Russian Muscle in Central Asia - February, 2009

Russian Muscle in Central Asia

US Will Want Negotiations: http://www.youtube.com/watch?v=1lQgTPSe1NE

US Interest in Central Asia Remains: http://www.youtube.com/watch?v=zccWHMI9Gk8

February, 2009

Russia is flexing its muscle in central Asia, and the Obama administration had better pay attention. Today's Wall Street Journal headlines: "Moscow Moves to Counter U.S. Power in Central Asia." It cites as evidence, quite correctly, two major steps by Russia:

Russia is reasserting its role in Central Asia with a Kremlin push to eject the U.S. from a vital air base and a Moscow-led pact to form an international military force to rival NATO -- two moves that potentially complicate the new U.S. war strategy in Afghanistan.

Together with Russia's war against Georgia last summer, and the more recent Russian muscle-flexing over gas pipelines that transit Ukraine, the Russian actions in central Asia reflect a no-nonsense message to President Obama that Moscow expects major changes in US policy toward Russia -- and that Moscow is prepared to play hardball to make sure it happens. In addition, in another corner of the former Soviet world, Russia and Belarus are creating a joint air defense system, too. The central Asia base is the US air base at in Kyrgyzstan, established at the start of the Afghan war in 2001, when the Bush administration bullied its way into central Asia on the pretext of fighting the War on Terror. The Manas air base has been crucially important as part of the US air war in Afghanistan, and losing it could severely weaken the US effort there. To persuade Kyrgyzstan to oust the Americans, the Russians agreed to provide the country with a $2 billion loan, $150 million in direct aid, write off $180 million in debt, and build a $1.7 billion power plant for the electricity-starved nation.

Notes the Journal:

The loss of the Manas base would be a major blow to the escalating U.S. war effort in Afghanistan. In 2008, 170,000 American personnel passed through Manas on their way in or out of Afghanistan, along with 5,000 tons of equipment. "We have contingencies, and it's not fatal, but there's no way around the fact that this would be a real blow," said a senior Pentagon official. "It could also leave us more dependent on Russia, which is not a place we'd like to be."

The Russians have offered to support the US war effort by allowing NATO to ship fuel and supplies over land from Europe to Afghanistan. That's become more important as the Taliban shuts down supply lines through Pakistan and over the mountainous border into Afghanistan. But it also would give Russia great leverage over the US-NATO war in Afghanistan. At the same time, as the Journal notes, Moscow announced the formation of a rapid reaction force, jointly with former Soviet states:

Russian paratroopers are to form the core of the new military force, which is planned to be about 10,000 men. Russian President Dmitry Medvedev said the force will be ready "to rebuff military aggression," fight terrorism, drug trafficking and organized crime, and handle natural and technological disasters. "These are going to be quite formidable units," Mr. Medvedev said. "According to their combat potential, they must be no weaker than similar forces of the North Atlantic alliance."

The AP reports what happened at the meeting of the Russian-led Collective Security Treaty Organization:

Russia sought to strengthen its security alliance with six other former Soviet nations Wednesday by forming a joint rapid reaction force in a continuing effort to curb U.S. influence in energy-rich Central Asia. The summit of the Moscow-dominated Collective Security Treaty Organization came a day after Kyrgyzstan said it would end the U.S. lease of an air base that supports military operations in Afghanistan. The eviction of U.S. troops would mark a victory for Moscow in what it considers its historical backyard. Russia, Armenia, Belarus and four Central Asian nations - Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan - agreed Wednesday to set up a joint rapid reaction force. The force is expected to have about 10,000 members and function under a central command, replacing the existing force, which has 3,000. It is not under unified command. The move would strengthen the military dimension of the alliance, which has served mostly as a forum for security consultations. A Kremlin adviser said Russian paratroopers would form the core of the force. Russia's envoy to NATO, Dmitry Rogozin, said Wednesday that Kyrgyzstan may host some of the newly formed rapid reaction forces at the base now leased by the U.S.

The Russia-Belarus deal is also reported by AP:

Russia and Belarus will create a new military system to monitor and defend their airspace, the Kremlin said Tuesday - strengthening cooperation between the two uneasy allies who are deeply suspicious of U.S. plans to put a missile defense shield in Europe. The deal reflects the former Soviet neighbors' mistrust of Western intentions. It also reflects their shared opposition to NATO's expansion into former Soviet turf and U.S. efforts to build missile defense sites in Belarus' neighbor Poland and the Czech Republic.

Obama ought to be paying attention not only because Russia can make or break US efforts to negotiate a deal in Afghanistan, but also because Obama needs Russia to help persuade Iran to find a solution to the conflict over Tehran's nuclear program.

