Desperate Russia opens doors for foreign militaries

Business Standard ^ | August 26, 2015 | Ajai Shukla

[sukhoi-30mki]

Russian President Vladimir Putin's foreign policy stance has invited damaging economic sanctions from the US and the European Union.

These have squeezed the important sectors that earn most of Russia's money -- oil, banking services and defence exports.

Battering the Russian economy further are plummeting oil prices, which are blocking Putin's 2010 pledge to spend some 20 trillion roubles -- about $650 billion then -- to revamp his ageing arsenal.

After years of defence spending increases, Russia's 2015 budget has hit a roadwall.

Moscow has scaled back plans for buying 500 warplanes from 2011-2016, as well as the new Armata tank and a host of warships.

Earlier this year, authoritative Russian think tank Centre for Analysis of Strategy and Technologies forecast a Russian military spending crisis.

"The modern Russian economy just does not generate enough resources to finance the current 2011-2020 rearmament program," said the report.

That is why Russia -- traditionally secretive on matters relating to defence -- has unprecedentedly invited over 30 journalists (half from China, Vietnam, Thailand and India; and a similar number from Brazil, Argentina, Chile and Mexico) to tour its defence facilities.

This includes your correspondent and another from one other Indian newspaper.

The Park Patriotic, a vast training-cum-exhibition ground outside Moscow, is being extensively revamped to hold equipment demonstrations, exhibitions, and exercises with foreign militaries.

With fewer orders from Moscow, the Russian arms industry must aggressively pursue more foreign orders.

Yet, increasing exports will not be easy for Moscow.

The Stockholm International Peace Research Institute's authoritative 2015 Yearbook finds that Russia is the world's second-biggest arms exporter, with 27 per cent of the export market.

Only the US is ahead with 31 per cent of the market.

Delegations from prospective buyer countries are evident at the MAKS 2015 air show, which President Putin inaugurated on Tuesday.

This year's version of the biennial aerospace exhibition features 156 global and 584 Russian companies, with the host nation's aerospace design strength on full display.

Tearing through the skies is the Sukhoi T-50, the Russian prototype of the Fifth Generation Fighter Aircraft that Hindustan Aeronautics Ltd will co-develop with Sukhoi when protracted negotiations over the design partnership are finally concluded.

Today was the first public flight of the aircraft since the last MAKS show two years ago. And both the Russian and Indian air forces are reducing the numbers of aircraft they are committing to build.

The Indian Air Force was initially looking to build close to 220 FGFAs. That was reduced to 144, and uncorroborated media reports have recently indicated that this number could go down to about 75. That is why Russia needs more foreign buy-in.

Russia's traditional reliance on India as a buyer is also evident with the spotlight on its new, light, multi-role helicopter, the Kamov-226T, developed for an Indian tender for 197 light utility helicopters.

So keen is Moscow that India buy this helicopter that President Putin personally took up the issue with Prime Minister Narendra Modi during their summit meeting last year.

Russia has proclaimed its willingness for a "Make in India" contract for this helicopter, but the jury in New Delhi is still out.

Disclosure: The correspondent is visiting Russia at the invitation of Rostec, the Russian state body that promotes the development, manufacture and export of high-tech industrial products.

Ajai Shukla

[sukhoi-30mki]

KA-226

[Trumpinator]

This article is in error unless it thinks oil prices were lowered specifically to get at Russia and that that Saudis had the price of oil artificially high and not set by market demand.

The sanction have had a negligible effect on the Russian economy. If Putin was as tame as a teddy bear and did no saber rattling this situation would still have happened to Russia. In fact the only thing I can think of that would be different is that western banks would be waiting in line to loan money to Russia and now they can’t due to sanctions (and thus losing a way to influence Russia).