Political economy of Russian arms deal (2)

By J. Kusnanto Anggoro

This is the second of two articles examining the surge in Russian arms sales in recent years.

JAKARTA (JP): The regression of the government's subsidies has affected Russia's arms industry. Employment in the defense- industrial complex is reported to have declined by 600,000 and wages for those who remain are said to be 62 percent below the average in other industries.

The arms exporting policy has become a chronic issue, involving the conservatives and the moderates, and has undermined Moscow's authority regarding regional leaders, who are so dependent upon the arms industries.

In the short term, Yeltsin could rely on promises of wage increase to regain political support for his reforms programs. He has been visiting the arms industry complex and has promised the workers a higher wage. So far he gets what he needs. But this sort of gimmick cannot be a reliable political gesture in the long term.

The options for Yeltsin are to, first, provide more subsidies for the arms industries and more budget on arms procurement, and, second, share his authority with regional leaders and local managers in the arms transfer policy.

The first is simply not a viable choice. It would put more burden on the already overtight central government budget. More subsidies for the arms industries would, logically, reduce the social security budget, which might, politically, be counter- productive at home and place other externally linked issues of western economic aid, on the back burner.

On the other hand, the second choice is potentially promising not only for the purpose of political mobilization at home, but also for Russia's external relations. It could lay, for example, the foundation for anticipating a changing situation in Russia's relations with the West.

Indeed, the arms transfer policy may not necessarily become a rallying point for Yeltsin, or his protege, in the upcoming parliamentary and presidential elections.

All political quarters in Moscow have now displayed a rare unanimity in calling on the government to actively promote arms exports to restore positions with traditional buyers of Soviet- Russian weapons and to explore new markets.

However, while the social consequences of enforcing hard- budget constraints will continue to haunt Prime Minister Chernomyrdin, the urgency of promoting arms exports will only grow. It is illustrative that Defense Minister Grachev himself expects Russian arms exports to rise by 40 percent in 1994.

To capture external markets, the Russians have, since early 1993, been increasingly willing to break old patterns of arms supply and compete in technology transfer to ensure minimal market share.

Promotion, price-slashing, and extended warranties are the main strategies of the Russian arms trade offensive. Defense Minister Grachev and the chair of the Russian State Committee for Defense Branches of Industry, Viktor Glukhikh, led an unusually high-profile delegation to an important arms fair in the United Arab Emirates in February 1993.

They offered 370 weapons systems, including R-73 air-to-air missiles, that were not yet acquired by the Russian military.

Grachev said that Russia would concentrate on products where Moscow believed it was more cost-effective than its western counterparts. This would, traditionally, include fighters, air defense systems, and main battle tanks.

Moscow has great deals to offer. A MiG-27 fighter, for example, has been offered for only US$16 million. Moscow also gives a 10-year warranty to cash customers. Unlike western countries, Moscow's sales bear no political conditions. The Russians sold their arms to India, but also to South Korea and China.

Alexander Rutskoi, the then Russian vice president, visited Kuala Lumpur in March, 1993, to personally promote Moscow's long- standing offer to sell millions of dollars worth of fighter aircraft to Malaysia. Kuala Lumpur eventually paid $550 million for eight MiG-29 fighters, instead of the previously agreed price of $800 million.

With the same amount of money, the Malaysians would have acquired eight F/A-18 jet fighters from the United States under a contract it signed in December. The Russians also sold T-72 main battle tanks, C-300 surface-to-air missiles, and MiG-29 and MiG- 31 fighters to China.

The sales to China led to the transfer, from Russian, of production facilities for the advanced Su-27 fighters and SA-10 surface-to-air missiles, as well as technical assistance. Recently, the Russians agreed to sell MiG-29 fighters, T-72 main battle tanks and surface-to-surface missiles to South Korea.

The Russians arms transfer could precipitate a more intense military build-up and bring a grave blow to the security of the Asia and Pacific region. It is perhaps to thwart the South's conventional superiority that North Korea began deploying ballistic missiles, capable of reaching eastern parts of China and Japan.

Chinese purchases of Russian T-72 main battle tanks and 300 SAMs would certainly be anticipated by the arms acquisitions of Taiwan and Japan. A Russian-Indian cooperation of developing the Advanced Space Launch Vehicle, which is capable of reaching targets 4000 kilometers away, and delivering 500-kilogram nuclear payloads, perhaps even multiple war-heads, has been responded with, by Pakistan, the development of Hatf ballistic missiles.

It is not at all clear whether the Russian arms transfer was the main factor behind the arms modernization in Taiwan, Japan and Pakistan. Military acquisition may stem from domestic factors, as well as external threats. Shortages of adequate spare-parts, changes in the defense doctrine, weaknesses in local defense industries, and budgetary politics have their own roles to play in arms dynamics.

Whatever the case, the message is that security is always an interdependent phenomenon. A state can never achieve a higher level of security by deploying more threatening weapons that would, in some ways, be responded to by its potential enemies. In short, one can never be safer by threatening others. With this backdrop in mind, it is predictable that the Russian arms transfer may, in the future, be responded to by similar gestures from the United States and other major arms suppliers.

The Russian arms transfer implies a more fundamental problem of designing an appropriate strategy of counter-proliferation. Both global and regional cooperation are now required to detect proliferation as early as possible. While confidence building measures and commitments to a peaceful solution of conflicts have become the catch-phrases of preventive diplomacy, transparency and arms registry should become its practical implementation. They are closely related to the problems of intention and capabilities, two intertwined factors in both the arms race and crisis stability respectively.

As far as the region of Asia and the Pacific is concerned, not much was achieved in the last meeting of the ASEAN Regional Forum-Senior Official Meetings in Brunei on May 20, 1995. Everybody agreed to the issue of setting up a regional arms registry.

As the first official meeting was devoted particularly to a wide range of measures to bolster peace and security in the post- Cold War era, it was a great achievement. What kind of practical steps, and scope, to be included in the registry have not been clearly defined.

If the registry is aimed at, say, finding ways to recognize the capabilities of others, and to block the flow of destabilizing weapons to the region, then it should avoid imposing greater transparency on major arms importers, and on countries with substantial domestic arms industries, rather than on exporters.

With substantial changes in Russia's arms exporting policy, any effort to retard the proliferation of destabilizing weapons, greater efforts are needed in this sensitive issue.

The author is a researcher in strategy, politics and international security at the Centre for Strategic and International Studies, Jakarta.