Political economy of Russian arms deal (2)

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.