Russia Pushing Weapon Sales Despite Criticism

“Swords into plowshares” may be the lofty motto of disarmament advocates now that the Cold War frost has melted, but “guns into greenbacks” is closer to the truth in Russia.

Despite a glut in the global arms market, Russia expects to export at least 50% more weaponry this year than last, and it is looking to this trade boom to finance a revival of its bankrupt defense plants.

The hard sell in war machinery illustrates a maturing of Russia’s marketing skills--and its commitment to protect as many as possible of the 6 million jobs left in arms manufacturing, to avoid expansion of this country’s army of unemployed.

But the Kremlin’s new aggressiveness in the arena of conventional arms sales, at a time when the defense needs of stable and developed nations have been sated, threatens to cast Russia in the role of supplier to rogue powers and expose its leaders to accusations of destabilizing Eurasia.

Russian President Boris N. Yeltsin and his security chief are enduring domestic criticism as well for having taken control of the state monopoly on weapons, feeding speculation that the market is being tapped to bankroll the president’s reelection.

The arms-trading issue promises to become a political football between nationalists trying to discredit Yeltsin and members of the current administration who are feeling rival pressures to boost profits and fight weapons proliferation.

“The two countries that were our greatest sources of hard currency in the past--Iraq and Libya--are now off limits because of U.N. sanctions,” said Dmitri V. Trenin of the Russian-American Commission on Conventional Arms Proliferation. “There are a lot of people who feel bitter about this, especially in the case of Libya. They believe the U.N. sanctions are unfair and that the only one suffering for this is Russia.”

Officials of Rosvooruzheniye, the state enterprise with the sole authority to produce, market and sell arms, echo Trenin’s view that Western efforts to curb arms supplies to pariah states are sometimes interpreted by Russians as moves to stifle competition.

“The Cold War may be over, but the United States, France and Britain are still our adversaries in the arms market,” said Rosvooruzheniye spokesman Valery I. Pogrebenkov. “As the global arms market narrows, there is ever harsher competition.”

He and other officials at the arms conglomerate claim that Western countries--the United States foremost among them--try to scuttle Russian deals with arguments that the prospective buyers are too dangerous to arm.

Rosvooruzheniye’s general director, Alexander I. Kotelkin, has even suggested that foreign competitors were behind a tax-evasion scandal in which criminal charges have been threatened against the firm’s previous administration. Other company officials have accused rivals of using photos of burning tanks in Chechnya to discredit the quality of the Russian hardware being used by both sides in that conflict.

The sensitivity generated by a crowded market is reflected in the dispute between the U.S. and Russian governments over Moscow’s proposed $1-billion sale of nuclear energy technology to Iran. Washington insists that the sale will provide Iran, which it accuses of sponsoring terrorism, with the means to produce nuclear weapons. Russia, eager for the earnings, is standing firm on its position that the sale is legal, purely civilian and in compliance with all non-proliferation agreements.

Although arms exports are expected to grow at least 50% this year, Russia has actually suffered a sharp drop in deliveries since the collapse of the Soviet Union. The Kremlin provided as much as $20 billion a year in military hardware to foreign countries in the 1980s, when it supplied half the global market. Last year, its share fell to 7% with sales of $1.7 billion. It now ranks second worldwide in volume, behind the United States, and third or fourth in the value of arms sales, behind France and on a par with Britain.

But analysts point out that Cold War-era comparisons are misleading because Russia’s motives for supplying arms have drastically changed.

“That was not trade,” Gen. Yevgeny I. Shaposhnikov, Yeltsin’s special representative at Rosvooruzheniye, said of the Soviet Union’s world-leading export of weapons. “These arms were supplied in exchange for slogans, for the support of the worldwide Communist cause. They paid us back in bananas, oranges, bad wine and the like.”

Whereas the Soviet Union delivered weaponry to allies for the worldwide struggle against “bourgeois imperialism,” Moscow sells today only with the aim of earning hard cash.

Officials at Rosvooruzheniye, an umbrella organization for 2,000 defense plants employing 6 million people, boast of recent successes and a promising outlook in what is unquestionably a down market.

About 60% of this country’s weapons sales are to Southeast Asian and Persian Gulf countries that appear to have the best growth potential, Rosvooruzheniye director Kotelkin told journalists last month.

India entered into a military cooperation compact with Russia two years ago that envisions $7 billion in arms purchases from Moscow by the year 2000.

Former allies in Nicaragua, Cuba, Angola, Afghanistan and other developing nations that were in the Soviet orbit are generally too poor to pay for weapons that used to be given to them. But Russia is now looking at ways of helping them modernize existing arsenals, to develop a market for future sales, said Pogrebenkov, the spokesman.

Russia remains a major supplier to some former allies by virtue of its foreign debts. Hungary and Slovakia have accepted sophisticated MIG-29 fighter aircraft and Russian training as payment for part of the bills left unsettled by the collapse of the Soviet Union.

Despite the dearth of traditional buyers, Rosvooruzheniye concluded supply contracts equal to last year’s $1.7 billion in just the first four months of this year, and prospective sales have prompted Kotelkin to predict that the 1995 figure will easily surpass $2.5 billion.

Russia’s high-end MIG fighter jets, S-300 antiaircraft defense systems, armored personnel carriers and late-model tanks are competitive in price and quality with Western products, analysts here argue.

The encouraging outlook for weapons sales has spurred some internal wrestling over the market. Defense Minister Pavel S. Grachev suggested earlier this month that his ministry should control all arms sales--a view Rosvooruzheniye officials say was quickly corrected by those close to Yeltsin.

Russian media have repeatedly tied Yeltsin’s security chief and close associate, Gen. Alexander V. Korzhakov, to executive moves to take control of the arms market.

Analysts and Rosvooruzheniye insiders decline to dispute the suggestions, but they claim the president’s chief bodyguard is interested only in enhancing security, not in steering the profits to a possible reelection campaign.

“The president believes that arms exports are a very sensitive issue, and he needs someone in charge he absolutely trusts,” Trenin said. “And Gen. Korzhakov is among the very few people the president has absolute trust in.”

Trenin described Yeltsin’s tightening grip on the arms trade as “a pattern of the state coming back to re-establish control over some areas where control had become lax,” and he ascribed no sinister motive to the action.

Russian officials initially indicated that profits from arms sales would be used to finance conversion of defense industries to civilian production.

But with a price tag estimated at upward of $150 billion, it would take decades of arms sales at the current level to switch all of Russia’s weapons plants to peaceful production, said Shaposhnikov, Yeltsin’s representative at Rosvooruzheniye.

Instead, he contended, earnings from arms sales should be spent to shore up research and development to ensure that Russia retains its prominent place in the international market.

The Russian government’s attempt to convert 40% of defense industries to civilian use in 1992 alone was widely criticized, because it halved a work force of 12 million in the military-industrial complex at a time when there was neither a private market to absorb workers nor a social security net to assist them.

“The pace of conversion in civilized countries is 5-7% a year,” Pogrebenkov said. He said it is now Rosvooruzheniye’s policy to invest a share of arms sale profits in plants producing aircraft and other hardware in high demand.

With experience now serving as a deterrent to conversion, Russian officials in the arms industry appear to be in accord in pushing not to turn swords into plowshares, but rather to make better swords.