Russian arms sales have been falling for the third year in a row. Can this be fixed?
Deck multipurpose fighters MiG-29K from Russia buys India, photo: Ministry of Defense of the Russian Federation
Specialists of the reputable Stockholm Peace Research Institute (SIRPI) published a press release on sales at the beginning of the week weapons 100 largest defense companies in the world. The published material notes that sales of Russian weapons by companies included in this rating have been falling for the third year in a row.
Published on December 6, 2021, the press release touches on global arms sales in 2020. Despite the coronavirus pandemic, which will not recede in any way, the 100 largest military-industrial companies in the world last year increased their arms sales by 1,3 percent compared to 2019. At the same time, the total volume of arms sales of hundreds of companies reached $ 2020 billion by the end of 531. Compared to 2015, the companies managed to increase sales by 17 percent at once.
The Stockholm Institute has been working with arms sales data since 2015, as this is the first year that sales figures for Chinese military industrial companies have appeared in the SIRPI database. The cumulative arms sales of the world's XNUMX largest defense companies have been growing for the sixth consecutive year, according to researchers.
Arms sales by Russian companies fall for the third year in a row
The SIPRI Top 100 lists 9 Russian military-industrial companies. Their total sales in dollar terms in 2020 fell 6,5 percent to $ 26,4 billion (2019: $ 28,2 billion). According to Swedish experts, this indicates a continuation of the trend that has emerged since 2017 - it was this year that arms sales by Russian companies included in the rating reached their peak.
By comparison, US companies in the SIPRI Top 100 account for 54 percent of all sales, or $ 285 billion. U.S. companies posted 2020 percent sales growth in 1,9. Companies from China accounted for 13 percent or $ 66,8 billion in monetary terms (an increase of 1,5 percent). The share of companies from the UK accounts for 7 percent or $ 37,5 billion in monetary terms (an increase of 6,2 percent).
In the foreground is a support fighting vehicle. tanks "Terminator", BMPT has export potential, photo: Ministry of Defense of the Russian Federation
At the end of 2020, military-industrial companies from Russia accounted for 5 percent of the total sales of companies from the SIPRI Top-100 rating. At the same time, Russian companies showed some of the most significant sales drops. The Stockholm Institute emphasizes that this is directly related to the completion of the large-scale State Arms Program for 2011-2020. Delays in deliveries caused by the spread of the coronavirus pandemic also played a role.
According to SIPRI, sales of the Russian company Almaz-Antey dropped by 2020 percent in 31, and that of Russian Helicopters and United Shipbuilding Corporation by 13 and 11 percent, respectively. At the same time, the United Aircraft Corporation was able to increase sales by 16 percent. Even greater growth was demonstrated by Concern Radioelectronic Technologies (KRET) and Ruselectronics, which managed to increase sales in 2020 by 22 and 39 percent, respectively.
In addition to the cumulative drop in sales, an important feature of Russian military-industrial companies, according to SIPRI experts, is the continuing diversification of product lines. Russian defense companies are working to sell as many civilian as possible, not military products. A state program is being implemented in the country, according to which the share of civilian products in the structure of revenue of defense industry companies should reach 30 percent by 2025 and 50 percent by 2030.
How the decline in sales is explained in Russia
The Federal Service for Military-Technical Cooperation (FSMTC) and Rostec have already called the data published by SIPRI formal. As noted in RBC, Rostec considers this information distorted and does not reflect reality. The main complaint of Russian state-owned companies is that the Swedes tie all payments to the dollar. At the same time, the bulk of the products of the Russian defense industry is accounted for by the state defense order program, payments for which are carried out in rubles. At the same time, SIPRI does not take into account the exchange rate difference.
Indeed, the SIPRI rating brings everything to the dollar as a common denominator, which allows comparison of all companies in the world, in whatever country they operate. In this regard, it is absolutely logical that Russian companies from the SIPRI Top-100 achieved their best results in 2017, when the average annual dollar exchange rate was 58,3 rubles. At the end of 2020, the average annual dollar exchange rate was 72,126 rubles. Such a serious devaluation of the Russian national currency directly affected the sales of Russian weapons in dollar terms.
Mi-8 and its modifications are one of the main products of the Russian defense industry, photo: Ministry of Defense of the Russian Federation
The second claim of Russian companies to the rating does not look so convincing anymore. Russian experts note that the Stockholm Institute relies on data from open sources, without presenting a real picture of sales. The FSMTC also noted that the rating does not take into account statistics on the maintenance of already delivered military equipment, as well as the trade in spare parts for it.
