In the Federal law of the Russian Federation of July 19, 1998 № 114-FZ "About military-technical cooperation of the Russian Federation with foreign States" VTS is interpreted as "activity in the field of international relations, connected with export and import, including with delivery or purchase, military products, and the development and production of military products".
For Russia, the PTS is one of the ways of promoting national interests abroad and has the goal of strengthening the military-political positions of Russia in other regions. It promotes the convergence of States in military-technical terms, is the basis for the creation of military-political unions with the further prospect of integration of military systems. This can lead to a change in the balance of forces in different regions, thereby, deter the aggressors and the maintenance of regional stability.
Currently, the only state intermediary foreign trade activities in respect of all products of military and dual-use is JSC Rosoboronexport (part of rostec). It accounts for more than 80% of exports of weapons and military equipment of Russian production. Among other subjects, the PTS ("the Russian organization that received the right to exercise foreign trade activity concerning military products") can also be selected JSC "EKO Concern "Almaz – Antey", JSC "UAC", JSC "USC", JSC "Scientific and production Corporation "Uralvagonzavod", JSC "Corporation "Tactical missiles" and several others (over 30).
"The Russian Federation carries out military-political and military-technical cooperation with foreign States and international, including regional, organizations on the basis of foreign policy, economic expediency". The usefulness of military-technical cooperation with Latin American States?
According to Deputy General Director of Rosoboronexport Sergei Ladygin is currently Latin America is a promising region of Russia in terms of development of PTS. You can understand that 33 States, approximately 20 000 km2 (15%) of land, are large and attractive market for Russian military-technical production, not to mention the fact that the region is located in the immediate vicinity of one of the main geopolitical opponents of Russia. In addition, compared with 2005, annual nominal exports of weapons to countries in the region has significantly increased for 2012 from $1,247 billion to $6,37 billion, respectively.
The Russian defense industry enterprises have to struggle, including in Latin America, in the context of growing competition in the arms market and increasing pressure from American and European manufacturers. In this regard, we should consider the successes of the Russian Federation on the global and regional arms markets.
According to the Stockholm international Institute for peace studies (SIPRI), between 2007-2011, the US share of global arms exports accounted for 30%, Russia – 24%, China 4%, while for 2012-2016 – 33%, 23%, 6.2% respectively. Notable in this respect, the upward trend in the share of China in the global arms market: in 5 years China has managed to climb by 3 points the ranking in third place. Among European producers, Germany and France, traditionally among the five major exporters of weapons and military equipment (4-7%).
Considering the structure of the Latin American market, it should be noted that from 2005 to 2012, the volume of exports of conventional arms (register of classification of the United Nations) of all countries is estimated at $24,55 billion, While Russia ranked first in the export of military products in the period. It accounted for about 25.5% of deliveries of weapons and military equipment in the region. The second place belongs to the United States (15,8%), the third – Spain (15,1%).
According to the previously mentioned SIPRI reports, no state in Latin America is not included in the top ten importers of weapons and military equipment (results 2015: Brazil – 12th place, Mexico and Venezuela – 20), but this does not mean that the countries of the region are not interested in this. The need for imports is due to several reasons:
- a lag in the development of industrial and scientific-technical sectors of the economies of Latin American countries from highly developed, and lack the necessary financial, technological and personnel conditions for the establishment of military products meeting modern requirements;
- fighting crime, drug trafficking and terrorism, as well as the need to ensure the security of the waters of the South Atlantic.
Based on this, Russia can offer not only the contracts on the ready-made military hardware, but also a wide range of services, among which are the repair of equipment and supply for her spare parts, after-sales service, personnel training operation of military products, etc.
Despite the fact that the regional structure of the Russian export (Fig. 1) is dominated by the Asia-Pacific region (42%), Russia increasingly turns his eyes to the distant Latin America. So, according to Rosoboronexport, the volume of deliveries of weapons and military equipment in the countries of the region since 2001 exceeded $10 billion.
