10 essays analyzing the strengths and weaknesses of the Russian Federation were released by the Center for New American Security (CNAS): “Identifying Russian Vulnerabilities and How to Leverage Them”
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1. INTRODUCTION
2. VULNERABILITY 1 – RUSSIA’S DEFENSE INDUSTRY
Vulnerability 2: Russian Arms Sales
The Kremlin’s need to replace its weapons destroyed in Ukraine, combined with the sanctions and export controls the West has implemented in the aftermath of Russia’s invasion, will make it harder and more expensive for Russia to sustain its arms sales—an important source of government revenue needed to sustain the war in Ukraine and a basis of influence with key external partners.
By Siemon Wezeman
Since 1992, Russia has been the second-largest exporter of major arms globally—after the United States—taking over that position from the Soviet Union. Moscow has, until recently, maintained a substantial margin over other arms exporters and secured major orders from a host of states, including large orders for advanced and costly arms. Russia’s invasion of Ukraine, however, will make it more difficult for Russia to sustain its leading role as an arms exporter. The Kremlin’s need to replace its own weapons destroyed in Ukraine, combined with the sanctions and export controls the West has implemented in the aftermath of Russia’s invasion, will make it harder and more expensive for Russia to produce many of the systems it exports. A decline in Moscow’s capacity to sustain its arms exports, in turn, will diminish Russian budget revenue needed to sustain its war in Ukraine. A decline in arms sales also has the potential to diminish Russian influence in several countries where the Kremlin has used these deliveries to tether foreign capital to Moscow, a dynamic that the Kremlin has leveraged to encourage compliance with its policy preferences.
Arms exports have been an important source of income for Russia: arms exports reached around $15 billion annually between 2011 and 2022. In 2022 they accounted for over 2.5 percent of Russia’s total exports—a much higher share than that of other major arms exporters. Except for oil and gas exports, arms exports generally outperformed other export sectors for many years.14 Arms exports have also long been a substantial part of Russia’s total arms production and critical to the Kremlin’s ability to maintain an economically viable development and production pipeline for many weapons. Without such strong arms exports, Russia’s cost of its own procurement would have been significantly higher.
Russia’s invasion of Ukraine in February 2022, however, amplified several long-standing problems in its arms development. In the late-1980s, the Soviet Union’s general technology development, which forms the basis for most military technology, began to trail Western development. After the breakup of the Soviet Union, Russia continued to face significant and basic weaknesses in its economy and technological base. This had started to hurt Russian arms exports before the West imposed sanctions on Russia in 2014. These sanctions significantly increased Russia’s challenges, particularly by cutting off Russia’s access to Western technology used in the development and production of its arms. The much broader and stricter Western sanctions after the February 2022 invasion of Ukraine have substantially increased the problems facing Russia’s arms industry.
Although Russia has found ways to circumvent the sanctions and export controls, these measures limit Russia’s access to Western technology that can be used for military purposes.18 Russia’s reduced access to technology could have a quick and negative impact on its arms production given that Russia has long relied on such technology in some of the weapons it manufactures, including in the advanced weapons systems that it offers for export. Unless Russia can access enough component parts cut off by Western sanctions from somewhere else (e.g., from China) or can quickly figure out how to close the technology gap with the West and produce the parts on its own, the sanctions are likely to have an increasingly significant negative impact on the development of Russia’s general technology base over time.
Russia’s technology gap vis-à-vis the West has hurt not only Russia’s technology base but also its arms exports. Within a few years, Russia is likely to lose a substantial part of its market share and income from arms exports to the United States and other exporters. Russian arms exports may well drop below those of France, China, or even South Korea. Already, Russian arms sales have declined in the past few years and Moscow has failed to secure major orders from states. There are several indicators discussed at greater length here suggesting that this trend will continue.
One indicator of Russia’s sustained downward trajectory is the annual export volumes of major arms, which in the past three years have been substantially lower than earlier years. Russia’s own announced financial values of exports and foreign orders also showed a marked decline in 2022, with the value of exports claimed to be just over $10 billion, while in any of the 10 years before it stood at around $15 billion.
