Russia's Arms Export Industry Is Collapsing

Russia’s Arms Export Industry Is Collapsing

Russia’s arms export industry—historically the second most lucrative in the world after the United States—appears to be collapsing under the weight of technological shifts, international political isolation, and its disastrous war in Ukraine, according to new figures released by the world’s leading weapons industry watchdog.

Data published by the Stockholm International Peace Research Institute (SIPRI) on Monday show that Russia’s military exports fell by 31 percent over the past five years when compared with the five years previous, threatening Moscow’s position as the world’s second most influential weapons dealer.

Russia’s share of global arms exports fell from 22 to 16 percent between 2013-2017 and 2018-2022, leaving it far behind the U.S. which accounts for 40 percent of military exports, and only slightly ahead of France, which was the source of 11 percent of arms exports over the past five years.

SIPRI’s latest data confirms Newsweek reporting from last year indicating a bleak trajectory bleak for Russian military exporters. “It’s really substantial, but it’s not really surprising,” Siemon Wezeman, a senior SIPRI researcher, told Newsweek. “And it’s not just because of what’s happening in Ukraine in 2022; it’s something that you could see coming.”

Russian military vehicles are pictured at the Red Square in Moscow for the Victory Day military parade in 2019 in this photo illustration. Russia’s share of global arms exports fell from 22 to 16 percent between 2013-2017 and 2018-2022.
Newsweek; Source photo by ALEXANDER ZEMLIANICHENKO/AFP/Getty
The West has been working to isolate Russia since its invasion and annexation of Crimea—and its fomentation of unrest in Ukraine’s Donbas region—since 2014. The effort has been supercharged since Russian troops again rolled into Ukrainian territory in February 2022. Led by Washington, D.C., Moscow’s adversaries are chipping away at the Kremlin’s customer base.

Meanwhile, the staggeringly high rates of Russian casualties and equipment losses in Ukraine are putting defense producers under pressure, as are the less-than-stellar performances of key Russian weapons platforms that appear unable to counter the most advanced NATO arms used by Ukrainian troops.

Denis Manturov, Russia’s deputy prime minister of industry and trade, told Interfax last month that a “significant” portion of weapons being produced in the country are being directed to Ukrainian battlefields. “Their provision is our absolute priority, but even in these conditions we continue to work with our partners from friendly countries and fulfill our obligations,” he said.

Newsweek reached out to the Russian Industry and Trade Ministry by email for comment on SIPRI’s report.

An Isolated Seller”There are different issues that Russia has to struggle with,” Wezeman said. “One, of course, is the pressure from the U.S. and others—already ongoing since 2014—on potential customers and existing customers of Russia, to stop and not to buy Russian, and at the same time offering them alternative technology and alternative weapons.

“They did it very strongly with India, but they also do it with others. They’ve done it with Indonesia, and that led Indonesia to cancel an order of Russian combat aircraft. They’ve done it with Egypt, where it’s not said so loud, but Egypt had an order for combat aircraft from Russia and that has gone. It’s pretty obvious, I would say, that the U.S. pressured them.”

The problem pre-dated the full-scale invasion of Ukraine, though has been exacerbated by President Vladimir Putin’s revanchist gambit.

“They would still have those issues,” Wezeman said. “The invasion, of course, adds to that because it’s even more pressure from the U.S. and other states: ‘Don’t buy from Russia. You’re either with us or you’re against us. If you buy from Russia, you look like you’re against us. And if you’re with us, maybe we are willing to supply all kinds of wonderful technology.'”

“Maybe two years ago that would have been a bit iffy, but nowadays they are willing to do it,” he added.

The unprecedented Western sanctions campaign against Moscow is biting. Russia’s economy did not shrink to the degree expected last year, but the Kremlin’s budget deficit is ballooning as its fossil fuel export profits dwindle. More than 1,000 foreign companies have fled Russia, and export controls are making it more and more difficult for indigenous manufacturers to get advanced components needed for high-tech goods and weapons.

One source with knowledge of Russia’s military industries—who requested anonymity for fear of retaliation—told Newsweek: “First, export contracts have now been pushed back into the farthest corner, as the needs of the military are the top priority. Second, I suspect there will be significant delays in delivering on even the existing agreements, due to the combination of foreign-made parts supplies getting cut off and the struggle to ramp up domestic production.

“Plus, the whole world is getting a demonstration of the ‘quality’ of Russian arms and tech in real-time, which has been uninspiring, to put it mildly,” they said. “Case in point is that Russia has resorted to buying combat drones from Iran, a country that has been under U.S. sanctions for years. I think we are seeing the early stages of a process whereby Russia drops out of the list of top global weapons exporters. It will continue to trade with the likes of the Taliban and a handful of allied nations, perhaps through some barter deals, but that’s about it.”

The source also noted the difference between the levels of quality control for military-industrial sector products supplied to the Russian military compared to those earmarked for export. The latter undergoes minimal checks, with only basic “commercial level” quality control needed to certify the goods for export.

“So, the result is that often companies working with foreign buyers will hoover up anything and everything on the market, including second-hand goods, rusty or malfunctioning parts, even blatant counterfeit. So that obviously impacts the quality of such exports,” they said.

A destroyed Russian tank is photographed in the town of Sviatohirsk, in the Donetsk region of Ukraine on March 1, 2023. Russian casualties and equipment losses in Ukraine are putting defense producers under pressure.
Moscow is casting around for suppliers as its forces struggle to make ground in Ukraine. Iran, North Korea and Belarus have been key sources of equipment and ammunition over the past year, while nations including Turkey, the United Arab Emirates and the central Asian states have emerged as potential sanctions-busting conduits for dual-use technologies. But even these channels are narrowing under pressure from the Western allies.

China has so far refrained from direct military support for Russia’s invasion, though according to U.S. officials has not yet decided on whether to withhold weapons entirely. Chinese state-owned companies are reportedly providing dual-use technology to Russia, prompting calls to extend Western sanctions to Beijing, too.

“The Chinese have to really think, ‘What’s in it for me if I help the Russians? And what’s in it for me if I don’t?'” Wezeman said.

Russia Left BehindRussia is facing a reputational quandary exacerbated by its military’s sub-par performance in Ukraine. Moscow’s limited military successes have come from massed, plodding offensives supported by withering artillery fire.

The Kremlin’s early failure to debilitate the Ukrainian government with a costly, ill-prepared thunder run on Kyiv showed the limits of Moscow’s expensive decade-long modernization drive, and the stubborn rot of corruption and Soviet-era organization.  » …
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