Between 2000 and 2016, the share of Latin America accounted for slightly more than 4.5% of the total volume of Russian arms exports. But it is possible to note the positive developments: over the period 2015-April 2017 total exports increased from 8 to already mentioned $10 billion. This is due primarily to the implementation of previously signed contracts. Besides, not last role was played by the successful demonstration of advanced Russian weapons systems in the course of the Syrian conflict.
As you know, the organization and participation of Russia in numerous international exhibitions of weapons and military equipment on its territory and abroad is an important source of formation of portfolio of orders. Among the exhibitions, which the Russian side uses as an arena of interaction and dialogue, as follows:
- Russia: military-technical forum "Army", aviation-space salon "MAKS", naval salon "IMDS", etc.;
- Foreign aerospace exhibition "AERO INDIA", "AIRSHOW CHINA" (China), exhibition of arms and military equipment "INDO DEFENCE" (India), exhibition of aerospace and naval engineering "LIMA" (Malaysia), defence exhibition in "AYDEKS" (UAE), "IDEF" (Turkey), etc.
Speaking of Latin America, it should be noted that with the aim of increasing the proportion of their weapons in the countries of the region, the Russian Federation will enhance cooperation through participation in various local exhibitions. For example, the exhibition of military and aerospace equipment "FIDAE" (Chile), exhibition of aircraft and defense systems "LAAD" (Brazil), interior defense technology ", SETDEF" (Peru), conference and exhibition of technological achievements in the field of defence and security "ECODEFENSE" (Columbia), aerospace salon "FAMEX" (Mexico). In the last two exhibitions, the Russian side participated for the first time in 2017, indicating the increased activity of the Russian defense industry in the Latin American market.
In this connection especially it is necessary to highlight the international exhibition LAAD-2017, which took place 4-7 April in Rio de Janeiro. During the event, Russia has demonstrated over 350 models of weapons and military equipment for all types of troops, some of which were highly appreciated by the delegations of Latin American countries.
Traditionally, the focus is on Russian aircraft and helicopters and air defense systems (41% and 13% of the total portfolio, respectively). Latin American partners are not the exception, so the most promising models of military equipment "Rosoboronexport" called military transport aircraft Yak-130, multifunctional frontline fighter MiG-29M multi-role su-35 fighters and combat helicopters Mi-28NE, Ka-52, Mi-35M helicopters and heavy transport helicopters Mi-26T2, antiaircraft missile-gun complex "Pantsir-S1" anti-aircraft missile system "Antey-2500" and portable anti-aircraft missile complex "Igla-s". During the exhibition there were conducted numerous negotiations that could eventually lead to the signing of new arms contracts.
However, despite all the statements about the prospects of the Latin American market in terms of VTS, the figures say. First, according to the head of FSMTC of Dmitry Shugaev, the supply of weapons and military equipment in 2016-2017 in the countries of North and South America make up 3% of the total volume of exports of military technology of the Russian production, which is not an inspiring result. Second, the military spending of Latin America as a whole is reduced. According to SIPRI, the positive dynamics of cost 2014 (2014– - 0,1 %, 2015 – - 3%). So, in 2016, the region spent on military needs about 8% less than in 2015, becoming the record for percentage decline in the cost among other regions of the world (Fig. 2).
Fig. 2. Military spending regions, 2015-2016
There's a logical explanation. The reason for this disappointing statistics is unfolding in 2014 the economic crisis (and in some countries also political), particularly badly affected States of South America and in 2016 reached its peak. Thus, the country caught in the epicenter of the "perfect storm" (a situation in which adverse factors are superimposed on each other, bringing their total negative effect increases), are forced to reduce the military budget.
According to the IMF and the Economist Focus (Fig. 3) the economic performance of most countries in the region in 2018 must leave the area at risk and begin to show positive growth, but political risks are still high. If forecasts of experts come true and the main partners in the region will not change his rhetoric on anti-Russian (in many countries, elections are held in 2018), it is possible to expect increase of demand for weapons and military equipment of the Russian production with the subsequent conclusion of contracts.
Fig. 3. Forecast Focus Economist: GDP of countries in the region in 2018.
