Russian Military-Technical Cooperation: Structures and Processes

Baidya Bikash Basu, Research Officer, IDSA

Abstract

This article deals with the changes in policies and institutions in post-Soviet Russia in the field of military technology exports and cooperation. The break-up of the Soviet Union forced Russia to adopt new policies for its defence industries. Economically devastated, Russia saw the defence industries as one of its economic wheels. As a result of this collapse, the new Russian leaders were forced to look at exports of weapons and military technology in a totally different light, driven now largely by commercial interests. At the same time, Russia has enacted legislation on military-technical cooperation with foreign states.

As it entered the international market, it found the United States, United Kingdom and France as the dominant suppliers of weaponry and military technology to other countries. Russia is trying to manage its arms transfers through legislation establishing the rights and responsibilities of different actors in the arms trade.

Introduction

Throughout the Cold War, the Soviet Union was a major exporter of arms and military technology. The trade was largely driven by strategic and political rather than commercial interests. The Soviet Union as a superpower tried to restrain another superpower, the United States, through arms transfers in all the regions of the world. The disintegration of the Soviet Union marked an end of the political and ideological factors that helped it in the arms transfer process. After the end of the Cold War, a new Russia has found itself competing with the United States, United Kingdom and France. There has been a consensus to maintain Russia's weapons export to the world market, which will ensure the survival of the Russian defence enterprises by facilitating their revival.

Changes in Policies

Russian arms export policies, norms and institutions have been in flux since 1991. In March 1992, a working group on Military-Technical Cooperation (MTC) was set up within the Committee for Industry and Power Economy headed by Deputy Chairman V. Ya.Vitebsky. This working group was composed of representatives of the Committees for International Affairs; Foreign Trade; Industry and Energy; Defence and Security; Budget Planning, Taxes and Prices. The state foreign economic companies Oboronexport and Spetsvneshtechnika (formerly the main engineering and the departments) were responsible for issuing licences for arms transfers. These were autonomous agencies under the Ministry of Foreign Economic Relations (MFER). Through presidential decrees, the licensing system for export of military equipment was introduced. In April 1992, then President Yeltsin signed a decree on the measures to create export controls in the Russian Federation. In May 1992, the presidential decree on MTC of the Russian Federation with foreign countries was signed. It vested the regulatory role in the Inter-Departmental Commission for Military-Technical Cooperation. This agency was charged with coordinating bilateral and multilateral inter-governmental commissions on MTC, licensing third country sales of arms and military equipment manufactured by foreign states with Russian assistance and endorsing documents on procedures for MTC. Regulatory functions were also vested in the Ministry of Foreign Affairs (MFA). This ministry supervises Russia's compliance with international obligations and ensures that all participants in MTC respect the political interests of the Russian Federation.1

In August 1992, the MFER issued new licences for military exports. There were many state agencies engaged in arms export, like the main department for collaboration and cooperation of the MFER, Oboronexport, Spetsvneshtechnika, Voyentech, and Promexport. Due to the presence of many state agencies, there were complications in the arms export decision-making process. To prevent further damage, a single specialised state agency, Rosvoorouzhenie (State Corporation for Export and Import of Armaments and Military Equipment) was set up in November 1993. Rosvoorouzhenie works under the direct supervision of the Russian government and is accountable to the president of the Russian Federation. Its main task is to handle the export of weapons and combat equipment on the basis of decisions taken by the president or the government. In May 1994, the Statute on Certification and Registration of the Right of Enterprises to Export Arms, Military Equipment and Works and Services for Military Needs was endorsed. This resulted in direct contact of the certified defence enterprises with foreign countries with which Russia was linked by MTC. Defence enterprises were allowed to exhibit arms and military equipment receiving export clearance, sign contracts, disclose their tactical and technical specifications, quoting approximate price and, finally, marketing military equipment on the basis of duly obtained licences.2

