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 Russias 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 Tanks 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
Military-Technical Relations between Russia and North
Editorial Office Korea: Past, Present and Future 25
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Cover photo: Il-96-300 - The flagship of Russias 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
In 2004-2006, many observers were convinced that
the best option for Russias civil aviation was to integrate
into the European aerospace industry. The emergence of is
perspective coincided with Moscows political rapprochement
with Paris, Berlin and Rome, and broad cooperation with
Europe in the energy sector. This approach also signaled an
extreme skepticism regarding the capability of the national
aviation industry to overcome its crisis, develop competitive
products and become a serious player, at least on the domestic
market.
The strategy of integration with Airbus seemed logical,
given the degradation of the civilian segment of the domestic
aviation industry and deteriorating political relations with
the United States. The ultimate, logical result of this strategy
would have been for Russia to give up its claims to be a system
integrator; that is, to give up its ambition of re-emerging as
an independent, major player in the world aviation industry.
In this case, manufacturing aircraft components for Airbus
would generate the bulk of sales. In the best case scenario,
Russia could count on becoming a full participant in the
development of a new generation of airliners, including the
possible transfer of an assembly line to a Russian aviation
plant. In the long term, Russia hoped to take part in the
management of EADS and raise its stake in the corporation
to 15-20%.
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
in this party is Vice President of Irkut Corporation Valery
Bezverkhny, who initiated the unsuccessful acquisition of the
bankrupt Fokker company by Irkut at the beginning of the
decade, and who later oversaw the sale of 10% of Irkut shares
to EADS. Igor Shuvalov, Presidential advisor on economic
issues, was the most active supporter of the European option
in the corridors of power. Moreover, for some time President
Vladimir Putin himself appeared to have toyed with the idea
of Russia joining EADS.
A natural opponent of the European strategy was the
Boeing party, led by the Sukhoi holding company, which
enjoyed close ties with the American corporation on the
SSJ-100 regional jet project. At that stage, when Aeroflot
was holding a tender for long-range aircraft that involved
 # 2, 2007 Moscow Defense Brief
The Russian Aviation Industry:
From European Option to National Strategy
Boeing787 and Europes A350, Russias national air carrier
could also be said to have belonged to the Boeing party.
Aeroflots top management preferred Boeing and was reluctant
to purchase the A350, which lagged behind its competitor
in development. There are reasons to believe that Sergei
Prikhodko, a deputy head of the Kremlin administration,
is the most influential supporter of the Boeing party in
the corridors of power. Economic Development and Trade
Minister German Gref tends to support it as well. In addition
to the Boeing faction, the national party was also opposed
the Europeans, and was represented mainly by the Ilyushin
Finance leasing company, which was banking on upgrading
and producing the Russian and Russian-Ukrainian Il96,
Tu204 and An148 aircrafts. Oddly enough, the national
party has virtually no supporters among governmental
authorities to lobby its interests.
The implementation of theEuropean optionmanifested
itself in the sale of a 10% stake in Irkut Corporation to the
Europeans, Vneshtorgbanks (VTB) purchase of a 5% stake
in EADS, and most importantly, the blocking of Aeroflots
purchase of the U.S.made Boeing787. Although the airline
management favored Boeing, it was forced by the government
to opt for the European A350. In addition, there is the project
for starting a production facility for converting A320 into
freighters.
Finally, the production of components for the European
Airbus has begun in Irkutsk.
Crisis of the European Option
The rapprochement between Russia and Europe was
quite intensive until about the beginning of 2006, when
Angela Merkel came to power in Germany as the new
Chancellor. After Gerhard Schroeder stepped down, the
climate in Russian-German relations became more reserved.
In bilateral relations, the new Chancellor emphasized
sensitive subjects such as human rights, freedom of speech
and democratic standards. Finally, it was Angela Merkel who,
in September2006, frankly and unequivocally stated that
Russia could not be a full-fledged partner in EADS.
The reaction of panic and hostility in the European
press to the news of Vneshtorgbanks (VTB) purchase of a
5% stake in EADS was an important indicator of the attitude

of European opinion-makers to the prospects of Russian-
European aviation industry integration. And this reaction
reinforced the widespread view in Russia that Europeans
openly despise Russia when it is weak, and fear and hate it at
the slightest sign of it growing strong.
The atmosphere of dialogue at industry level also
deteriorated. Firstly, it became clear that the main priority for
EADS, which was going through a deep crisis, was to resolve
production problems on the A380, and not the formation
of dubious and risky alliances with Russia. Secondly, Louis
Gallois, the new co-CEO of the European concern, is known
for his antipathy against Russians, a characteristic generally
inherent in French Protestants. Russia remembers well that
it was Gallois who played a key role in removing Russian
companies from the ATR project.
The situation in Russia also changed. A diversification
of the economy and reorientation from a reliance on raw
materials was declared at the political level. The state started
paying close attention to industrial policy in several machine-
building sectors, including aviation. Consolidation of the
aviation industry intensified in 2006. The state decided to
launch and partly finance large-scale national projects from
the budget: the SSJ100 regional jet, the MS21 short- and
medium-range aircraft and the PS12 engine.
The political and industrial positions of the national
party strengthened. Large-scale state financing of the MS21
project runs inherently counter to the European option. Part
of the Irkut alliance consolidated around Oleg Demchenko,
General Director of the Yakovlev design bureau and Irkut
Corporation President; influential in both political and
military circles. Finally, the reputation of EADS was badly
spoiled in Russia by the crisis of A380 production and
especially the overhaul of the initial A350 project, which
was especially sensitive in Russia from the viewpoint of
both forming the fleet of long-range airliners and possible
industrial involvement in the program.
It now seems that plans for Russias involvement in EADS
had been unrealistic from the very start, or at least premature.
The European corporation is not just a manufacturer of civil
aircraft, but also a dynamic military enterprise, which Russia
could hardly joint in the foreseeable future, especially as
the United States is the biggest market for EADS defense
products after Europe.
The National Strategy
The cool stance adopted by European political and
industrial leaders leaves Russia no other alternative than to
implement a purely national strategy of reviving domestic
aviation, perhaps as a second-tier, but as an independent
Industrial Policy
player on the global market. Indeed, all the necessary
prerequisites are in place.
First, even though the situation in civil aviation
remains grave, the outlook is clearly positive. In 2001, not
only old, but even new Russian aircrafts failed to meet
international flight safety and environmental requirements
or to be certified internationally. Only a few aircraft were
being built, and the system of after-sale maintenance did not
exist. Two key civilian aircraft manufacturers AviastarSP
and the Voronezh plant were on the verge of bankruptcy.
Air transportation plummeted. Russia had over 260 airlines,
each so miniscule that none of them could afford to order
new aircrafts. The profits of the entire sector totaled a
mere $300million. At 2,000 units, the aircraft fleet was
redundant.
But from 20012006, the situation improved noticeably
as the debts of key manufacturers were restructured or paid,
and the production of new aircraft meeting international
safety and environmental requirements revived, thanks to
orders from leasing companies.
Secondly, domestic demand for new aircrafts started
to soar in 2004. The combination of rapid growth of air
transportation (at about 8% a year except 2005) and the
massive disposal of obsolete Soviet-made aircrafts resulted
in snowballing demand for modern, cost-effective airliners.
Market volume over the next five years is estimated at 300
aircraft.
Thus, the basic prerequisites for a strategy to revive
national production have been established.
In fact, the national choice policy boils down to three
simple tasks. First, the combination of customs measures
and leasing mechanisms will supply the needs of Russian
airlines with upgraded Il86 and Tu204, as well as new
SSJ100 regional jet and An148. Second, to unilaterally
launch the MS21 program, if the Europeans refuse to
deliver a line for the assembly of the next generation A320
modification to Russia. Third, to intensify talks with China
on the development of a short-and medium-range jumbo
jet to replace the Il86. It must be stressed that the national
strategy is not tantamount to autarchy, and that in any case
the new airliners will be developed on the basis of broad
international cooperation, as is the case with the Sukhoi
regional jet project.
The successful implementation at least one program
to develop new generation aircraft with Russia acting as a
system integrator will establish a new baseline for future
talks on international alliances, be they with the Europeans
or the Chinese. If the Russian aviation industry proves
capable of regaining the status of a global player, on at least
the scale of Embraer or Bombardier, Europe will be more
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

In 2007 Russias national defence procurement (NDP)

amounted to 302.7 billion rubles (app. $11.6billion),
which marks an increase of 27.9% over 2006. Of this sum,
will be devoted to conventional weaponry. In2007,
the strategic forces will acquire 17 land and sea-based
intercontinental ballistic missiles (ICBM) a post-Soviet
$5.6billion (47.9%) will be spent on purchases of new record, according to published information finance the
equipment,$2.3billion (19.8%) on repairs and modernization, construction of three ballistic nuclear missile submarines
and $3.7billion (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 NDP2007 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 Ministrys 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 SPA2015. The gap between the relative percentage
allocated to purchases of new arms and equipment is evident
with 63% for SPA2015 and just 47.9% for NDP2007.
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
250 97,7
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 submarine at Sevmash was rejected in 2006 and not
48,5
11,8 included in NDP2007.
100 Finally, NDP2007 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.