Traditional partners of the Russian Federation in the region are Argentina, Brazil, Venezuela, Colombia, Cuba, Mexico and Peru. As a rule, more than 60% of the supply in the Latin American direction in Venezuela, followed by Brazil and Peru (see Fig. 4). Unfortunately, the regional arms market is dominated by European and American or local suppliers as it happens in Brazil, where military expenditures are the highest in the region. In this connection it is expedient to explore some more of Russia's bilateral cooperation with key partners.
Fig. 4. The share of Russia in import of weapons and military equipment in Latin America
Russia-Venezuela. Currently, Venezuela is the largest buyer of weapons and military equipment of the Russian production in the Latin American region. As noted earlier, about 60% of the Russian import of military hardware falls in Venezuela. The coming to power of the late socialist Hugo Chavez in 1999 was marked by Washington's refusal from military-technical cooperation with Caracas. During the visit to Moscow President of Venezuela in 2001, was signed the intergovernmental agreement on the basis of which is the PTS, however, the first major arms contracts were signed only in 2005.
About 30 contracts in the period from 2005-2013 was signed between Rosoboronexport and the defense Ministry of Venezuela. The imports were made Kalashnikov AK-103 multi-role fighters su-30MK, helicopters Mi-17V-5, Mi-35M, Mi-26T, tanks T-72B. Also in Venezuela is actively delivered to different air defense systems of Russian origin (BUK-M2, s-300VM "Antey-2500", s-125 Pechora-2M, Igla-s, etc.). It is worth noting the fact that part of military hardware was purchased from Russian loans. So, despite the growing congestion, in 2009, in Caracas had issued a loan of $2.2 billion, and in 2011 – $4 billion. The total amount issued between 2006 and 2017, the credit is estimated at $17 billion.
It is also worth noting that by the end of 2017 will finish construction of the service center on repair of helicopters, and in 2019 in full force to make plant for the production of AK-103 and ammunition, the construction of which is carried out in the framework signed in 2006 contract. Thus, Venezuela is the first country in the region, where will be launched the licensed production of Kalashnikov assault rifles.
In General, we can note the positive developments in military-technical cooperation. This is confirmed by the Minister of defense of Venezuela Vladimir Padrino Lopez in 2015, and President Nicolas Maduro in 2017, stating that thanks to Russian weapons and close cooperation, the potential of the army of the Republic has increased, which may indicate a strong interest by the Venezuelan side to further cooperation.
However, in cooperation with the States there has been a disturbing trend. Strengthened Russia's position in the Venezuelan market is under threat. Firstly, the future of the defense budget of Venezuela is very unclear because of the deep economic crisis and political instability. Most of the supplies of weapons and military equipment from Russia was financed by revenue from hydrocarbons, the prices of which grew rapidly in the early 2000s, However, after several years of relatively low oil prices Venezuela is experiencing a serious economic downturn, which forced governments to cut spending on military procurement. If in 2013 they accounted for 3.5% of state expenditures in 2016 this figure amounted to only 0.7%. Second, in recent years Russia has faced increasing competition from China: Venezuela was the second country in volume of import of Chinese weapons for the period 2008-2015 (Fig. 5).
China's competitive advantage lies in the fact that Russian weapons are on average 20-40% higher than Chinese (based on or copied from the superior quality of the Russian samples), which is beneficial to Latin American countries that currently cannot afford expensive Western weapons (see below).
Fig. 5. Import of Chinese weapons in Latin America, 1991-2014.
However, during his last visit to Moscow, held in October in the framework of the "Russian energy weeks-2017" N. Maduro has hinted that he needs the support of Russia. In light of the remarkable interest of the Russian side to the Venezuelan hydrocarbons, requests the head of the Republic about a debt restructuring and new lending does not seem so absurd. Policy of concessions in relation to Venezuela, the Russian Federation defends its geopolitical interests, considering the state as an important Outpost on the South American continent.
Russia-Brazil. According to the rating of the 2017 Global Firepower (GFP), Brazil has 17-th in the world and 1st in Latin America according to the power of the army. This is understandable: the state with the largest territory and the strongest economy in the region, is its de facto leader. Since 2003 military expenses of the state gradually increased (see table. 1). However, the "Golden decade" for Brazil ended in 2012 With the onset of the economic crisis and corruption scandals President Dilma Rousseff, in which she was nominated impeachment, the situation in the country worsened even more, which resulted in a reduction of funds for needs of defense.
