Russia remains a major player in the global defense market. Various estimates are available on the size of Russian arms exports (more on that later)—but all leading market monitors agree that Russia is currently the world’s second-largest arms supplier after the United States. Arms exports are an important source of earnings for the Russian economy.
In 2016, Russia exported $285.7billion worth of goods and services; according to the Federal Service for Military and Technical Cooperation (FSMTC), defense hardware and services accounted for 5.2 percent of that figure ($ 15 billion in absolute terms). But Russia’s overall exports rely disproportionately on raw materials and minerals—especially hydrocarbons, which account for 62 percent of the total.
If we exclude energy from the tally, arms exports become even more important for the Russian economy. For example, they make up over 60 percent of Russian machinery exports ($15 billion of $24.4 billion). In other words, arms exports are one of the very few success stories in the Russian high-tech sector, along with the exports of nuclear technologies and materials.
Arms exports are important to Russia not just economically, but also politically and militarily. President Vladimir Putin once famously said at a sitting of the Commission for Military and Technical Cooperation “Effective military and technical cooperation is a potent instrument of promoting our national interests, political as well as economic.” The Kremlin may also see major arms contracts as part and parcel of its long-standing and developing political and economic relationships, for instance with China, India, Algeria, Kazakhstan, Venezuela, and many other countries.
Another notable development in this regard is the growing non-commercial arms deliveries to Russia’s allies in the Collective Security Treaty Organization (CSTO), especially Belarus and Armenia, and to non-CSTO member Syria. These deliveries are a major instrument of Russian foreign policy. They help to strengthen Russia’s closest allies that serve as buffer states along its borders (Belarus, Armenia), and to suppress the terror threat—mostly in Syria, but also in Kyrgyzstan and Tajikistan.
Click here for the full report (64 PDF pages) on the CSIS website.