Negotiating contracts for Russian armaments in the first three quarters of 2017

By Andrei Frolov

2017 has a chance to be remembered as a revolutionary year in the history of Russian foreign arms sales. This results from the fact that Russian arms producers have been particularly successful this year in making a number of breakthroughs in markets that were previously inaccessible, or nearly inaccessible – the petrol-states of the Middle East and Turkey.

The development of relations with these countries allows for the possibility that Russian foreign arms sales may expand beyond the limits of the current “plateau” of $14–16 billion in contracts and deliveries per year and a standing backlog of orders within the limits of $45–50 billion. In addition, it should be noted that this year, the somewhat negative trend of the gradual closing of the sphere of military and technical cooperation, according to independent expert evaluations, continued to gain momentum. Therefore, the openly available data do not provide a full picture, although they make it possible to evaluate trends.

One can note, with respect to renowned “landmarks” of Russian arms contracting, that in these months Rosoboronexport JSC has signed new contracts within the first two quarters amounting to $8 billion, i.e. more than half of traditional indicators.

Let us give more detailed consideration to the basic results and events of the first three quarters of the current year from the viewpoint of new contracts signing. The first quarter has been notable for an important contract with Pakistan to supply one Мi-171Е helicopter to Baluchistan province and another to Punjab province. Although two helicopters clearly do not move the needle against the background of multi-billion contracts, for instance, with Egypt or multi-million deals with Kazakhstan, the very fact of continuing cooperation with Pakistan is what matters against the background of stagnation and ever-growing uncompromising attitude and increasing demands of India. Along with supplying RD-93 engines for the Pakistani-Chinese FC-1 fighter and a remarkable contract to supply four Мi-35М helicopters that was signed in 2015 (the helicopters were finally delivered in 2017), a new contract for Мi-171 transport helicopter may be treated as a gradual restoration of Russia’s position in Pakistan.

Some contracts from the first quarter can be referred to as probable. A contract with Myanmar to supply Yak-130K combat trainers is one example.

The 16.6 million Euro bundle of agreements between Rosoboronexport JSC and the Ministry of Defense of Greece for technical and after-sales support and delivery of spare parts for Russian air defense missile weapon systems in the arsenal of the Army and Air Force of Greece is also an important, if unimposing, event. With this deal, a NATO country has gotten around the NATO and EU embargo on cooperation with Russia in the field of export and import of combat equipment.

Cooperation with CIS countries is also an important factor. Thus, for example, Belarus acquired a Protivnik-GЕ radar from Russia in the first quarter.

The second quarter also saw upbeat events. Reaching an agreement with Turkey for the procurement of S-400 Triumph long-range air defense systems is perhaps the most important event of the quarter (and the year). Turkey has thus become the second buyer of this system after China. The contract itself was signed as early as in September.

Similarly, Armenia has purchased an order of the cutting-edge 9K333 Verba portable air defense systems, making it the first known foreign customer of this system. Belarus has signed a contract with Russia to procure 12 Su-30SМ fighters as well as upgraded Т-72B3 tanks in the model that features additional protection, which may also be the first such contract for this tank modification.

One can also mention among the significant contracts the procurement of eight Su-30SME fighters, with an option for four more planes, by Bangladesh (a deal that has not been officially confirmed.) However, a deal with Bangladesh for the acquisition of five Мi-171Sh helicopters has been confirmed.

The contract concluded at the end of June between Rosoboronexport JSC and the Czech company Lom Praga is not very large in terms of cost, but is important from the point of view of image. The partners have jointly won a NATO contract for the overhauling and upgrading of four Мi-17V-5 helicopters of the Afghan army.

The third quarter brought about more front-page news – Russia and Saudi Arabia signed a preliminary agreement in July providing for the supply of $3.5 billion in armaments and equipment. Progress in an India order for the construction of the FGFA fifth-generation fighter was another important event. The deal became public in July. A small, but significant, contract was signed with Iran for the delivery of spare parts for Мi-8/17 helicopters.

A package of contracts to supply helicopter equipment to China was another significant event of the third quarter – they included five light Ansat helicopters outfitted for medical use, seven Мi-171Е of the transport modification, two fire-fighting Kа-32А11VS, and four VK-2500 turboshaft engines (apparently the first export delivery of this engine separately from a helicopter). Equatorial Guinea returned during summer months into the number of Russian weapons’ buyers, as a contract was signed for the delivery of two Pantsyr-S1 anti-aircraft missile and gun systems with the accompanying missiles. Another African country, Burkina Faso, purchased two Мi-171Sh transportation combat helicopters and air-launched weapons.