Table. 1. Military expenditure of Brazil and their share in public expenditure
(2003-2016., in billion $, current prices)
Since the Brazilian arms market is the largest, Russia is facing strong competition from Western European, American and Israeli suppliers. In addition, defending its leadership position in the region, Brazil is betting on the development of national defense industry. There is the 38.2% of all enterprises of the military industry in Latin America.
At the moment Russia exports to Brazil are mainly air defenses, tactical and technical characteristics which the Brazilian partners highly appreciate. Special demand-portable air defence systems (MANPADS) "Igla-s", the last delivery which ended in 2016. In total, Brazil purchased 160 MANPADS specified sample.
Since 2013, he conducted negotiations on the purchase of air defense missile-gun complexes (zrpk) "Pantsir-S1", and in the course of the exhibition LAAD-2017 the Brazilian side confirmed its intention to buy from Russia this type of zrpk.
Russian helicopters are successfully operated in Brazil. Contract 2008 Brazil were purchased transport-combat Mi-35M helicopters worth $150 million. For maintenance and repair of this type of helicopters in the country will set up a service center.
The coming to power of D. Rousseff in 2011 was marked by the diversification of foreign relations, which had a favourable impact on the VTS of the two States. However, the changing political situation had a negative impact on agreements with the administration of the ousted President. For example, a contract to supply 7 helicopters Ka-62 is practically suspended. In addition, the possibility of selling several pieces of equipment (aircraft Yak-130, a heavy military transport Mi-26 helicopters, civil helicopters Mi-171a1 and Ka-32A11BC, Ka-226T, "Ansat" and armored vehicles "Tiger"), which early was interested of the armed forces of Brazil, was called into question.
In 2018, the country will hold new presidential elections, the results of which prospects of Russian exports of weapons will be more or less clear, but in the face of strong competition and unfavorable internal situation of the Russian weapons are not in great demand.
Russia-Peru. Currently, Peru remains one of relatively large customers in the region, which focuses mainly on Russian helicopters. In 2011, in Peru were delivered 6 transport helicopters Mi-171SH and 2 drums Mi-35P $107,9 million, and in 2013 with the Ministry of defense of Peru was awarded the contract for the supply of 24 military transport helicopters Mi-171SH for the sum more than $500 million.
However, not without difficulties. In September 2015, the national Bank of Peru has blocked the payment under the contract of 2013 due to the US imposed sanctions on several Russian companies, in which number entered and "Rosoboronexport". In September 2015 were held tense negotiations, in which it announced the resumption of supplies. At the beginning of 2016 delivery of helicopters to Peru has ended.
Over the last 10 years was concluded several contracts for the modernization of aircraft: in 2008 – 19 MiG-29 fighters, in 2011-2012 – 7 helicopters Mi-25. In addition, 2017 is preparing the opening of a service center for repair of helicopters in Peru. In addition, the Peruvian side expressed interest in the modernization of the tank fleet, which is based on T-55 Soviet-made, and the purchase of T-90S tanks, as well as exploring the possibility of purchasing MiG-29.
It is worth noting that China was not spared and the Peruvian arms market. In 2014, in Peru, it was decided to replace the Soviet multiple rocket launcher systems fire (MLRS) BM-21 "Grad". The choice was made in favor of Chinese manufacturers into service in the Peruvian army received 27 new, Type 90B MLRS .
In this connection it is possible to assert with confidence that Lima prefer price to quality: "heiress" of "Grad" MLRS "Smerch" and "Uragan" in various versions have better performance characteristics compared to a Chinese competitor. In addition, already having a negative experience during the operation of the acquired military equipment of Chinese production (a serious problem in trucks "Babin 2528" "Dong Feng EQ-1180/EQ-2100" "Shanxi Steyr" SX-190; removal from service ammunition caliber 5,56х45 mm due to the large number of misfires and does not meet the quality standards), the Ministry of defense of Peru, in fact, stepped on the same rake.