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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

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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 612 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 Admiralty Shipyards
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
Soobraznitelniy 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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Russian Defence Procurement in 2007
 Industrial Policy

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 Zelenodolsk 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 Volga 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
Admiralteystvo
(Sevastopol)

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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 reactors 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 tank 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 Volgograd Tractor 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 175188
Ulyanovsk oblast 96138
Primorskiy krai App. 40 million higher than NDP-2006

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Russian Defence Procurement in 2007

Russias Space Program in 2006:
Some Progress but No Clear Direction
Andrey Ionin
R ussian space officials have declared 2006 a good year, even
though the program is still plagued by an obsolescent
industrial base, low wages averaging 12 thousand rubles
(about $450) per month, and an aging workforce (46 years on
average). They prefer to highlight the following:
Annual production of the space sector, which includes
over 100 firms and 250,000 employees, rose by 14%,
which is 3.5 times above average for Russian industry;
Russia remains the world leader in space launches for
the seventh year in a row, with 25 in 2006, compared to
just 18 for its closest competitor, the USA;
Although the Americans completed three of five planned
Space Shuttle missions to the International Space
Station, Russia once again made the most significant
contribution;
Russias space industry firms have begun to be
consolidated into holdings;
Russia has added new international partners like
Brazil, Kazakhstan and South Korea, to established
relationships with the US, France and other European
states.
According to Roskosmos, the national space agency,
Russia is in a dead heat with the US in piloted space navigation,
and comes in a firm second if one takes into account the
entirety of systems in orbit, launch sites and ground control
centers. However, a critical examination points to a more
complex state of affairs.
Piloted Space Navigation
The construction of the International Space Station (ISS)
was originally planned to have been completed in 2004, but
the deadline was extended in 2006 to the end of the decade,
and the eighth and last Russian module will be attached to
the ISS as late as 2011. However, a more significant problem
concerns the size of the crew. According to the original
schedule, there should have been six resident crew by 2005
and ten at a later stage. There are presently 2-3 resident crew,
and they are fully occupied with the task of maintaining their
life support systems and the station itself, with no time left
over for scientific experiments the main purpose for which
the ISS was created.
It is not at all clear how this problem can be solved,
especially since the US plans to terminate the Space Shuttle
Industrial Policy
program by 2010. Perhaps, by that time, private firms will
step into NASAs role and design new vehicles for delivering
cargo and astronauts to the ISS. Indeed, NASA held a tender
worth $485 million for this purpose, in December 2005, and
announced two winners in September 2006: SpaceX and
Rocketplane Kistler, both US companies. Another solution
would be for other ISS partners (US, Canada, Japan and the
European Space Agency) to take up Russias suggestion and
double the rate of production starting in 2009 of the Soyuz-
TMA manned spaceship, at a cost of approximately $150-200
million per year. But since it takes over two years to build
these ships, and since no additional funding has yet been
secured, this option could make a difference only in 2010, by
which time here would no longer be any need for new orbiting
modules of the ISS. After all, who would work on them, and
for how long?
Another, less urgent issue, concerns the terminal date
of the ISS program. The station was originally intended to
be used until 2015, though Russia announced in 2006 that
this term could be extended until 2025. This is, perhaps,
just a technical issue, but the fact is that the USA remains
the principal investor in the ISS, and without their interest
and active participation no further continuation of the
program is possible.And American interest in the ISS, having
decreased now for several years, reached a nadir in 2006. The
new National Space Strategy signed by George Bush makes
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
joint piloted lunar program, a journey to Mars? Or should
Russia pursue an independent course, including a national,
high-latitude space station or its own Mars program? In
brief, there are many alternatives available, but Roskosmos
has not set any priorities; and until they do so there will be
no progress.
The same lack of clarity bedevils the development of a
replacement for the reliable, but obsolete, Soyuz spaceship.
By the end of 2005, Roskosmos launched a competition to
create a manned re-usable spaceship a largely unexpected
move, since the consensus for almost two years had been
that Roskosmos was set on developing the Clipper reusable
manned spacecraft, designed by the Rocket and Space
Corporation Energia.
The submission of three competing designs and the
competition itself all took place rather quickly: the results
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Some Progress but No Clear Direction
for Russias Space Program in 2006
 Industrial Policy
were to be announced on 3 February 2006 and a contract to
begin work to be signed 20 days later. However, the declaration
of results was postponed by six months, and then annulled.
The official explanation for the Clippers failure was the lack
of a national launch vehicle capable of putting a spaceship
weighing at least 14 tones into orbit (the Russo-Ukrainian
Zenit was considered unacceptable for political reasons).
Similarly, the Clipper had no clear function in the Federal
Space Program. But this was all-too clear long beforehand, so
the only mystery concerns why the tender had to be held in
the first place.
In the end,one might argue that the most illogical decision
was taken: to continue the program of the deep modernization
of the Soyuz launch vehicle (project Soyuz 2-3), to meet the
requirements of the European Space Agency, which apparently
now remains the main investor in this program. Under this
scheme the development of a new spaceship (perhaps even
that very same Clipper) could begin no earlier than 2012, the
date by which the Clipper should already have made its first
flight.
Turning to the market of space tourism, all seems well, at
least at first glance. Russia enjoys a monopoly on this market,
and a long list of clients that have signed up for flights to 2009,
even though the price of a tour has been raised from $20 to
$25 million. However, in spite of all of its natural advantages,
including world-beating positions in biomedicine and rocket
technologies, Russia is losing its chance to become a leader in
the growing market of sub-orbital space tourism.Two American
projects have taken the lead over their peers: the nine-seat
SpaceShipTwo by Virgin Galactic and the six-seat Dream
Chaser by SpaceDev. The inaugural flight of SpaceShipTwo is
scheduled for 2008. Ticket prices start at $200,000 per head,
and will decrease to $25,000 over the course of the planned
decade of service. Bigelow Aerospace has even launched a
space hotel project: a prototype was successfully placed in
orbit by a Russian-Ukrainian Dnepr launch vehicle in July
2006. This market is not sitting still: NASA recently announced
it will join forces with Virgin Galactic on a feasibility study of
supersonic rockets that could take passengers form London
to New York in less than two hours.
For its part, Roskosmos makes the excuse that the risks
of this business are too high, and would require extraordinary
insurance schemes. Everything must be checked and
re-checked a thousand times, they say, and flippancy and
adventurism are severely punished in space. Indeed, suborbital
tourism carries its own risks and these must be dealt with,
but who is in a better position to overcome these challenges
than Russia, with its knowledge and experience in manned
space-flight?
In any case, there was no articulation in 2006 of
any kind of vision for manned programs. Inertia alone is
guiding developments, and the future of the program is far
fromclear.
10 # 2, 2007 Moscow Defense Brief
Some Progress but No Clear Direction
for Russias Space Program in 2006
Program on Sector Restructuring
The rocket and space industry began a process of
restructuring in 2006. In July, the Russian government
examined a Roskosmos program for the development of
the sector to 2015. The program paints a rosy picture for
the Russian space industry: for example, average annual
growth for production is forecast at 8%, and the share of
rocket and space technology meeting world standards is
projected to grow from the current 41% to 100% during the
same period.
Integration is seen as the means of reaching strategic
goals. Holdings are to be formed along functional lines,
as a few select large firms will absorb their suppliers and
related enterprises. The transformation will take place in
several steps. The first involves the incorporation of joint-
stock companies, though no deadline for this process has
been set. The second step, due to conclude by 2010, involves
the establishment of holdings, and by 2015 the number
of holdings will be consolidated to just three or four. State
financing is not set to increase, but should remain within
the range of existing federal programs. Foreign partners
are not to participate in the formation of the holdings. This
program is clearly distinct from the programs adopted for
other sectors of the military-industrial complex where, for
example, the formation of a single integrated structure is
envisaged for each of the aviation and shipbuilding sectors.
The program has not yet been approved, but the creation
of holdings has already begun:
The Khrunichev State Research and Production Space
Center will be the core entity of a holding for the
development of heavy-lift launch vehicles;
The Reshetnev NPO PM will be the core entity of the
Data Satellite Systems holding for the development of
communications and navigation satellites;
The Russian Institute of Space Device Engineering
Science and Research Institute will be the core entity
of the Russian Rocket and Space Device Engineering
and Information Systems holding, and other holdings
as well.
There is little to suggest, however, that the formation
of these holdings will yield any long-term competitive
advantages, and that bodes ill for their effectiveness on the
global space market. Moreover, the level of corporate risk and
the distortion effects of production monopolies are sure to
increase. A successful restructuring strategy would rather
adhere to the following principles:
1. The principle of vertical integrationshould guide the
merger of space sector enterprises. Holdings should integrate
not suppliers and related enterprises, which has no bearing
on efficiency or competitiveness, but key elements of the
market cycle: launch vehicles, satellites, operating services,
and so on. Indeed, this is precisely how all global leaders

