Russia Defence and Security Report Q3 2008

The Russian political environment survived the departure of Vladimir Putin as President almost unchanged. As had been widely expected, the outgoing premier actually consolidated his power within his new offices. The stability that marked his presidency is therefore expected to continue.

The Russian economy shows few signs of slowing significantly in the medium term despite the tight global credit environment, elevated risks of recession and slowdown in the United States and eurozone, respectively. Underpinned by a strong resources sector, the Russian economy is expected to average 6.6% growth annually through to 2012.

Russia maintains a massive defence industry that, despite pain associated with modernisation, restructuring and excess capacity, supports a thriving export industry. Russia is at least challenging, if not surpassing, the US in terms of total defence industry exports.

In 2005, Russia exported US$6.1226bn worth of military items, and the figure for 2006 was expected to grow by a further 5%. The government arms-exporting agency Rosoboronexport predicted that foreign military sales (FMS) in 2007 would have reached the US$7bn mark.

The government has formulated a plan for re-organisation of its military structures that is ready for implementation. One clear goal of the government-led plan is to have 70% of the armed forces professionalised by 2008, setting targets of professionalising 50% of all sergeants and recruits by 2007, and a quarter of all service people to be employed on a contractual basis by 2008. Resources have also been allocated for rearmament.

In terms of Russias own security, the situation in Chechnya continues to linger and there are multiple terrorist issues, especially in the neighbouring Central Asia region.