According to the statute, on the request of the State Committee for Defence Industries (Goskomoboronprom) the Interdepartmental Commission for MTC with Foreign States was to certify the defence enterprises. Goskomoboronprom was to have the requisite set of documents and could conduct onsite inspections of the enterprise. Various ministries and nodal agencies like the MFER, Ministry of Defence, the Federal Counter-Intelligence Service, Ministry of Economy, the State Customs Committee and Rosvoorouzhenie were to have the application copies. The Certification Commission of Goskomoboronprom included representatives from these ministries and agencies. The recommendations of Goskomoboronprom were generally approved. At its final stages, the political consequence of a deal, if any, was to be assessed by the Ministry of Foreign Affairs.3

In December 1994, the then President Boris Yeltsin signed a decree making the State Committee of the Russian Federation on Military-Technical Policy directly accountable to the head of the state. The State Committee was to undertake drafting of federal programmes and conceptual approaches to MTC, projects under respective inter-governmental accords, programmes with foreign countries in jointly developing and manufacturing arms and military equipment, and participating in the work of state commissions and international organisations. Further, this committee was given the responsibility to license MTC projects and the state defence orders on defence exports, including components and spare parts by looking into Russia's external debt, as well as foreign debts owed to Russia. The State Committee was also to supervise Russian compliance with various international treaties on MTC. This new agency was to coordinate R&D planning to support and develop the export potential of the defence industry, thereby, creating new export models of weapons and modernising existing arms and defence equipment. Together, coordinating, advertising, marketing, contracting, and participating in MTC with foreign countries, controlling the receipt and use of currency proceeds from export operations, pricing the basic defence items for exports and imports, auditing of foreign economic activity of Russian agents of MTC, establishing finance-industry relationship within Russia's defence complex were tasks handled by this committee. The committee was authorised to suspend licences, if the participants of foreign economic activity violated the established procedures of MTC. It was also entrusted with receiving foreign delegations and sending delegations abroad to facilitate MTC in agreement with the MFA and MFER. Effectively managing budget allocations for the MTC programmes, implementing armament programmes, limiting disposal and elimination of arms and ammunition and conversion of defence industry were also in its ambit of responsibilities. The regulatory management agency called the State Committee was abolished as part of the reorganisation of the Russian government in August 1996 and its functions were transferred to the Russian Security Council. No doubt, the State Committee had tried to secure strict state control in the area of arms trade and MTC.4

The military doctrine of November 1993 has a special section on MTC. It defines MTC as:

l Exporting and importing of weapons and military hardware, military technologies and results of scientific and technical projects in the military sphere.

l Sending military advisers and specialists on official trips.

l Implementing commissioned and joint research and design projects to create new types of weapon and military hardware.

l Technical assistance in building military facilities and defence enterprises.

l Other military-technical projects and services.

This doctrine laid down five major objectives of Russia's MTC with foreign countries. These were:

l Strengthening Russia's military-political positions in different regions of the world.

l Raising hard currency for the state needs, defence conversion projects, defence production, destruction and disposal of weapons and restructuring of defence industries.

l Maintaining the required level of Russia's export potential as regards conventional weapons and military hardware.

l Developing a scientific and experimental basis for the defence industries and their scientific research and design institutions and organisations.

l Providing social support for the personnel of industrial plants, institutions and organisations that develop and produce weapons, military and special hardware and other items.5

Post-Soviet Russia has tried to ensure legal as well as state control in the area of arms export. It has been continuously revived and rejuvenated by the impact of economic restructuring and intervention by arms export lobbies who are the major actors.

Changes in Structure

The restructuring of arms export and MTC has gone through three phases in post-Soviet Russia characterised by a separate model in each phase.

Liberal Multi-Actor Phase

After the break-up of the Soviet Union, the old institutions could not effectively control transfers of weapons and enforce laws and regulations. The first two years (1992-1993) were marked by restructuring and balancing between centralised control and market freedom. The problem for the defence industry was that it was largely dependent on arms production and it was trying to retain the bulk of the revenues by conducting arms sales. Initially, these years saw Russia's arms transfer system lacking specific guidelines in the area of arms exports. Numerous difficulties and total confusion were clearly noticeable in the products as well as the pricing. The problem of accounting and inadequate enforcement of laws gave rise to widespread corruption and pilferage.6

