Media: India, Algeria, Vietnam still biggest buyers of Russian arms

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Dec. 18, 2012, 9:59 a.m. | Russia and former Soviet Union — by Interfax-Ukraine

A picture taken on January 24, 2011, shows an armoured military version a Russian Tiger 4X4 car negotiating deep snow in the countryside some 120 km west of Moscow. Russia's deputy prime minister responsible for the defence industry, Dmitry Rogozin, said on today he was planning to ditch his BMW for a Tiger, a locally made military vehicle billed as Russia's answer to the Hummer.

MOSCOW - Russian arms exports reached a record $14 billion in 2012, President Vladimir Putin said, and India, Algeria and Vietnam remain the biggest buyers, Kommersant reported on Tuesday.

However, the leading buyers were joined by Iraq, which entered into a contract to buy 42 Pantsir-S1 air defense systems and 30 Mi-28NE combat helicopters worth a total of $4.2 billion, or about 30% of all contracts, the paper reported.

The paper said the figure of $14 billion was reached in part because the financial year closed with the inclusion of profits from the $2.33 billion contract with India to modernize the Admiral Gorshkov (Vikramaditya) aircraft carrier. However, due to problems identified in sea trials, the carrier will only be delivered in the fourth quarter of next year.

Not including the delayed delivery of the carrier, Russian arms export revenues totaled about $11.7 billion in 2012, the paper said.

The contract with Iraq has also run into problems. The adviser to Iraq's prime minister, Al Mousavi said on November 10 that the deal has been annulled due to suspicions of corruption.

Moscow immediately officially asked Baghdad to clarify the situation, but has still not received a response, Kommersant said. "It's possible that this deal will be frozen for some time, because we need to understand how serious our partners' intentions are. They first need to sort things out among themselves," the paper cited a source as saying.

Citing sources in Russia's system of military and technical cooperation, the paper said little had actually changed in the sector compared to last year. The overall order book is still about $40 billion, down from $50 billion in 2010.

"Our portfolio of orders will remain at this level for three-four years. The future is not rosy. In the absence of really big contracts, like for example the ones concluded with Algeria in 2006 ($7.5 billion), the portfolio could shrink by up to half," the paper quoted a source close to the Federal Military and Technical Cooperation Service as saying.

Nonetheless, the breakdown of exports changed slightly in 2012, Kommersant said. Aircraft accounted for 37% of all contracts secured this year, up from 34% in 2011; naval hardware edged up to 21% from 20%; air defense systems rose to 25% from 20%; ground forces hardware fell to 10% from 21%; and other contracts made up 7%, up from 5%.

Meanwhile, the future of military and technical cooperation between Russia and Libya is up in the air, and Russia has not managed to enter the markets of Angola and Nigeria, the paper said, citing a source in the sector.

However, Russia might begin specific negotiations on ground forces hardware and aircraft with the military of Equatorial Guinea in 2013, he said.

As for China, with which Moscow signed a $700 million contract this year for 140 AL-31F aircraft engines, Kommersant reported that Beijing is still trying to persuade Russia to sell it one division (eight units) of the S-400 Triumf anti-aircraft weapon systems. However, Russia's Defense Ministry and Federal Security Service still oppose the deal.

"The Chinese need technical elements of this system in order to develop their own equivalents on their basis. Selling the systems before our military has them in the necessary numbers is suicide," the paper quoted its source as saying.

There is also an impasse with Su-35 fighter jets. China wants to buy a minimum batch of 12, but Russia is insisting on 30 jets and setting up joint production, the paper said.

The paper, citing its sources, also said that servicing of military hardware in Russia remained at a low level. Improving this situation will become a priority for Russian military and technical cooperation next year, the paper said.

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