in the space sector have been structured, from Lockheed
Martin and Boeing to the European EADS.
2. The formation of space holdings should avoid
the temptation of maximizing the share of domestically
produced components. This is not an effective strategy for
the modern market; where, in order to reduce delays and
lower production risks, to increase the competitiveness of
production and to concentrate the holdings scarce resources
on the development of key competencies, the share of foreign
production should, in fact, be maximized. Following what as
long become standard practice abroad, stocks of external
components should be maintained through just-in-time
production contracts, while domestic production should
be expanded, as required, through transfers of licenses and
technical documentation.
3. The process of restructuring should not strictly
follow sectoral boundaries. A holding is unable to minimize
corporate risks and diversify high technology production
if it remains bound to just one military-industrial sector.
Especially since the space sector is characterized by
extremely high risks, space production as a share of total
production should be no higher than 20-25% for a multi-
sector holding. In other words, the vertically-integrated
space enterprises should join with larger military-industrial
holdings as junior partners, as is the case with such various
companies as Lockheed Martin, Boeing, EADS and Saab.
4.The question of foreign participation in the ownership
of space enterprises should be revisited, insofar as the
creation of large multi-sector holdings will in itself facilitate
control over strategic Russian assets and technologies. The
broad purpose of such international cooperation should
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
the establishment of strategic alliances. Indeed, if Russia
hopes to become an equal partner to Western high-tech
companies like EADS, then where is the logic in shutting
them out of our markets? Regulated access to our space
enterprises and technologies should be used to leverage
Russian participation in their production programs and
structures.
The Choice of Cosmodromes
Russian authorities have not established a clear position
on how many cosmodromes are required, and where they
should be located. A new federal targeted program for the
development of Russian cosmodromes from 2006-2015
was adopted in 2005. At that time, of the two cosmodromes
in service Plesetsk, in Archangelsk oblast (in Northern
Russia), and Svobodniy, in the Amur oblast (on Far East),
only the first was to be maintained. However, then Defence
Industrial Policy
Minister Sergey Ivanov made a point of saying that the
Russian Space Forces would not pull out of Svobodniy.
Nevertheless, in February 2007, President Putin signed
a decree liquidating Svobodniy, which, founded in 1996, had
served a mere eleven years. At the same time, Roskosmos
noted the necessity for establishing yet another cosmodrome,
probably the Kapustin Yar missile testing range in Astrakhan
oblast (in South Russia), to take over manned launches from
Baikonur. In this case Baikonur would be used exclusively
for international commercial projects with Russian
participation. But then why should Russia have signed a
lease to 2050, given the fact that Baikonur, from a purely
commercial point of view, is among the least competitive
cosmodromes in the world? The Alkantara spaceport would
seem much more suitable, but Russias space relations with
Brazil have not yet reached that level. Russian participation
is limited to important, but private contracts to upgrade the
technical and commercial parameters of the Brazilian VLS-1
launch vehicle.
The decision to close Svobodniy runs counter to the
governments policy to develop the Far East, not to mention
regional trends in the space sector. The Pacific is an area of
high growth. Russias participation in Chinas ambitious and
fast developing program is well below potential. Japan is
looking to move ahead. South Korea, with Russian assistance,
is about to establish its first space launch vehicle and construct
its first cosmodrome. Indonesia, together with the Makeyev
Design Bureau, is developing an aerospace airborne launch
system. But rather than reorient Svobodniy to take advantage
of these strategic regional developments, they decided to
close the base.
Conclusions
The list of overdue decisions and contradictory policies
with long-term implications for Russias space sector could
be extended. Why should this be the case? At first glance, it
would seem that the sector has everything necessary for
sustained and even rapid development. Space programs
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
is growing at a steady clip: the budget for the Federal Space
Program in 2007 reached 24.4 billion rubles (942 millions
USD) , which is three times higher than in 2002.
Perhaps the main problem is the absence of any concrete
strategy for the development of the Russian space industry.
This was hardly understandable several years ago, when the
dearth of funding precluded any kind of strategy other than
mere survival. But while the funding situation has changed
in a cardinal manner over the past few years, there have been
no new ideas to match.
# 2, 2007 Moscow Defense Brief 11
Some Progress but No Clear Direction
for Russias Space Program in 2006
 Industrial Policy
A new Russian space strategy is necessary to drive
development forward, and it should answer the following
key questions. What benefits should Russia derive from a
national space program? How will the space program benefit
ordinary Russians, Russian businesses and government
agencies, including those in charge of national security?
What projects should the national space program focus
on, and what project should be excluded? To what extent
should the program participate in the global space market?
Where should the line be drawn between national security
and commercial space projects? Who should Russia take on
as strategic partners? Does Russia need a large-scale space
project? Should it pursue this project on its own or with
international partners?
12 # 2, 2007 Moscow Defense Brief
Some Progress but No Clear Direction
for Russias Space Program in 2006
The USA published its fifth National Space Strategy
in October 2006, which articulates the needs of American
society as priorities for the national space program. This
is clearly the correct approach, as the US taxpayer foots the
bill for the majority of American space production. In this
manner, the space policy serves to set long-term goals and
allows society to exercise some oversight over the space
bureaucracy, and NASA in particular.
Similarly, a Russian space policy would help to establish
strategic goals and provide society with some say in how they
are pursued. After all, since the bulk of the sectors assets are
owned by the state, Russian society is the main investor in
the federal space programs and the main shareholder of the
national space industry.

