UNITED24 - Make a charitable donation in support of Ukraine!



In the 1990s exports of military technology are handled through centralized purchases coordinated through a single state entity, Rosvooruzheniye. In late 1993, President Yeltsin formed the State Corporation for Export and Import of Armaments (Rosvooruzheniye) to consolidate and control arms sales under a single agency, but after that time the state still realized only a small part of the huge hard-currency profits from arms sales, while a number of top Rosvooruzheniye officials, with ties to a complex web of financial enterprises in Russia and abroad, flourished as sales continued to go undocumented. The agency acquired the nickname "Ros-vor," meaning "Russian thief," as the controversial activities of its officers were publicized and public confidence dropped.

Shortly after creating Rosvooruzheniye, the government approved direct arms sales activities by weapons manufacturers, further complicating the effort to monitor sales. Another state agency, the State Armament and Military Equipment Sales Company (Voyentekh), was established in 1992 to sell used equipment and arms overseas, with the proceeds to finance housing for troops. According to frequent allegations, that program also is riddled with corruption, most of its profits have not reached the housing fund, and much equipment had gone to the criminal world.

The Rosvooruzhenie (literally: “Russian Weapons”) company, after merging with the Federal State Unitary Enterprise Promeksport, was transformed into Rosoboronexport, now Russia 's only special exporter of domestic weapons and military equipment with multi-billion turnover.

At the level of the Russian Federation government, foreign arms sales represent sources of western hard currency. Recognizing the importance of this trade the President by decree established Rosvooruzheniye as the exclusive outlet for Russian arms production, an action which was to some extent diluted by subsequent exemptions granted to specific firms. Despite these measures Russian foreign arms sales continued to fall for a variety of market reasons including strong US competition and customer concern that the Russian VPK and/or privatized manufacturers would be unable to supply replacement parts in the future.

In January 1992 a decree of the President of the Russian Federation reorganized the GIU and the GTU to form the Russian State External Economic Association for Exports and Imports of Military Products and Services, or VO, Oboronexport (literally: “Defense Exports”) and the State External Economic Company for Exports and Imports of Weapons and Military Equipment, or GVK, Specvneshtekhnika (literally: “Special Foreign Hardware”), respectively. General management of both Oboronexport and Specvneshtekhnika belonged to the Chief Directorate for Military Technical Cooperation. First Rank Capt. I.M. Misnik was appointed Acting Chairman of Oboronexport, and Rear Admiral S.N. Krasnov was put in charge of Specvneshtekhnika. Oboronexport, Specvneshtekhnika and GUSK (the acronym survived) retained their status of structural divisions of Russia’s Ministry for External Economic Relations.

On 25 November 1993, a decree of the President of the Russian Federation established, on the basis of Specvneshtekhnika (GVK), Oboronexport (VO) and GUSK of Russia’s Ministry for External Economic Relations, the State Company for Exports and Imports of Weapons and Military Equipment Rosvooruzhenie (literally: “Russian Weapons”), with a status of independent commercial entity whose activities were not subordinate to federal authorities. Lieut. Gen. V.I. Samoylov was the first to be appointed Director General of a new state-controlled company.

The level of corruption in Russia's military and security services is alarming as well, particularly given their access to sensitive technology and advanced weaponry. Though long protected by Boris Yeltsin because of his crucial support during Yeltsin's 1993 confrontation with the disbanded Supreme Soviet, former Defense Minister Pavel Grachev (as consultant to Russia's state arms export company, Rosvooruzheniye) was under investigation for his possible role in the contract killing of Russian journalist Dmitrii Kholodov in October, 1994. Kholodov was investigating Grachev and corruption in the military; three officers in the Airborne Troops had been arrested.

Although he has never been formally charged, Grachev's reputed corrupt activity won him the nickname "Pasha Mercedes" among journalists as a result of his lavish lifestyle. He was widely believed to have played a major role in selling Russian weapons, including not only small arms but armored vehicles as well, to the Chechen government until almost immediately prior to Moscow's December 1994 intervention in the breakaway republic. Cynics in the Russian media suggested that the Chechen Republic's Finance Ministry and Central Bank headquarters were destroyed by Russian airstrikes against the region's capital, Grozny, early in the war in order to eliminate evidence of military and other corruption.

From the onset of his tenure as director of Goskomoboronprom, Zinoviy Pak proved to be an imaginative and aggressive marketer of Russian military hardware. He energized the moribund Rosvooruzheniye to the point that it even was placing sophisticated advertisements in Western commercial publications aimed at United States and NATO armed forces. Pak also entered Russian dual-use technology, applied in such products as sports airplanes and high-speed passenger boats, in numerous international exhibitions. In March 1996, Soskovets reported that Russia's 1995 arms sales abroad exceeded US$3 billion, an increase of 80 percent over 1994 and 60 percent more than sales to the Russian military. About 75 percent of foreign payments for weapons were made in cash. By mid-1996 new sales of about US$7 billion already had been identified, and the predicted 1996 income was US$3.5 billion.

In early 1996, MIC chairman Pak astounded the United States Army by marketing the Russian SA-12 surface-to-air missile system in the UAE in direct competition with the United States Army's Patriot system. He directed Rosvooruzheniye to offer the UAE the highest-quality Russian strategic air defense system, the SA-12 Gladiator, as an alternative to the Patriot at half the cost. The offer also included forgiveness of some of Russia's debt to the UAE.

In August 1997, a series of presidential decrees were enacted which established tighter control over military exports by the state enterprise Rosvooruzheniye, enabled two additional state firms to sell military goods and technology, and opened the door to future direct sales by arms manufacturers, if licensed and approved by the Ministry of Foreign Economic Relations.

On 25 February 1999 the Russian Space Agency signed a cooperative agreement with Russian arms exporter Rosvooruzheniye, “intended to raise Russia’s earnings on the world market and help it develop space hardware.” Russia had earned only US$800 million, compared to the United States’ US$50 billion, in commercial satellite launches during 1998. Rosvooruzheniye hoped the deal would help Russia break into the international space markets.

The former general director of Rosvooruzhenie, Alexei Ogarev, on 15 June 2022 was found dead in a house in a cottage village near Moscow. "The body of Alexei Ogarev was found yesterday in a house in the Balaton cottage settlement on Thursday afternoon. Previously, the death was not criminal," the agency's interlocutor said. He added that the exact cause of death is still unknown. Officially, the Investigative Committee confirmed the discovery of a 64-year-old man dead in a cottage settlement in the Odintsovo district, but did not specify his identity.

"According to preliminary data, the man's death is not of a criminal nature. However, the exact cause of death will be established based on the results of the examination. A pre-investigation check has been organized," Olga Vradiy , senior assistant to the head of the Moscow Region Main Directorate of the Investigative Committee, told RIA Novosti.

Ogarev headed "Rosvooruzhenie" in 1999-2000, also worked as Russia's permanent representative to the OSCE, deputy head of the presidential administration and deputy secretary of the Security Council.

Join the GlobalSecurity.org mailing list

Page last modified: 19-06-2022 19:46:26 ZULU