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Moscow Times
December 20, 2001
Arms Cash Cow for Whom?
By Pavel Felgenhauer

The "multipolar world" concept was invented by former Prime Minister Yevgeny Primakov in the mid-1990s and quickly became the foundation of Russian defense and foreign policies.

In 1997, Primakov wrote: "One of the basic aims of Russia's foreign policy is to collaborate in the transformation of a bipolar world into a multipolar world ... to counterbalance -- together with Europe, China and Japan -- the trend toward unipolarity."

After Primakov was ousted in 1999, the multipolar concept continued to thrive. It was even incorporated into the official Russian military doctrine signed by President Vladimir Putin last year.

As with most other nations, Russia's foreign policy reflects its foreign trade. In the last decade, Russia has exported large quantities of oil, gas, steel, fertilizers and timber -- mostly to the West. At the same time, Russia has also exported manufactured products (mainly arms and military and nuclear technologies) to the East -- to China, India, Iran, the Middle East and Africa.

Russian arms exporters were always considered a force to be reckoned with in foreign policy decision-making. The multipolar concept not only implied Moscow should have a free hand to play states off against one other while maintaining an equal distance from all, it also reflected the delicate balance between the oil/gas/metals lobbies and the arms exporter lobbies in the Kremlin.

Almost all previous attempts by pro-Western forces to alter Russian foreign policy involved schemes to diversify Russian arms exports and to create a pro-Western lobby within the military-industrial complex.

In 1997, tycoon Vladimir Gusinsky and Israeli Prime Minister Binyamin Netanyahu launched a project to begin joint production of new armaments, combining Israeli electronics and powerful Russian platforms to make weapons that could compete on the world market.

Gusinsky managed to encourage the Kremlin to sign a decree allowing military cooperation with Israel. In 1997, Israel and Russia signed their first major arms deal to jointly produce a $200 million early-warning A-50 "Falcon" plane for China. Beijing prepaid the full cost of the plane, which was built in Russia and equipped in Israel. The Chinese opted to buy up to five more. However, in 2000, Washington pressured the Israelis to cancel the deal at the last moment. All other proposed East-West joint arms programs (such as the Russia-European missile defense) either never got off the ground or went wrong.

Today the United States does not want its friends selling China new weapons that may be used against U.S. troops or its allies in Asia.

China is the only major arms market in the world that is not controlled by the United States or its close allies. This year and last Russia sold China nearly $2 billion worth of arms per annum. But should Russia be allowed to continue selling new jets, submarines, anti-aircraft missiles, etc. to China at current volumes if Moscow truly wants to be a U.S. ally?

In the last two weeks, Putin has swallowed without much protest Washington's abrogation of the ABM Treaty and U.S. backtracking on closer Russian partnership with NATO. People in the Kremlin now openly say the multipolar concept was a mistake, which in effect means that Moscow is accepting a Washington-dominated unipolar world. But will the Kremlin also be as ready to sacrifice one of its main cash cows -- the arms trade?

Russian officials boasted this week that arms exports for 2001 might exceed $4 billion. But recently Audit Chamber chairman Sergei Stepashin disclosed that Russia exported $3.7 billion of armaments in 2000, while government coffers received only $7,000.

The Finance Ministry estimates that the budget may have received as much as $70 million in 2000 from the arms trade. In any event, it's clear that vast sums have disappeared somewhere without trace. Perhaps it can be explained away as routine Russian corruption, but some insiders say money from the arms trade is used secretly to finance "special projects" run by the Kremlin.

It has been announced that early next year the Audit Chamber will conduct audits of Russia's arms-trading organizations. Maybe these audits will produce no incriminating evidence, as with many other checks in the past.

But maybe Putin really is ready to curtail Russia's arms trade, which is only causing problems with Washington (while the proceeds are almost entirely misappropriated) and is using Stepashin as a battering ram.

Pavel Felgenhauer is an independent defense analyst.

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