Russian Anti-Armour Weapons
and Israeli Tanks in Lebanon
Mikhail Barabanov
T he military conflict that unfolded from 12 July 14
August, 2006 between Israel and the Hezbollah, the
Lebanese Shiite Islamist Resistance group, marked the first
time in several years that the Israeli army has confronted
a well equipped opponent in a large-scale confrontation.
Military observers paid particular attention to the use of
Israeli armour and the outcome of battles between Israeli
main battle tanks and Hezbollahs anti-tank weaponry.
All in all, four division headquarters and 17 Israeli Army
brigades (six armoured, seven infantry and four airborne)
took part in battle, though not all were up to full combat
strength. Over 30,000 Israeli servicemen and up to 400 main
battle tanks were directly engaged in battle on Lebanese
soil, and the tanks were all Merkava models made in Israel.
Of the six armoured brigades, two brigades (7th and 847th)
were equipped with the Merkava Mk 2 model, three brigades
(188th, 434th and 673rd) with the Merkava Mk 3 model, and
one brigade (401st) with the most advanced Merkava Mk 4
model. Of the seven infantry brigades, two (1st and 609th)
were equipped with Achzarit heavy armoured personnel
carriers, converted from Soviet T-55 tanks seized from Arab
forces in the wars of 1967 and 1973.
Since 2000, Hezbollah has turned the expanse between
the Israeli border and the Litani river into a heavily fortified
line of defence, known as Nasser. Practically every
settlement was equipped with temporary or permanent
fortifications (including concrete bunkers, steel doors,
etc), a large number of underground tunnels and heavy
camouflage. However, although Hezbollah fighters made
use of these fortifications, they did not engage in positional
warfare, but mounted mobile military operations. Fighters
were mobilized in groups of no more than 20 people (often
just five or six), based, as a rule, on detachments of anti-
tank missile systems. It appears their strategy was to expose
the advancing Israeli units, and tank units in particular, to
guided anti-tank missiles fired at a fairly long range, often
changing their positions, using a network of tunnels and
bunkers.
Hezbollah deployed up to 2500 fighters, of which a
core of a thousand regular troops were well trained and
equipped to the best western standards. These zealous,
professional fighters were well supplied with arms, and
strictly followed orders. One could not say that Israel was
fighting with partisan formations in the conventional sense
of the term, but in reality with a well equipped and organized
War And People
regular army, even if it displayed some peculiar methods of
warfare.
Hezbollah made a special effort to confront Israeli
armour with a huge number of anti-tank weapons, including
the Soviet Malyutka anti-tank guided-missile complex (NATO
code AT-3) with 9M14 series guided-missiles (including
licensed Yugoslav versions and the Iranian Raad and Raad-2T
tandem warhead clones, the Fagot (AT-5), Konkurs (AT-5,
including the licensed Iranian Towsan-1 version), the French
MILAN, the American TOW (including its Iranian Toophan
and tandem warhead Toophan-2 copy), recoilless guns and
several versions of the Soviet RPG-7 hand-held anti-tank
grenade launcher. Iran and Syria were the main suppliers
of these weapons, with some western systems apparently
reaching the Shiites from the arsenal of the Lebanese Army.
Aside from that, Hezbollah used a small number of
modern 9K115-2 Metis-M (AT-13) and 9K129 Kornet-E (AT-
14) portable anti-tank guided-missile systems, and RPG-29
Vampir anti-tank rocket launchers, delivered by Russia to
Syria in 1998-1999. These three new systems penetrated
armour exceptionally well thanks to their tandem High-
Explosive Anti-Tank (HEAT) warheads. The close-range
Metis-M system have a range of up to 1500 meters and are
armed with 9M131 guided-missiles weighing 13.8 kg with
wire-guidance. The heavier Kornet-E fires 9M133 laser-
guided missiles weighing 29 kg up to 5500 meters. Both
systems are made by the Tula Instrument Design Bureau
and were equipped with 1PN86V1 Mulat thermal sights.
The hand-held RPG29 Vampir anti-tank rocket launcher is
one of the latest products of Moscow-based Basalt. Weighing
11.5kg, it fires rocket-propelled grenades that weigh 6.2 kg
up to 500 metres from a telescopic pipe.
Hezbollahs defences were structured around these anti-
tank weapons, which were used in great numbers. According
to Israeli estimates, the fighters launched over 500 anti-tank
guided-missiles in July alone, and about 1000 through the
course of the conflict. Moreover, the anti-tank guided-missiles
were used not only against armoured objects, but also against
Israeli infantry. The fighters sought generally to employ the
weapons from the maximum possible range.
On the whole, both the scale of Hezbollahs use of anti-
tank systems, as well as their possession of modern systems
with superior armour penetration capability, came as a
surprise to the Israeli command. Nevertheless, measures to
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
only their heavily protected APCs on main battle tank chassis:
the Achazarit (on the T55 chassis), the Nagmahon, a few of
Nemerah prototypes(on the Merkava chassis), the Puma
combat engineering vehicle and the Nakpadon, all based on
the old British Centurion tank chassis, while the standard
M113 APCs, even those modernized with a great deal of
extra protection, where hardly used at all, and then only as
engineering, support and convoy vehicles.
According to various Israeli and Western sources, during
the course of battle in Lebanon, between 46 and 50Merkava
main battle tanks (of the 400 deployed) and 14 APCs were
hit by anti-tank weapons, including 22 incidents where tank
armour and 5 cases where APC armour was penetrated.
Another six tanks and at least one APC were blown up by
mines and IDEs.
Of those tanks hit by anti-tank weapons, 18 were the
newest Merkava Mk 4 version (from the 401st armoured
brigade), and six of these had their armour penetrated.
Twenty-three tank and five APC crew members were killed. A
large number of anti-tank guide-missiles and RPG grenades
hit the tanks, but in most cases these did little damage. It was
reported that one of the Merkava Mk 4 tanks survived 23 hits
from anti-tank guided-missiles before it was finally disabled
and its armour penetrated. All penetrations of Merkava
armour, according to Israeli statements, were achieved by the
Konkurs, Metis-M and Kornet-E anti-tank guided-missiles,
and the RPG-29 rocket-propelled grenades. If one considers
that 22 of 50 tanks had their armour penetrated, that gives
a penetration rate of 44% (and only 33% for the Merkava
Mk4). According to Israeli Army statistics, the penetration
rate for tanks during the 1982 Lebanon War was 47%, and
60% during the 1973 War. The crew casualties rate was also
much higher in 2006 at 0.5 crew member for each damaged
tank, while the rate per disabled tank in 1973 War is one full
crew member.
The number of irrecoverable tank losses among those
damaged, according to recent Israeli publications, was
five altogether, of which two (a Merkava Mk 2 and Mk 4)
were destroyed by IDEs and three tanks were completely
burned out after hits by guided anti-tank guided-missiles.
This attests to the high degree of protection afforded by the
most modern Merkava Mk 4 tanks, which could be damaged
only by the most modern anti-tank weapons with powerful
tandem HEAT warheads hitting, it would seem, weakened
armoured zones.
The extremely low percentage of missile hits and the
low percentage of armour penetration clearly shows that the
vast majority of anti-tank guided-missiles were of the old
type, most likely the completely obsolete Malyutka (and its
many copies), with clumsy guidance systems (manual, on the
oldest models), with no modern sights and a relatively small
warhead, by modern standards.
14 # 2, 2007 Moscow Defense Brief
Russian Anti-Armour Weapons and Israeli Tanks in Lebanon
It appears that non-modernized second generation anti-
tank guided-missiles produced in the 1970s (Fagot, Konkurs,
MILAN, TOW) were used in battle. The Kornet-E and Metis-M
systems, with their much higher level of effectiveness, were
clearly present in very small numbers, but accounted for the
majority of Israeli losses. This allows one to conclude that
Israel made an issue of the possession of these new systems
by Hezbollah mostly for political, rather than strictly military,
reasons. On the other hand, if Hezbollah had a large number
of Kornet-E and Metis-M systems, the Israeli tank attack
in Lebanon could have been completely repelled. Modern
Russian weapons proved to be quite effective against the
newest Western equipment.
The old types of anti-tank guided-missile systems have
shown themselves to be extremely ineffective. And since the
majority of anti-tank forces in the world are equipped with
precisely this old generation of missile systems, the results of
recent warfare in Lebanon should sound an alarm, and provoke
considered reflection regarding the purchase of modern anti-
tank weapons, such as the Kornet-E.
Nevertheless, from their experience in Lebanon the
Israelis themselves concluded that armour itself cannot in
principle provide full protection from anti-tank guided-
missile systems, and that all of their tanks would be equipped
with active protection systems such as the Rafael Trophy and
the IMI Iron Fist systems.
They decided in early 2007 to equip the entire fleet of
Merkava tanks and the Nemerah APCs yet to be built with
Trophy active protection systems by the end of 2008. Passive
electronic countermeasures are also now held in high regard.
Apparently, none of the four tanks equipped with experimental
electronic countermeasures system was hit by even a single
anti-tank guided-missile.
However, the importance of heavy conventional armour
(including explosive reactive armour suites) was also proven
on the battlefield, and the Israelis decided to continue the
production of Merkava Mk 4 main battle tanks, and to launch
the serial production of heavily armoured Nemerah APCs on
the chassis of these tanks. Two hundred such vehicles have
been ordered.
Thus, the war in Lebanon has proven the Soviet and
Russian approach to the development of protection for main
battle tanks, as established in the 1970s, to be very well. In
the 1980s the USSR created the first comprehensive passive
(Shtora) and active (Drozd, Arena) protection systems, which
are still being developed today. Israel and the West are only now
catching up to Russia. Meanwhile, we can see that the newest
Western tanks (included the well-protected Merkava) burn up
when hit by modern anti-tank weapons in just the same way as
the old Soviet T-72 tanks deployed in Chechnya and Iraq.
Russia avoided the Western fashion of dismissing heavy
armour and explosive reactive armour as unnecessary and
continued to develop a balanced configuration of armour,

including detachable and built-in protection, and in this
turned out to be justified. The Lebanese conflict of 2006 and
the war in Iraq have once again proven allegations of the
obsolescence of the main battle tank to be absurd. The modern
MBT with its powerful heavy armour and large combat weight
will continue for some time as the core of the land forces.
As for the tactical application of armour troops, it is
clear that the Israelis used their tanks in small groups almost
exclusively for immediate support of line infantry. It was
precisely this well equipped and trained infantry that played
the decisive role in battle. Attempts to use armour troops
to achieve a breakthrough without infantry support and
reconnaissance inevitably led to senseless losses, as befell
the forces of the 401st Israeli armoured brigade at Vadi Saluki
on 9 August.
War And People
The tank battalion of this brigade, pushing forward with
no infantry, fell into a fire trap of anti-tank guided-missile
systems (mostly Kornet-E, according to Israeli sources),
losing eleven Mk 4 Merkava tanks damaged and eight crew
killed, including the battalion commander. The Israeli
armour troops were clearly not well prepared for action
against modern anti-tank weapons.
On the Israeli side, it is also clear that the armoured
reserve units were insufficiently prepared, especially in the
use of countermeasures (smoke screens, advancing fire to
disturb aiming, reverse gear withdrawal, etc). As such, the
quality of the training of the armour troops and the ability
of the commanders to effectively combine tanks and other
forces remain the key elements for the successful use of main
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

