ROSOBORONEXPORT (ROE)
Throughout the 1990s two state arms exporters existed in Russia, Rosvooruzheniye State Corporation and Promexport. The two enterprises merged in November 2000 to form a federal state unitary enterprise, Rosoboronexport State Corporation (ROE). As the single state intermediary agency Rosoboronexport became responsible for exporting and importing defense, military, and dual-purpose products, as well as technologies and services. The creation of ROE aimed to restructure the military and technical system of coordination between foreign states and the Russian Federation. Rosoboronexport’s main goals were to ascertain and enhance long term relationships with foreign customers, and to advance Russia’s standing in the international arms market.
Rosoboronexport was placed under the control of the Federal Service of Military-Technical Cooperation (FSVTS) in 2003, which was subsequently removed from the Ministry of Defense (MoD) and subordinated directly to the President. Later, in 2006, Rosoboronexport was subordinated to the newly-created Military-Industrial Commission (MIC). In all likelihood, experts believed the ROE would serve as the MIC’s agency to regulate the defense industrial sector.
In addition, Rosoboronexport developed a close working relationship with the MoD as the two made attempts to improve certain aspects of the defense sector. Together they worked towards increasing control over the trade of conventional weapons, raising funds for future R&D projects via arms sales, supplied the armed forces with hardware and training, and offered to build an effective security system with other members of the Commonwealth of Independent States (CIS) through military-technical cooperation, often at subsidized prices
On April 28, 2004 a Presidential decree appointed Sergey V. Chemezov as Director General of Rosoboronexport. Chemezov had acted as Director General of Promexport prior to the merger, and was named the First Deputy Director General of Rosoboronexport upon its conception.
The basic trade activities of Rosoboronexport include:
- Exportation / importation of the state’s array of available military and dual-purpose products and services
- Organization of licensed armament and military equipment production abroad
- Maintenance and repairs of weapons, armaments, and military equipment supplied to customers
- Modernization of armaments and military equipment made in Russia
- Training of foreign specialists to operate and maintain supplied material in Russia and customer countries
- Technical assistance in building military infrastructure installations, such as defense enterprises, airfields, depots, firing grounds, training centers, etc.
- Promotion of innovative high-technology civil-purpose products developed by Russian defense industry enterprises
As the main state agency for arms sales Rosoboronexport role within the political, economic, and industrial framework of Russia has increased substantially. In 2005 ROE announced plans to take a more active role in the management of the nation’s vertical integrated holding companies. By the end of 2006 export sales had reached an annual level of $5-6 billion, which represented the main source of funds for R&D and procurement programs. In addition, it was estimated that 70-90 of critical defense companies’ production and revenue was related to the exportation of systems or spare parts.
By the beginning of 2007 Rosoboronexport had expanded its authority into the civilian sector. This included the takeover and integration of firms in the automobile and metallurgical sectors. Rumors circulated that the shipbuilding industry was next on the list.
Director General Chemezov announced the formation of Rosoboronexport’s own holding company, OPK (United Industrial Corporation) Oboronprom, which was formed in 2002 as a closed joint-stock company in which ROE held a significant share. A series of presidential decrees in 2004 and 2005 listed the company as one of Russia's strategic enterprises and later granted it the status of parent management and holding company within the helicopter sector. Oboronprom actively encouraged the process of forming these large, vertically integrated firms in the aircraft, helicopter, shipbuilding, missile-building, and defensive systems sectors. Rosoboronexport sought to increase its influence in these industries via Oboronprom’s injection of managers and purchasing of their shares.
On August 4, 2006, the U.S. State Department announced sanctions against Rosoboronexport (and the aircraft manufacturer Sukhoi) for alleged violations of the Iran Nonproliferation Act of 2000, thereby barring U.S. companies from dealing with those Russian entities for two years. Russian officials denounced the action as retaliation for their Venezuelan arms sales. In December 2006, over Russian protests, the sanctions against Rosoboronexport were reconfirmed for two more years (although sanctions against Sukhoi were lifted).
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