Why Israel Runs With The Big Dogs

Israeli arms exports last year were once again over $7 billion. Four years ago Israel became one of the top four arms exporters on the planet, shipping $7.2 billion worth of military equipment. The year before Israel had exported $6.9 billion. The U.S. is the largest exporter, followed by Russia and Germany. Israel is holding on to the number four despite being much smaller than the top three (the U.S. has a population of 310 million, Russia 142 million, and Germany 82 million people compared to 7.8 million in Israel). Israel defense exports account for about three percent of their GDP, compared to .7 percent in Russia and even less in the United States and Germany.

 

But even for the larger exporters, those foreign arms sales are important. Russian arms exports for 2012 were a record $15.2 billion. This is a major increase over 2010 (a then record $10 billion). That was an 18 percent jump from 2009 sales of $8.5 billion. That was less than two percent more than 2008's $8.35 billion. It was feared that the 2010 sales might be as high as it would get for a while. 

This was because the subsequent political upheavals in the Arab world might lead to large cancellations of orders, in part because of Russian willingness to use bribes to obtain sales and past help in security matters to keep the ousted dictators in power. Russia did lose some orders and there might be other cancellations (especially from Syria). But India remained the largest buyer of Russian arms, despite complaints of poor quality and bribes.

 

Increasing arms sales is very important for all the major exporters. The defense industry employs over three million people and accounts for about 20 percent of industrial jobs in Russia. At the end of the Cold War in 1991, defense work was more than three times as large as it is now. It was the enormous size of the defense industry that played a major role in bankrupting the Soviet Union. The Russians were never quite sure (cost accounting not being a communist favorite) what proportion of their GDP was devoted to military spending, but it was later estimated to be over 20 percent. That was more than four times the figure for Western nations (and their generally larger per-capita economies).

 

Half the weapons exported worldwide last year came from the United States (mostly) and Russia. European nations have long occupied the next three slots (Germany, France, and Britain). But lately German and Israeli exports have been growing. The other big exporters are Spain, China, the Netherlands, and Italy. These top ten exporters accounted for over 90 percent of the exports. The major importers are Middle Eastern Arab nations, India, South Korea, China, and (until recently) Greece.

 

Israel and Germany have been gaining more sales because of reliability and quality. Israel has a major advantage in that many of its weapons and military equipment have proved their worth in combat. Often subject to arms embargoes, Israel learned to design and build a lot of its own weapons and equipment. With a highly educated and motivated workforce, Israeli gear was often world class, while also cheaper and more reliable (and often combat proven) than similar stuff coming from the United States and Europe.

Russia’s Weaponry Exporter Reports $34Bln in Orders

Russia’s state arms exporter said Wednesday that its order portfolio stood at $34 billion as of June 1. 

Rosoboronexport delivered $6.5 billion worth of weaponry to foreign customers in the first half of this year, deputy head Igor Sevastyanov announced, adding that the current order portfolio included contracts with 67 countries.

Russia, which last year sold $15.2 billion worth of weaponry, is the world’s No. 2 arms exporter, behind the United States.

Sevastyanov added that his company was in talks regarding contracts worth a total of more than $80 billion. But it was not immediately clear in what time frame those contracts could be concluded.

Russia’s main arms customers are India, Algeria, China, Venezuela, Malaysia and Syria. Vietnam also emerged as a significant purchaser in 2010, when it signed a deal to buy submarines, aircraft and other military hardware.

Russia Rearms With Crap

As expected, it’s recently become more difficult for the Russian military to buy foreign weapons. This is because last November president Putin dismissed the Defense Minister and the Chief of the General Staff. The dismissed minister (Anatoly Serdyukov) had been brought in five years earlier to reform and revitalize the armed forces. He was the first civilian to head the ministry (which had always been led by a retired general). This angered a lot of vested interests, especially in the defense industries. Most of these organizations merged or disappeared after the collapse of the Soviet Union in 1991 (which brought with it an 80 percent decline in defense spending). The surviving defense industry managers have convinced Putin that the kind of rapid reform Serdyukov sought is not possible or desirable.

The new Defense Minister did not cancel existing foreign arms purchases, but did try to renegotiate some of the terms. All this is at the behest of Russian arms manufacturers and their political allies. This has made many of the troops unhappy. Many military leaders want Western quality weapons, either from Russian firms or from Western manufacturers. Now Russian troops will have to make do with less capable “Soviet” style weapons. The problem is that a lot of these Russian made weapons suck and efforts to get Russian manufacturers to shape up have not been entirely successful. Putin was convinced that this was not a problem because the Russian nuclear forces are still in good shape and capable of keeping invaders out. The military is effective enough to deal with patrolling the borders and dealing with outlaws in the Caucasus. 

Many military reforms will continue, adapting the smaller, post-Soviet forces to many Western innovations (brigade centric organization, battlefield Internet, and improved training). But the Russian forces will continue to have second rate gear, the kind that Russian manufacturers can produce and that won’t threaten the jobs of Russian workers. This means less importing of foreign weapons, except when it means getting new technologies for stuff to be built in Russia. 

What’s at stake here is the $900 billion the government has pledged to spend in the next decade to replace the many aging (and often not very good when new) Cold War era weapons. The troops wanted better weapons, like Western forces have. The Russian arms firms and politicians wanted most of that money to stay in Russia and, given the degree of corruption, in their pockets.

Russia’s Arms Exports Top $6.5 Bln in H1 2012

Russia exported over $6.5 billion worth of military equipment in the first half of 2012, President Vladimir Putin said on Monday.

“Exports of Russian weaponry exceeded $6.5 billion, registering a 14% increase year-on-year,” Putin said at a meeting of the Committee on Military-Industrial Cooperation.

Putin said Russian annual arms exports doubled over six years from $6 billion in 2005 to over $13 billion in 2011.

The current export orders portfolio of the Russian defense industry is about $43 billion and it is steadily growing, he said.

“New export contracts, worth $5.7 billion, have been concluded since the beginning of this year,” the president said.

Russia, which is the world’s second largest arms exporter and supplies weaponry to 55 countries, is planning to sell $13.5 billion worth of weaponry in 2012.

Its main arms customers are India, Algeria, China, Venezuela, Malaysia and Syria. Vietnam also emerged as a key importer after it signed a deal to buy submarines, aircraft and other military hardware from Russia in 2010.