T he year 2006 was Russias most successful on the arms

market in the post-Soviet period. Records were set
in each of the four principal categories used to measure
developments in the industry:
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;
Volume of payments received. Revenues peaked at
$8billion, according to official figures. Data on currency
receipts are not always published; for example, official
figures are not publically available for 2005, the last
data known is $6 bln in 2004;
The value of signed contracts, the most significant
indicator, reached an unprecedented $14 billion, over
twice the previous record of $6 billion set in 2004;
The current backlog of orders has reached an
unprecedented $30 billion, more than double the figure
at the close of 2005.
The most important events of the year were the signing
of a grandiose $7.5 billion Algerian package transaction,
which included writing off $4.7 billion worth Algerian
debt, together with a series of contracts entered into with
Venezuela. These two major deals created a qualitative shift
in the structure of Russian arms exports. Previously, 7080%
of exports went to just two countries: China and India. Now,
beginning with 2007, the geographic distribution of deliveries
is more balanced, with Russia boasting as many as five major
clients: China, India, Algeria, Venezuela and Malaysia.
Contracts
Contracts worth $14 billion were signed in 2006,
which is an absolute record not just for the post-Soviet
era, but probably for the whole modern history of Russia,
including the Soviet period as well. In spite of the fact that
it enjoys a quasi-monopoly on arms exports from Russia,
Rosoboronexport accounted for just 64% of new contracts,
while the independent arms exporters accounted for over one
third (36% or $5 billion) of the value of new contracts.
Algeria was the indubitable leader in purchases of
Rusisan arms in 2006. During President Putins visit in March,
a grandiose package transaction worth $7.5 billion was
signed (see table 1). The agreement included the forgiveness
of a $4.7billion debt to Russia. Russias Finance Ministry
objected, but Putins personal intervention saved the deal,
which could be characterized as the conversion of bad
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 Chavezs
visit to Moscow, contracts valued at over $3 billion were
disclosed. Although the Venezuelan package is smaller than
the Algerian, the two have much in common. First, both are
considerably larger than the usual Russian export deal. Only
the program for the licensed production of the Su30MKI
by India of probably $3.5 billion can compare. Second, both
deals expand the traditional geographic sphere of major
Russian importers, which to date has been limited essentially
to China and India. And while Algeria, though it has not been
a significant customer of Russian arms, did indeed import
large volumes of arms from the Soviet Union, Venezuela was
not a Russian arms client before this year. Third, each package
contained a wide range of items, including weapons for the
air force, army and very likely for the naval and air defense
forces.
Russias traditional customers also placed large orders
for arms and military equipment. China purchased a new
batch of 8 batallions of S-300PMU-2 (SA-20) SAMs for
$1billion in addition to the eight batallions ordered in 2004.
India signed a contract worth $1.6 billion for three new
Project 11356M frigates in addition to those ships of the
same class received by the Navy in 2002 and 2003. Vietnam
acquired two Project 11161 Gepard-3.9 class light frigates
and one Bastion (SS-N-26/SSC-5) stationary shore-based
anti-ship missile system.
The overall backlog of orders reached $30 billion by
the end of 2006, of which the official state arms-trading
company Rosoboronexport accounts for only $18 billion. The
independent arms exporters account for $12 billion worth of
contracts, primarily MiG Corporation (at least $2.5billion
at the end of 2006 and $4.5 billion as of March 2007) and
the Tula Instrument Design Bureau ($4 - $4.5 billion). The
composition of the national backlog as a whole is not known,
but Rosoboronexports portfolio is made up of arms and
equipment for air (42.5%), sea (23%), air defense (22%),
and land forces (9%), with the remaining 3.5% for other
products.
The Algerian and Venezuelan deals signal a qualitative
shift in Russias position on the international arms market.
Russia has moved beyond the plain commercial sale of
individual types of arms that characterized its trade in the
1990s, to more complex, political arrangements with better
heeled customers for comprehensive packages that meet their
their defense and security needs. Very few states are capable
of providing this kind of dependable and long-term security,
and it seems clear that Russia has joined this club, along with
the US, UK and France, just two or three years ago. Indeed,
Venezula was looking for a comprehensive security package
in 2002, but at that time Moscow decided against dealing with
a regime rallying against the US. Four years later, Russia is
more sure of its ability to develop military-technical relations
with Carracas in spite of Washingtons disapproval and the
inevitable application of State Department sanctions.
Important arms buyers now see Russia as a power at
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
from Russia, both Algeria and Venezuela could have easily
turned to European exporters to satisfy the majority of their
needs. In this manner, a positive dynamic of political factors
is compensating for the innovational, technological and
commercial problems plaguing Russias defense industry.
These include the increasing obsolescence of Soviet-era
technology, the saturation of the Chinese market and the
growth of competition on the Indian. However, the stable
growth of delivery volumes and, more importantly, the
growing value of contracts, suggest that Russias growing
political and economic clout continues to balance out these
negative tendencies. The value of Russias brand is growing,
and is being successfully converted into new arms deals.
Deliveries
The structure of Russias arms trade resumed its
traditional pattern in 2006, with aviation deliveries
accounting for about half of all exports. Naval deliveries took
the lead in 2005, but this was due to the substantial delivery
of submarines and a destroyer to China. Meanwhile, there
were no deliveries of heavy fighters, a traditional mainstay
of Russian arms exports. Aviation deliveries returned to
normal in 2006, at 49.9% of total exports, with 27.3%
for naval deliveries, 11.4% for land forces and 9.2% for air
defense. On the whole, the composition of deliveries was
similar to that of 2004 (see figure 1).
The geographic distribution of deliveries has also
changed. The share of the big two customers of Russian
Figure 1. Composition of Russian arms deliveries 2004-2006
2,4 3,2
100%
5,8 5,1
10,1
12,9
80%
18,8
60%
48,1
40%
60,1
20% 33,5
0
2005 2006
18 # 2, 2007 Moscow Defense Brief
Russia on the Arms Market in 2006
arms China and India fell from 74% to 62% over one year,
while the share of the Middle East and North Africa grew
to 22%, due largely to the Algerian package. Latin America
accounts for the most significant jump from 0.5% to 7.7%
of total exports thanks to Venezuelan purchases of fighers
and helicopters. In all, Russia exported arms to 64 countries,
compared to 61 in 2005 and 57 in 2004.
Rosoboronexport delivered $5.3 billion worth of arms
in 2006 (up slightly from $5.23 billion in 2005), accounting
for 82% of all Russian deliveries. Deliveries from MiG
Corporation grew substantially from $306 million to $390
million, as did those from the Tula Instrument Design Bureau
(from $230 million to about $320 million).
Independent exporters, including the Reutov Machine-
Building Scientific & Production Organization and the
Kolomna Machine-Building Design Bureau accounted for
12.6% of deliveries worth $814 million. The 18 Russian
companies licensed to export spare parts delivered $350
million worth of goods, or 5.4% of total deliveries, up 16.7%
from the year before. Sukhoy Corporation was the leader
with $235 million, with Salyut and Admiralty Shipyards in
second and third place with $50 million and $23 million
respectively.
The largest transfers last year were deliveries of Su30
fighters, together with kits for their licensed assembly.
Two Su-30MK2V fighters were delivered to Venezuela, and
between 13 to 15 kits for the assemble Su-30MKI fighters
were delivered to Indias HAL Corporation, according to
the terms of the 2000 contract for the licensed production
of 140fighters in India. Two MiG29SMT fighters and two
MiG29UBT twin-seat fighters were delivered to Algeria. The
2,2
Misc. Equipment
9,2
Air Defense Systems
11,4
Land Forces
Naval Forces
27,3 Air Forces
49,4
2007 Year

Figure 2. Geographical distribution of Russian arms exports, by regions
Misc. countries 0,4%
CIS 1,1%
Europe 3,8%
Latin America 7,7%
Middle East
and North Africa 21,7%
fact that the deliveries of Su30MK2V fighters to Venezuela
began just 4 months after the contract was signed suggests
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
not capable of producing new multirole aircrafts.
As usual, Russias helicopter plants had a good year,
producing 90 aircraft, including 70 Mi8/17 helicopters (in
several different versions), with the majority going to foreign
customers, first of all Venezuela and China. The Moscow
Salyut and the Ufa engine building production associations
continued to work on two large Chinese orders for 280
AL31F/FN turbofan engines for the Su27SK fighters, the
Su-30 fighters and the national J-10 fighters.
In the sphere of naval armaments, Russia transferred a
second Project 956EM destroyer to the PLAN for $700 million
and one (last) Project 636M Kilo-class submarine to the
PLAN for a probable $250 million. The transfer to Iran of 29
TorM1 (SA15) SAMs, including 12 towed systems, was the
most sensational delivery. The Islamic Republic became the
Arms Trade
Principal partners:
Asia: India, China, Vietnam and South
Korea;
Middle East and North Africa: Algeria;
Latin America: Venezuela and Mexico;
Europe: Greece;
CIS: Azerbaijan, Armenia, Belarus and
Uzbekistan.
Asia 65,3%
first recipient of this lighter and less expensive system which
promises to remain in high demand.
Preliminary forecast for 2007
According to the Federal Agency for Military Technical
Cooperation, Russia will export over $7 billion worth of arms
in 2007. Mikhail Dmitriev estimates that 75% of this total, or
$5.5 billion, will be exported by Rosoboronexport. The past few
years have shown these estimates to err on the conservative
side, with actual deliveries consistently turning out higher
than predicted. In view of the large expected transfers of Su30
fighters to Malaysia (between 9 and 12 planes), Venezuela
(at least 10 planes), Algeria (810 planes) and India (1520
planes, include kits), one might expect the value of deliveries
for the current year to reach something in the order of
$7.3$7.5billion at current prices.A high volume of deliveries
will also be supported by the transfer to China of S300PMU2
(SA20) 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 Friendsand With Whom?
On Russias Foreign Policy Orientation
Vladimir Frolov, Andrey Seregin
T he problem of identifying Russias potential allies in
the global arena is made all the more difficult by the
absence of any domestic consensus regarding Russias chief
foreign policy goals. The MFA seeks to diversify Moscows
international economic and political relations, but the tactical
emphasis placed thus far on energy policy does not fully
account for the strategic goal of supporting stable relations
with Russias key foreign policy partners and neighbors.
Clearly, the system of international relations is on the
verge of a profound change, arising from the forced (and
perhaps long-term) retrenchment of the hegemonic reach of
the USA; its eventual withdrawal from Iraq and Afghanistan,
along with attempts to shift responsibility for the fate of the
world on to other centers of power, etc.
For over 50 years US hegemony has distorted
international relations to such an extent that America has
become the main focus of the foreign policy orientation of
the vast majority of states. And no matter how prominent
alternative centers of power may appear, the architecture
of international relations is still based primarily on the
vertical principle. States are not free to act on a purely
horizontal basis among themselves, but are always looking
up to Washington. A weakening of American hegemony thus
entails a sharpening of horizontal competition in certain
regions leading to a marked weakening of stability.
At the urging of the Russian President and foreign policy
leaders, Russia has sought to weaken the hegemony of the
USA and foster an equitable and genuinely multipolar world
order. But an ad hoc policy of multipolarity will not lead
inevitably to the just and stable multipolar world order that
Russia, China and India, among others, are striving for. There
are several issues that need to be addressed by Russian foreign
policy, first among which concerns the choice of partners and
allies.
Pragmatism or Idealism?
Russias foreign policy has acquired a pragmatic (some
would say mercantile) character over the past few years.
It provides support to Russian exports with the aim of
20 # 2, 2007 Moscow Defense Brief
The Multipolarity Trap: How Russia Should
Make Friends and With Whom?
increasing the nations foreign policy capacity, making full
use of Russias competitive advantage, particularly in the area
of fuel and energy.
This policy has borne fruit in Gazproms impressive
capitalization of over $300 billion, making it the worlds third
largest company after Exxon-Mobil ($392.94 billion) and
General Electric ($355 billion). The stated goal of Gazprom
chairman and First Deputy Prime Minister Dmitry Medvedev
to reach the level of $1 trillion seems realistic. In this area
the goals and tasks of Russia foreign policy are clear and
understandable, and the policy of establishing pragmatic
relations with energy transit states is on the whole justified.
Clearly, in the 21st century the principle of realpolitik
is making way for the rebirth of messianism. Moreover,
it is not only the United States that sees itself following a
predetermined ideological mission, but China, and many
other powers. It is no coincidence that the Russian MFAs
Survey of Foreign Policy recognizes a dangerous tendency
towards the re-ideologization of international relations,
and calls for careful consideration of this new development
at a doctrinal level.
As distinct from the Soviet Union, Russia has no edge
over the West in the sphere of ideology. In the vast majority of
situations, Russias foreign policy does not contest Western,
primarily American, principles, but rather makes reference
to the same system of liberal values and, for this reason, finds
itself compelled by degrees to toe the line set by Washington
and Brussels. For this reason, any attempt to break the
paradigm, and offer the world Russias proper vision of its
mission (and not just oil, gas and armaments), is greeted in
the West with unconcealed disdain. For the West,democratic
Russia is unequivocally a state with limited sovereignty,
subscribing to Western standards of liberal democracy and
market relations.
Thus, it becomes clear why the West was so quick to
exploit the isolated excesses of Russias energy policy in the
near abroad from 2004-2006.Although Russia presented well-
grounded arguments in favor of pragmatic trade at market
prices with transit states, this policy undermined trust in
Russias ability to play a constructive role in international
affairs. In essence, because Russia overplayed its energy card,

