Odessa Network: a new report on Russian arms transfer networks

I would like to highlight a truly excellent report that came out this month on shipborne Russian international arms transfers. The Odessa Network details the network of Ukraine-based companies that are responsible for transporting the bulk of Russian and Ukrainian weapons deliveries to foreign clients. These are not companies are working on behave of rogue individuals, but rather have contracts with each country’s official arms exporting agency. The report details 40+ shipments over the last decades to countries such as Venezuela, Sudan, Vietnam, Angola, Syria, China and several others. There is a particularly enlightening case study that makes an effort to document recent shipments to Syria by ships connected to participants in the network. The authors argue that their approach can be used for detecting future arms shipments to countries such as Syria, where the exporting states are looking to avoid public exposure.

The study finds that the bulk of the shipments originate in the Ukrainian port of Oktyabrsk, located near Mykolaiv. This port was the main starting point for Soviet arms exports and appears to have continued its role in the post-Soviet period. The authors trace the connections between key companies, mostly based in Odessa, that are involved in arms shipments and Russian and Ukrainian government officials. They also trace links between these companies and EU shipping companies that provide specialized services for transporting cargoes that are outside the capabilities of the Ukrainian companies. Financial services and money laundering operations for the network appear to be run by Latvian banks.

As the authors themselves note, such a report cannot provide a complete picture, as some cargoes are shipped by air while neighboring countries (especially in the FSU) receive their arms by truck or rail, rather than ship. Nevertheless, the report introduces a wealth of detail on the process through which the bulk of Russian arms are shipped to customers around the world.

The one area where I think the report could be stronger is in the political conclusions it draws. One of the main questions I had from the start was “why Ukraine?” or “why not Russia?” In other words, why does the Russian government choose to depend on Ukrainian channels for shipping such sensitive cargo. The report points to the advantageous location of Oktyabrsk vis-a-vis St. Petersburg and Kaliningrad, but this does not explain why Russian Black Sea ports, such as Novorossiisk, are not used for such shipments. Similarly, even if Oktyabrsk needed to be the port of origin, why depend on a network of firms based in Odessa, rather than on a homegrown Russian network? A network based in Russia could still ship from Oktyabrsk, after all. Finally, given the tight government control over such sensitive cargo as arms shipments, it seems odd that the relatively conflictual relations between Russia and Ukraine during the Yushchenko presidency did not lead to any disruptions of the network. I realize that answers to these questions would be more speculative than data-driven, but they would be highly interesting for Russia-watchers interested in regional political relationships and their implications.

 

Iran’s S-300 lawsuit against Russia may backfire

I’m resuming posting briefs I write for Oxford Analytica. This one was published in early September.

In July, news broke that Iran had filed an arbitration case in Geneva seeking a 4 billion dollar fine against Russia for cancelling its contract to sell S-300 anti-aircraft missile systems to Iran. There has been speculation that the claim is actually part of a move by the two sides to restore the contract, perhaps as part of a larger deal that would have Russia resume significant military sales to Iran. In fact, Tehran’s move has angered Moscow.

Impact

o   The presence of the S-300 systems would make Iranian nuclear installations much less vulnerable to attack by Israeli or Western forces.

o   The situation complicates Russia’s relations with Iran, and makes it harder for Moscow to maintain ambiguity on Iran’s nuclear programme.

o   It is possible that Moscow has already threatened, in private, to cease UN Security Council vetoes of anti-Iranian resolutions.

o   If it moves forward, the case in Geneva is likely to be decided in favour of Russia.

What next

Tehran’s lawsuit may result in at least a temporary cooling of Russian-Iranian relations and a corresponding opportunity to increase international pressure on Iran over its nuclear programme. Russia is less likely than ever to resume sales of weapons to Iran in a situation where such a move would be seen as caving in to Iranian pressure. Instead, Moscow will seek to pressure Tehran to withdraw the claim without preconditions, and may publicly threaten to stop vetoing anti-Iranian resolutions in the UN Security Council if Tehran does not comply.

Analysis

The contract to sell five S-300PMU-1 battalions to Iran for 800 million dollars was originally signed in December 2007. The Russian government promptly became subject to a great deal of private and public lobbying by Israel, the United States and other Western countries that sought to have the deal cancelled.

