Russian arms export: the end of a "golden age"?

The nominal value of Russian arms exports continued to grow in 2011, reaching 13.2 billion dollars against the previous year’s 10.4 billion. Never­theless, there are hints at a systemic crisis on this front. Russia lost three important arms procurement contracts last year. It did not even get shortlisted in the Indian MMRCA tender for 126 medium multirole fighters; it also lost the Indian contract for 22 combat helicopters; and perhaps most devastatingly, Moscow failed to sell Kilo-class submarines to the Indonesian Navy, which opted instead for three examples of the obsolete Korean Project 209 design built under a German license. Each of these failures has its own explanations, but taken together they indicate an accumulation of negative factors affecting the prospects of Russian arms exports.

A more precise indicator of something being quite wrong in Russia’s arms exporting business was last year’s reduction in the size of the orderbook, for the first time since 1999. The value of orders landed by the Rosoboronexport state-owned arms trader shrank from $38.5 billion as of late 2010 to $32.5 billion by the end of 2011. According to Mikhail Dmitriev, former head of the Federal Service for Military Technical Cooperation, the overall value of Russia’s standing export contracts reduced from $48 billion as of late 2010 to $40 billion in late 2011.