June 20,2008:
By virtue of a major aircraft sale
to Saudi Arabia, Britain was the world's largest arms exporter last year. In
2007, Britain sold $19 billion worth of arms, passing the perennial leader, the
United States. But over the past five years, the U.S. still has the lead, with
$63 billion in sales. Britain was second, with $53 billion, and Russia third
with $33 million. But while Britain is on a roll, Russia is on the skids. This
year, Russian sales will be 25 percent
less than 2007. The sudden fall in Russian arms sales comes from problems with
the two largest customers; China and India. Russian arms exports had been
growing rapidly during the last few years, going from $4.3 billion in 2003, to $8 billion in 2007.
Until
Britain's recent surge, the United States and Russia were the largest exporters
of weapons, together accounting for about 70 percent of world sales.
Traditionally, the U.S. sold nearly three times as much as Russia, and that
ratio has gotten worse for the Russians. There has been more effort by the
Russians to not just sell on price, but also on service and warranties. Most of
the cost of a new weapon comes during the lifetime (often a decade or more) of
use. In the past, Russia had a bad reputation for support, and lost a lot of
those "after-market" sales of maintenance services and spare parts.
The U.S. was much better in that respect, but much more expensive. While the
Russians had the price advantage (often half, or less, the cost of equivalent
American weapons), they tried to build on that by improving their reputation
for providing service. But now the horror stories of Russian failure to support
weapons systems are returning.
Russia has
another advantage in that it is not shy about paying bribes. Britain achieved
its large sales last year for the same reason, and attempts by British legal
authorities to investigate the bribery were openly suppressed by the government
(the Saudis threatened to take their business elsewhere, and cut off
counter-terror cooperation otherwise.)
Russia
also has another problem with China. Over the last decade, about 40 percent of
Russian arms exports went to China. That is now at risk, as Russian
manufacturers feud with the Chinese over stolen technology. The Chinese have
been quite brazen of late, as they copy Russian military equipment, and then
produce their own versions without paying for the technology. Worse, the
Chinese are now offering to export these copies. The Russians are trying to
work out licensing deals with the Chinese, but are not finding much interest.
The Chinese say their generals are angry over how Russia sells technology to
potential Chinese enemies, like India.