Russia reverses its decision

Although the Russian government has resisted Western pressure for several years, it decided to cancel the contract in September 2010. Soon after the passage of UN Security Council Resolution 1929, which imposed sanctions banning the sale of most missile systems to Iran, then-President Dmitry Medvedev went further by announcing that Russia would stop virtually all military exports to Iran. The Russian government then returned the 167 million dollar advance it had received from Iran for the missiles. The units themselves were disassembled. The total losses to Russian arms exporters as a result of the freeze on military sales to Iran could be as a high as 1 billion dollars per year.

Iran has periodically sought to restore the contract. These efforts initially consisted of quiet diplomacy, followed by public complaints. To increase pressure on Russia, in April 2011, the Iranian government filed a case with the International Chamber of Commerce in Paris, claiming damages of around 900 million dollars from the cancellation of the contract. Iran’s argument is that the UN-mandated sanctions approved in 2010 did not apply to the S-300 missiles, since these were ground-to-air missile systems and designed primarily for defensive purposes. Observers largely agree that Russia’s move went beyond what the UN sanctions required.

The S-300 dispute generated widespread attention again this summer, as the Iranian government withdrew its case from the Paris tribunal. Tehran refiled it at the International Court of Arbitration in Geneva, and raised the damages sought to 4 billion dollars. Neither side drew attention to the lawsuit; information about the filing became public in July with the publication of the annual report of Rosoboroneksport, Russia’s state arms dealer. Since Rosoboroneksport is listed as the defendant in the claim, the potential liability was listed in the report.

Iranian officials have repeatedly noted that they are not interested in receiving the money they would get by winning their case. Iran saw Medvedev’s decree as a public humiliation that affected its pretensions to status as a regional power, in addition to reducing its ability to defend itself against possible Israeli or US air strikes.

Iran wants contract restored

The Iranian ambassador to Moscow has openly stated that should Russia agree to send the missiles, Iran would withdraw its suit. The implication is that Iran was using the suit in order to pressure Moscow to reinstate the contract. The size of the claim is equal to one-third of Rosoboroneksport’s annual revenue.

Tehran makes serious miscalculation

Tehran believes that the return of Vladimir Putin to the presidency, combined with escalating war of rhetoric on the part of Israel vis-a-vis Iran, has created a window of opportunity for Russia to reconsider its decision. It may be easier for Putin to restore the contract than it would have been for Medvedev, who signed the original decree to cancel the sale. Iranian leaders also believe that Russia wants to avoid the regional chaos that would most likely follow Israeli or US air strikes against Iranian nuclear facilities. One way of preventing such strikes is to bolster Iranian defences against air attack, which is the main purpose of S-300 missile systems.

However, if Iranian leaders believe that putting financial pressure on Russia will force them to resume arms sales, they have miscalculated. Russian leaders have already indicated that they will take a harder line against Iran’s nuclear programme if Iran does not withdraw the suit. One Kremlin official was quoted stating that if Tehran does not withdraw its claim in the near future, it will be on its own in dealing with the international community on nuclear issues.

Change of tactics

Iran appears to have recognised its error in judgment and has already begun to back off. The Iranian ambassador said that the size of the claim was increased by the court, rather than by Tehran. This seems unlikely, as even if the court chose to include punitive damages without an explicit request from Iran, the amount would have been discussed with the plaintiff in advance.

An end in sight?

Russia does not want to be seen as Iran’s pawn. At the same time, Moscow wants to maintain an ambiguous position on Iran’s nuclear programme — seeking to prevent Tehran from acquiring nuclear weapons while helping it resist Western pressure to completely shut down its nuclear programme, which Tehran insists is for peaceful purposes.

While the case is unlikely to result in a long-term shift in Russian-Iranian relations, it may damage the relationship in the short term. Iran will test the domestic Bavar 373 long-range air defence system during military exercises in October. If the system proves successful, Tehran may feel less of a need to continue seeking the S-300 and may decide to end the episode by withdrawing its claim.