Source: http://www.thenation.com/blogs/dreyfuss/405430/russian_muscle_in_central_asia?rel=hpbox

Russian Military Aircraft Exports Remained Strong in 2008

The official results of Russia's 2008 arms sales have not been released yet, but Deputy Prime Minister Sergey Ivanov said last December that they might exceed $8 billion. It is expected that, like in previous years, aircraft equipment will comprise the bulk of arms export deliveries. Last year's overall performance demonstrated that heavy fighters of the Sukhoi Su-30MK family and modernization solutions (primarily radar upgrades) for earlier-exported Mikoyan MiG-29 warplanes continue to enjoy the highest demand with foreign customers. Export sales of the Mil Mi-17 family of transport helicopters also remain strong.

Sukhoi and Irkut

The major portion of export work conducted by the Russian aircraft industry in 2008 was related to the contracts for Su-30 family multi-role fighters from Algeria, India, Indonesia, Malaysia and Venezuela. Unlike in previous years, information about last year's export deliveries has not yet been made public, so all the figures below are preliminary.

India most probably received the largest number of Russian fighters in 2008. It can be safely assumed that New Delhi took delivery of the last two Su-30MKI fighters under a deal signed in April 2007. That contract envisaged the sale of 18 such aircraft to replace the same number of Su-30K warplanes delivered to the Indian Air Force in 1997 and 1999. The first 16-ship batch was handed over to India in 2007. In addition, India last year was expected to receive at least four aircraft under the November 2007 contract for 40 Su-30MKI fighters and knock-down kits, in addition to the 140 kits contracted in 2000. According to estimates, India took delivery of at least six Su-30MKI fighters in 2008 under the terms of the current contracts. It is also possible that 10 to 12 Su-30MKI kits were supplied to Hindustan Aeronautics Ltd for subsequent assembly at its Indian facilities.

Irkut Corporation continued to deliver Su-30MKM fighters to Malaysia under a $950 million contract signed in 2003. A total of 18 such aircraft are to be supplied to that country. Irkut previously shipped six Su-30MKMs in 2007. According to estimates, the Royal Malaysian Air Force last year received another six of the type. The contract should be completed by 2009. No exact information is available about the number of Su-30MKI (A) fighters delivered to Algeria last year under a contract signed in 2006. In all, Algeria is to receive 28 such aircraft. The original schedule envisaged eight deliveries in 2007, followed by another 10 annually in 2008 and 2009. However, only six fighters were delivered in 2007. It is unlikely that Irkut — which currently operates to its full production capacity — could have managed to catch up with the schedule during 2008. Most probably, the Algerian Air Force received eight Su-30MKI (A) fighters last year, bringing its total fleet to 14 units.

The export structure of Sukhoi-built aircraft appears to be somewhat more transparent. The company last year completed its 2006 contract to deliver 24 Su-30MK2V fighters to Venezuela. The first four aircraft were shipped in 2006, followed by another 12 in 2007. The final eight-strong batch was delivered during 2008. Also last year, Sukhoi supplied the first two Su-30MK2s for Indonesia under a $335m contract signed in 2007. A total of six fighters will be delivered to that country (three Su-30MK2s and three Su-27SKMs).

Sukhoi carried on with its second three-year contract to modernize Russian Air Force warplanes, upgrading eight Su-27 fighters from a Far-Eastern air force regiment to the Su-27SM standard. During the 2004-2006 timeframe, 24 fighters were similarly upgraded; another 16 aircraft underwent modernization in 2007-2008. Overall, the Russian Air Force now has 40 warplanes upgraded to the Su-27SM standard. Under separate contracts, Sukhoi last year handed one newly-built Su-34 tactical bomber to the Russian Air Force, and upgraded five of the service's Su-24 bomber fleet to the Su-24M2 configuration.

MiG Corp.

The key achievement for MiG Corp. in 2008 was the final resolution of a collapsed 2006 contract to supply 34 MiG-29SMT/UBT fighters to Algeria. After receiving the first 15 aircraft by April 2007, the Algerian Air Force alleged that the fighters incorporated some second-hand equipment. In the course of year-long negotiations Algeria rejected all compromise proposals by MiG, from replacing the controversial equipment to substituting the entire airframes with new aircraft of the same type. Russia eventually agreed, in February 2008, to take the previously delivered MiG-29SMTs back from Algeria. In December last year, the Russian Defense Ministry announced its decision to purchase the whole 34-ship Algerian batch from MiG Corp. for 22-23 billion rubles ($620-650 million at the current exchange rate).

