Business to Boom For Rosoboronexport Despite US Sanctions Threat

Rosoboronexport could benefit from a growing demand for low priced arms despite the looming threat of US sanctions.

The Obama administration has passed international sanctions against Kalashnikov, the Russian automatic weapons manufacturer but is yet to take a decision against Rosoboronexport which exports most of Russia’s ships, tanks, aircraft and other heavy weapons.

A group of American lawmakers have petitioned US President Obama to pass sanctions against Rosoboronexport earlier this week after the Malaysian airlines aircraft shooting over a rebel-held area of Ukraine.

Iraqi Defence Minister Saadun al-Dulaimi left Baghdad for Moscow yesterday in a pitch to purchase arms to fight against ISIS rebels which have been gaining ground against government forces. Russia had supplied SU-25 planes and Mi-35 helicopters to attack the rebels from the sky. The aircraft have helped in halting the rebel advance but done little to dislodge them from territory already ceded.

While it is not known what arms the Iraqi defence minister would seek, it will in all probability include armored vehicles, helicopters besides light artillery. Western suppliers have shied away from Baghdad due to the uncertainly over the country’s financial situation. Following the US withdrawal from Baghdad, a security void was created which the ISIS rebels quickly capitalized on.

US and EU sanctions many not affect Rusosboronexport’s ability to export to Baghdad or any other country outside the sphere of influence of Washington. These include two of the world’s biggest arms importers, India and China.

Rosoboronexport supplies Mi-17 Helicopters to Afghanistan as part of a US pull out plan to hand over security to Afghan security forces. “

Cutting off that flow could be "catastrophic" for Afghan forces fighting the Taliban, a top U.S. general told Congress on Thursday as reported by Reuters.

"The unofficial ban on Russian arms exports to the NATO member countries has been enforced by all NATO member states except Greece," said Konstantin Makiyenko, an expert of the Center for Analysis of Strategies and Technologies said to Voice of Russia. "On other markets, such as the Indian or the Middle Eastern markets, the US and their allies tried to push the Russian arms exporters out by all legal and sometimes illegal means."

Back in 2012, under a $4.2 billion arms deal Russsia was to supply 30 helicopter gunships Mi-28N and 42 air defense and artillery systems Pantsir-1. Kommersant daily reported at the time that the countries agreed to launch negotiations over Iraq’s purchase of Russian fighters MiG-29M/M2.

Moscow had to rush 25 Sukhoi fighter planes to the Iraqi government in Baghdad earlier this month. This was the only way the Iraqi governments, whose pilots are used to fly the Soviet-made aircraft, could get any air force at all to fight back the aggression of ISIS. The US government did not object.

Marine General Joseph Dunford, commander of U.S. forces in Afghanistan, had said 88 Russian helicopters the Pentagon is buying for Afghan security forces were critical for protecting U.S. troops that remain in the country after the end of this year.

"Without the operational reach of the Mi-17, the Afghan forces will not be successful in providing security and stability in Afghanistan and will not be an effective counterterrorism partner," said Dunford.

Dunford said that while the helicopters already had been bought, the law would make it hard to buy spare parts to maintain the aircraft. He said he had been able to find no way to maintain the helicopters without dealing with Rosoboronexport.

The contract is planned to be finalized before October 31, 2014. Twelve choppers had already been delivered so far.” 

France will be the first NATO country to supply Russia with military equipment. Under the 1.2 billion euro contract (US$1.6 billion) signed by Russian exporting company Rosoboronexport and French DCNS in June 2011, Russia is to receive two Mistral-class helicopter carriers. The first one, the Vladivostok, will be received in October. The second, the Sevastopol, will be delivered at the end of next year.