$5Bn Russian weapons for an old customer

WAR is good for the weapons industries. Regional conflict in the Middle East must be music to many ears around the world. Most of all to those who want to sell outdated guns and mortars to corrupt officials with stacks of cash stolen from the state treasury. Besides what do the buyers care they will buy crap at a high price only for the commission involved. Once the weapons fail to fire they will simple supply more of the same. When things get really messed up they will change buyers asking higher prices than before. New buyers will just buy from the old buyers nasty stock and resupply them to those fools who will just end up paying more and more.

Russia is spreading its wings in the Middle East again. Under Putin Russia wants to project its hard and soft powers to reposition itself as a “rising” superpower. The former communist country wants to step out from its years of isolation and retake its position on the world stage. Keeping a base in the Middle East will be critical for this mission. Thats where Tartous, Syria comes in. Iran will be a strategic partner for the forseeable future for Russia since Iran and US are not going to close ranks any time soon. Egypt is still a US ally thanks to the Muslim Brotherhood decision to stand by the peace treaty with Israel. Billions of US Dollars are involved as defence aid through that arrangement. Its more like Dollars for Peace treaty for Egypt.

More news from Russia on its arms sales:

Russia may join the ranks of major importers of weapons to Iraq. During the visit of Iraqi Prime Minister al-Maliki’s, a contract for $5 billion may be signed for the sale of MiG fighter jets, products of Russian Helicopters, anti-aircraft missile systems, armored vehicles and other weapons to the Middle Eastern country. 

In Soviet times, Baghdad was one of the main buyers of the products of MIC USSR. After the war in the early 1990s, military and technical cooperation between Russia and Iraq was at a very low level. After the second US-Iraq war, Russia began supplying weapons to Iraq in larger volumes. Between 2008 and 2011 the new government in Baghdad purchased Russian weapons worth $246 million dollars. The bulk of the purchase was helicopters. In this same period, the actual deliveries of weapons and military equipment of U.S. production totaled $6.56 billion dollars, according to the director of the Center for Analysis of World Arms Trade (TSAMTO) Igor Korotchenko.

According to the Iraqi News Agency Shafaq, during the visit of Iraqi Prime Minister Nouri al-Maliki in Moscow scheduled for October 10, new contracts for the supply of arms and military equipment may be signed.

// If the deal goes through, Iraq will be among five largest importers of Russian arms. According to the newspaper, contracts will be signed for the supply of the products of the pro RAC “MiG”, “Helicopters of Russia, and “Tula “Instrument Design Bureau” in the amount of $4.3 billion dollars. It is assumed that Iraq would sell 30 Mi-28N combat vehicles and 42 anti-aircraft missile and gun complex “Shell-S1.” Additionally, there may be new contracts for the supply of MiG-29M/M2, radars, armored vehicles and other weapons.

Until now, the main supplier of arms to Iraq was its main occupant – the USA. Baghdad has purchased from the U.S. military-industrial complex M1 tanks, F-16 fighter jets and other weapons for nearly $15 billion. The Americans supplying outdated weapons to Iraq at traditionally high prices – 36 old F-16 for over $5 billion dollars. In addition, Baghdad purchases equipment from the governments of other countries occupying Iraq. Ukraine supplies over $1.5 billion worth of weapons.

Last year, Russia has retained the second place in the world in terms of arms exports, selling weapons abroad for 11.3 billion dollars. Most likely, this year the country will also remain in second place with a total export at $13.293 billion, or 19 percent of the world supply. The main volume of shipments accounted for a very small number of countries that have the potential to negatively affect the front-runner position of Russia in the global arms trade.

In the next four years, in terms of the signed contracts, the leaders of Russian weapons import will be India, Venezuela, and Vietnam. “First place in the period from 2012 to 2015 in Russia’s arms exports will again be taken by India with $14.3 billion dollars. In second place instead of Algeria will be Venezuela with $3.2 billion. Vietnam will be in third place,” said Igor Korotchenko to the media based on the improved analytical predictions by TSAMTO. In the fourth place in terms of procurement of military goods from Russia is China with $2.8 billion followed by Syria with $1.6 billion.