The second indicator of Russia’s declining position as an arms exporter is the decline in its known orders of major arms. Russia’s order books are thinner than in the past, and by the end of 2022 several states secured export orders in all or some categories that were significantly higher than Russia’s. Orders for Russian combat aircraft, one of the main Russian arms exported in the past 30 years and often heralded as a success story by Russia, are much lower than those of several competitors: the United States outsold Russia by more than 10 times, and France, Italy, China, and South Korea also outperformed Russia. The picture for warships, tanks, helicopters, and transport aircraft is similarly bleak for Moscow. And, unlike a few years ago, Russia is no longer considered a serious candidate by several states with plans to import large numbers of advanced major arms. Even Russia’s deepening military relationship with Iran is unlikely to offset Russia’s troubles—Iran’s economy and military budget are not large enough to replace lost markets like Indonesia and Egypt, not to mention lost orders from India.
A third indicator suggesting Russia’s arms sales will continue to decline is the success of some of Russia’s main clients in replacing imports with local equipment. For the past three decades China has been the second-largest importer of Russian major arms, but Beijing’s own military modernization has limited Russia’s utility as an arms partner. This is also the case for India, Russia’s main client for the past 30 years. India is increasingly building its own knowledge base and capacity to develop its own weapons, often in partnership with Western competitors of Russia, which will limit buys from Moscow in the future.
The much broader and stricter Western sanctions after the February 2022 invasion of Ukraine have substantially increased the problems facing Russia’s arms industry.
The fourth factor indicating a sustained decline in Russian arms sales is the prospect that Russian arms simply have become less attractive. Russia increasingly lags behind in innovation and performance relative to what many Western states or even China offer. This is particularly true for next-generation weapons, such as the Su-57 fifth-generation combat aircraft, the Armata tank, or the latest submarines with air-independent propulsion or new long-endurance batteries. Russia promised that these systems would be operational some years ago, but none are operational or as advanced as planned. While some Russian weapons remain good enough for many states, the big-market countries demand better. India has been the clearest example of a buyer lacking trust in Russia’s ability to produce weapons that can remain on the cutting edge for the next several decades. In 2018, for example, India ended plans for hundreds of Russian Su-57s after investing several billions of dollars in development, as it no longer believed Russia could deliver a system that met India’s requirements. Additionally, it is likely that a similar lack of trust in Russia’s ability to remain on the cutting edge has, at least in part, driven a downturn in orders from rich Middle Eastern states.
Recent wars provide case studies of the waning attractiveness of Russian arms for clients facing advanced adversaries. Syria is one example where Russia had success testing and showcasing its systems in combat situations. However, the combat uses for many Russian weapons, including in Syria, has been against less advanced adversaries and often in situations where avoiding collateral damage was not high on Russia’s agenda. The picture that emerged from Syria was a mix of advanced and outdated Russian weapons. For example, Russia’s modern combat aircraft in Syria generally used the type of “dumb” ammunition long out of fashion with most Western states. The war in Ukraine differs from most other recent wars: it is a full-scale, long war where both sides use the full spectrum of advanced major weapons. And it brings back memories of the last two similar wars: the 1990–1991 Gulf War and the 2003 war in Iraq. In both wars, Western weapons were dramatically more successful than the Soviet weapons from which many current Russian weapons are developed. The lackluster performance of Russian weapons in Ukraine, even some of the most advanced ones, has added to doubts about their quality.
The fifth and final factor underscoring declining Russian arms sales is Russia’s waning ability to maintain its delivery schedules for existing orders. The war has created new challenges that hinder Russia’s ability to stick to its delivery schedule. This may be a short-term issue due to Moscow’s decision to prioritize replenishing its own weapons stocks as its military is being degraded in Ukraine rather than production challenges linked to Western sanctions and export controls. However, the short-term impact has strained Russia’s relations with its clients; in the longer term, technology sanctions may hamper Russia’s ability to fulfill existing or new orders, as it will need to find alternative sources for small components, such as microchips.