Centralised Uni-Actor Phase

To streamline arms exports, a specialised state agency for exports and imports of armaments was set up in November 1993. The State Corporation for Exports and Imports of Armaments and Military Equipment (Rosvoorouzhenie) became the dominant organisation in the field. Viktor Samoylov became the director general of Rosvoorouzhenie, to be replaced by Alexander Kotelkin later on. This model was largely developed by Alexander Korzhakov, head of the Presidential Security Service. President Yeltsin appointed Boris Kuzyk, as a presidential aide on MTC. Kuzyk was to manage the entire system from above on behalf of the president. In December 1994, this centralised uni-actor model was completed with establishment of a State Committee for MTC as a ministry level structure directly under the president. The supervision of this committee was given to Oleg Soskovets, first vice premier, a long standing and trusted friend of Alexander Korzhakov.

The presidential Decree Number 2251 of December 30, 1994, gave wide ranging powers to the State Committee for MTC in carrying out state policy in the area of MTC with other countries, coordinating weapon programmes, conversion of the production facilities of the Military-Industrial Complex and disposition of weapons and military hardware. This same decree ensured the transfer of functions to the coordinating Inter-Agency Council for MTC which was to be chaired by Oleg Soskovets. The Inter-agency Commission on MTC was disbanded. Three distinct levels of decision-making are noticeable in this model: the president, the government and designated agencies, along with the State Committee for MTC playing a vital role. In the world of arms market, Russia's position became stronger as there was a decisive step toward government consolidation of arms export, curtailing the mafia presence in arms trade, enthusing a sort of discipline and in the end dramaticaly suppressing the institutional and personal competition.

The preference for a continuing strong government role in the area of arms export showed signs of strain in this centralised uni-actor model. President Yeltsin removed Korzhakov and Soskovets in June 1996 and this model was heatedly disputed by the liberal minded team of Anatolii Chubias. The Committee for Military-Technical Policy was abolished and its functions were transferred to the MFER. Internally, the enterprise directors and regional leaders in the area of MTC had a clear say in the Russian experience of a laissez-faire economy. Given the level of economic difficulties Russia was facing, eight military-industrial plants were granted the right to market and sell their products independently in the world's arms market.7

Centralised Multi-Actor Phase

Meanwhile, a new model was being carefully developed by Yakov Urinson, first vice premier and minister of economics. The Ministry of Defence Industries was abolished and transferred to the Ministry of Economics in March 1997. The Kremlin leadership was facing new challenges in drastic restructuring because of the shortage of experienced personnel and law enforcement agencies in the decision-making process. Dwindling resources, crumbling infrastructure, inconsistency in policy and its implementation were seriously undermining the very survival of newly born Russian institutions. Significantly, there was little trust between the governmental authorities and the intra-agencies involved in the area of arms export. There was no Federal Law till 1998 on MTC because of lack of coordination and cooperation among the legislature, the presidential administration and the executive. Under the 1993 Constitution, presidential decrees acquired great significance in Russia, serving as an important source of law. The Presidential Decree No. 907 of August 20, 1997, on measures for strengthening the state control of foreign trade activity in the area of MTC changed the status of Rosvoorouzhenie into a "federal state unitary enterprise". Alongwith Rosvoorouzhenie, two more firms were authorised to operate: Promexport and Rossiyskiye Tekhnologii. Rosvooruzhenie was to manage export contracts of new weaponry with the coordination of various enterprises; Promexport was to provide follow-on support through spare parts, components and service support as well as disposal of surplus equipment from the Russian armed forces; and Rossiyskiye Tekhnologii was to manage export of licences and technological know-how in R&D related contracts, thereby, protecting Russian copyrights.8

Types of Military-Technical Cooperation

Military-Technical Cooperation with Commonwealth of Independent States (CIS) Countries

