No Stopping Russian Arms
By Pavel Felgenhauer, The Moscow Times
July 27, 2004 — Russia came in for harsh criticism last week when state-owned jet producer MiG delivered 12 MiG-29 planes to Sudan. Amnesty International suggested that the jets could be used against civilians in Sudan’s western region of Darfur, where attacks against indigenous black tribes by the government-backed Arab janjaweed militia over the last 15 months have left at least 30,000 people dead, forced villagers into refugee camps and left some 2 million people without sufficient food and medicine. U.S. Undersecretary of State John Bolton blasted MiG for selling modern weapons to a government the United States considers a sponsor of international terrorism.
This is certainly not the first time that Russian arms exports have raised hackles in Washington. There is hardly a local war or conflict in the world where Russian arms are not extensively employed because they are reliable, relatively cheap and often specifically designed in the Soviet era for use by poorly trained and educated conscript soldiers.
Massive Russian arms shipments to China have also distressed the Pentagon, especially the sale of warplanes and sea-based weapons that could be deployed against Taiwan. The United States has pledged to defend Taiwan in case of an attack from the mainland. Were such a conflict to occur, Russian-made weapons would undoubtedly play a major role.
Washington has denounced Russian arms sales to Syria and Iran, nations it accuses of sponsoring terrorism. Last year the Pentagon claimed that Russian-made Kornet guided anti-tank missiles had been smuggled from Syria into Iraq and used to knock out U.S. armor. State-owned KBP Tula, which produces the Kornet, has been hit with U.S. sanctions for doing business with Syria and Iraq. Several other Russian companies have also been sanctioned, mostly for deals with Iran.
KBP peddles its wares in China and the Arab world, and U.S. sanctions have not directly affected its business. But an executive at one defense firm now hit by U.S. sanctions told me that Washington’s wrath is a financial burden. Most arms contracts are calculated in U.S. dollars, and over the last decade or so wire transfers into Russia have been handled by U.S. banks, in particular the Bank of New York.
“We were warned that wire transfers going through New York could be frozen because we are under U.S. sanctions,” the executive told me. “We resorted to alternative mechanisms for wiring the money into Russia, but had to pay a much higher fee — up to a few percent of the total value of the contract.”
Still, the potential profit to be made selling arms to so-called “nations of concern” is too great for the threat of U.S. sanctions to be a serious obstacle. The main MiG assembly plant at Lukhovtsy, south of Moscow, had some 200 MiG-29 fighters on hand when the Soviet Union collapsed in 1991, most of them ready to ship. MiG is still in the process of selling off this Soviet hardware to nations like Algeria, Yemen and Sudan.
Yevgeny Ananyev, a banker connected with MiG in the 1990s, went into hiding after Italian authorities issued an international warrant for his arrest. He stands accused of bribe-taking and money laundering in connection with the sale of three MiG-29s to Peru in 1998. In 1998 Ananyev, then chief of state-owned arms-trade monopoly Rosvooruzheniye, told me that at the Lukhovtsy facility Soviet-made MiG-29s were dismantled and then reassembled under the supervision of foreign customers’ representatives and sold as new.
The so-called production of arms using Soviet designs and equipment, a Soviet-trained workforce and Soviet-made weapons repainted to look like new is typical in the defense industry today. This keeps production costs low and profits high, while the veil of secrecy surrounding the arms trade allows firms to avoid taxes almost entirely.
In Russia, a single arms contract can make you rich overnight. The chance of cashing in and becoming a millionaire is a temptation that no criticism from Amnesty International or the State Department can do anything to discourage.
Foreign customers, especially in rogue states, are also happy to do business with Russia. They get quality fighter jets at a very good price. Soviet-era planes are not exactly cutting-edge, of course. Iran in 1991 and Yugoslavia in 1999 deployed MiG-29s against Western aircraft without much success. But in regional conflicts in Africa and Asia, Russian, or Soviet, weapons will do the job for years to come. They will be readily available, and there is nothing the West can do about it.
Pavel Felgenhauer is an independent defense analyst.