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The arms trade up-ended: A window of opportunity for Turkey, South Africa, India

  • Russia is the arms supplier of choice for many EMs, which will face diplomatic pressure to shun Russian arms

  • Meanwhile, demand for military hardware, especially air defence systems at which Russia excels, will grow

  • EM arms exporters – Turkey, South Africa, India, and possibly Brazil – are well positioned to benefit, as is Israel

The arms trade up-ended: A window of opportunity for Turkey, South Africa, India
Paul Domjan
Paul Domjan

Senior Contributing Analyst

Tellimer Research
19 March 2022
Published by

This is the third of a series of reports about the war in Ukraine. The first looked at the conflict’s geopolitical implications, the second at energy security and the third at sanctions (and football). This report explores the impact on the arms trade, and the final one will assess the long-term repercussions of the war.

Till death do us part in the arms trade

A British Army colonel with whom I worked two decades ago used to explain that one country buying a major weapons system from another as like getting married and having children. It was a serious decision that you shouldn’t take lightly, and it would leave you bound together for many years. Even if you wanted to go your separate ways, the kids still bound you together.

When kids are a missile defence system rather than a couple of sprogs, the issues that bind you together aren’t visitation schedules and how to pay for summer camp, but rather the need for maintenance, training, munitions, spare parts and upgrades.[1] The trade in small arms is more like dating, but sophisticated major weapons systems are a serious matter.

The Cold War-era arms trade was like the idealised 1950s family – shared values and not a possible hint of divorce on the horizon, even for those, like much of the Soviet bloc, who found themselves in an unhappy marriage to a partner they wouldn’t have freely chosen. Deeply integrated and interoperable military alliances left no questions about who would purchase what from whom.

That structure of certainty slowly came apart in the post-Cold War world, most notably with NATO’s expansion, which brought a great deal of legacy Russian military hardware, like the MiG-29s that Poland has offered to transfer to Ukraine, into the NATO arsenal.

The real test though of the NATO supply structure was Turkey’s decision to purchase the S-400 air defence system from Russia. Not only has this left Turkey with a long-term defence supply relationship with Russia, but the US was also concerned that integrating the S-400 with Turkey’s early warning systems would provide Russian intelligence with powerful insight into the rest of Turkey’s NATO-specification arsenal, leading the US to promptly boot Turkey out of the F35 programme on security grounds.

The changing security architecture of the post-Cold War world has also led to tremendous changes in who needed to work with which military hardware. China has dramatically increased its purchases of Russian hardware and, despite replicating some of the designs, continues to purchase Russian inputs (like aero engines) and Russian systems in areas where it has limited domestic capability, like missile defence (including the S-400) and helicopters. In seeking to pivot to Asia and counter China, the US has had to build close relationships with nations that have traditionally relied on Russia for the bulk of their arsenal, including the largest buyer of Russian weaponry – India.

Figure 1: Russian major arms exports by destination – India is by far Russia's largest customer

Russian major arms exports by destination – India is by far Russia's largest customer

The ambiguity of the post-Cold War architecture is shown by the proposals that have been floated to resolve the problem of Turkey’s S-400s. The US has suggested that Turkey could purchase a US system, either THAAD or Patriot, and then transfer the S-400s to either Azerbaijan, which happens to be the US’s only ally in the strategically important Caspian Sea, or to Qatar, whose Al Udeid Air Force Base hosts both US Central Command and US Air Force Central Command. If the S-400 really provides a powerful lens for Russian intelligence, I imagine that there will be plenty to learn in either of these countries as well.

A brief overview of the Russian arms industry

Russian controls c20% of the global arms trade, and its market share is second only to the US. Russia’s major arms exports are roughly three times larger than those of all other emerging markets combined.

Figure 2: Russia clearly dominates among emerging market arms exporters of major arms

Russia clearly dominates among emerging market arms exporters of major arms

Although Russia is famous for rugged and practical weaponry, like the AK-47 and the RPG-7, approximately one-third of Russia’s exports are high tech major systems, including aircraft, ships and air defence systems, like the S-400.

Figure 3: Russian major arms exports by category – so much more than AK-47s (note: SIPRI does not measure exports of unguided munitions and small arms)

Russian major arms exports by category – so much more than AK-47s

In the emerging world, Russian arms are seen as having several clear advantages over those of the US and its allies:

  1. Cheap and dependable: The inaccurate and indestructible AK-47 is the hallmark of Russia’s reputation for producing weaponry that is simpler, cheaper and more dependable.

  2. Cheaper options to purchase: Western weapons systems are typically sold as a full package of training, support, and maintenance for the life of the system, but Russian suppliers are more flexible about selling arms on a standalone basis. Although this is a far less effective way of building military capability, it appeals to some emerging markets that want to add hardware quickly and cheaply.

  3. No constraints: Western governments, especially the US, often place conditions related to democracy or human rights on arms exports. For many emerging markets, an outright deal to purchase from Russia, without the risk that conditionality violations will prevent their purchases from ultimately being delivered, is an appealing alternative.

To understand this better, let’s look in a bit more detail at the S-400. The S-400 is an excellent and versatile air defence system. It provides multiple layers of defence against both aircraft and missiles at a rank of up to 400 kilometres. Neither of the US’s air defence offerings, Lockheed Martin’s Terminal High Altitude Air Defense (THAAD) and Raytheon’s Patriot, have the same range of capability.

For example, while US diplomacy succeeded in convincing Saudi Arabia to purchase THAAD rather than the S-400, the THAAD system is a single layer system with less flexibility and less range and is only effective against missiles. The latest Patriot is a multilayer system that can target both aircraft and missiles, but at a much shorter range than the S-400. India credibly argues that, even if the US were to sell its F35 fighter jets, it would still need the full capability of an S-400 system to deter China, which has already deployed its own S-400 system on its border with India.