Russia faces a major problem in MTC with the CIS countries. The CIS countries are sovereign states and have their own arms export organisations and policies. More than any other of the former Soviet republics, Ukraine is conscious about its status as an independent country and its national identity. It prefers to go ahead aggressively in promoting its arms trade. Nevertheless, Russia and Ukraine are jointly developing the An-70 military transport aircraft project. After the collapse of the Soviet Union, there was a serious problem with the defence industries. Russia inherited three-quarters (75 per cent) of all the defence industries-roughly 90 per cent of the industries making finished products. The remaining 14 per cent were in Ukraine, 2 per cent in Belarus and 9 per cent in the other republics. Defence industries in Ukraine produced half of the total Soviet output of tanks, combat vehicles, combat ships, aircraft engines, missiles, military optical products and radio communication systems.9

Russia understands the need to develop production and technological relationships with the CIS countries. The November 1993 Russian military doctrine puts special emphasis on this dimension. Defence industries in Russia are able to carry out arms transfers, commercial sales, joint development and joint production with the CIS countries. Under the 1992 Mutual Security Treaty, Russia-CIS military technical cooperation is carried out. The agreement of March 20, 1992, on the powers of the CIS supreme defence agency, was the first document to establish the CIS Council of Heads of State as a supreme defence agency. The main tasks of this agency were: (a) determining together with the CIS Joint Armed Forces (JAF) Supreme Command, a coordinated programme of weapon manufacturing, and combat technology for the JAF, the volume of funding for the programme within the appropriations for defence and the maintenance of the JAF and military contract handling priorities; (b) establishing the procedure for the standardisation of the weapons, combat technologies and other logistic material for the JAF; (c) determining defence R&D procedures, acting via member states' corresponding organisations, provision of the JAF with weapons, combat technology and other material and services; (d) producing war oriented economic plans, material accumulation plans and reserve mobilisation plans. The treaty provides for a committee for MTC to conceptualise and give final shape to relevant programmes and coordinate the operations between the participating countries. This committee is placed under the Council of CIS Defence Ministers. The heads of the CIS governments approve it. The JAF Supreme Command implements the defence decisions of the CIS higher bodies. The ten participating countries are: Azerbaijan, Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Uzbekistan and Ukraine. In December 1993, the CIS Council of Defence Ministers created a CIS Military Cooperation Coordination Headquarters (MCCH) in Moscow, with Russia providing 50 per cent of the funding. At Askhabad, in December 1993, the CIS leaders signed the Agreement on the General Condition for Support of the Development of Production, Cooperation of Enterprises and Sectors of Commonwealth of Independent States Participating States. For the realisation of this agreement, the protocol was signed in Moscow in April 1994. At the Almaty CIS summit meeting of February 1995, a Concept of Collective Security of Participating States was adopted. MTC was included in the first stage.

Thus, these legal and institutional arrangements created the basis for MTC between Russia and the CIS countries. Russia also enjoys bilateral military-technical cooperation with the CIS countries. In some cases, it is a full-fledged arms transfer and defence industrial cooperation including joint-designing and co-production. Such cooperation may be seen between Russia and Belarus and between Russia and Kazakhstan. Secondly, Ukraine is interested in bilateral defence industry cooperation; however, it is sceptical about the integration of its armed forces into the CIS. Some CIS countries like Kyrgyzstan, Tajikistan and Uzbekistan have Russian assistance in building their own national armies through arms transfers and services and training. The other type of bilateral cooperation involves repair and maintenance of former Soviet equipment and arsenals. Full-fledged military cooperation is not the criterion. Armenia and Georgia exemplify this relationship. Lastly, some CIS countries are indifferent to MTC with Russia for various reasons but they see no alternative. Azerbaijan, Moldova and Turkmenistan are in this category. The future course will depend on the trust and cooperation of the CIS countries with Russia.10

Military-Technical Cooperation With Asian and Other Developing States

Asia is the most important destination of Russian weapons and MTC. Russia has developed extensive MTC with several major Asian countries, along with arms export, licensed production, servicing of old and new arms and equipment, and training personnel. China and India are the most prominent countries that have this type of cooperation with Russia.