Bilateral PTS is hard to call truly fruitful. Currently, the Peruvian armed forces are interested mostly in Russian helicopters. Without increasing the nomenclature of the purchased Russian arms is problematic to make a breakthrough in the development of the relationship, whereas the absence of compelling reasons to strengthen the army. Although the economic crisis has not greatly affected the country, as Venezuela and Brazil, Peru is not eager to sign new contracts with Russia, so the future of cooperation so far looks very vague.
Russia-Mexico. A major exporter of military hardware to Mexico is the United States whose deliveries increased many times and reached about $3.5 billion since taking office, President peña Nieto in 2012 (including in the framework of the War on drugs). However, the Russian defense industry also found a place in Mexico. The imports of Mexico is helicopters and its maintenance.
In 2011, a contract was signed for the supply of three multi-purpose military transport helicopter Mi-17V-5. In 2014-2015, the holding company "Helicopters of Russia" had a major overhaul of 19 Mi-17/Mi-17-1V. Also in the near future we plan to conclude a contract for maintenance of helicopters Mi-17. Russian helicopters, as in Mexico and are used to eliminate the consequences of emergency situations and rescue people. Trucks "Ural" is also used extensively in the aftermath of hurricane Katrina.
Mexican air force are interested in buying party light wheeled AFV "Highlander-M", which is now being tested in one of the special forces.
Despite the fact that military spending from 2010 to 2016, Mexico consistently spent 2-2,5% of public spending (of 0.5-0.7% of GDP), purchase more serious equipment for military use, and not light armored vehicles and helicopters can cause a negative reaction of the United States, as the country is focused on its Northern neighbor. There is potential for further development, however, the intergovernmental agreement on cooperation in military-technical terms, which would allow to establish a legal basis for its extension, still was not signed.
Russia-Argentina. In 2015, came to power, opposition leader Mauricio Macri, thus ending the twelve-year period of the Kirchner couple. The new President has criticized the policy of the previous administration aimed at developing comprehensive cooperation with Russia, and expressed its desire to restore relations with Brazil and the United States.
However, the position of the M. Makri cannot be called purely Pro-American. This is evidenced by his statement that the country will insist on returning to the Argentina of the Falkland Islands (Malvinas) that is not in the interests of the United States, which has traditionally supported the Crown in this territorial dispute, especially during the armed conflict in 1982, in defiance of all agreements in the framework of the OAS.
However, Russian-Argentine cooperation in the military sphere can hardly be called successful in the era of "kerchenska", whereas, since 2003 in the distant Latin American country was delivered only 2 of helicopter Mi-171 in the amount of approximately $27 million (2011), and in 2014, Russia delivered 12 su-24 bombers in exchange for food.
Now the situation is not better. In spite of the statement that the management change will not affect the development of military-technical cooperation with Russia, only Argentina is considering the purchase of light fighters MiG-29 and an additional batch of Mi-171 and counting on after-sales service previously supplied helicopters.
Unfortunately, at present Russian producers of military hardware are not so interested in the Argentine partners, cooperation in the fuel and energy sector, where Russia is relatively well entrenched (latest: Gazprom's development of oil fields, the construction by Russia of a nuclear reactor at the Atucha complex, the construction of TPP "Cuido-1"), so talking about the signing of new contracts in the near future.
Russia-Colombia. A large share of public expenditure of Colombia is traditionally constituted by military spending. Since 1998 this index does not fall below 10% and is the highest in the region. The reason for this is 50-year-old civil war, literally tearing the country: the main parties are government forces, as well as the formation of the leftist Revolutionary armed forces of Colombia (FARC) and national liberation Army (ELN). However, in 2016, the conflict was more or less settled by the Colombian President Juan Manuel Santos, for which he received the Nobel peace prize in the same year.
In his Nobel lecture H. M. Santos noted that many countries, including Russia, "have reason to be proud of this achievement,". The Russian scored in terms of VTS? As in many other countries of the region, the base of Russian exports to Colombia is helicopters. From 1996 to 2008 the Colombian side gained 25 helicopters Mi-8/17 in the amount of $189 million In 2013, a contract was signed for the supply of 5 helicopters Mi-171a1 and 5 Ka-62. As for the other equipment in 2005-2006, Russia set 8 BTR-80.
