Kuwaiti Deal: A Shot in Russia's Arms Industry

Russia's sale of armored vehicles and rocket launchers to Kuwait this week will boost Moscow's position on the lucrative international arms market and give a helping hand to the country's ailing defense enterprises, a senior defense industry official said Tuesday.


The Russian state arms trading company Rosvooruzheniye signed a contract Monday to sell BMP-3 armored vehicles and Smerch multiple rocket launchers to the Kuwaiti defense ministry. The volume and value of the sale were not disclosed.


"This is a great breakthrough," said Gennady Yampolsky, deputy chairman of the State Committee on Defense Industry. "And not the last one."


Yampolsky said that the deal will keep busy thousands of workers at defense enterprises in Urals and Moscow region, which produce the systems to be sold to Kuwait. "We give people jobs and bring money to state coffers at the same time," he said.


Officials at Rosvooruzheniye declined Tuesday to put a value on the contract or to say how many of each system had been bought, but arms market sources earlier valued the contract as high as $800 million. Yampolsky said the systems would be delivered to Kuwait within two years.


The Kuwait deal is Russia's second major success on the international arms market this year, following a $600 million agreement in June to sell MiG fighters to Malaysia.


Russia's arms exports have lost ground to Western competitors in the past few years, falling from $11 billion in 1985 to a mere $1.2 billion in 1993.


Russian arms sales to developing countries shrunk by almost 40 percent over the last three years, while U.S. exports to these countries rose 38 percent and French exports rose 46 percent, according to Defense Ministry estimates.


The tide now appears to have turned, however, and Russia's arms exports will grow by 30 to 40 percent this year over 1993 as a result of several lucrative deals signed in the past two years, Yampolsky said.


Russia has bolstered its competitive position over the past year, he said, through paying greater attention to customers' needs and using senior government officials as negotiators.


"The U.S., France and Britain have been on the market for ages and they are strong," Yampolsky said. "This is their field, but we're snapping off a piece of their pie."


Yampolsky said that the deals with Malaysia and Kuwait have gone through largely because top government figures, including First Deputy Prime Minister Oleg Soskovets and Foreign Minister Andrei Kozyrev, were personally involved in the negotiations.


He also said that Russian arms exporters have become much more flexible and consumer-oriented, which helped find potential buyers and simplify negotiations. "'What would you like?' is now our strategy," Yampolsky said.