Indo-Russian defence cooperation in the post-Soviet era has undergone radical changes. President Yeltsin's visit to New Delhi in January 1993, saw a marked shift in the relationship between the two countries. Yeltsin and Prime Minister P.V. Narasimha Rao signed a 20-year Treaty of Friendship and Cooperation replacing the similar 1971 Soviet-Indian Treaty. The two leaders also signed a bilateral military cooperation agreement including deals on sale and production of Russian weapons and the supply of Russian spare parts. June 1994 saw this reiteration once again when Prime Minister Narasimha Rao visited Moscow. In October 1996, Russian Defence Minister Igor Rodionov visited New Delhi and signed a military-technology cooperation agreement with his Indian counterpart, Mulayam Singh Yadav. In early October 1997, Indian Defence Minister Mulayam Singh Yadav visited Moscow and the Russian president agreed to extend bilateral defence cooperation till the year 2010. Initially, the period was from 1994 to 2000. India was the only country with which Russia signed this type of bilateral defence cooperation programme in 1994. This extension by a decade will add a new dimension to Indo-Russian relations. During Prime Minister Primakov's visit to New Delhi in December 1998, out of the seven agreements signed between India and Russia, the document on long-term military technical cooperation till the year 2010 is the key document. On a visit to New Delhi in March 1999, Russian Defence Minister Igor D. Sergeyev and his Indian counterpart, George Fernandes signed a military cooperation agreement to train Indian defence personnel in key Russian military academies.11 The long-term bilateral defence co-operation programme will cover such new areas as naval nuclear technologies and anti-ballistic missile defence systems. This long-term MTC will enhance the joint R&D capabilities of the two countries in the production of new weapon systems. On December 27, 2000, India and Russia finally signed the single largest arms deal: the Su-30 MKI will be manufactured in India with Russian assistance. This means complete transfer of technology to India. This Indo-Russian Sukhoi deal is the single largest defence deal ever signed by Russia with any foreign country. Under this deal, 150 Su-30 MKIs will be manufactured in India, including indigenous production of all the components over a period of the next two decades. The Su-30 MKI will have onboard avionics and other support systems developed by India and also equipment from countries like France, Israel, South Africa, and the United Kingdom.12

China also has MTC with Russia. Both China and India account for almost three-fourths of Russia's armament exports. Russian and Chinese military officials have maintained regular contacts at various levels. Russian defence enterprises have shown strong interest in selling military equipment to China. The Chinese are very impressed by the Russian military equipment and the list of weapons acquired from Russia shows that China wants to meet its growing demand of weapons by purchasing multi-purpose, air-superiority fighter Su-27 aircraft, equipped with Archer air-to-air missiles, two Sovremenny-class destroyers with SS-N-22 Sunburn cruise missiles and SA-N-7 Shitl missile systems and SA-N-7 Gadfly missiles, four Kilo class diesel-electric submarines and strategic S-300 PMU-1 long-range air-defence systems. In 1992, China signed a deal with Russia for Su- 27 ( Flanker B) aircraft. China manufactures Su-27 under a licensing agreement reached between Russia and China in February 1996. For additional Su-27 aircraft and related production technology, China signed a similar deal with Russia in December 1996 during Prime Minister Li Peng's visit to Moscow.13 Russia did not issue the licence to China, which is tied to Russian AL-31 F engine supplies for the licensed production of Su-27 bombers because complete transfer of state-of-the-art technology to China can pose a threat to Russia in the future. In the first phase, Su-27 kits were produced in Russia and assembled in China. In the second phase, complete production was to take place in the Chinese Shenyang Aircraft Factory. China cannot export Su-27s to other countries, and any modification in the Su-27 can be done only with the consent of the Russian side. Notably, China wants complete transfer of advanced military technology and production licences from Russia, rather than buying the whole equipment. This is due to budgetary containts and also avoid over-dependence on any one supplier. During President Yeltsin's visit to China on December 9-10, 1999, Russia agreed to deliver top-of-the line fighter jets to China in a $1 billion deal. Both countries struck a deal on Sukhoi 30 MK fighters.14 Russia has shown willingness because its economy requires hard currency.