The share of the top three importers of Russian weapons in the overall balance of supply abroad will be 62.43 percent, the share of the top five – 74.9 percent. The total volume of the Russian arms exports in this period is projected at $32.5 billion dollars. The emergence among the major buyers of Russian military equipment of Baghdad is unlikely, said the director of the Center for Analysis of World Arms Trade.

“Personally, I have serious doubts that Iraq will buy billions dollars’ worth of our weapons. They will not be allowed to do it. Iraq’s foreign policy is tightly controlled by the U.S., and no matter what they say, that Iraq broke away from America and left to float freely – it is not the case. Of course, there are some contradictions between the administrations in Washington and Baghdad. However, Iraq is tightly attached to the American war machine. In previous years, they purchased solely from the U.S. for the amount of over $6 billion. We sold for under $300 million dollars. The numbers speak for themselves. So I do not expect very large contracts. Even if Iraq wants to buy a large quantity of Russian weapons, America will be opposed to it,” said Igor Korotchenko to “Pravda.Ru.”

During the visit of Iraqi Prime Minister al-Maliki to Russia other issues in addition to the military contracts will be discussed. During the visit, the parties may sign a number of documents on the Russian-Iraqi inter-industry and investment ties. Relevant programs are being refined by the chambers of commerce of Iraq and Russia. Baghdad expects Russia’s direct investment in Iraq at over $10 billion.

Gold for oil… I must be dreaming…

US Dollar is the international reserve currency. Its the only currency used for oil trade. The monarchs sitting on 70% of the world’s oil reserve will probably not want to start thinking about changig the reserve currency or the oil currency from USD to Dinar or to gold. Thats too bad cos it could have made these tribal heads superpowers.

Russia, once a superpower, knows the importance of reserve currency and balance of payments all too well. It knows that a change in Russia’s reserve currency to its Ruble could make it a superpower once again. Here is an article from a Russian paper:

Can Russian ruble become international reserve currency?. 48118.jpeg

Russian Prime Minister Dmitry Medvedev has recently surprised the international business community by saying that the Russian ruble could become an international reserve currency in the near future. The current situation in the global economy suggests such a development. Experts tried to figure out to which extent it was possible and what the move could bring to Russia.

Historically, the U.S. dollar became the main reserve currency for the entire postwar period (during 1945-1980). Only after the establishment of the European Monetary System in 1979, with the mechanism of joint circulation of European currencies on the foreign exchange market, a second key currency emerged – the German Mark. However, its share in international operations did not exceed 30 percent.

The introduction of the euro did not significantly change the balance of power between the key currencies. According to the Bank for International Settlements, the share of U.S. dollar in foreign exchange transactions has not changed in the last decade and made up about 85-90 percent, analysts of News Forex said. Today, the major currencies playing the role of reserve currencies, are the U.S. dollar, the euro, the Japanese yen, the British pound sterling and the Swiss franc. They are used to conduct and serve trade operations, ensure the global movement of capital, express prices in foreign trade transactions and in exchange rates and to ensure the mechanisms of currency interventions.


The Swiss franc is not a currency of foreign trade, but it is used as a reserve currency, because Swiss banks have mobilized considerable funds and provide  reliable placement of capital. In turn, the pound sterling, despite Britain’s declining role in the world markets, retains the reserve currency role, given the development of worldwide banking network of the country.

Ukraine’s leading trader Yevgeny Antipenko said that a country that issues reserve currency has to meet certain requirements too. In particular, they include the regime of free convertibility of currencies (on current and capital transactions), the relative stability of the exchange rate, a favorable legal regime for using the currency for non-residents both inside the country and on international currency markets, a high level of development of the banking and insurance systems, financial market infrastructures and the country’s leading positions in global economy and in the world trade.

The advantages of the United States, whose currency acts as the key reserve currency, are obvious. The orientation of the majority of countries on the US dollar allows the US to fully exercise international settlements with its own national currency at constant or even increased demand for the dollar as the world’s most common means of payment and savings.