our largely well-justified criticism of American hegemony
is increasingly being misrepresented as the neo-imperial
ambitions of the Kremlin, and not as a natural and logical
policy meant to establish an equitable system of international
relations. Today, unfortunately, it is hard to imagine a state
under Russias influence that would engage in relations
with Russia without constantly glancing back at Washington,
Brussels and other key regional players like Beijing, Delhi,
Tehran or Ankara.
Moreover, in the age of the rebirth of foreign policy
idealism, Russias wager on the energy card not only repels
its natural allies (with centuries of cultural, social and
ethnic ties to Russia), but also, paradoxically, weakens its
integration with Europe, provoking growing opposition
from the principal consumers of Russian energy. Urged
by Washington, and for exclusively political motives, the
European Union has already de facto adopted a policy of
reducing its energy dependence on Russia, a policy that is
much more costly than the development of a partnership
based on objective realities, such as the mutual dependence
of supply and demand, Russias objective need for advanced
European technologies for production, and so on.
After the Brussels summit the EU is deliberately going
around Moscow to draw the states of Central Asia and the
Caspian into a tighter embrace. Even the most innocent
attempts by Russia to negotiate with consumer states on a
bilateral basis is seen by Brussels as an attempt to undermine
European unity.
The basic elements of the strategy to shield European
consumers from Moscows energy imperialism can already formation of real multipolarity lies in the inertial foreign
be distinguished: to put energy security on NATOs agenda,
to divert Central Asias energy resources from Russia through
the development of new transport routes, the creation of a
transit union among Ukraine, Belarus, Poland and Lithuania
and, possibly, a consumer cartel meant to raise the price
of access for Russian companies to European markets,
including a demands for controlling blocs of shares in
Russian corporations.
Clearly, energy policy on its own cannot adequately
serve Russias national interests. It should be an important,
but by no means exclusive element in Russias system of
international relations.
Stability or Multipolarity?
At the jubilee meeting of the Foreign and Defense Policy
Council, Foreign Minister Lavrov stated that the unipolar
world has not come to pass. The above-mentioned Survey
of Foreign Policy asserts that the myth of a unipolar world
has come to a final end in Iraq. The very model proved to be
unworkable, as it does not offer an ethical basis for modern
civilization. This argument is strong, but the following
International Cooperation
conclusion invites skepticism: As a result, the equilibrium
and competitive environment lost at the end of the Cold War
are being reestablished. Not surprisingly, the authors qualify
this dubious conclusion with the more realistic statement that
in a globalizing world there can be no islands of stability.
The colonizing states, having withdrawn from the Third
World during the middle of the last century, left the curse of
civilization behind in the form of monoculture resource-
based economies, elite education in Western as opposed
to local traditions, and the like. Today, one might speak of
the damned American hegemony and its legacy for the
rest of the world. Even with the partial retrenchment of US
power, the entire system of international relations, built one
way or another on cooperation with or resistance against
Washingtons policy, shall cease to provide stability.
At the same time, the development of new, equitable
and competitive international rules of the game (strongly
promoted, among others, by the head of the Russian MFA),
is failing to make any headway, due to the simple inertia of
American domination. Experts on both sides of the Atlantic
are convinced that the preponderance of US economic and
military-industrial capacity means that it will retain its
dominant position for the next few decades. Thus the majority
of states, including Russia, will keep US considerations at the
core of their foreign policy.
Hence the frequent reproach of Russia for its anti-
American line, along with the groundless suspicion that
Russia understands the construction of a multipolar world
in an anti-American light. Similarly, a key obstacle to the
policy thinking of the majority of Russias potential allies:
from the countries of the CIS to the EU, China and India.
They all persist in calibrating their foreign activities to
the position of the USA, to marshal their long-term foreign
policy strategies with a view to the US retaining primary
responsibility for dealing with majority of todays global
issues, from the fight against terrorism and support for global
stability, global resource distribution and the elimination of
poverty.
The sad fact is that in spite of their ambition to regional
leadership or to increase their influence in global affairs, the
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
as its own, even as Washington encourages China, Russia,
India and Brazil to shoulder their share of the burden of
maintaining global stability.
Meanwhile, multipolarity, in the form that it is taking
today, as a result of the expected weakening of American
hegemony and in the absence of any generally accepted
rules of the game or mechanisms for maintaining global
stability, is a threat to Russias national interests and a poor
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
hegemony would become a world of multiple centers of
power, none of which could seek to lead on the global scale.
The world is already witness to increasing competition
among regional powers and the qualitative expansion
of militar y expenditure. The majority of regional
mini-superpowers taking part in the construction of
multipolarity are already engaged in arms races, including
nuclear. The number of nuclear-weapon possessing states
(thanks to the increasing availability of relatively primitive
technology dating to the 1960s), and the resulting temptation
to use them to advance practical foreign policy objectives,
will only grow. Within the next five to seven years the nuclear
club could expand to include North Korea (if the Six-Party
talks fail), Japan, Taiwan, Iran, South Korea (if North Korea
does not abandon its nuclear weapons), Brazil, Turkey, Saudi
Arabia and Egypt.
The crystallization of new power centers has set
off a chain reaction: at the urging of the United States, 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
cannot remain within the control of the US or the first order
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
and world stability will be threatened if they were allowed to
come into contact.
Russia has no allies except its army and navy?
Russian experts and media are fond of quoting
Alexander III to the effect that Russia has no allies aside from
its army and navy, by which they understand that Moscow
should focus on developing its domestic political-military
capacity rather than seek to cultivate eternal friends abroad.
The argument has merit to the extent that in their current
state, Russias armed forces are not exactly what one would
describe as a reliable ally.
In his last address to the Federal Assembly, the Russian
President took note of the rampant arms race that has
broken out in the world. This race today has truly reached a
qualitatively new level and taken on a multifaceted character.
Its scale exceeds the peak of the Cold War. In the decade
beginning in 1995, CIS military spending has grown by
more than 50%. Significant growth of military spending is
occurring in even the poorest countries of the world: Congo,
Rwanda, Sudan, Botswana and Uganda have all doubled their
defense spending from 1985 to 2000.
According to Russias Defense Minister, Russia spends
just 2.6% of GDP on defense, while the Soviet Union spent up
to one third on defense needs. Defense spending in Russia
today is one sixth of the US defense budget and less than
that of the majority of G8 countries. Over the past five years
22 # 2, 2007 Moscow Defense Brief
The Multipolarity Trap: How Russia Should
Make Friends and With Whom?
the USdefense budget has practically doubled; the share
of military spending has risen to 4% of its GDP and now
accounts for half of world spending on defense. In 2005
American defense spending rose to about $505 billion,
compared to $28.8 billion for Russia in 2007 (821.1 billion
rubles). Russia spends less than the majority of leading
states, including China ($67.5 billion), Japan ($45.8 billion),
France ($45billion), the UK ($42.8 billion) and Germany
($35.1billion). The military capability of the European
members of NATO alone (that is, not counting the US) is
many times greater than Russias.
The multilateral non-proliferation and arms control
treaty regime is in a deep crisis. The majority of negotiating
forums are stalled, while accepted norms are being eroded
(for example, on missile defense), or living out their last days
(SNF-1 (The Treaty on Reduction and Limitation of Strategic
Offensive Arms) expires in 2009, the Moscow Treaty expires
in 2012).
In the near future we could witness the collapse of the
mutually assured destruction or irreparable damage). The
US has adopted a nuclear policy of first use, and in its nuclear
necessity of using nuclear weapons against emerging threats
to national security. Meanwhile, the effectiveness of strategic
missile defense has improved considerably. Up to $1.7 trillion
will be spent in the long term (to 20302040) on a global
missile defense system.
Under such conditions, it is obvious that Russia cannot
rely on its army and navy alone as allies in the defense of its
national interests. Given the current scale of global defense
spending, Russias armed forces are simply not up to the task
of responding to the threats that arise from the blurring of
the role of nuclear weapons and the development of strategic
missile defense.
What does Russia seek from the Moscow-Delhi-
Beijing axis?
On the surface, Evegeny Primakovs long-cherished
(since 1999) idea of creating a military-political axis among
Moscow, Delhi and Beijing, with the possible inclusion of
Brazil, is alluring, as it would create a block including over
40% of the worlds population, 20% of global GDP and over
half of all nuclear warheads. The cumulative GDP of India
and China, at purchasing power parity, is already higher than
that of the United States, and the GDP of Brazil, Russia, India
and China is higher than that of the European Union. The
combined spending of Beijing and Delhi on R&D has already
reached 80% of US levels.
The leaders and diplomats of the three aforementioned
countries have been active over several years now, working