Among other developments, the manufacturer worked to repair and upgrade MiG-29 fighters for Bulgaria, Serbia and Slovakia in 2008. The company also signed a $964-million contract to modernize 64 Indian Air Force MiG-29B fighters to the MiG-29SMT configuration. Another modernization order, worth $106 million, came from Peru: MiG Corp. will repair and upgrade 19 MiG-29s for that country's air force. Some Russian media have reported that the Peruvian fighters would be upgraded to the SMT version, but these speculations appear to be erroneous. It is more likely that the modernization effort will include the RVV-AE air-to-air missile capability. It is also possible that the fighters will be able to use these missiles to engage two targets simultaneously.

In separate development, Russia last February delivered the first Ilyushin Il-76EI aircraft to Israel for installation of the Elta Phalcon airborne early warning system. This work was completed during 2008, after which the aircraft was handed over to the Indian Air Force late last year. It arrived at an Indian Air Force station in Goa in January 2009.

Helicopters

Another notable accomplishment last year became the signing of the largest contract in the history of Russian helicopter manufacturers. Under the $1.2 billion deal, Mil undertook to deliver 80 Mi-17V-5 helicopters to India. Of no less significance were the orders for Russian rotorcraft from Brazil and Thailand, which have up to now operated only US and European-built helicopters. Brazil ordered 12 Mi-35M attack helicopters for $350 million, while Thailand purchased three Mi-171 transports for $27.5 million. In all, according to some reports, Russia last year landed over 100 export orders for rotorcraft of the Mi-8/Mi-17 family. About one half of these came from Middle Eastern countries.

On the delivery side, the largest export helicopter shipments in 2008 were to Venezuela and Indonesia. The former took delivery of 14 Mi-17V-5 transports and two Mi-172 VIP versions, whereas the latter received six Mi-17V-5 transport rotorcraft. Eight Mi-171Shs were delivered to Croatia, five Mi-17s army aviation rotorcraft to Colombia, two Mi-171s to Pakistan's drug enforcement agency, one Mi-26TS fire-fighting helicopter to China, and one military Mi-171 — the first of two such airframes on order — to Mongolia. Given that the total backlog of Russian helicopter exports stands at over 100 units, even this list appears to be incomplete.

Source: http://www.ato.ru/rus/cis/archive/24-2009/def/def1/

Flexing of Muscles. The Russian Defense Budget

Maxim Pyadushkin

Russia continues to increase its defense expenditures with the aim of reviving the country's military might. The defense budget for 2009 amounts to 1.34 trillion rubles (about $37 billion), reflecting a nominal increase of 31.5% compared to 2008 — which was the highest during the past five years. Such growth was partly inspired by the August war in South Ossetia, which showed that Russia's army is capable of conducting a successful campaign outside of the country's territory, but also spurred a discussion on whether military expenditures are sufficient for the needed modernization of the armed forces. While the intentions for boosting Russian military spending are good, the actual growth in procurement may be limited by potential budget cuts because of the economic crisis. The federal budget for 2009-2011 was adopted by the lower chamber of Russia's parliament (State Duma) at the end of October.

Compared to the draft version discussed earlier, the defense spending for 2009 was increased by 60 billion rubles — an amount that was added after the consideration of the August war experience. This additional money will be directed to the armed forces' military procurement. "The additional funding is allocated mainly for the purchase of modern armament, first of all for aviation", explained Sergey Ivanov, Russia's vice premier who supervises the military and defense industry. The Defense Ministry will also get another 20 billion rubles to set up two new military bases in South Ossetia and Abkhazia, he said. Out of the 1.34 trillion rubles allocated for this year, the Russian Armed Forces will get 962.4 billion. Another 22.4 billion will be spent on nuclear weapons, while 174.1 billion rubles is allocated for national defense research studies.

The national defense expenditures for the next two years are expected to grow at a slower pace. In 2010, the government plans to spend 1.39 trillion rubles on national defense (a nominal increase of 8.9%), while a year later, the defense expenditures will grow by another 6.5% to 1.48 trillion rubles. Nevertheless, Russian lawmakers were not completely happy with the approved money. Among the reasons cited by critics is that the proposed defense spending for the next three years will amount to just 2.6%, 2.53% and 2.3% of the country's GDP (gross domestic product) for the corresponding years. The lawmakers insist that this is well below the levels of defense expenditures set up earlier. In 2000, Russia's Security Council agreed that the expenditures during these years should be higher — 3.21% of GDP.