 

New report on Russian interests in Syria, part 2: Russian arms sales

I’ve covered Russian arms exports to Syria on this blog before, but the CAST report has some useful new information on this topic. Barabanov and Aliev note that Russian arms exports to Syria were very limited until the restructuring of Soviet-era Syrian debt to Russia in 2005.  Shortly after that, the two countries signed a series of arms contracts with a total value of 4.5 billion dollars. While these contracts were not publicized, available information indicates that they included the following:

  • 8 MiG-31E interceptors. This contract was annulled in 2009, most likely because of Israeli objections. No aircraft were ever transferred.
  • 12 MiG-29M/M2 fighter jets, with an option for an additional 12. The first set of aircraft, and possibly all 12, are to be transferred towards the end of this year. No information is available on the option for an additional 12 aircraft.
  • 8 battalions of Buk-M2E missile systems (total value $1 billion). Four were shipped in 2010-11, with the rest to be transferred by 2013.
  • 12  battalions of S-125-2M Pechora-2M SAMs ($200 million). Four were shipped in 2011, and another four were shipped on the MV Alaed, which was recently forced to return to Russia after its insurance was cancelled.
  • 36 Pantsir-S1 anti-aircraft missile systems ($700 million). According to the CAST report, only 12 have been delivered so far. SIPRI, on the other hand, believes that all 36 have been delivered.
  • 2 K-300-P Bastion coastal defense systems, armed with 36 Yakhont anti-ship missiles ($250 million). Contract completed in 2011.
  • an unknown number of 9M123 Chrystanthemum self-propelled anti-tank missile systems. Most likely, none have been delivered to date.
  • an unstated number of Igla-S surface to air missiles (200 according to SIPRI). Contract completed in 2010.
  • modernization of 1000 T-72 tanks to T-72M1M level ($1 billion). Little work completed to date.

There was another set of contracts completed in 2007-08 to modernize Syria’s air force. This included the following:

  • 15 Su-24MK bombers. Work began in 2010. These are to be armed with Kh-31A anti-ship missiles, 87 of which were produced through 2010.
  • unknown number of MiG-29 fighters to SM level. (24 according to a previous CAST report). First four completed in 2011.
  • unknown number of MiG-23 fighters to MLD level. Seven completed through 2011.
  • 20 Mi-25 combat helicopters. 17 delivered so far. Last three were supposed to be delivered on the MV Alaed earlier this month.
  • 2 Ka-28 anti-submarine helicopters. Contract completed.

The most recent contract was completed in December 2011, for 36 Yak-130 trainer aircraft ($550 million). However, this contract has not yet been approved by the Russian government.

To summarize, Russia has completed about $5.5 billion worth of military contracts with Syria since 2006, primarily for air force and air defense modernization. The report notes that despite prompt payment by the Syrian side, fulfillment of many of the contracts was dragged out (and in the case of the MiG-31s, cancelled) by the Russian government. So far, Syria has received only $1 billion worth of equipment from these contracts.

The authors argue that Russia has been very cautious in selling arms to Syria, making sure that Western powers and especially Israel did not object to the equipment being provided. In particular, Russia has refused to sell Iskander ballistic missile systems and S-300 anti-aircraft missile systems to Syria. In other words, the report argues that Russia has valued its relationship with Western states and Israel more than the financial and political gains from selling more weapons to Syria. Furthermore, even if Assad’s government survives, it will not be able to afford to pay for more Russian weapons for the foreseeable future, limiting its role as a customer for the Russian defense industry.

Syria, Russia, the US, and the Implications of those Helicopters…

Josh Tucker from The Monkey Cage asked me to comment on the Russian helicopters supposedly heading to Syria. Here’s what I wrote:

Yesterday’s statement by Hillary Clinton that Russia is supplying Syria with attack helicopters has stirred up a great deal of controversy, providing more ammunition (so to speak) to US domestic opponents of the Obama administration’s policy of normalization of relations with Russia. This policy has already been damaged by Russian actions against domestic political protests, by serious disagreements over missile defense, and by the two countries’ diametrically opposed positions on the ongoing conflict in Syria. In this post, I want to quickly address the specific question of Russian arms exports to Syria and then turn to the political impact of this most recent contretemps.

