Leadership: Russia Rushes To Save Failing Defense Firms


March 7, 2009: Russia is hustling to sell weapons to foreign customers, and, less frequently, buy more for their own forces. They don't just need the money, they need to prevent most of their defense firms from going out of business. Only a third of Russian defense firms are in good financial shape. About 30 percent are close to bankruptcy, and another 36 percent are just scraping by.

Export sales are stuck at about $8 billion a year, largely because of problems with China (which is stealing Russian military technology and building their own copies of Russian military gear) and India (which is increasingly turning to Western equipment.) These two countries account for most of the export sales, and Russia is having a hard time finding new customers to replace lost sales from the two big customers.

The current worldwide recession, and falling raw materials prices, has hurt the Russian economy badly. As a result, the defense budget was cut 15 percent. But that may have to be reversed to avoid losing defense firms that managed to survive the end of the Cold War and the utter lack of sales to the Russian military during the 1990s.