Russia, in fact, can get a lot of advantages, for example, an opportunity to get cheap and unlimited crediting of the national economy due to the accumulation of reserves in other countries in this currency; to purchase large quantities of goods and services on foreign markets to avoid the chronic deficit of the balance of payments.

Russia would become a world power, and its finances would be equated to gold. The ruble would thus be in demand abroad. This would make international settlement much simpler. In any case, if the Russian ruble becomes a reserve currency in the world, Russia will obtain the superpower’s status with all pros and cons that go with it.

According to experts, if the US Federal Reserve confirms Russia’s accession to the circle of the countries whose currencies are considered to be international reserve currencies, then one can give the following recommendations for different groups of Russian citizens:

1. Entrepreneurs (12%) having bank deposits should increase the share of deposits in Russian rubles, because the ruble rate will grow as soon as its new status is confirmed.

2. Tourists traveling for vacations abroad will be able to use ruble Visa and MasterCard cards.

3. International payments and transfers between Russia and the rest of the world will become much more simple.

4. For the majority of low-income Russians, the status of the international reserve currency will not play any significant role.

A reserve currency is a currency of a country, in which central banks of other countries form and preserve their official gold and currency reserves. This is a narrow interpretation of the essence of a reserve currency, which means that technically any national currency could become a reserve one in case foreign central banks formed their reserves in this currency. In reality, the recognition of a certain reserve currency requires a complex of economic prerequisites.

Why Putin supports Assad

Since Syria’s President Bashar al-Assad has at least one ally on the UN Security Council: Russia, an ally adamant in its opposition to sanctions against Damascus.

According to BBC, many analysts believe this stance brings little benefit to Russia, and is more a product of domestic considerations and psychological complexes of the Kremlin’s ruling elite.

Last October, Russia and China used their veto to stop a UN resolution that condemned the government of Mr Assad for the suppression of anti-government protests.

Now, Moscow has once again threatened to wield its veto, demanding changes to the latest text.

While Moscow does not wholly support the actions of the Syrian government, it opposes sanctions and has repeatedly stressed its opposition to even the slightest hint of external intervention along the lines of the Libya.

The Kremlin is also against the call for President Assad’s resignation and insists that the blame for the crisis in the country and the death of some 5,500 civilians cannot be attributed to the Syrian authorities alone.

The draft resolution does not mention any possible military action against Syria. But Russia wants to delete from it a call for Bashar al-Assad to hand over power to his deputy and a proposal to ban the sale of arms to Syria. Russia is a key weapons supplier for Damascus.

Moscow’s most desirable outcome would appear to be saving President Assad, who would then implement some reforms.

On January 30, Russia’s foreign ministry once again called for talks between the Syrian authorities and the opposition and suggested Moscow as a venue. While Russia insists on talks “without preconditions”, the Syrian opposition demands a ceasefire and an end to repression by government forces.

Of particular concern for the West is the continuing delivery of Russian arms to Syria. According to some estimates, some 10% of Russia’s global arms sales go to Syria, with current contracts estimated to be worth $1.5bn (£950m).

Moscow argues that it has not signed up to Western sanctions and has contracts with Damascus which must be honoured.

Western observers generally see the situation in terms of geopolitical pragmatism: Syria is Russia’s long-time ally in the Middle East, and Russia maintains a naval base in the Syrian port of Tartus.

But Russia’s pragmatism is now being called into question.

It sends a simple and clear message to the population – we are strong, we are not afraid of anybody”

Over the past 15 years the same scenario has been played out three times in different countries.

Although with some reservations, Moscow supported first Slobodan Milosevic in Serbia, then Saddam Hussein in Iraq, and more recently Muammar Gaddafi in Libya, even though it had no means to translate that support into action, and even though the Kremlin did not want seriously to undermine its relations with the US and Europe.

The West achieved its aims in each case, while Russia appeared impotent and suffered political and economic losses.

“Russia is constantly losing allies. With the exception of Belarus, Kazakhstan and Venezuela, there are practically no countries that may be called our friends,” political analyst Alexei Vorobyov told the BBC.

