Russian defense industry exports plummet

At the end of the previous decade, in 2019 and 2020, the exports of the Russian defense industry reached, on average, $15 billion per year. They then represented a major source of foreign currency for the federal budget, and the first exporting industrial activity of the country.

To support these exports, Russian companies are increasingly relying on the Army fair, held near Moscow every year, and whose audience has grown considerably in recent years.

70% drop in Russian defense industry exports at Army-2023 show

Thus, the 2021 edition of the show allowed manufacturers to sign more than $2 billion in export contracts, but also to present with great fanfare certain new programs, such as the Su-75 Checkmate light fighter.

checkmate Su7510 Arms Exports | Defense Analysis | Defense industrial subcontracting chain
The Su-75 light fighter was the star of the Army-2021 show

For the past two years, however, Russian military exports have been in freefall, as evidenced by the announcement of Rosoboronexport at the end of the Army-2023 exhibition. Indeed, during this edition aiming to relaunch the dynamics of Russian military exports, order intake only reached $600m, 70% less than in 2021.

Several reasons explain this descent into hell for Russian exports in this field, the beginnings of which can be found from 2019, between the consequences of the war in Ukraine and the American CAATSA legislation,

The military campaign started on February 24, 2022 by the Russian armies against Ukraine, which was initially supposed to last just a few days, or even a few weeks, has in fact had a major influence on this situation.

The repercussions of the War in Ukraine on Russian defense exports

First of all, the stalemate of the conflict and the considerable losses, in men as in material, recorded by the Russian armies, obliged the Russian industries to concentrate their production to regenerate the Russian means, sacrificing for that the export contracts.

As such, multiple delivery contracts have been suspended, including with respect to certain traditional and strategic customers of the Russian defense industry, such as India, Algeria or Vietnam. As a result, even loyal customers have moved away from offers in this industry, as shown by the eviction of Russian offers from many competitions, particularly in India, in favor of Western equipment.

T80 Mud Arms Exports | Defense Analysis | Defense industrial subcontracting chain
Russian equipment did not demonstrate excellent capabilities at the start of the conflict against Ukraine

The performance of the Russian armed forces in Ukraine, particularly at the start of the conflict, probably influenced the dislike of these customers for Russian-made military equipment. This is particularly sensitive in the field of artillery systems, obviously outclassed by their Western equivalents, armored vehicles or ground-to-air systems.

Thus, many weapon systems that had hitherto enjoyed a flattering reputation, such as the S-400 or Pantsir S anti-aircraft systems, the T-90M tank or the Su-34 fighter-bomber, showed obvious limitations during of this conflict. Without being able to be effectively quantified, it is likely that the image of Russian military equipment on the international scene will have been permanently tarnished in Ukraine.

The Rise of CAATSA Legislation

In 2017, the United States Congress passed the Countering America's Adversaries Through Sanctions Act, abbreviated as CAATSA, signed on August 2, 2017 by President Trump. This allowed the US executive and Congress to sanction states such as individuals and companies for having acquired certain strategic equipment from adversaries of the United States, such as North Korea, Iran and the Russia.

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