1. MTC system sustainability and performance, efficiency of FSMTC of Russia as its core element
The system of military-technical cooperation established under Decree of the President of the Russian Federation № 1953 dated 1 December 2000 «Issues of military-technical cooperation between the Russian Federation and foreign states» has proved its efficiency. Power vertical headed by the President of Russia with the FSMTC of Russia as its inherent component enables manageability and performance of the military-technical cooperation with foreign states, headway of the national military-industrial complex, and investments of profits into production and design of new advanced versions of arms and military hardware.
In 2006, the FSMTC of Russia pooled its efforts to implement priority guidelines of the state policy for military-technical cooperation in interests of national security, stronger international authority, and irreproachable status of a leader in the world export of military purpose products.
To meet its objectives, the Federal Service for Military-Technical Cooperation focused on its oversight functions aimed at reaching an estimated indicator of an aggregate export sales of military purpose products, introducing into practice new forms of cooperation, retaining Russian foothold in traditional weapons markets and acquisition of new markets, as well as maintaining adequate after-sale services of earlier delivered military hardware.
2. Statistics on MTC system performance in 2006
Export volumes reached record high in 2006. Starting from the inception date of the Military-Technical Cooperation Committee (MTCC of Russia) in December 2000 transformed in 2004 to the Federal Service (FSMTC of Russia), an aggregate export volume of military purpose products almost doubled up to USD6.5 billion last year.
In 2006, FX revenues were worth USD8 billion.
The Table shows export performance of military purpose products.
|Export volume in USD||3.7 bln||4.8 bln||5.6 bln||5.8 bln||6.1 bln||6.5 bln|
Export deliveries were made to 64 countries. Cf. in 2004, weapons deliveries were made to 57 countries, in 2005 – to 61 countries.
3. Structure of Russian export by types of weapons
Share of military aircraft has been high, which has not dropped below 30% of the total volume for the recent years. In 2006, it accounted for 49.9 %. Share of navy products sharply risen in 2005 slightly reduced to 27.3% during the reporting year. Army weapons remain stable and, practically, unchanged in proportional terms – 11.4% by 2006 results. Share of AD systems, reaching 9.2%, has increased significantly.
Performance of Russian arms export by types of armed forces for the last three years is shown in the Table below:
|Types of armed forces||Share in %|
|Share in %|
|Share in %|
4. Geography of Russian export sales in 2006
Among target states for Russian arms export are Central, East and South Asian states which share in the total volume amounts to 65 % or worth USD4.2 billion. Key Russian partners in the region are India, China, Vietnam, and South Korea.
Share of Middle East, and North African states has considerably increased by over 21 % of the total volume or worth of circa USD1.4 billion which is twice as much as 2005 figure.
More sales were made to Latin American and Caribbean states (key customers Venezuela, Mexico) from 0.5 % to 7.7 % of the total volume, having reached circa USD0.5 billion.
Positions in the market of Central, East, and South Europe remained the same. Though their share in the Russian export is trivial – circa 3.8 % by the results of 2006, for Russia it is a high-profile area. Greece is a traditionally key partner.
Growth of export to the CIS countries shows a favorable tendency. Despite its still insignificant share – a little more than 1 % of the total volume - its value increased twice versus 2005. Appreciable increase in deliveries was notable for Azerbaijan, Armenia, Belarus, and Uzbekistan.
5. Consistency of Russian policy for military-technical cooperation
Despite counteraction of our competitors breaching at times fair competition for commodity markets, Russia intends to continue developing relations in the military-technical cooperation, both with traditional and future partners. The Russian Federation maintains contacts in this area with 80 states. Framework bilateral agreements for military-technical cooperation have been concluded with most of them, which the Russian Federation has always performed in strict conformity with all international laws and full compliance with effective non-proliferation regimes. Military-technical cooperation between Russia and foreign states is invariably a prerequisite for regional and global stability.
6. Forward looking scenario
While implementing the MTC policy set by the Russian President, the Federal Service for Military-Technical Cooperation creates the environment for stable growth of arms export which in 2007, as forecasted by the FSMTC of Russia, can reach the level of more than USD7 billion.
Date of publication: 27.02.2007