Belarus continued procurements from Russia – the last contract was signed in July for the delivery of radar equipment for an integrated air defense system. Contracts with Kazakhstan were signed for the supply of equipment, production tooling, technical documentation for the full cycle of overhaul and upgrades to armor material and armored vehicles for Semei Engineering JSC of Kazakhstan and spare parts for Т-72 tanks. An agreement has also been reached with Kazakhstan to build a service center for maintenance of MiG aircraft in the inventory of the Air Force and Air Defense of Kazakhstan, as well as for the repair of some assemblies and accessories of these planes.

Prospects proceeding from the results of the first three quarters

It became public in the first quarter that Lebanon intends to implement a package of contracts with Russia about $500 million worth for the delivery of armor equipment and missile launchers. In the same period, interest in Russian helicopters was indicated by Peru (eight Мi-171) and Bangladesh (an unknown number of Мi-35М).

It was announced in the second quarter that the UAE had considered procuring Su-35 fighters from Russia. Apparently, an agreement in principle was reached during the third quarter on a deal with Indonesia for the supply of 11 Su-35 fighters, as well as on the form of payment on this contract (it will be paid in part with pure rubber).

Negotiations have been held with Latin American countries. It was learned that Mexico is planning to buy a new batch of Мi-17 helicopters from Russia. Talks have been held with Peru about a contract to purchase Т-90S tanks, and also with Argentina for the purchase of Мi-35М, Мi-28NE and Kа-52 combat helicopters. The latter, though, looks somewhat unrealistic in light of the very difficult financial situation in Buenos Aires, which was proven by the story of as-yet unfinished procurement of MiG-29 fighters by Argentine from Russia (also from the first half of 2017).

Proceeding from the results of the first three quarters, it has also become known that Russia is in negotiations with several countries about the supply of Т-90 tanks (Kuwait) and construction factories for assembling (Egypt) and overhauling (Algeria) the tanks.

Finally, negotiations have been held with India during the first nine months of 2017 regarding the implementation of intergovernmental agreements (but not the contracts) concluded during the visit of President Vladimir Putin in October 2016. Three intergovernmental defense and industry agreements were signed in the course of this visit: on the supply of five squadrons of S-400 air defense missile weapon systems and four frigates of design 11356 to India, as well as on the establishment of a joint company for the manufacture of multi-purpose Kа-226Т helicopters in India (according to the agreement, the company will manufacture 140 Kа-226Т in India, and 60 more helicopters will be supplied fully assembled from Russia). At the same time a long-discussed agreement was signed on the lease to India of a multi-purpose nuclear-powered submarine of design 971. Of these four potential contracts, there is available information only about the joint venture for the manufacture of Kа-226Т helicopters in India. These works have significantly progressed during 2017, as has the construction of a new “Indian” modification of the Kа-226Т helicopter, known as the Kа-226.54.

Table 1. Basic and significant contracts of the first three quarters of 2017

Exporter

Importer

Contract closing date

Remarks

Russia

Turkey

September

A $2 billion contract for the supply of four squadrons of S-400 Triumph long-range air defense systems

Russia

Greece

February

16.6 million Euro worth of contracts for technical and after-sales support and delivery of spare parts for Russian air defense missile weapon systems in the inventory of Army and Air Force of Greece (9K33М2/М3 Osa-АK/АKМ, 9K331 Tor-М1 and S-300PMU-1). The contracts are intended for three years (2017–2019)

Russia

Myanmar

March

Russia is believed to have signed a contract to supply an additional batch of Yak-130 combat trainers to Myanmar

Russia

Bangladesh

May

The Air Force of Bangladesh is believed to have closed a contract with Rosoboronexport JSC for the procurement of eight Su-30SME fighters, with an option for four additional aircraft as well as a confirmed contract for five Мi-171Sh helicopters

Russia

Armenia

May

Armenia acquired 9K333 Verba portable air defense systems from Russia

Russia

Belarus

June

Russia and Belarus signed a contract to supply 12 Su-30SМ fighters for the Air Force of Belarus. The cost of contract may reach $600 million

Russia

Equatorial Guinea

August

Russia and Equatorial Guinea signed a contract for two Pantsyr-S1 anti-aircraft missile and gun systems, and the accompanying missiles

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