I have written before on Russian arms sales to Syria. Most of the recent contracts in this sphere have involved missiles of various kinds, as well as the modernization of tanks and fighter aircraft. According to the Stockholm International Peace Research Institute (SIPRI), Russia has not sold any helicopters to Syria since the Soviet days. Although this is not evident from the SIPRI data, Russian sources indicate that a contract was concluded in 2005 for Russia to modernize Syria’s Soviet-made Mi-17 helicopters. Russian media is speculating that US intelligence confused the return shipment of Syria’s own (newly modernized) helicopters for brand new helicopters that have been sold to Syria.

While I don’t have the information to come down definitively on one side or another of this debate, I would just say that it is generally very difficult for Russian arms exporters to conclude a major contract of this type in complete secrecy. It also takes time to make the helicopters, so any such contract would have had to have been concluded at least a year or two ago, when there would have been no need for secrecy. There is I suppose some possibility that Russia is supplying Syria with helicopters from its own inventory, rather than newly built ones. But that seems relatively unlikely given the relative scarcity of good equipment in the Russian military after years of low procurement. So I would say that the most likely scenario is in fact that these helicopters are in fact modernized Syrian Mi-17s, rather than new ones secretly sold to Syria.

Regardless of the exact provenance of these helicopters, recent events and the rhetoric on both sides show that the conflict is rapidly heading in the direction of a civil war. Moreover, this would be a civil war with echoes of the proxy civil wars of the Cold War days, with Russia potentially arming the Assad regime while Western countries (and their Gulf State allies) arm the rebels. Such wars were fairly ubiquitous in the 1970s and 1980s, but have largely faded from our memory since the end of communism. At the time, both superpowers were able to compartmentalize their relations in such a way as to continue negotiations on critical issues like arms control while fighting these proxy wars and engaging in rhetorical battles over the relative virtues of communism, capitalism, Western democracy and people’s democracy. It may be that leaders on both sides will soon need to relearn those compartmentalization skills so they can continue to cooperate on issues that are important for both sides (Afghanistan, counter-terrorism, counter-piracy, dealing with the rise of China) even as they take opposite sides in a likely civil war in Syria and engage in increasingly heated rhetoric about repression of grassroots protests (or, from the Putin government’s point of view—Western efforts to foment regime change) in Russia.

UPDATE: Actually, the helicopters are modernized Mi-24s. Not sure whether the Russian media reports were mistaken and the mid-2000s modernization contract was for Mi-24s rather than Mi-17s or if there were two separate contracts.

Russia fears demonstration effects of Syrian uprising

Here’s the full text of my Oxford Analytica brief from January. I posted an abbreviated version earlier, but now can post the whole thing.

As the uprising in Syria approaches its one-year anniversary, the stand-off between its government and the international community seems set to continue for the foreseeable future. Throughout this period, Russia has been Syria’s foremost protector in the international arena. It has taken on this role because of Syria’s economic significance for the arms export industry, its role as the host of Russia’s only military base outside the former Soviet Union — and concern that a successful mass uprising might have negative consequences for its own political stability.

What next

Russian leaders will use the Syrian crisis as an opportunity to show that their country is still a force to be reckoned with in the Middle East. They will also press their case that overthrow of the current Syrian regime would lead to further instability in the region — which might even spread to parts of the former Soviet Union. As a result, Russia will continue to do its utmost to prevent the fall of President Bashar al-Assad’s regime.

Analysis

Syria is one of the five largest foreign buyers of Russian defence equipment, receiving 6% of all arms exports in 2010 (the most recent full year for which data are available). In recent years, Syria has received:

  • 2,000 anti-tank missiles for modernised T-72 tanks (delivered between 1999-2005);
  • 200 Igla (SA-18) portable surface-to-air missiles, delivered without portable launchers as a result of US and Israeli pressure — and therefore usable only on ships, helicopters or vehicles (delivered in 2006);
  • 36 Pantsir-S1 mobile air defence systems, armed with 500 SA-19 surface-to-air missiles (delivered between 2008-10);
  • 2 K-300 Bastion coastal defence batteries, armed with Yakhont (SS-N-26) anti-ship missiles (delivered in 2010).

