Russia and Eastern Europe: if defence exports are becoming more important in Western Europe, they are vital in Russia. Over the course of little more than a decade, Russia has had to cope with the loss of superpower status, a massive decline in the numbers and quality of its military forces and the need to totally reorganise its military industrial complex. (Complete Guide).

In spite of its dilemmas, which remain a work in progress, Russia has gained momentum in the export marketplace.

Efforts to centralise and control defence exports have seen the creation of Rosoboronexport as the centrepiece of Russian export sales efforts. There have also been cultural changes, for example a more open policy in areas such as research and development (R&D), technology transfer and partnerships. China is thought to have paid a significant R&D cost in an Antey surface-to-air missile programme, as well as receiving transfers of submarine and other technologies. In the partnership area, NPO Mashinostroyenia of Russia has teamed with the Defence Research & Development Organization of India to create the Brahmos missile system to meet the needs of the Indian Navy and the Indian Air Force. The next step will be to offer other countries the opportunity to participate in the programme; according to Indian sources, they see Singapore as a potential candidate.

In the short to medium-term, it is unlikely that Russia will be able to devote the funds necessary to modernise its own military in any major sense. This does not mean that it will be unable to field new systems, some good examples are the fourth and fifth generation air defence system programme with the S-400 system (entering service by the end of this year or early next) and the future S-500 system, which prove that funding can be made available for programmes of critical importance. As far as other areas go, the trend in Russia will be to upgrade and modernize existing systems.

For other states of the Former Soviet Union (FSU) such as the Ukraine and Belarus, their economic situation remains desperate. In both cases, there is a strong defence industry and they have achieved export success. According to the IISS, in 2000 the Ukraine exported $400 million worth of equipment (ranking 8th in arms exports) and Belarus exported $200 million (ranking 11th in arms exports). Both of these nations will continue to be significant suppliers of defence equipment in a legitimate sense, equally they will be a source of concern for other nations due to illegal arms sales from or through their territory.

Former Easterners in Nato

The entry of the Czech Republic, Hungary and Poland into Nato seemed, at least at one stage, to offer a new defence market for the US and Europe to tackle. The reality of the situation proved to be very different. Although the military in all three countries would doubtless have been delighted to accept increased budgets, the economic situation made an effort to make major purchases of new standard Nato-type equipment very unrealistic.

There have been `purchases' of equipment in the sense of the fighter programmes, where Hungary has decided to lease the Saab/BAE Systems Gripen and the Czech Republic has essentially selected the Swedish aircraft as the preferred bidder for its fighter competition. Poland is still in the evaluation stage for its requirement for 48 fighter aircraft; in the meantime, it is to receive the Luftwaffe fleet of 23 MiG-29G and MiG-29GT aircraft. Existing combat aircraft are, where possible, being given equipment to allow Nato interoperability but overall air force numbers continue to shrink. Apart from receiving MiG-29s, Poland has also received Leopard 2 tanks and other armoured vehicles from Germany and an FFG-7 class frigate from the US Navy, with a second one likely to be supplied. The Polish Navy will also be receiving four Kaman SH-2G Super Seasprite intermediate weight naval helicopters from US Navy stocks.

Although they might disappoint as export markets, the Eastern European nations also export defence equipment themselves. In March, Poland won the Malaysian Army tank competition with the Bumar-Labedy PT-91 Tvardy tank and, according to the Polish Defence Minister, the value of this order could eventually amount to $300 million. Bumar has also supplied T-72 ARVs to India, as have ZTS Martin, part of DMD Holdings in Slovakia. Due to their indigenous defence industries the Eastern European countries can be niche players in the export markets, as well as their meeting numerous domestic needs.