Russian Efforts to Mitigate or Offset the Vulnerability
It is doubtful Russia can do much to stem the decline in its arms exports. Prior to 2022, Russia had sought to respond to this challenge by offering more technology transfers. For example, for a while Russia was co-developing its fifth-generation combat aircraft (the Su-57) with India with the expectation that New Delhi would purchase up to 144 of the aircraft. However, India ultimately terminated the deal in February 2023. This example underscores a broader pattern: Russia’s recent offers to transfer its technology have largely been unsuccessful. Officials in India, its biggest customer, have openly questioned Russia’s willingness and ability to provide the promised technology.
Other than allowing greater technology transfers, Russia has few other options to make its arms sales more attractive. Given Russia’s rather small and weak economy (it had a gross national product (GNP) of $1.48 trillion in 2022) and the challenges its budget faces as a result of the war in Ukraine,31 Moscow has little capacity to offer incentives, such as soft loans to help arms exports. Such credits have been instrumental for other exporters, mainly European states and South Korea, to gain large orders, often in competition with Russia.
It is doubtful Russia can do much to stem the decline in its arms exports. Russia can flood markets in developing states with the weapons it can produce now or from existing surplus stocks, as it did in Mali, for example. While such exports make headlines and can do serious damage locally, they are often of marginal economic or strategic importance. To gain any medium- or long-term competitive edge on the larger markets, Russia will need to offer modern, next-generation weapons and the whole package of an integrated support; armaments; and Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISTAR) structure with the guarantee it will be able to support the equipment with spare parts and almost constant upgrades over decades. However, it does not have the money or the technology base to do this for all weapons. And, unlike most other producers, Russia has limited options to supply components for platforms developed elsewhere (as it currently still supplies engines for some Chinese aircraft) or niche systems that can be integrated with platforms or systems of Western origin.
Opportunities for the U.S. and its Allies to Exploit the Vulnerability
The United States, its allies, and other partners should build on ongoing efforts to use the aftermath of Russia’s invasion to gain a larger part of the arms market. There are, of course, economic benefits from doing so. Increased arms sales bring financial and employment benefits and—although less important for the United States than other small and medium exporters—the larger production runs cut per-unit prices for national procurement. Perhaps even more important, arms exports are a tool for foreign and security policy—a dynamic more salient now than in the past three decades. Arms exports help cement, expand, and build friendly relations or formal alliances with states. This has historically been true for Russia: Moscow has used the high volume of sales to countries of geostrategic importance, such as India, Egypt, Algeria, Vietnam, Serbia, and Indonesia, to buttress relations with these states. Russia’s influence with many of these countries is already declining, as Moscow has lost contracts, including to Western states. Indeed, these countries have the option to turn to Western states for their armament needs, creating an opening the United States and the West can exploit.
The United States, its allies, and other partners should build on ongoing efforts to use the aftermath of Russia’s invasion to gain a larger part of the arms market.
For several years, the United States and its allies have used a combination of carrots—and sticks—pressuring states to stay away from Russian (and Chinese) arms while offering advanced arms, credits, technology transfers, partnerships, and various other benefits. Egypt, Indonesia, and the Philippines have canceled orders from Russia. Russia has almost disappeared from Latin American markets. It is no longer considered a candidate for most of the large Indian procurement programs. Russia has not managed to break into the large Middle Eastern markets and is no longer a main candidate for medium markets like Malaysia, Indonesia, or Thailand. This carrot and stick policy has a high chance of success in India, and likely in Vietnam and Algeria, where the competition with Russia is strongest and the rewards the largest. This is a long game—all three have a large inventory of Russian weapons and have good arms trade experiences with Russia. It will take time to wean them off Russian arms. However, India seeks advanced technology and an assurance against China and Pakistan; Russia can’t provide the latter, and India seems to no longer believe Russia can offer the advanced technology. Vietnam, of course, would like more support in regard to China, which Russia is not able to provide.
Of course, the opportunity to weaken Russia’s position as an arms exporter should not be used blindly and must be balanced by other considerations: Russia (and China) are generally weak on norms for arms exports and provide arms with few conditions attached, while Western states generally do the opposite. Trying to use the advantage they have now over Russia in some states, Western states should not water down their norms but live up to their stated policies of responsible arms transfers.
