Forecast International,
NEWTOWN: According to reports from the RIA Novosti news agency, the Kremlin is planning to up its target for 2009 arms sales to $8.5 billion. This represents a 6 percent increase over the 2008 target of $8 billion, which was surpassed with a total of $8.35 billion in arms exports registered in 2008.
Of note is the fact that Russian defense industry officials remain outwardly optimisitic of this prediction despite the global economic crisis that is sapping purchasing power from key client states and is simultaneously threatening to engender the collapse of the Russian defense-industrial base.
On February 12, Alexander Fomin, Deputy Director of the Federal Service on Military-Technical Cooperation, announced that “despite the financial crisis, we are planning to boost our arms exports in 2009. I believe I would not be mistaken if I were to mention a figure around $8.5 billion.”
When asked about the above-expected performance of Russian arms exports in 2008, Fomin noted, “Our plan for 2008 was over-fulfilled.”
Russian arms exports may not experience the same good fortune in 2009. Many of Russia's primary client states, including Venezuela, Algeria, Malaysia, and Iran, are heavily reliant economically on high energy prices, just as Russia is. The downturn in late 2008 that is expected to continue through 2009 significantly erodes their purchasing power and hinders Russia's own ability to provide preferential financing options to these clients.
Other Russian clients, most notably China and India, are gradually developing their own defense-industrial capability thanks in part to technology transfers and licensed-production agreements with Russia. Both of these trends may portend that 2009 will not be the record-setting year for Russian arms sales that 2008 was.
