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Sanctions, Oil Price Slump May Slow Russian Military Upgrade

FILE - Russian air defense missile systems are displayed at the MAKS Air Show in Zhukovsky, outside Moscow, Aug. 27, 2013.

FILE - Russian air defense missile systems are displayed at the MAKS Air Show in Zhukovsky, outside Moscow, Aug. 27, 2013.

Moscow, a major player in the global arms business, has worked to re-equip and modernize its armed forces in recent years as well as boost its international sales.

But Dmitry Gorenburg, a senior research scientist with CNA Corporation, a Washington-based think tank specializing in defense-related issues, says the drop in world oil prices, Western sanctions and limited manufacturing capacity may force Russia to slow those ambitions.

"My guess is that a lot of it will get pushed further down the road because they won't be able to afford as much as they allocated," Gorenburg told VOA.

Moscow has been implementing a 10-year state armaments program to modernize its military. When the program was adopted in 2010, its cost was some $600 billion. Under President Vladimir Putin, the industry gave it absolute priority.

While that push has increased domestic sales in Russia, professor Julian Cooper, an associate fellow at Chatham House, a policy institute in London, said Russia is reaching the limits of what it can sell. That, he said, has made it difficult for Moscow to expand its exports.

"My sense is that Russia has actually reached some kind of plateau on its arms sales and arms exports," Cooper said.

Russia, U.S. dominate

In recent years, Russia and the United States have dominated the arms market in the developing world. According to the Stockholm International Peace Research Institute, the five largest suppliers from 2009 to 2013 were the U.S., Russia, Germany, China and France, totaling 74 percent of all exports.

Cooper said he thought Russia's total military spending next year would most likely peak at about 5.4 percent of its gross domestic product and then would start to decline.

"I think there is a very good understanding in Russia that there are limits to how much you can spend on the military before you get into dangers of undermining the economy," Cooper said.

Washington spends about 3.84 percent of its GDP on its military. But in dollar terms, Russia still ranks third after the United States and China.

Gorenburg said that despite its economic challenges, Moscow is trying to maintain and expand its position in global arms sales and be a major geopolitical player. As a result, Russia has been trying to develop joint ventures with companies in India and Brazil and expand into new markets.

Nigeria, for example, turned to Russia for heavy weapons after the U.S. rejected a request for Cobra attack helicopters.

Low cost, no strings

Ben Moores, a senior analyst at the defense and security analysis organization IHS Jane's 360, said Russia is known to sell equipment at a relatively low cost, and doesn't ask for any guarantees in terms of where those weapons may end up.

Gorenburg pointed out that Russia is an alternative to the West.

"It has sold arms to countries such as Brazil, Argentina, Egypt and some of the countries in the Arab world as well, so there is an effort to be a player in a part of the world where the United States might be reluctant to sell arms, for example," he said.

The largest importers in 2013 were India, the United Arab Emirates and China. Washington's Congressional Research Service said that from 2008 to 2011, the U.S. and Russia made almost 70 percent of all arms transfer agreements with developing nations, worth a total of roughly $207 billion. The U.S. made nearly $113 billion and Russia $31.1 billion.

VOA's Joe De Capua contributed to this report.