So why are the Kremlin and foreign ministry following the same path again? “Although Putin likes the European way, he sees many parallels between himself and Assad,” says the former head of Russia’s National Strategy Institute, Stanislav Belkovsky. “It is a question of personal sympathy, and a feeling of possibly sharing the same fate.”

Some observers, especially from the opposition camp, are keen to suggest that Putin is mindful of the fate of Hosni Mubarak and Muammar Gaddafi, fearing that he might be next. But others find such parallels too far-fetched. It is difficult to imagine a civil war or military intervention in a nuclear state like Russia. Alexei Vorobyov has no doubt that the Kremlin’s foreign policy is largely addressed to a domestic audience.

“It’s not a struggle for Syria or Iran, it is a struggle against the West. Of course, it is just a pretend struggle. But it sends a simple and clear message to the population – we are strong, we are not afraid of anybody.”

Among those who shape Russian foreign policy, there is a widespread belief that if Moscow sticks to its guns it will eventually gain a strategic advantage. They reason that sooner or later the West will stumble, either because of the economic crisis, or for some other reason. In these circumstances, being seen as a leader of the camp rejecting Western values could bring great dividends.

Author: GrandViewKiev.com

Putin Wins, Chechnya Loses

Thousands of people gathered in Moscow on 10th March 2012 for a rally against Vladimir Putin’s presidential victory. Crowds who have been waging series of demonstrations against the feared ex-KGB boss’s policies were wearing white ribbons to symbolize their fight for free and fair elections in Russia. Putin won a six-year third term as president in the recently concluded presidential elections in March.

At the end of the tightly policed rally, leftist leader Sergei Udaltsov attempted to lead an unsanctioned march of around 60 people to a central square, he was stopped by police.

Even though international vote monitors say the election was skewed in his favour, most opposition leaders have been forced by the margin of victory to acknowledge that Putin was the winner.
Officials results showed the prime minister and former KGB officer won almost 64 per cent of votes and put the runner-up, Communist Gennady Zyuganov, on less than 18 per cent.

“The main slogans of the meeting were ‘For honest elections’, ‘For honest authorities’ and ‘Putin is not our president,'” Udaltsov commented.

After holding four mass protests over the last three months, and successfully breaking the taboo against opposition rallies in Russia, the movement now faces a huge challenge to decide where to go from here.

Putin, currently prime minister, won 63.6 per cent of the vote in the elections and is now preparing for a May inauguration to take back the Kremlin job he held from 2000 to 2008 from his protege Dmitry Medvedev.

Putin came to Russian center stage under the former president Boris Yeltsin, who made him Prime Minister in 1999, after serving in influential national security and intelligence offices. At the time of his resignation Yeltsin named Putin Acting President in 2000. Putin easily won the election in March 2000, followed it up by getting reelected in March 2004. Due to a constitutional bar Putin nominated Dimitry Medvedev as his successor in 2008. Medvedev in turn nominated Putin as the Prime Minister.

It was Putin’s war on Chechnya that made Russia resemble Orwellian style police state, for the first time after the collapse of Soviet Union. Allegedly, sometimes the price one had to pay for being critical on the war on Chechnya was ones’ life.

Chechnya declared independence as a Republic in 1992 during the breakup of the Soviet Union. The First Chechen War began in 1994 when Russian forces entered Chechnya, occupied it and unleashed a reign of terror in which more than 100,000 people, mostly Chechen muslims, died. It was followed by years of cat and mouse chase between Islamist fighters under Shamil Basayev against the mighty Russian army. Chechen fighters lead an attack on Dagestan which in 1999 which became the trigger point for Russian nationalists to rally support for an all out invasion. Unconfirmed accusations on Chechen separatists blamed for a series of Moscow bombings finally lead to Putin’s popularity and support for a full scale war. Russia established direct rule over Chechnya in May 2000. Russia drew international condemnation for its widespread violation of human rights.

Russia is expected to play an influential role in world politics under Putin. Under a wave of newly freed Arab republics riding on NATO firepower Russia will need to keep old alliances alive, hopefully with the right state actors.