The Battle for the World Arms Market: Russia and Ukraine Compete for Global Buyers

 

Russia is very attached to its arms exports. Even if we leave aside the issue of geopolitical influence and the status of a “security donor” for dozens of countries, Russian companies involved in the production of weapons and military equipment receive billions of dollars in revenue from the sale of military equipment. Thanks to this money, they have been developing their technologies for 30 years and maintaining their production lines in good condition, even in peacetime conditions.

In the first year of the war against Ukraine, Russian exports faced a number of problems: an embargo on the supply of electronic components and industrial machine tools, financial sanctions, a sharp increase in government orders and reputational losses, since the failure of the blitzkrieg in Ukraine was, in a sense, interpreted precisely as the failure of Russian weapons. In addition, India and China began to build their own defense industries and reduce dependence on the Russian Federation.

According to the Stockholm International Peace Research Institute (SIPRI), in the period from 2020 to 2024, Russian arms sales fell by 64 percent compared to the period from 2015 to 2019. The Russian Federation's share of the global arms market decreased from 21 to 7.8 percent.

But those who have already managed to bury the Russian army should not delude themselves.

Russian money loves silence

 

First, SIPRI analyzes only open-source data, and Russia traditionally keeps many transactions secret. For example, a five-year contract for the supply of Russian Pantsir air defense systems to Saudi Arabia worth $2 billion only became known after an investigation by the Kiev Independent.

An illustrative case is the purchase of modern Russian Su-35 fighters for the Egyptian army. The contract was kept secret until the last moment, until the information was leaked and published by a business publication. The recent

delivery of Su-30s to Ethiopia, which had not been reported before, was unexpected news.

Such secrecy is connected with the fact that the United States applies secondary sanctions (CAATSA) against buyers of Russian technological weapons. In some cases, this has been successful, and countries have actually refused Russian aircraft and air defense systems after threats from the Americans. So life has taught the Russians to work according to the principle "money loves silence".

Secondly, even according to open SIPRI data, the Russians maintain their exports at a fairly high level. 7.8 percent of the world market is billions of dollars annually spent on the development of technologies and production in the aggressor country. This is comparable to the exports of Great Britain and Germany combined.

Thirdly, Russian arms and military equipment companies have reoriented themselves to the domestic market. The Russian Federation has enough resources to fully cover the needs of its army. However, even the occupation of its own capacities does not prevent the Russian Federation from actively preparing for exports.

The Kremlin leaders leave the export window "ajar" and are not afraid that their weapons will go abroad en masse instead of to the front or that companies engaged in the production of arms and military equipment will sharply raise prices for their own army.

Therefore, Russian arms and military equipment companies are now taking everything - both record state orders and export contracts, if there are still free capacities.

In other words, after the invasion of Ukraine, Russian arms exports were first reduced, but now their factories are bustling with production. The Kremlin is already trying to partially restore its position in the world market, and later not only to return 21 percent of the world market, but also to increase its wealth by selling the experience of technological warfare.

And there are every reason for this. It turned out that technological sanctions are not so terrible. There are dozens of investigations on the Internet about how the Russian Federation imports scarce machinery and electronics through hundreds of sealing companies. Potential buyers have already confirmed this.

Financial restrictions are being circumvented with the help of alternative calculation methods. For example, for the Shahed drone technology, the Russians made a deal with Iran in gold bars.

Profiting from aggression

 

Russian equipment has been tested in combat with the Ukrainian army, which uses a large number of Western and domestically developed innovative weapons. At arms fairs, the Russians do not hesitate to say that their products have been “tested on Ukrainians.”

 

According to Sergei Chemezov, head of the largest arms corporation Rostec, the order portfolio of Rosoboronexport, which supplies all Russian military products to the world market, now stands at a record $60 billion. Chemezov explains such a large amount by pent-up demand, but notes that 80 percent of the weapons are now being delivered to the Russian army, and 20 percent of the surplus is for sale.

Even if you don’t take Chemezov at his word, many other indicators show that the Russians are indeed remaining active in the arms market. These are mainly their requests for sales of traditional products: airplanes, helicopters, and air defense systems.

However, increasingly, the Russians are also offering innovative weapons that have proven themselves well in the war against Ukraine. In 2023, several Southeast Asian countries ordered Krasuha and Sapphire anti-aircraft missile systems from Russia, which are used as a means of countering drones.

In 2024, Russia issued more than 30 documents that allow companies to demonstrate their weapons at arms fairs and offer them for sale. Among them are electronic warfare systems, unmanned aerial vehicles, including the Lancet and Kubi strike systems, as well as the latest Pantsir SMD-E air defense systems, which were created precisely during the Russian-Ukrainian war as a means of combating drones.

Namely, the export of drones from Russia has been suspended until the end of 2025, as everyone is going to the front. But it seems that the Russians are preparing for export. For example, export versions of popular UAV models are appearing en masse and are being shown to foreign buyers. Also, Rosoboronexport is negotiating the production in other countries of one of the most popular reconnaissance drones, the Orlan.

Moreover, the Russian Federation is not waiting for the end of the war and is simultaneously stimulating the civil drone construction industry, encouraging companies to export and developing an unmanned ecosystem in the country.

The Russians are starting from a low base, and in some cases are already forming new partnerships in order to quickly occupy new market niches after the end of the war.

 

Experience in technological warfare is a competitive advantage

 

The strategy of maintaining ties with the world market, measuring demand, looking for potential partners for the future and maintaining export flexibility, if it does not harm the front, is a completely natural behavior of a country planning aggression in the coming years.

 

The closest example is Israel. After another escalation in Lebanon and the Gaza Strip, as well as the refusal of several European arms suppliers to issue export licenses, the country has made large investments in its own defense complex.

And although the war continues, and the ceasefire breaks down from time to time, domestic defense companies are already working to increase sales of military equipment abroad and place surplus production capacities under new export contracts. The motivation of the Israelis is very simple: the country must fight. War and industrial development require a lot of money.

Experience in technological warfare is a competitive advantage. The enemy is trying to cash in on its experience of full-scale invasion and aggression. Ukraine is capable of competing with Russia in the international arena as well.

It is important that more countries turn to Ukraine for experience, not Russia. The Ministry of Defense of Ukraine is already ready to offer innovative solutions tested in combat conditions, and there is a demand for this type of experience. According to the TSU, most NATO countries have already approached Ukrainian manufacturers about partnerships or arms purchases. In order to ensure sustainable success in the arms market in the long term, Ukraine should actively present its advanced models to potential partners through international fairs and demonstration projects, as well as offer technological cooperation, in particular in the form of joint production.