The Russian defense industry is recovering
Defense News has published a list of the hundred largest defense sector companies. The number of Russian corporations on the list is second only to the number of US corporations. Experts attribute this to rearmament in the Russian Armed Forces and an overall rise of tension in relations with the West.
Defense News (USA) has published a list of the hundred largest defense sector companies. For the first time, the number of Russian corporations on the list is second only to the number of US corporations. Experts attribute this to rearmament in the Russian Armed Forces and an overall rise of tension in relations with the West.
Forty of the companies on the list are American. The defense earnings of Boeing alone came to $32.4 billion in 2006 – four times the combined revenues of all the Russian companies on the list (around $8 billion). Even so, the Russian companies are well represented: Russia has the second-highest number of companies on the list (13 this year, for the first time) and most of them have risen on the ranking over the past year. The group of Russian companies includes more multi-profile corporations that make both military and civilian products. In previous years, Russian companies on the list had mostly been individual plants, but now only three of those remain (Uralvagonzavod, Severnaya Verf, UMPO).
Even more important is the fact that Russian state arms procurement is making a substantially greater contribution to the revenues of Russian defense companies. This figure is not mentioned in the ranking, but Ruslan Pukhov, director of the Center for Analysis of Strategies and Technologies (CAST), says it has quadrupled over the past seven years: “In the 1990s, exports contributed up to 95% of revenues for Russian companies. But now state arms procurement accounts for 30% at Almaz-Antei and 10% at the Instrument Design Bureau.” Thus, says Pukhov, Russia is correcting a dangerous imbalance; it used to be said that state arms procurement was a myth and defense corporations should focus entirely on exports. “But now state funding has opened up for Sukhoi Aviation, and the state is buying new engines from MMPP Salyut to modernize Su-27 jets and buying S-400 systems from Almaz to re-arm the Army,” says Pukhov. He notes that although state arms procurement still accounts for less than 25% of the overall portfolio, some progress is clearly being made.
All this indicates some substantial military and geopolitical shifts. The West is displeased by Moscow’s energy policy and its independent stance on the CIS and Kosovo. Evidently, the Kremlin is very serious about confrontation with the USA and NATO, and the strong anti-Western rhetoric of Russian leaders goes a long way beyond election campaign purposes. On July 14, Russia announced a moratorium on compliance with the Conventional Armed Forces in Europe Treaty; most experts regard this as only a prelude to complete withdrawal from this treaty, and increasing military confrontation in the Caucasus and north-western Russia. Russia’s response to the deployment of missile defense elements in the Czech Republic and Poland will demand even higher military spending.
Ivan Safranchuk, an analyst with the World Security Institute (USA): “In political terms, it would be premature to speak of an arms race – but in terms of technology, it’s been under way for some time.”