Russia, world's No. 2 arms seller, may buy weapons worth $12B

MOSCOW — Russia may buy $12 billion of arms from European and Israeli companies over the next five years as the world's second-biggest arms exporter hunts for higher-quality weapons than domestic companies can provide, according to a Moscow research institute.

The two biggest deals — $1.8 billion each — may be signed within two years, according to a report compiled for Bloomberg News by the Center for Analysis of Strategies and Technologies. Russia plans to acquire four Mistral helicopter carrier ships from Paris-based DCNS, and is in talks with Iveco, a unit of Fiat, for as many as 3,000 light armored vehicles, the report shows.

"Russia has been an exception on military procurement, because no other country in the last 15 years tried to be 100 percent autonomous," said center director Ruslan Pukhov. "Now we have recognized that you can't be competitive in all areas."

While the military has always purchased some weapons from abroad, the search for overseas suppliers increased after the five-day war with Georgia in 2008 revealed weaknesses in Russian technology, Pukhov said. The drive for foreign equipment is now reaching the stage of large-scale deals. Russia ranked 80th in arms imports in 2005-2009, behind Myanmar, according to the Stockholm International Peace Research Institute.

Russia will increase spending on military equipment by 8 percent to $37.2 billion in 2010, Putin said in December. President Dmitry Medvedev said the military this year needs more than 30 ballistic missiles, five Iskander air-defense batteries, about 300 "modern" armored vehicles, 30 helicopters, 28 warplanes, three nuclear-powered submarines and a corvette.

The Center for Analysis of Strategies and Technologies publishes Arms Export, a bimonthly journal on the weapons trade and defense industry, and Moscow Defense Brief, which covers Russia's view on security issues for an international audience. Pukhov sits on the Defense Ministry's public advisory board.

The center "probably possesses the widest range of information on Russian defense procurement, technologies and arms exports and imports of any Russian research institute," said Konstantin von Eggert, a Moscow-based political analyst and member of the Royal Institute of International Affairs in London. "It has proven accurate in its analysis."

Medvedev called for an overhaul of the military after the war with Georgia. At least 30 percent of the army's weapons must be "state-of-the-art" by 2015, he said last month.

"When ordering new weapons and technologies, the army will think first of all about what's best in terms of personnel safety," Defense Minister Anatoly Serdyukov said in April.

Russia is still the second-biggest arms exporter, with 23 percent of the market, behind the United States at 30 percent, according to the Stockholm institute.

Most of Russia's purchases will be made in North Atlantic Treaty Organization countries, Pukhov said. "You have rhetoric that can be quite anti-Western at times," he said. "Russia's real policy is to buy arms from NATO countries. This means Russia doesn't see the alliance as a main threat any longer."

The biggest item on Russia's shopping list is four Mistral warships. One vessel will probably be built at an STX France shipyard, according to the report. A second may be built by STX in sections and assembled in Russia, and two more may be built under license in Russia, the center said.