Contracts for future deliveries include:

  •  200 more SA-19s;
  • additional Igla portable surface-to-air missiles;
  • 2 MiG-31M interceptors, second-hand from the Russian air force;
  • 8 Buk-M2E missile system batteries (worth 1 billion dollars); and
  • an unknown number of 9M123 Chrysanthemum self-propelled anti-tank missile systems (status uncertain);
  • 36 Yak-130 training aircraft (worth 550 million dollars, announced this month);
  • modernisation of 24 Syrian MiG-29s to the SMT level;
  • modernisation of S-125 Pechora-2 surface-to-air missiles; and
  • modernisation of 200 T-72 tanks, as part of a 500 million dollar contract to upgrade 1,000 tanks, with 800 already completed by end-2010.

The total value of these contracts is around 4 billion dollars; the agreements are critical for some companies’ financial survival. Russian exporters fear that regime change in Syria would lead to the loss of contracts, as new rulers may pursue opportunities to purchase weapons from other countries. They point to Libya as an example of the economic impact of a government overthrow on Russian arms sales. Since the uprising began, Russia has continued to send weapons to Syria, including a shipment of various munitions that came to attention this month after the ship carrying the weapons made an unscheduled stop in Cyprus because of high seas.

Wider interests, higher stakes

In addition to military contracts, Russian companies have other investments in Syria, primarily in natural gas extraction. These are valued at approximately 20 billion dollars and include a pipeline and a liquefied natural gas production facility.

Based on their experience with the new government in Libya, Russian leaders believe that these contracts will be lost if the opposition comes to power in Syria. Even if Russia abandons Assad at this point, they assess that the opposition would not forgive their earlier strong support for his regime. The announcement of a new contract for training aircraft this month, with initial deliveries scheduled for 2013, shows that the Russian government has decided to bank on the survival of the Assad regime. If the regime falls, both this contract and the other unfulfilled contracts for Russian military equipment are almost certain to be cancelled. Russia’s economic interests in Syria can be maintained only if Assad defeats the opposition or there is a negotiated settlement.

The role of Tartus

In the years after the break-up of the Soviet Union, Russia gave up all but one of its military facilities outside the territory of the former Soviet Union. The one remaining is the naval logistics facility in Tartus. This is not a true military base, since it does not permanently host any Russian military personnel other than the 50 sailors who staff it. It consists of two floating piers, a floating repair facility, and a supply depot. Its primary purpose is to repair and resupply Russian navy ships transiting the Mediterranean.

Russian leaders are concerned that the fall of the Assad regime may lead to the closure of this facility. While the Syrian opposition has not made any statements regarding the future of Tartus, Russia has long depended entirely on Assad and cannot expect to have good relations with his successors, especially if they come to power by force.

Power projection

The recent visit to Syria by a Russian naval group that included the Admiral Kuznetsov aircraft carrier was designed to demonstrate the importance that Russia attaches to its relationship with Syria and its current leadership. While official Russian sources repeatedly stated that this was a routine resupply visit scheduled long ago and had no political connotations, it was almost certainly intended as a political signal. The arrival of the ships was interpreted at home and abroad as a sign that Russia would not tolerate a ‘Libya scenario’ — and was perceived as such by the Syrian government and official media, which trumpeted the arrival of the ships as an indication of Russian support for the Assad regime.

Russian leaders may have actually meant to signal something slightly different: they want to demonstrate that Russia remains a player in the Middle East, and that its positions have to be taken into account. They believe that Assad’s departure will result in Syria either becoming a Turkish ally or descending into long-term chaos and civil war. In either situation, Russia will lose a dependable ally.

Syrian demonstration effects

The authorities in Moscow are also concerned that further successful popular uprisings in the Middle East may lead to demonstration effects in its own neighbourhood — and perhaps even in Russia itself. Initially, the greatest fear was about the possibility of popular uprisings bringing down ‘friendly’ autocrats in Central Asia. However, the recent large demonstrations against the falsification of elections in Russia itself have only increased its leaders’ determination to ensure that no additional ‘dominoes’ fall under popular pressure.

While the ‘Arab awakenings’ have little direct connection to the emergence of protests against Vladimir Putin’s political order, Russian leaders feel that they are surrounded by a tide of anti-incumbent protests — and see each government toppled as potentially feeding the mood throughout the world. A related fear is that the overthrow of the Assad regime may feed a resurgence of anti-government protests in Iran, bringing the region’s political instability even closer to Russia’s borders.