The atmosphere of growing understanding between Russia and the Southeast Asian countries found expression when Malaysia, the first non-Communist state in Southeast Asia, purchased Russian military equipment. In 1994, Malaysia acquired 18 MiG-29 fighter aircraft.15

Since 1992, Russia and South Korea have signed a protocol for regular visits of defence officials and naval vessels between the two countries. In April 1995, South Korea accepted deliveries of Russian military equipment-tanks, infantry combat vehicles and anti-tank missiles-as partial repayment of Russia's $ 210 million debt to South Korea.16

The major equipment sold by Russia includes the T-72,T-80,T-90 Main Battle Tanks (MBT), armoured vehicles, Kilo class diesel powered submarines, aircraft carrier, Su-27/30 aircraft, MiG-29 aircraft, MIL and Kamov helicopter gunships, S-300V and S-300PMU air defence systems and other weaponry. Evidently, the Russian arms trade laid emphasis on exporting the most sophisticated state-of-the-art systems, which was approved by Aleksandr Kotelkin, former director general of Rosvoorouzhenie way back in 1996, when he stated :

If previously the Soviet Union did not deliver, as a rule, the newest models of arms to other countries, today Russia sells modern, high-tech models. Also, these deliveries are occurring simultaneously with the introduction of these weapons systems in Russia's armed forces. This is an important difference between Russia's export policy and U.S. policy. The United States often sells other than the best weapons systems abroad, and most often sells either used arms or arms which have been in the arsenal for many years.17

Military-Technical Cooperation with Industrialised Countries

Economic factors like the financial crisis of August 1998 and the rouble devaluation, have forced the Russian defence industry to cut back production. However, in 1999, the defence industry received high priority in the Russian economic and technology policy. In total industrial production, arms production increased by around eight per cent in real terms in 1999.18

Given its economic and financial crisis, the Russian defence industry has shown pragmatism in cooperating with the West in developing and manufacturing new generations of weapons and military hardware. Russia's main aim is to generate resources for R&D and facilitate marketing of the products in the international arms bazaar. The Russian defence enterprises are weak in marketing, sales and distribution. In these circumstances, the role of Western companies is significant. The Russo-French agreement on MTC and collaboration in the MiG-AT advanced jet trainer would involve the French companies Larzac, Snecma and Sextant Avionique. This aircraft will be manufactured in Russia. In the initial stage, the MiG-AT will be equipped with French engines and onboard instrumentation, but later these will be Russian made.

Similarly, Russo-German cooperation on the MiG-29 aircraft which was upgraded to MiG-29 SMT, with Germany's Daimler-Benz Aerospace (DASA), involved marketing the new upgraded MiG-29 SMT. In November 1996, Russia signed an agreement on MTC with Italy. This served as a framework for Italy's participation in the development of the Yak-130 trainer aircraft.19

President Vladimir Putin in a significant move sacked the heads of the two leading arms export firms, Rosvoorouzhenie and Promexport, and merged the two companies to stop them from squabbling with each other for a bigger share of sales. Rosvoorouzhenie and Promexport would have earned about $2.95 billion and $700 million respectively in the year 2000 and shared more than half of the country's total expected arms sales of $4.5 billion. Almost all arms manufacturer are required to export their goods through Rosvoorouzhenie and Promexport. Only seven defence companies are exceptions to the rule. On November 4, 2000, Putin merged the two companies, Rosvoorouzhenie and Promexport, into a new export powerhouse called Rosoboronexport. In August 2000, Rossiyskiye Tekhnologii was merged into Promexport. Putin named Promexport deputy head Andrei Belyaninov as the director of Rosoboronexport. Belyaninov has been given two months time to draft a company charter. This document will then follow a lengthy trail of approval through the numerous government agencies that supervise arms trade.

President Putin also signed a decree on MTC with foreign states. The decree stipulates the establishment of a new state structure-the committee for MTC to look into the Russian arms exports. President Putin will head this as its new chairman and Prime Minister Mikhail Kasyanov will be the deputy chairman. This decree will regulate the Russian military exports through four provisions pertaining to the committee and commission for the issues of MTC. These include the procedural specifications related to the realisation of MTC, granting permission to foreign economic operations as regards the delivery of military products, examining the credentials of the foreign clientele, as also the licensing of the defence export-import operations.

