Russia Cranks Up Arms Production, Sales ; A Revamped Weapons Industry Looks to Boost Exports. Algeria, Libya May

Article excerpt

Washington, already concerned about reports of abuses against civilians by Russian forces in Chechnya, may now have cause for alarm over another byproduct of the war - the revival of the Big Bear's arms industry.

Despite the end of the cold war, the two powers are still rivals in the tight world weapons market. And some nations unfriendly to the United States - Libya, Iran, and Syria - are knocking on Moscow's door looking for sophisticated arms.

Russia's three-month campaign against Islamic separatists in the breakaway Chechen republic has fattened the defense ministry's budget this year and next. The result is the oiling up of an arms industry that has been rusting since the 1991 collapse of the Soviet Union, with $1 billion allocated for procuring and developing new weapons alone.

This year, state defense export agency Rosvorouzhenie expects total Russian foreign sales of more than $3 billion. Officials

with Rosvorouzhenie report orders worth $9 billion through 2005. About half of these are for aircraft and helicopters, but increasing interest has been registered in Russia's naval- and air-defense systems.

"Before the Chechen war, the military industrial complex and the Army had the public image of a monster devouring the people's money. But public opinion has shifted dramatically," says Valentin Rudenko, an arms trade expert with the state-linked Military News Agency in Moscow. "The war has highlighted the necessity of ... developing high-precision weapons that can be used without threatening civilian lives. So the process of modernizing weapons has been intensified."

This is good news for a sector that nearly collapsed after accounting for 80 percent of industrial production during Soviet times. The decline coincided with the fall of the Berlin Wall, when Russian armsmakers stopped producing for Eastern European countries and other cold war allies and had a brusque entry into the competitive international market.

Boosting the revival, a weak ruble makes Russian arms seductively cheap. Currently, Russia's main weapons customers abroad - China, India, Iran, Algeria, and Greece - are looking at increasing business. They purchase mostly aviation hardware, such as Sukhoi and MIG fighter planes and helicopters, as well as missiles. The Asian market especially is expanding as Russia actively courts non- Western clients.

The interest is not solely in buying hardware, but also in pursuing technological military cooperation. Over the past five years, Rosvorouzhenie has signed such collaboration deals with Malaysia, Singapore, Sri Lanka, Bangladesh, Vietnam, and Ukraine.

Sales to Libya, Syria

Another market that appears to be expanding for Russia is Libya, thanks to the suspension of United Nations sanctions in April. Rosvorouzhenie reports that negotiations are under way to repair and modernize Soviet-era military hardware operated by the Libyan Army. …