Procurement: Russian Incentive Program

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March 3, 2007: Algeria has agreed to buy more MiG-29 fighters from Russia. Algeria already has 34 MiG-29s on order, and eight have already been delivered. The Algerians have an incentive program with Russia, which has made this additional sale possible. Basically, Russia agreed to forgive $4.7 billion in old (Soviet Union era) debt (largely for weapons), if Algeria bought $7.5 billion worth of goods and services from Russia. Algeria found that some of the best deals were to be found in the weapons category, although many Russian industrial and consumer goods are approaching Western standards of quality. But for the moment, most of that $7.5 billion will be spent on weapons. Russia doesn't mind this, as it is intent on increasing export sales of high-tech weapons, which help keep its weapons industries alive. The Russians are increasingly using financial incentives, often including debt forgiveness, to facilitate weapons sales.

 


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