The new decree severely limits the influence of the Russian chairmen in charge of the corresponding inter-governmental commissions for trade, economic, scientific and technical cooperation that Russia is presently involved in. Furthermore the formal role of the Russian Cabinet in the realisation of various defence contracts has been curtailed. There are two lists-No.1 and No.2; the former enumerates the countries into which the exports of Russian weapons are allowed while the latter enlists the specific military hardware to be offered for sale. Decisions related to ordering of armaments by countries and the particular military hardware requested by them now solely rest with the presidential decrees and not in the form of government resolutions.

According to the new decree, a foreign buyer should send an order for the purchase of Russian weaponry to the MTC committee. Within two days, the committee must register and transfer it to the state intermediary, Rosoboronexport, or to one of the seven defence enterprises that have obtained the right for independent export. An exporting company, on directly receiving an order, must transfer it to the committee within two days. The committee will take into consideration the company's merits in distributing contracts, and finalise a decision on the deal. The processing of the order is to be finalised within a maximum of 20 days. The client must be notified about any relevant decision within two days after it is taken. Putin has made General Mikhail Dmitriyev, a colleague in the Foreign Intelligence Service, the chairman of the committee. Andrei Belyaninov, another Intelligence Service general is heading the Rosoboronexport. Sergei Chemezov, Putin's friend and former director general of Promexport, has been appointed first deputy head of Rosoboronexport.

Thus, the participation of the Russian Cabinet of Ministers in MTC stands defined only in cases involving linkage of arms deliveries with the fulfilment of debt liabilities or the requirement of state crediting. It may also be noted that the committee for MTC has been redefined by the current presidential decree as a subordinate entity to the Ministry of Defence from being a sub-structure of the Ministry of Industry and Science.

Putin's decree in its present form seeks to eradicate competition not only among the state intermediaries and government administration groups, but also between the various Russian arms export firms at their own independent level as well as with the participants of MTC in the external market. The decree also specifies a provision that initiates recalling of the Rosvoorouzheniye and Promexport export permission in the event of any given firm being charged with causing competition.20

Conclusion

To revive its declining defence industry, Russia is exploiting market openings in countries that do not buy weapons from the Western countries or are denied military technology and weapons because of Western sanctions. China, Cuba, Libya, Iran, Iraq and North Korea are seen as potential markets. The Clinton Administration had imposed a complete embargo on these states and expects Russia to comply with it. Russia is determined to export its high technology, both civil and military, as it fears that the United States is driving Russia out of the market. However, even those countries that have an arms trade relationship with some of the Western countries have begun to look at MTC with Russia. Konstantin Kosachev, deputy head of the Parliamentary Foreign Affairs Committee, has this to say, "As far as public opinion is concerned, the West is no longer seen as a reliable partner". Selling arms to Iran is a bone of contention in the relationship with the United States. Krasnaya Zvezda reported, "The US was supposed to compensate for losses in halting sales of arms to Iran by helping to promote Russian weaponry in other markets, but failed to do so". According to Kosachev this was "the West's great strategic mistake. The only markets left are where there is no serious western competition."21

The arms trade was a source of tension in the Cold War days. The situation has changed after the end of the Cold War as the arms market has become more globalised. Through the 1990s, Russia's defence industry lacked policy and long-term funding for defence conversion and, therefore, had to rely more on the export of weapons and military hardware. Due to the decline in domestic demand, the Russian defence industry has focussed more on exports. The Russian Defence Ministry's procurement share ranges from 10 per cent to 20 per cent of the production, while China and India account for up to 80 per cent.22 Its traditional strong ties with India remain. In stimulating defence exports, the Russian government has a clear stake, as it constitutes one half of all products manufactured by Russia's otherwise uncompetitive machine building heavy industry. Russian exports of weapons and military hardware generate extra budgetary money for restructuring the Russian armed forces and their technical modernisation.

