Valdai Club 5: Meeting with a senior defense industry official

On May 25, the Valdai group met with a senior representative of one of the major Russian defense industry corporations. The meeting was conducted entirely under the Chatham House rule, so I can discuss the content of the meeting but cannot name the speaker or the other participants.

For various reasons, I was not able to take detailed notes at the meeting, so in order to provide a complete set of reports on all of the events at the conference, I will quote (with permission) from Richard Weitz, a colleague who also participated in the meeting. His full article discussing this meeting in the context of the overall state of the Russian arms export industry is well worth reading and can be found at the Second Line of Defense blog.

The defense official argued that Russia can continue to sell arms to China. Richard described his statements this way:

But the defense company head we had dinner with insisted that Russian firms still see opportunities for additional lucrative weapons sales to China. Although he recognized that Russia helped contribute to the improved quality of the PRC defense industry through its license transfer of Su-27 technologies and other means, he still saw future opportunities for profitable collaboration with the Chinese. According to him, such collaboration is possible since most representatives of the Chinese aerospace industry recognize that China’s defense sector is still lagging and therefore needs to rely on foreign partners.

When I asked about the PLA’s recently unveiled “5th-generation fighter,” this defense company leader responded that the Chinese have a long way to go before they will produce a genuine “5th-generation” plane equivalent to the Russian Tu-50. He explained that although some of the subsystems of China’s J-20 might be considered 5th-generation, the Chinese still need much more time to combine all these subsystems effectively and produce a genuine state-of-the-art 5th-generation craft.

The relationship with India is of particular interest, as it is Russia’s most significant arms export partnership at this point. Richard writes:

Conversely, the defense company president also expressed some irritation at the Indians for forgetting that it was Russia, rather than India, who was the leading partner in their defense relationship. He added that, despite the decision of the Indian defense ministry to eliminate Russian (and U.S.) planes from their latest round of competition to sell India its next multi-role fighter, he still considered the country a good sales market as long as New Delhi realized that the process was a two-way street and that Russia had useful things to offer.

I would just add that he said that he believed that India rejected the MiG-35 as a finalist for the MMRCA tender because they wanted to diversify their supplies. He also noted that Russia and India are full and equal partners in building and designing the T-50 fifth generation fighter and that when serial production of these planes begins, they plan to have two parallel production lines, one in each country. He noted that the T-50 will fly at the 2011 MAKS air show but will not be on display there. He was hopeful that such planes could be sold to countries in Southeast Asia, Latin America, and perhaps Africa. The plan is to start building the planes by 2015, while also continuing to build the various descendants of the Su-27 (i.e. the Su-34 and the Su-35) for another 15 years. He mentioned the possibility of upgrading some of these 4th generation airplanes with 5th generation technology.

On the question of arms sales to former Soviet republics, Richard describes the official as saying the following:

In contrast, he argued that Russian defense companies saw few good commercial opportunities in many former Soviet republics. Their defense budgets are so small that they can only afford to buy a few modern systems. Many of these purchases are discounted or subsidized by the Russian government as a means of bolstering the regional security ties. The CEO, however, acknowledged that Russian firms do have opportunities to service and upgrade these countries’ existing Soviet-origin weapons. In the case of modern aircraft, such servicing and upgrades can be very lucrative. But some of these states, such as Kazakhstan, have pursued what he considered the mistaken policy of having firms from Belarus service their warplanes simply to save money despite the inferior quality of work.

One last note from Richard on the official’s perceptions of competition from European arms manufacturers.

Finally, he confirmed that Russian arms sellers did not consider European military aircraft manufacturers as major competitive threats. Although their planes were often of very high quality, they were typically very expensive due to limited production runs (resulting from the small size of the European domestic markets) and to high European labor and manufacturing costs. (The fact that Eurofighter and Dassault have made it to the final round of the Indian multi-role fighter competition, while the Russian entry did not, presumably explains his critical remarks about the Indians not appreciating that their defense relationship with Russia must be a two-way street.)

Thanks to Richard for permission to cite large chunks of his post. It’s worth reading the whole thing. I’ll try to wrap this series of reports up by the end of the week. There are two more to go — one on missile defense and one on the panel on prospects for international cooperation.

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