Press Release

Contact: Charles Falzone III, Foreign Affairs/Defense Analyst

Phone: (203) 426-0800

Fax: (203) 426-4262

Web site: www.forecast1.com

E-mail: charles.falzone@forecast1.com

Forecast International, Inc.

22 Commerce Rd. Newtown, CT  06470 USA

 

FOR IMMEDIATE RELEASE

 

Russian Arms Sales on the Decline

 

NEWTOWN, Conn. [May 12, 2005] — A Forecast International Military Market Report warns that Russia’s steadily declining arms export market, plagued by a poor reputation, is likely to get worse in the years ahead.  The recently updated Russia report featured in FI’s “International Military Markets – NATO & Europe,” notes that Russian arms exports dropped by nearly 26 percent from 2003 to 2004 – from $5.3 billion to $3.9 billion.  This despite the country’s efforts to attract sales using offsets, debt swaps and creative financing.

 

The Soviet Union’s collapse at the end of the Cold War left most Russian contractors without substantial government funding.  Aircraft manufacturers like Mikoyan, Sukhoi and Mil, for example, were seriously affected when the flow of state subsidies dried up, which left little for research and development.  In addition, former Soviet satellite nations, which traditionally turned to Russian manufacturers for military hardware, now shop the world market.

 

Studies by the Russian Rosoboronexport agency – tasked with exporting Russian military technology ­– also substantiate the fact that Russian arms exports have seen a decline in recent years because of poor investment. 

 

“It becomes clear through an analysis of export trends that growth in the Russian defense industry is impossible without large investment,” said Forecast International Defense Analyst Charles W. Falzone III. 

 

Russian Research and Development firms have promising new-technology blueprints, but little means to fund development projects that yield prototypes.  That most Russian military technology transferred in the previous five years featured modified designs developed in the 1970s and 1980s is another factor contributing to the decline in arms exports.

 

“Additionally, Russia has been unable to break into defense markets where Western arms manufacturers are well established,” Falzone said, “partly because Russian arms are not only viewed as technologically inferior, but also because the Russian defense industry has gained a poor reputation for providing follow-on support, spare parts and training for their weapons platforms.” 

 

Much of the Russian defense market is based on sales to China and India, which poses a problem in the coming years.  France and Germany, eager to supply military technology and hardware to China, are pushing the European Union to lift the 12-year-old Chinese arms embargo.  Although the EU is still debating the issue, it appears repeal is likely within the next several years if not sooner.  In turn, China is more likely to choose top-of-the-line Western hardware, such as France’s Rafale or Sweden’s Gripen fighters – currently under EU embargo – over what is generally perceived to be aging Russian technology.

 

Forecast International, Inc., is a leading provider of market intelligence and analysis in the areas of aerospace, defense, power systems and military electronics.  Based in Newtown, CT, USA, Forecast International specializes in long-range industry forecasts and market assessments used by strategic planners, marketing professionals, military organizations, and governments worldwide.  To arrange an interview with Forecast International’s analysts, please contact Monty Nebinger (203-426-0800, monty.nebinger@forecast1.com).