Furthermore, Russian leaders are concerned about the gains made by Islamist forces in the region, and particularly in Egypt. The twin dangers of popular overthrow of local autocrats and the subsequent victory of Islamic parties in elections raise the danger of an Islamist takeover of parts of Central Asia. Such a scenario would likely lead to a significant increase in migration flows from the region to Russia, further destabilising the domestic political situation.

An Enduring Partnership: Russian-Indian military cooperation (Part 3: joint projects and future prospects)

And here’s the conclusion to the three part series on Russian-Indian defense cooperation, written last summer. New posts return next week.

Joint Projects

In addition to purchases, Indian and Russian defense industries are working on a range of joint projects, some of which have already resulted in very successful products. As India increasingly shifts from importing to domestic manufacture of military hardware, joint production is likely to replace sales as the main driver of Russian-Indian defense cooperation.

The BrahMos supersonic cruise missile is considered by some experts to be the fastest and most accurate cruise missile in the world. It has a range of 290km, can be used against ships or land targets, and can be launched from ships or land. Air and submarine launched versions are currently under development, with a design complete for Russia’s Amur diesel submarine. The missile is currently in service on Indian frigates and destroyers, as well as in the Indian army on mobile launchers. The air version will be installed on Indian aircraft by 2012. A faster and more accurate BrahMos II missile will be ready by 2014 and will be installed on the Kolkata class destroyers. It will be capable of speeds up to Mach 6. BrahMos version III, designed to be highly maneuverable and capable of steep dives, is currently under development. The BrahMos is not currently used by the Russian military, though version II may be equipped on the next generation Russian destroyers (project 21956) that are currently being designed. It is available for export, with Chile, Brazil, South Africa, Indonesia and Malaysia involved in negotiations for a potential purchase.

A project to jointly develop a multi-role transport aircraft is in initial stages, with costs being split evenly among Rosoboronexport, UAC, and HAL. A joint venture was registered in India in December 2010. Developers believe that a prototype aircraft may be built in 6-8 years. It will be modeled on the Il-214, with a range of 2500km and a payload of up to 20 tons. The goal is produce around 200 aircraft, with 30 percent available for export.

India’s HAL is cooperating with Sukhoi on the development of a new fifth-generation fighter aircraft, which is slated to join the Russian and Indian air forces in the second half of this decade. This plane will be highly “stealthy” and highly maneuverable. Its top speed will exceed 2000 km per hour, with a maximum range of up to 5000 km. Its ability to take off and land on short runways make it a potential candidate for the development of a carrier-based naval version. A contract to produce a joint design for a two-seat version of the plane was signed in December 2010. The contract calls for Russia to procure 200 single-seat and 50 twin-seat aircraft, while India purchases 50 single-seat and 200 twin-seaters. HAL is to design the computer and navigation systems and most of the cockpit displays. It will also modify Sukhoi’s single-seat prototype into the twin-seat version. Currently, three single-seat prototypes are undergoing flight tests in Russia and may join the Russian air force as early as 2013. The Indian prototype is expected to be ready by 2015. The total value of the joint project is estimated at over $35 billion.

Future Prospects

Military cooperation between Russia and India is obviously very strong. The partnership has moved beyond arms sales and licensing of Russian designs for production in India to joint ventures that promise to link the two countries’ defense industries into close cooperation for the foreseeable future. At the same time, some recent problems with the relationship may be a harbinger of a long-term decline in Russian arms sales to India. The delays and cost overruns that have plagued the conversion of the Admiral Gorshkov aircraft carrier into the INS Vikramaditya have been the most significant source for Indian complaints in recent years. The problems seem to have been worked out and Indian navy officials have recently stated that they have no complaints at this point.

At the same time, there have been problems with the timely provision of spare parts and resulting difficulties in repairing and servicing Russian-manufactured equipment by the Indian military. For example, half of India’s upgraded MiG-21s, which were modernized between 1996 and 2006, are already in disrepair and the backlog at Russian repair facilities has led the Indian air force to decide to cannibalize some of its existing aircraft rather than having all of them fixed. As a result, the modernized MiG-21s are to be retired by 2018, rather than the originally planned 2025.