on the deepening of cooperation with a view to establishing
a qualitatively new level of relations that would ensure the
creation of new poles of power to counterbalance the US
and the EU.
However, it seems that Russia faces a problem that
mirrors that troubling Moscows relations with CIS capitals.
While Russia seeks, in its relations with Beijing and Delhi,
to address strategic issues and to build a truly equitable
and multipolar world order in place of the current chaotic
multipolarity, Beijing and Delhi appear to reciprocate with
a more pragmatic approach. The declarations of China and
India on the goals of a multipolar world, the democratization
of international relations, the strengthening of the role of the
UN and of international law do not in fact guide their actions.
China and India continue to calibrate their foreign policy
in relation to the US. Their policy towards Washington seeks
mainly to extract investment and technology, and neither
China nor India are prepared to sacrifice their good relations
with the US for the sake of the Russian idea of equitable
multipolarity.
Moreover, the recent turn of the Bush Administration
towards India (that some have already compared to Nixons
opening of China in the 1970s) has launched a profound
recasting of relations between the US, India and China.
Following President Bushs historic visit to India,Washington
has removed sanctions against India, which opens the
door to military cooperation and the transfer of advanced
military and civilian technologies, and introduced legislation
on nuclear cooperation with Delhi. It is clear that this is all
done with the aim of undermining the position of China,
to contain its expansion in Asia and to restrict its global
ambitions. Washington does well to wager on the integration
of India into the concert of western democracies.As distinct
from Moscow and Beijing, Delhis inclusion into the latter
does not pose any particular problems for the American
establishment.
Chinas India policy, in turn, is taking on an anti-
American character. Following the historic (the first in 10
years) visit of President Hu Jintao to India, it became clear
that Beijing is ready temporarily to put aside its territorial
disputes with Delhi, if only to throw a wrench in the works
of the US. The fifth plenum of the XVI session of the Central
Committee voiced a new policy on the attaining of global
harmony, which China understands as the attainment of a
worthy place for the Chinese in the world. China no longer
seeks to fill the role of the younger brother in the family of
superpowers. China has long grown up and is tempted to
abandon its customary role of watching the tigers fight in
the valley, which it has followed for the past 50 years.
Beijings ambitions are thus far limited to securing
regional leadership through the Shanghai Cooperation
Organization, ASEAN+3, the Six-Party Talks and the like,
to secure energy supplies from Central Asia and Africa (a
International Cooperation
summit of 48 African states recently took place in Beijing),
Iran and Venezuela. However, it is clear that Beijing has been
forced to recast its foreign policy in light of its competition
with the US, and it is constantly seeking to bring North Korea,
Pakistan, Afghanistan, Iran, Kazakhstan, the countries of
Central Asia and Latin America and, in the future, Iraq, into
its orbit. The Shanghai Cooperation Organization, of which
Russia is a founding member, is the main instrument of
this policy. The US has already de facto identified China as
a potential opponent: about half of the National Security
Strategy is dedicated to China, and a recent report of the
congressional Joint Economic Commission makes strong
economic demands, including yuan devaluation, on China.
Against this background, the geopolitical and strategic
interests of Delhi in relation to Beijing and Moscow are not
obvious. It is likely that the aspiration, largely irrational, to
raise the international status of India, is the main driver.
Delhis new partnership with Washington opens many
possibilities, and Russias value to Delhi as a member of the
G8 would fall considerably should the club expand to include
ten members. Moreover, Moscows reliance on the axis of
military-technical and energy cooperation with Beijing and
Delhi will require further concessions from the Russian side
for the foreseeable future. India already intends to increase
its share of Sakhalin-1 (currently 20%), and to participate in
Sakhalin-3 and other projects in the Far East. The removal
of sanctions against India by the US and the EU, imposed as
a result of Indias self-proclaimed entry into the nuclear club
eight years ago, will pose additional problems for Russia-
India relations.
The call on Beijing and Delhi to think strategically in
terms of an axis sounds hollow coming from Russia, as it is
in fact the weakest link. As the expansion of the nuclear club
and the development of strategic missile defense continues,
Russias nuclear arsenal plays a role of decreasing importance,
exposing the asymmetry between Russias economic capacity
and that of its allies.
In 2007 Russias GDP has simply re-attained the level
of 1990; during this time that of the US and other leading
powers like China and India have marched far ahead. While
Russia hopes to double its GDP over the next 10 years (an
unrealistic goal according to many economists), Chinas is
forecast to triple by 2020, accounting for 20% of the world
economy. Russias GDP now accounts for just 2% of the world
economy, and even a doubling would not necessarily suffice
to maintain this share over time. By 2020, India will assume
third place, behind the US but far ahead of Japan and the
EU.
In economic terms,Moscow has much less to offer Beijing
or Delhi than does Washington, and less even than these two
countries have to offer each other. Russias trade with India
was $3 billion last year and the goal is to reach $10 billion by
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, Chinas
trade with India today is six times higher, at $18 billion, and
US trade with India is ten times higher, at $28 billion. China
is forecast to become Indias main trading partner sometime
between 2007 and 2009. Our trade turnover with China is
about $30 billion, which is seven times less than the trade
deficit between Beijing and Washington over $200 billion.
China is increasingly competing with Russia on energy
issues. In particular, the Chinese have secured contracts
for substantial volumes of cheap energy supplies from
Kazakhstan and Turkmenistan, beginning in 2009, eroding
Russias monopoly on the transit of Central Asian fuel.
Meanwhile, Beijing and Delhi are gradually reducing their
mutual competition for energy supplies in favor of a kind
of consumer pool. In 2005, national oil companies of each
country (first of all Sinopec and ONGC) invested jointly in
the Syrian Al-Furat Petroleum Company, and recently jointly
acquired 50% of the Colombian Omimex.
Conclusions
The growing unpredictability of multipolarity in its
present incarnation presents a threat to the national
interests of Russia at the regional and global levels.
The weakening of American hegemony is promoting a
sharp rise of competition in all problematic regions and
the growth of the Islamic threat. Russias foreign policy
departments are thus tasked with developing global
rules of the game, promoting the role of existing
instruments such as the UN and regional forums, and
the creation of new international institutions capable
putting order to the chaos of multipolarity.
Under these conditions Russia must increase its
cooperation with the US. Facing similar threats
to security and increasing globalization, Moscow
and Washington are doomed to pursue a difficult
relationship. Nevertheless, mutual mistrust between
the elites of both countries is also bound to increase.
The growing asymmetry in the economic and political-
military capacity of Russia compared to the US, the EU
24 # 2, 2007 Moscow Defense Brief
The Multipolarity Trap: How Russia Should
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and also China and India will soon preclude the exercise
of the traditional Soviet tactic of using force to solve
political problems (as the bottom falls out of Russias
nuclear deterrence), and limit the ability of Russia to
deploy economic means in support of foreign policy
goals.
The threat of a north-south conflict between civilizations
is growing as a result of the deepening ideologization of
international relations. In this context, Moscows tactic
of seeking temporary partners to address shifting
goals, (or, in the words of Minister Lavrov, network
diplomacy) will produce only short-term gains. The
proposal to raise the status of Russia through a close
alliance with Beijing and Delhi is in need of a serious
rethink. Russia will be forced in the medium term to
limit its ambitions to more attainable objectives. It
would be advisable for the MFA to exchange approaches
to relations with the CIS and the axis respectively. It
should revive the idealist approach to Moscows relations
with the former Soviet Union, and to put dealings with
India and China on a more pragmatic footing.
Russia should once again demonstrate to the world
that it has a vision of its proper mission, one that is,
moreover, comprehensible and attractive to the majority
of world states; to demonstrate that it is capable of being
a reliable partner, with a view to maintaining long-term
(50-100year) neighborly relations, even at the expense
of short-term interests. The highest priority for Moscow
should be to eliminate the misalignment of its policy
in the post-Soviet space, as a kind of testing ground
for a new foreign policy mission. It should concentrate
its efforts on the formation of a core confederacy
including Russia, Belarus(once the problem of
Lukashenko has been dealt with), Kazakhstan, Armenia,
Uzbekistan (with the gradual democratization of the
regime), Kyrgyzstan and Tajikistan. It is also important
to create an appropriate system of incentives to deter
Ukraine, Azerbaijan, Moldova and Georgia (although
this would probably require a change of the Saakashvili
regime) from participating in the integrative projects of
the West.