Focus on modernization

Russian government officials agree the recent experience in the Caucasus showed that, despite the ultimate military success, the country's armed forces should speed up their reorganization and re-equip with new weapons. Meeting with commanders of the military districts in late September, Russian President Dmitry Medvedev explained the steps that should increase the national armed forces' effectiveness. First, all combat units should maintain constant alert, he said. The other priority is to give the military new, high-tech weapons. "We need an army that is equipped with the most modern armament," said Medvedev. The president also mentioned the need to improve troops' command and training systems. But lawmakers say the growing budgets still don't guarantee that the armed forces will get what they really need. According to the Duma Defense Committee, the balance between the army's operational expenditures and re-armament program funding should be 50:50 by 2011, while the approved budget shows that in fact it will remain the same as in 2008 — 54.7% for operational expenditures against 45.3% for weapons procurement programs.

Nevertheless, the Russian government is convinced that the approved spending of $4 billion on military procurement in 2009-2011 is enough to support the country's military might. Vladislav Putilin, deputy head of the government's military-industrial commission, said "the three-year procurement plans will support a 100% equipment status of the armed forces, and increase the percentage of modern armament in military units." He explained that within the next three years, Russia's armed forces will purchase more than 70 strategic missiles, over 30 Iskander tactical missiles, 48 combat aircraft, 6 unmanned aircraft, more than 60 helicopters, 14 naval ships, nearly 300 tanks and more than 2,000 other vehicles. Putilin also mentioned the planned procurement of a "large number of launch vehicles and spacecraft" that should ensure the fulfillment of the country's space program.

Besides the procurement of in-production weapons, the armed forces plan to test new ones. According to the approved budget, they are going to start evaluation tests on 487 new systems, components and elements of new armament and military equipment. The testing of 600 new items is to be completed in the next three years, and the military plans to bring 400 of them into service. The Russian Defense Ministry reportedly received 600 billion rubles for procurement in 2009 out of the procurement budget's total of 1.3 trillion rubles. But as Sergey Ivanov explained earlier, this figure also includes the spending for other Russian paramilitary and law enforcement agencies. In addition, some of this money will be spent for "capital investment and housing construction for servicemen." In 2010, the military procurement budget is to be increased by another 30 billion rubles, while in 2011 it will grow again, by 70 billion rubles.

Crisis challenges

But the economic crisis that hit Russia in the second half of 2008 is likely to become the major challenge for the military's reinforcement plans. In the previous crisis of 1998, the economic conditions surprisingly gave certain advantages to Russia's defense industry. At that time, the industry was working mainly for export customers, so the Russian ruble's sharp devalvation gave a boost to defense production — decreasing production costs and making the price of Russian weapons more competitive on foreign markets. The export revenues sometimes allowed manufacturers to finance the development of weapons ordered by the Russian national armed forces.

With the current economic crisis, the Russian government has announced its intention to support the country's defense industry to ensure the military will get what they have ordered. Discussing procurement plans at the end of December, Prime Minister Vladimir Putin stressed that defense procurement orders are becoming the major source of revenues for the industry, and that the military-industrial commission will strictly control timing and quality of the execution of government contracts. But despite the announcements, the government is refraining from providing direct subsidies to defense manufacturers. So far, only two companies — engine manufacturer NPO Saturn and the MiG Corp. jet maker — have managed to get financial support from the budget or state-owned banks to cover their losses.

Following the build-up of this latest crisis, the government is discussing the possibility of revising this year's budget. It is not clear whether the military will cancel or suspend some of their procurement programs, as the budget is to be revised in February. But the manufacturers could lose out — if not in numbers of products being delivered, then in revenue. The Defense Ministry reportedly plans to cut the price of all procurement contracts that have already been placed by 15%. On the other hand, the government is ready to support its leading manufacturers. According to Vladimir Putin, budget allocations for the existing programs can be redistributed in favor of more important ones. This means support for large government-controlled defense holding companies created in the last few years, and the continuation of the defense industry's re-nationalization.

Source: http://www.ato.ru/rus/cis/archive/24-2009/def/def2/

In other news:

Russia Aims Again at U.S. Influence

Russia sought Wednesday to strengthen its security alliance with six other former Soviet republics by forming a joint rapid reaction force in a continuing effort to curb U.S. influence in Central Asia. Russia, Armenia, Belarus and four Central Asian nations - Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan - agreed to set up the joint force. The force is expected to have about 10,000 men and function under a central command, replacing an existing force that has 3,000 soldiers and it is not under unified command. The move would strengthen the military dimension of the Collective Security Treaty Organization, which has served mostly as a forum for security consultations. A Kremlin adviser said Russian paratroopers would form the core of the force. Russia's envoy to NATO, Dmitry Rogozin, said Wednesday that Kyrgyzstan may have some of the newly formed rapid reaction forces take over a base leased by the United States. Russia and several other neighbors also agreed to create a crisis fund worth around $10 billion to help countries suffering from the economic downturn.

Source: http://www.nytimes.com/2009/02/04/world/europe/04iht-pact.4.19936294.html