Russia's arms exports

In 2014, Russia's exports of machinery, equipment and transport vehicles amounted to $26bn 329m, or 5.3% of total exports, with imports of fuel and energy commodities being $345bn 445m (69.5% of exports), according to the foreign trade statistics published on 26 February by the Federal State Statistics Service (Rosstat).

The export of the foregoing high-tech products contracted by 8.9% while total exports dropped by 5.8%.

At the same time, the situation with exports of military-purpose products (MPPs) looks better than the situation taken as a whole: MPPs exports exceeded $15bn compared to the planned $13bn for the last year. Russia's President stated the same figure and mentioned new contracts "worth nearly 14 million dollars" at a meeting held late in January by the Commission on Military-Technical Cooperation. Therefore, Russia's arms exports accounted for a little more than a half (57%) of the exports of machinery, equipment and transport vehicles, or 3.0% of total exports, down by only 4–4.5% compared to the record value of 2013 (15,74bn).

The share of MPPs in the export structure is bigger than that of lumber and pulp and paper products (2.3% of exports), but less than that of food products and agricultural raw materials (3.8%), as well as non-ferrous metals and items made thereof (3.2%).

An insignificant shrinking in 2014 of the MPPs portfolio to $48bn from $49bn is not critical at all for the time being.

The success, although relative, of Russian MPPs exporters is quite noteworthy, because just two weeks before the New Year Presidential Aide for Military Technical Cooperation Vladimir Kozhin stated about "more than 13 billion dollars" of arms exports, i.e. the exports goals were actually achieved. This was followed by above-target (or recognized as previous) MPPs exports of some $2bn which most probably came from the available stock of Russia's Defense Ministry.

The fulfillment of MPPs export plan in 2015, which has been increased by some $2bn compared to the previous year, will not so much hinge upon the western sanctions against Russia as it will be determined by the ability of Russia's military-industrial complex to simultaneously meet the ramp-up demand from both foreign customers (15% on top of the planned demand) and domestic demand from the Defense Ministry (at least 30% on top of the state defense order)1.

Vasily Zatsepin, Ph.D. in Military Science, Head of Economics of the Military-Industrial Sector Department

1The assessment of the classified budget spending item "National Defense" for 2015 in accordance with the Federal Law of 01.12.2014 No. 384-FZ and "Budget for Citizens" to the Federal Law on Federal Budget for 2015 and the Planning Period of 2016 and 2017.