training aircraft at the force European companies to move more production into the final stages of testing. Alenia corporation is on the verge of dollar zone. While this includes the US itself and East Asia, joining the Sukhoi Superjet 1 00 Russian regional jet project Russia could also serve as a location for European production as a full partner, not just as a supplier of equipment. Similarly, in the dollar zone. # 1, 2007 Moscow Defense Brief Russia’s Relations with Europe in Aerospace, Shipbuilding and Defense Industries Official View Point Finally, the scientific and industrial complexes of Russia losses during the 1990s, has preserved a strong capacity for and Europe are complementary. As demonstrated by the innovation, to which it has devoted significant resources in technical problems associated with the serial production recent years. There are areas in which Russia remains a world of the A380 and the delays to the full-scale launch of the leader, for example, in the sphere of piloted spaceflight and A350 project, Europe is beginning to suffer from a deficit of satellite navigation. Thus, a strategic partnership in high- resources in its competition with the US on a wide range of tech between Russia and Europe would by no means be a one products, and new difficulties lie ahead in the niche for short- way street. Russia has much to offer, and the competitiveness range carriers. At the same time, Russia, in spite of its colossal of both parties would benefit. # 1, 2007 Moscow Defense Brief Russia’s Relations with Europe in Aerospace, Shipbuilding and Defense Industries War And People North Korea: the Bush Administration’s Strategic Fiasco Ivan Safranchuk hen North Korea withdrew from the Non-Proliferation long thought to be a bluff. But now that the nuclear test has WTreaty (NPT) in 2003 and declared itself to be a nuclear destroyed such illusions, the Korean crisis might finally be power, the prevailing view was that it was bluffing. Isolated tackled seriously. and dependent on humanitarian assistance, it was hard to The main options are: 1) military action against North imagine that it had truly developed nuclear weapons capacity. Korea on a limited scale to destroy critical infrastructure, or As a result, even if Pyongyang had bluffed earlier for the sake on a larger scale to overthrow the regime; 2) full isolation of getting better positions at negotiations, it now had no other of North Korea, hoping that a social-economic crisis will choice but to prove its claim. Otherwise, the regime would bring changes to Kim’s behavior; 3) regime change from the have faced complete political bankruptcy. through the promotion of civil unrest or an elite coup d’etat; The Bush Administration thought it had learned 4) reconciliation with North Korea through negotiations. some lessons from the Clinton years. In 1994, the Clinton Limited or large scale military action against North administration promised economic benefits to North Korea Korea would be very unfavorable