In sum, it may be argued that the Russian authorities in the defence decision-making structure are now pursuing a policy with strong economic imperatives. The government has come up with special regulations towards export promotion to compensate for low domestic demand. Defence production has reduced by 80 per cent approximately, including production of arms and military hardware by 90 per cent and that of civilian commodities by 75 per cent. Russia accounts for only 3-4 per cent of the global production of armaments. This output is largely exported which allows for the survival of the defence production facilities. The key issue is to create an impact of the latest Russian weaponry in the clientele states. Russia is able to do that through the economic-political instrument, known as "Arms Transfers" and "Military-Technical Cooperation."

NOTES

1. Yevgeni M. Kozhokin, "Arms Export Controls: What Role for Parliament?" in Andrew J. Pierre and Dmitri V. Trenin eds., Russia In The World Arms Trade (Washington D.C., Carnegie Endowment for International Peace, The Brookings Institution Press, 1997) pp. 50-54.

2. Ibid., pp. 54-55. Also see Sergei V. Kortunov, "Arms Export Controls: Competition Among Executive Agencies" in Ibid., in Pierre and Trenin, eds., Ibid., p. 36.

3. Ibid., n.2, pp. 36-37.

4. Ibid., pp.37-38. Also see, n.1, pp.54-55.

5. Alexander A. Sergounin, "Military-Technical Cooperation Between the CIS Member States" in Ian Anthony ed., Russia and the Arms Trade (Sweden: SIPRI, OUP, 1998) p. 158. Also see Footnote nos. 45 & 46.

6. Igor Khripunov, "The Politics and Economics of Russia's Conventional Arms Transfers" in Gary K. Bertsch and William C. Potter, eds., Dangerous Weapons, Desperate States (New York: Routledge, 1999) pp. 147-148.

7. Ibid., pp. 148-150.

8. Peter Litavrin, "The Process of Policy Making and Licensing for Conventional Arms Trasfers" in Ian Anthony, ed., Russia and the Arms Trade (Sweden: SIPRI, OUP, 1998). Also see, Footnote nos. 6, 7, 8, p. 109.

9. n. 5, p. 151.

10. n. 5, pp. 158-167.

11. Vinay Shukla, "Russia in South Asia: A View From India" in Gennady Chufrin, ed., Russia and Asia: The Emerging Security Agenda (Sweden: SIPRI, OUP, 1999) pp. 247-269. Also see in this, Shannon Kile, Appendix 2, pp. 500-505.

12. See, "India, Russia Sign Deal for 140 Sukhoi-30 in Jasjit Singh, ed., Jets" The Hindustan Times, December 29, 2000.

13. Jasjit Singh, "Trends in Defence Expenditure" Asian Strategic Review 1998-99 (New Delhi: IDSA, 1999), pp. 46-49. Yuri V. Tsyganov, "Russia and China: What is in the Pipeline?" in Chufrin, ed., pp. 310-312. Also see, Kile, in Chufrin, ed., n. 11, pp. 502-503.

14. See, "Russia, China Seal $1b Deal for Fighter Jets" The Times of India, December 11, 1996, p. 16.

15. Amado M. Mendoza, Jr., "ASEAN's Role in Integrating Russia Into the Asia Pacific Economy" in Watanabe Koji, ed., Engaging Russia in Asia Pacific (Singapore: ISEAS, 1999) p. 136. Victor Sumsky, "Russia and ASEAN: Emerging Partnership in the 1990s and the Security of South-East Asia," in Chufrin, ed., n. 11, p. 414. Also see Kile, in Chufrin, ed., n. 11, p. 501.

16. See Kile, in Chufrin ed., n. 11, p. 501.

17. n. 6, p. 140. Also see, Footnote no. 22, p. 161.

18. SIPRI Yearbook 2000: Armaments, Disarmament and International Security, p. 321.

19. n. 6, pp. 142-144.

20. Yuri Golotyuk, "Arms Export Placed Under Putin's Personal Control" and Mikhail Kozyrev, "President Bans Competition in Arms Export" Vedomosti, December 5, 2000. Information Department, Embassy of Russian Federation in India, New Delhi.

21. Ian Travnor, "US Foes to be Russia's Arms Clients" The Hindustan Times, December 6, 2000.

22. n. 6, p. 135. Also see, Footnote no. 9, p. 161.