It is quite logical to object to this that the rating itself is based on data from open sources for absolutely all countries, and it equally does not take into account the sale of spare parts and maintenance of military equipment for all companies, not just Russian ones. SIPRI is an institution, not a secret service, so the information provided by Swedish researchers is incomplete for all countries.
Obviously, both Chinese and American companies can conduct deals that do not come to the attention of the Swedes, and there is nothing strange about that. Especially when you consider that even public Chinese civil companies that are listed on American exchanges are not famous for their transparency in their reporting. In this regard, SIPRI tries to conduct research with the information that is available, reducing it to a common denominator and one currency.
With all the pros and cons of this approach, you just have to put up with it, since there is simply no other organization in the world that would conduct research of a similar volume and publish it in the public domain.
Can Russian companies earn more from arms sales?
Russian companies can certainly earn more from arms sales. The volume of sales in dollars could easily be increased simply by strengthening the national currency. However, in the near future, economists do not see any prerequisites for a significant strengthening of the ruble against the dollar.
ZRPK "Pantsir-S1" and the launcher of the S-400 "Triumph" air defense system, Russian air defense systems with good export potential, photo: Ministry of Defense of the Russian Federation
At the same time, the most ambitious in the modern day was completed in the country. stories army rearmament program. The state program for the procurement of weapons for 2011-2020 allowed the Russian armed forces to be brought to a completely new level of power. The downside is that less and less money will be spent on the purchase of weapons and military equipment inside the country.
Export is the only way for Russian military-industrial companies to increase sales. And this very export has been stable in recent years, or, translating from the language of the bureaucracy into Russian, it is stagnating. All recent years, the export of Russian weapons has been revolving around one figure - 15 billion dollars a year, fluctuations from this value are extremely insignificant.
In recent years, US sanctions have also hampered the increase in Russian arms exports. In an interview with Vedomosti, Ilya Kramnik, a researcher at the Institute of World Economy and International Relations (IMEMO), Russian Academy of Sciences, noted that only strong and politically important countries for the United States, such as India, can acquire Russian weapons. Note that, in turn, countries such as Indonesia and the Philippines are forced to refuse purchases of Russian weapons. At one time, the Philippines has already abandoned Russian helicopters in favor of American ones, and Indonesia cannot fulfill its desire to acquire Russian Su-35 fighters.
The second problem, in addition to the sanctions, Kramnik called underrepresentation in the market or our complete absence in popular segments. A prime example is the patrol aviation... For geographical reasons, such aviation is in demand and is actively developing in the regions of Southeast Asia, where there are countries that traditionally buy Russian weapons. But Russia cannot offer them anything today. This direction completely sags, even for the Russian armed forces.
The second observed failure in the international market is unmanned aircraft. UAVs actively growing segment, but Russia produces only small and reconnaissance UAVs. True, here the Russian industry can please with promising developments in the field of strike and strategic drones, which over time can be brought to the world market.
Work Robot demining "Uran-6" in the Syrian Palmyra, photo: Ministry of Defense of the Russian Federation
The drop in sales of the Russian Helicopters holding is due, among other things, to the fact that the bulk of its sales for many decades has been accounted for by one model - the Mi-8 and its modern modifications. No matter how good this helicopter is, it is necessary to bring an adequate replacement to the international market. It is obvious that the sales of attack helicopters, either in individual terms or in monetary terms, will never be able to bypass the sales of military transport helicopters.
With airplanes, the situation is somewhat different. This is still one of the most important components of domestic military exports, but the fourth generation Su-30 fighter and its modifications were purchased by almost all countries that just wanted it. At the same time, the UAC definitely has something to increase sales: this is, first of all, the export potential of the multipurpose Russian fifth generation fighter Su-57 and the new light tactical fighter Checkmate, in the marketing promotion of which Russian defense companies have already invested heartily.
Russia has the greatest export prospects in the field of hypersonic weapons, where we are one of the world leaders. Russian electronic warfare systems also have good prospects, which is already confirmed by sales. Robotics is also a promising area. In the field of ground systems, Russia in recent years has shown quite a lot of complexes that are able to interest buyers. And Russian sapper robots have shown themselves well in Syria, including when clearing mines in Palmyra.
Traditionally, domestic air defense systems have a high export potential. The Almaz-Antey company has completed a large-scale program of rearmament of Russian troops for the S-400 Triumph system and can now fully focus on its export deliveries. As even the Americans note, at least a dozen countries of the world have a substantive interest in the Russian air defense system. At the same time, Russia already has a trump card in its sleeve in the form of the S-500 air defense system, which, over time, may also be exported.
Information