The reform of the Russian military has also caused some problems, including the recent and sudden cancellation of the Indra-2011 military exercises that included both naval and ground forces components. It appears that these exercises were canceled because of organizational chaos in the Russian military. In addition, the Russian air force has so far refused to conduct joint exercises with India, possibly because of fears that Indian pilots flying Russian-built aircraft would outperform their Russian counterparts.

India’s desire to maintain a diverse set of suppliers has recently had some negative effects on Russian suppliers. Most significantly, the MiG-35 was not included among the finalists for India’s medium multi-role combat aircraft competition. Since this loss leaves MiG with no guaranteed orders for the MiG-35, it is now unclear whether this jet will be built at all. Similarly, India recently decided to purchase six C-130 transport aircraft from the United States, rather than Russian Il-76 planes.

Finally, whereas in the initial stages of its military expansion, India was focused on procuring armaments that were cheap and easy to use, its foreign purchases are now largely limited to the most advanced technology. Simpler weapons and platforms, such as smaller ships and aircraft, are now largely built in India either to domestic designs or under license from foreign designers. As a result, Indian demand for foreign military hardware is likely to shrink over time. If Russia is to remain competitive on this shrinking market, it will have to provide its most advanced equipment and to expand joint design and production. The fact that it has been willing to do so with the Su-30MKI and T-50 fighter jets is a sign that Russia greatly values its partnership with the Indian military. India also values the partnership, since Russia is the only country currently willing to jointly develop military hardware with India. So despite the above-mentioned bumps in the road, it seems likely that Russian-Indian defense cooperation is likely to become stronger over the next decade.

 

An Enduring Partnership: Russian-Indian military cooperation (Part 2: aircraft and ground forces)

Here’s part 2 of the piece on military cooperation with India from last summer. Look for part 3 (on joint projects) next week, as well as an update on recent developments (which include the failure of the Mi-28 in the helicopter tender discussed below).

Aircraft

The vast majority of fixed-wing aircraft and helicopters operated by the Indian air force were purchased from Russia. These include 121 Mig-21 Bison, 69 Mig-29 Fulcrum, and 157 Su-30MKI fighter aircraft, 145 Mig-27UPG ground attack aircraft, 105 An-32 medium transport aircraft and 24 Il-76 heavy transport aircraft. The air force also operates three Il-76 aircraft equipped with Israeli EL/M-2075 Phalcon AWACS systems and 6 Il-78MKI aircraft fitted with Israeli refueling systems. In addition, the air arm of the Indian navy operates 8 Tu-142M and 5 Il-38SD maritime patrol aircraft. The latter aircraft, three of which were originally purchased 30-40 years ago, were modernized over the last 10 years.

In 2008, the two countries signed a contract to upgrade existing Mig-29s, in service since the 1980s, to the Mig-29SMT standard, at a total cost of $964 million. The first four aircraft will be upgraded in Russia, while the other 58 will be overhauled in India with the assistance of Russian experts. During the overhaul, which will be completed by 2013, the planes will be fitted with advanced avionics, new multi-functional Zhuk-ME radars, a new weapon control system, new armaments, and revamped engines. As a result, the lifespan of the aircraft will be extended by 25-40 years.

The Indian navy has ordered a total of 45 MiG-29K carrier-based fighter aircraft, to be used on the Vikramaditya and the indigenously built Vikrant. An initial 16 planes were ordered in 2004 as part of the Admiral Gorshkov/Vikramaditya deal, with delivery initially scheduled for 2011-12. The first five planes were transferred to India in early June 2011. In January 2010, the Indian navy ordered an additional 29 planes for the Vikrant at a cost of $1.5 billion. Together with a future naval variant of Hindustan Aeronautics Ltd.’s (HAL) Tejas planes, the MiG-29s will thus form the core of India’s naval aviation for the foreseeable future.

India has been purchasing fighter jets from Sukhoi since the mid-1990s. An initial contract for 50 Su-30 jets was signed in 1996. Four years later, HAL signed a $4 billion contract with Sukhoi to assemble from kits 140 Su-30MKI fighter jets. Since then, it has signed two further contracts for an additional 58 aircraft, worth a total of $2.4 billion. Eighteen of these planes were received in 2007 and 2009 in trade for an equal number of older Su-30K and MK aircraft that had been in service since the late 1990s. The other 40 were received in 2008-10 and included 20 finished aircraft and 20 assembly kits. The planes received in the first phase of deliveries are to be modernized, with 40 planes to be upgraded with new radars, avionics, and BrahMos supersonic missiles. The project will begin in 2012 and will be carried out by HAL at a cost of $2.34 billion with assistance from Russian experts.