The war in Ukraine will reconfigure the arms trade

As the Russian invasion of Ukraine has unfolded, and its wider geopolitical consequences have become clear, the British colonel’s comments keep ringing in my ears. The war really is going to up-end the arms trade, or at least it should.

Ukraine desperately needs a modern air defence system to replace the Soviet-era S-300 and S-125 units upon which it currently relies for air defence. If Ukraine had an S-400 or an advanced Patriot system, the debate over imposing a no-fly zone over Ukraine, which would force NATO to overstep President Biden’s red line, would be much less pressing. As it is, schemes are apparently afoot, with US support, for Slovakia to transfer its older S-300 air defence units to Ukraine, with Germany and the Netherlands, in turn, transferring Patriots to Slovakia. After failing for eight years to provide Ukraine with an advanced Patriot system, it is unsurprising that the US finally approved the possible sale of such a system to Taiwan in the run-up to Russia’s invasion of Ukraine.

The fallout in Asia extends beyond Taiwan. India’s reluctance to condemn Russian aggression has led many US policymakers to question to what extent India’s arms imports from Russia will constrain India’s freedom of action as a US ally. The US can no longer have its cake (the Quad alliance) with India and eat it, too (limit US arms sales to India).

I’ve written before about India’s desire to lease US nuclear-powered attack submarines rather than the Russian ones it currently leases, and the US’s reluctance to allow this. The US may now be willing to offer nuclear attack submarines and other advanced weaponry if that detaches India from Russia diplomatically.

Turkey, South Africa, India, Israel and, possibly, Brazil could seize the opportunity to profit from Russia’s predicament

For many countries in the emerging world, however, US and other western weaponry will remain too expensive, too complex and, given conditionality, too difficult to procure. If the US is going to succeed in pressuring these countries to sever their reliance on Russia, it will need to offer a similar alternative.

Turkey appears particularly well-positioned to be that alternative. The country has a substantial domestic defence industry that has enabled it to rise from 14th in 2015-19 to 12th in 2017-21 among major arms exporters. Not only can Turkey compete with Russia as a provider of affordable equipment, but Turkish armoured drones distinguished themselves in Azerbaijan’s recent war with Armenia and now have done so again in Ukraine. Turkey is also developing its own air defence system, which will offer more affordable short- and medium-range options as well as, eventually, a long-range system to rival the S-400 and the Patriot.

Figure 4: Turkish major arms exports by destination

Turkish major arms exports by destination

Figure 5: Turkish major arms exports by category

Turkish major arms exports by category

Despite the post-apartheid collapse of South Africa’s formidable defence industry, South Africa has clawed its way back into the top 20 exporters. Mismanagement and corruption clearly contributed to the industry’s decline, but a deficiency in demand for military hardware following the end of apartheid was also a major contributor, with exports unable to make up the shortfall. The South African government is actively seeking to arrest the industry’s decline, and one could imagine South African arms displacing Russian ones, especially in Africa. Although this won’t solve the structural problems facing the South African defence industry, it could provide sufficient demand to give the industry a chance.

Figure 6: South African major arms exports by destination

South African major arms exports by destination

Figure 7: South African major arms exports by category

South African major arms exports by category

Looking simply at the scale of major defence exports, one might see Brazil, which has export volumes only slightly smaller than those of South Africa, as another potential winner. However, Brazil’s major defence exports are very heavily skewed towards light aircraft. Indeed, Brazilian aircraft, which already have been purchased by Nigeria and Mali, might compliment South African arms in other categories in Africa.

Figure 8: Brazilian major arms exports by destination

Brazilian major arms exports by destination

Figure 9: Brazilian major arms exports by category

Brazilian major arms exports by category

India’s major arms exports are two-thirds the size of South Africa’s, but Indian production could rise rapidly if the US decides to embrace its partnership with India and support India to indigenise production as an alternative to reliance on Russia, which is a long-standing objective of Indian defence policy. India has already produced very technologically sophisticated indigenous hardware, including nuclear-powered ballistic missile submarines, and is working jointly with Israel on air defence.

Figure 10: Indian major arms exports by destination

Indian major arms exports by destination

Figure 11: Indian major arms exports by category

Indian major arms exports by category

Finally, Israel is already a larger supplier than any of these emerging markets, and India is its largest customer. Israel has sophisticated missile defence technology, ranging from the very specialised Iron Dome system to the highly flexible Barak-8, which was jointly developed with India. The Abraham Accords potentially open new, and highly lucrative, markets in the Middle East to Israel.

Figure 12: Israeli major arms exports by destination

Israeli major arms exports by destination

Figure 13: Israeli major arms exports by category

Israeli major arms exports by category

Furthermore, Prime Minister Naftali Bennett’s shuttle diplomacy over Ukraine, including flying to Moscow on the sabbath, shows that Israel wants to take a larger role on the world stage. Expanding its defence industry, and building the long-term relationships that brings, would be a major step in this direction.

Enjoyed this piece and want to learn more about the arms trade? Read Mark Thomas’s As Used on the Famous Nelson Mandela, one of the best – and, undoubtedly, the funniest – books ever written about the arms trade. It even explains how to start an arms-dealing club at your kid’s secondary school!

Special thanks to Rafael Domjan, who has not yet started an arms-dealing club at his secondary school, for research support.

[1] For the record, I’ve never made the decision to purchase a major weapons system or gotten divorced, but I think that I know enough about both experiences to be confident that the analogy holds.