Military-Technical Relations between
Russia and North Korea: Past, Present
and Future
Artyom Sanzhiev
N orth Korea and Russia/USSR have maintained
political, economic and military relations for over fifty
years. Military-technical cooperation has always figured
prominently in this relationship, and has evolved during the
post-Soviet era in two major stages:
1991-2000 was a period of sharp decline, due largely to
the shift of Russias foreign policy in the early 1990s;
Since 2000, military-technical relations between the
two states have resumed its traditional pattern.
First Stage (1991-2000)
The collapse of the Soviet Union led to a deterioration in
relations between Russia and the DPRK that affected all areas
of activity, including military-technical. Russias change of
course was driven first of all by a domestic economic crisis
and resulting inability to sponsor the North Korean regime
financially. Secondly, Russia sought to improve relations with
the Republic of Korea, and signed a basic treaty in 1992.
The new political situation,as well as the chronic inability
of North Korean to pay its debts, led to the cancellation of the
majority of defence programs initiated in the Soviet era. Thus,
after the delivery in1994 of up to18 MiG-29 fighters kits, the
assembly of these fighters in the DPRK was wound-up.
However, Russia did not wish to sever ties entirely and
sought to maintain a minimal level of military-technical
cooperation with the country that remained, after all, a
formal ally. The Russian leadership made attempts to recast
its relations with the DPRK in a variety of formats, for
example, at the level of the CIS DPRK. In March 1992 the
Chief of the General Staff of the CIS forces Viktor Samsonov
visited Pyongyang and signed several agreements on military
relations. These agreements led to a fairly active exchange of
delegations, navy and air force in particular. An agreement
on military cooperation was worked out in August 1995, but
was not officially signed until 2001. During the visit of Deputy
Foreign Minister Grigoriy Karasin to Pyongyang in January
1997, Russia and the DPRK agreed to expand their trade
and economic relations, including steps to renew military-
technical ties.
International Cooperation
In spite of the cooling of relations during this period,some
Russian military equipment was nevertheless transferred to
the DPRK, including 260 units of the 9K310Igla1 (SA16)
man-portable surface-to-air missile system and a license for
its production. The DPRK also produced Malyutka (AT3) and
Fagot (AT4) anti-tank guided-missiles and other weapons
systems under Russian license. Moreover, in 1994 Russia
acquired the Malakhit air surveillance system with ten Shmel
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.
The low volume of the aforementioned deals suggests
that substantial deliveries of military equipment to the
DPRK had ceased, although some Russian sources maintain
that deliveries of spare parts for Soviet-made equipment
continued Leonid Ivashov, Chief of the International Relations
Department of the Russian Defence Ministry, confirmed
in May 1997 that Moscow continued to pursue military-
technical relations with Pyongyang, though at a restricted
level and consisting of spare parts deliveries, for equipment
delivered in Soviet times. Russia considered maintaining at
least a minimal level of cooperation essential to maintaining
a strategic foothold on the Korean Peninsula.
Meanwhile, other former Soviet republics began to
sell not only parts, but complete weapons systems that they
had removed from active service. North Korea apparently
acquired 50 tanks from Belarus between 1994 and 2000.
From 19951999 34 old MiG-21bis fighters, 24 obsolete
100 mm KS19 anti-aircraft guns, together with four SON-
9 firecontrol radars to match, and other miscellaneous
military equipment was acquired in Kazakhstan, for a grand
total of up to $176 million.
Military-technical relations between Russia and the
DPRK also included some illegal transfers of excess military
goods from the Far Eastern Military District. For example,
five Mi-8T military transport helicopters were seized by
customs at Kraskino in Primorskiy Krai. Officials found that
the classified systems had not been removed, and that the
helicopters had been repaired (at the expense of the military)
just before sale. The delivery had been approved by high
military officials.
# 2, 2007 Moscow Defense Brief 25
Military-Technical Relations between Russia and North
Korea: Past, Present and Future
 International Cooperation
The ensuing investigation uncovered prior illegal
transfers mediated by front companies. In 1995, three Mi8T
helicopters were to be retired from service and given to use
by law enforcement, civil defence and health care services.
However, they were sold instead to the Rosa airline based
in Nakhodka. A year later, this airline purchased another
five military helicopters. Following a media outcry, the Far
Eastern Military Procuracy conducted an investigation that
ascertained that all of the aforementioned helicopters had
been repainted, their engines replaced, refuelled and their
lubricants replenished on an unscheduled basis, shortly before
they were sold. Aside from these accounts, is impossible to
determine how many such helicopters and other military
equipment may have been sold illegally to the DPRK.
Second Stage (2000 Present)
The signing in February 2000 of a Friendship, Good
Neighbourliness and Cooperation Treaty, together with
President Putins visit to Pyongyang that same year, marked
a certain revival in bilateral relations. And while this was
largely confined to the political sphere, there was some spill-
over to the military-technical. In 2001-2002, 32 armoured
personnel carriers BTR-80A were delivered. It is likely that
some automobiles were also sold during this time, including
UAZ jeeps. In April 2001, the North Korean Minister of Defence
Kim Il Choi signed an intergovernmental agreement on defence
industry and military equipment cooperation, as well as an
interdepartmental agreement on military relations.
The current state of bilateral relations is closely related
to the economic situation in North Korea. According to then
Defence Minister Sergei Ivanov, Russias military-technical
cooperation with Pyongyang has an exclusively utilitarian
character and is limited first of all by the economic capability
of North Korea. He went on to add that Russias military-
Table 1. Deliveries of Russian Arms to DPRK 1990-2005
Description Quantity
Ka-32 helicopters N/A
BTR-80A armoured personnel carriers 32
MiG-21 fighters N/A
Malakhit surveillance system with Shmel UAVs 1 (10)
Fagot 9M111 anti-tank guided missiles 3250
Igla-1 9K310 MANPADS system 1250
Malyutka 9M14M anti-tank guided missiles 20 000
Mi-8T helicopters at least eight
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
technical relations with Pyongyang are no different than
those with Seoul, signalling a balanced approach to the two
Koreas, with the added proviso that Russia has no intention of
providing gifts to the DPRK without at least some repayment
of loans. Indeed, North Koreas debt to Russia is one of the
main obstacles to further cooperation.
North Korea has shown great interest in purchasing
Russian Su-27/30 fighters, submarines and escort ships.
The North Korean military is especially keen on naval
armaments. In November 2005 a North Korean delegation
led by Rear Admiral Han San Sun attended an international
arms exhibition in St. Petersburg. The delegation seemed
to be most interested in long range torpedoes capable of
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, artillery
and air defence systems.
Russia may choose to pursue military-technical
relations with North Korea by modernizing its obsolete fleet
of aircraft and military ships. A relatively small number
of new systems could also be delivered with the support of
long-term credits.
The DPRK clearly cannot afford to pay for deliveries of
Russian arms or the services of Russias defence industry,
and so alternative strategies for promoting bilateral ties
must be devised. For example, Russia could participate in
the development of North Korean natural resources. For
instance, the DPRK has significant deposits of magnesium,
coal and uranium. Russia could also make use of the countrys
infrastructure, including its many ports.
On the other hand, North Koreas nuclear test has
generated an extremely negative international environment
for such cooperation. Although Russia will probably not find
it necessary to halt its current level of military-technical
cooperation (spare parts deliveries), it is equally unlikely to
expand these relations in the near term.
Delivered Comments
2001 Civilian
2000-2001
2000 Not confirmed
1994 Kulon
1992-2004 Produced under license
N/A
1976-1995
late 1990s Not confirmed
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 Saint Petersburg 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 Russias 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 Masters 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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