The Congressional Research Service recently published a report on conventional arms transfers that identifies Russia as the world's leading arms supplier to developing countries in 2005. According to CRS calculations, Russia ranked first in arms sales agreements with developing nations, with contracts worth approximately $7 billion. Although Russia's current arms exports have decreased considerably since the Soviet period, its revenue per transaction is now greater because Russian firms have yielded much of the lower-end market to lower-cost suppliers like China, India, and former Soviet bloc allies. In addition, whereas the U.S.S.R. transferred much weaponry under easy commercial terms or without charge (e.g., under long-term loans not expected to be repaid), Russia now discounts arms only to its closest allies. As an added bonus, many new contracts also facilitate energy cooperation since recipients sometimes grant privileges to Russian companies or establish joint ventures as part of the deal. In some cases, Russian sellers accept in-kind payments in lieu of currency or credits -- poultry meat from Thailand, oil and gas from the Middle East. Both internal and external factors help to sustain high Russian arms exports. Unable to secure sufficient state orders to meet their large production capacity, Russian firms have been seeking out foreign markets. Certain countries are drawn to Russian weapons exports because of their Soviet-era debts, their need to upgrade their existing Soviet-era arms, and Russia's willingness to supply arms to any regime not under United Nations sanctions. This final criterion is an advantageous standard from Moscow's perspective. Russia's veto power in the U.N. Security Council allows it to prevent it sanctioning any government without its consent.
Russian Arms Trade With Developing World Continues to Grow