A contract for another 42 planes at a total cost of $4.3 billion was negotiated in 2010. These planes are to be delivered by 2018. Their high unit cost, compared to previous units, has sparked rumors that these planes would be provided to India’s Strategic Forces Command and would be designed to carry nuclear weapons. These rumors have not been confirmed to date. Thus, by the end of this decade, the Indian air force plans to have a total of 270 Su-30MKI fighters in service at a total cost of around $14 billion, making it the dominant aircraft in its fleet. Furthermore, Mikhail Pogosyan, the head of Russia’s United Aircraft Corporation (UAC), has stated that India might purchase an additional 200 Su-30s in the foreseeable future.

Other potential future aircraft sales to India include naval reconnaissance planes, where the Russian Be-200 amphibious plane is a finalist along with the Canadian Bombardier Q-400 and the Swedish Saab-2000. The United Aircraft Corporation’s Il-78 is a finalist (together with the EADS A-330) in a tender for refueling planes for the Indian air force.

The Indian military is also one of the largest customers of the Russian Helicopters Corporation. The air force currently operates 260 Russian-made helicopters, including 4 Mi-26 heavy transport helicopters, 68 Mi-8 and 156 Mi-17 utility and transport helicopters, 5 Mi-25U training helicopters, and 7 Mi-25 and 20 Mi-35 helicopter gunships. The navy operates 5 Ka-25 multi-purpose helicopters, 18 Ka-28 ASW helicopters, and 9 Ka-31 airborne early warning helicopters. An additional 9 Ka-31s and 8 Ka-28s are under contract for future delivery.

India has been systemically replacing its aging Mi-8s and Mi-17s with upgraded Mi-17s. An initial contract for 80 armed Mi-17-V5s was signed in 2008, 59 Mi-17-1V transport helicopters were purchased in 2010, and a contract for another 80 Mi-17-V5s was signed in June 2011 at Le Bourget. The first four helicopters were delivered in September 2010, with further deliveries anticipated over the next five years. Russian Helicopters Corporation is also hoping to receive a contract to modernize 108 Mi-17s for the Indian army and 15 Ka-28s for the navy.

Russia has made the short list for all four helicopter tenders being conducted by India, which include the following:

1) A $2 billion tender for 197 small utility helicopters for the army, where the competition is between the Ka-226T Sergei and Eurocopter’s AS-550 Fennec;

2) a $600 million tender for 22 attack helicopters, with the Mi-28NE Night Hunter and the AH-64D Apache Longbow still in the running;

3) the Mi-26T2 is competing with the CH-47F Chinook in a $700 million tender for 15 heavy transport helicopters; and

4) a recently announced tender for 50 light multi-purpose naval helicopters.

Decisions on at least some of these tenders are likely to come later this year. If Russian Helicopters is chosen for at least one of these deals, it will increase its credibility for exports to other countries and potentially spur further foreign sales.

Ground Forces Equipment

Several years ago, the Indian army chose the Russian-made T-90 as its main battle tank. An initial party of 310 T-90S tanks had been purchased in 2001 and received by 2006. In 2007, it bought an additional 347 upgraded T-90Ms, which are being assembled in India under license. Another 1000 T-90M tanks will be built locally over the next ten years. The Indian army also operates almost 2000 older T-72 tanks and 1500-2000 Soviet-made BMP-1 and BMP-2 armored vehicles.

A significant percentage of the Indian army’s artillery and missile systems are also Soviet or Russian-made. The most significant items include the Tunguska and Shilka self-propelled anti-aircraft guns, Smerch and Grad multiple rocket launchers, as well as a range of tactical surface-to-air missile systems that includes the Strela, Osa, and Klub. The Indian Army also operates the S-200 and S-300 strategic SAM systems. However, India has no plans to make additional purchases for its ground forces from Russia, as it increasingly shifts to domestic military production.