Currently, the country is interested in buying Russian-made helicopters Mi-8/17 and Ansat, including, medical versions, as well as in the acquisition of the new multirole Mi-171A2.
The Russian-Colombian VTS looks very productive in the field of helicopters. It can be expected that the recent interest of several models of helicopters will become soon an official contract because Russian equipment has earned the trust of Colombian partners, in addition, the country lacks funds for such transactions.
In this article it is also interesting to examine the current state of the PTS with these ideological allies of the USSR as Cuba and Nicaragua.
Russia-Cuba. Currently, intensive military-technical cooperation with Cuba, however. Basically Russia has limited the supply of spare parts and provides repair services for equipment of Soviet manufacture. One reason is the insolvency of Havana, so Moscow provides loans to supply. In the future, it is possible to supply the civil aviation industry of the Russian production in Cuba (IL-96-400, an-148/158, the MS-21 aircraft, helicopters Mi-8/17, Ka-226T, Ka-32АК11ВС, Ansat, and others)
In 2001 in the Republic of closed electronic intelligence center in Lourdes, resume, which, according to the President of Russia, Vladimir Putin, will not. Also it is not planned to open military bases in Cuba as relations between the countries are developing in a different direction.
Russia-Nicaragua. During Soviet times, up to 90% of the weapons and military equipment to Nicaragua was a Soviet production. Because for decades the country's army has not undergone major changes, a large portion of the military hardware of that time have survived to this day.
Currently, the status of defence cooperation with Nicaragua is much better than with Cuba. Over the last 10 years in the country was given 2 helicopters Mi-8/17 43 units of BMP-1, 43 units of BTR-70, 50 tanks T-72B1. In addition, for the Navy of Nicaragua specially built 2 missile boats of the project 12418 "Molniya", 4 patrol boats of the project 14310 "Mirage", base minesweeper project 1265Э. However, many units of weapons are used.
It is also worth mentioning that in 2015, signed a resolution to allow Russian warships to enter Nicaraguan ports, and also approved the agreement for patrol coastal waters. Soon, the opening of Russian-built centre for topographic support for the army of Nicaragua.
The restoration of cooperation is quite fast and smooth, but large-scale deals will be unlikely signed, limited solvency of the Central American States and the lack of need at the moment to do large orders.
Summing up the above, we can identify the main characteristics of the arms market in Latin America to date:
- No need for the mass purchase of weapons and military equipment due to the low probability of conflicts in the region and the absence of a serious external threat to Latin American countries;
- The reduction of military expenditures due to the onset of the economic crisis;
- Orientation for the purchase of cheaper and used arms;
- The weakness of the national military-industrial complex, and the paucity of national Armed Forces.
Taking into account the political instability, the arrival of the political elites calling for reducing cooperation with Russia and increasing competition from Western and Chinese manufacturers in recent years, we can conclude that the statements about the prospects of the Latin American arms market are overly optimistic. The future VTS with a number of States appear to be very vague and often is episodic in nature.
Exception is deliveries of Russian-made aircraft, which has proved itself worldwide, so the "Rosoboronexport" still manages to maintain its leading position in Latin America in this sector.
About 20 years ago, no one imagined that Russia would be able to return to this remote market, but a perfect jerk and a desire to strengthen its position in the region as an exporter of weapons and military equipment are obvious. In addition to arms supplies, there is a great potential for further development: the establishment of licensed production in the countries of the region, sending Russian specialists, the opening of centers for repair and maintenance of supplied products of military and dual-purpose, a further demonstration of products of the Russian defense industry, etc. Properly using such opportunities, Russia will be able not only to lose the position, but to gain a foothold in the region.
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 Bulletin of the chamber of accounts No. 2 (February) 2017 S. 260. URL: http://www.ach.gov.ru/activities/bulleten/891/29494/
 Tank throw in Nicaragua. 03.08.16. URL: https://www.gazeta.ru/army/2016/08/03/9746165.shtml
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