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Saturday, August 29, 2015
Underwhelming Business Results at Russian MAKS Air Show [Iran S-300 deal not signed]

Underwhelming Business Results at MAKS Air Show
MATTHEW BODNER 12:18 p.m. EDT August 29, 2015
http://www.defensenews.com/story/defense/policy-budget/warfare/2015/08/29/underwhelming-business-results-maks-air-show/71323130/

MOSCOW – Russia’s International Aviation and Space Salon (MAKS), held here
last week, was supposed to demonstrate the success of Moscow’s pivot toward
the East in the wake of its falling out with Western nations. But major
deals were nowhere in sight as the show concluded its business program on
Aug. 27.

With high-profile visits by Saudi, Jordanian, Iranian, Chinese, and Egyptian
military delegations, analysts predicted a number of big-ticket deals and
announcements to be made at the show, but none took place.

“I think the show was a bit disappointing,” said Yury Barmin, a UAE-based
Russian expert on the arms trade. “It was just that — a show. While in 2013
Russia signed $18 billion worth of contracts at MAKS, this year’s figures
are likely to be significantly lower,” he added.

Ruslan Pukhov, head of the Moscow-based Center for the Analysis of
Strategies and Technologies, a defense industry think tank, said “obviously
the previous show was more successful, and to put it frankly, better. But
this was, lets say, satisfactory. It showed that Russia is courting
non-Western countries.”

Although Russia, in defiance of Western sanctions imposed in response to
Moscow’s annexation of Crimea last year, is courting non-Western nations,
the biggest expected deal at MAKS was a domestic contract for the Russian
military — but the deal was not signed.

In early August, Russian media reports suggested that United Aircraft Corp.,
which owns MiG and Sukhoi, would sign a 100 billion ruble (US $1.5 billion)
contract with the Defense Ministry for 48 new Su-35 fighters.

Instead, UAC President Yury Slyusar said at his company’s press conference
last week that the contract remains in a high state of readiness and would
be signed by the end of the year.

“This order is very important for us,” Slyusar said, Russian news agencies
reported. “It demonstrates that the first order was completed, and that the
military is satisfied with the performance of the first batch of [Su-35]
planes.”

UAC is completing a 2009 contract for 48 Su-35s this year, and with Russia’s
T-50 stealth fighter facing delays connected to development problems and the
collapse of the ruble, the Air Force has chosen to stick with the generation
4++ model of the Su-35 to bridge the gap.

But pricing disputes prevented agreement on a deal for this stopgap measure,
according to Pukhov, who is also a member of the Defense Ministry’s public
advisory board.

“Each party has their own set of interests and probably were not ready to
make quick concessions just to sign a contract at the MAKS air show, and so
the negotiations are ongoing,” Pukhov said.

A prototype of the T-50 fighter took part in the MAKS aerial demonstration
flights, but was not displayed on the show grounds for visitors to get a
close look at the fighter, which is Russia’s first fifth-generation fighter
slated for serial production.

The MiG aircraft company also announced that it will sign a contract with
the Russian Defense Ministry for its developmental MiG-35 fighter jet next
year. The fighter has been stuck in development for several years without
strong interest from domestic or foreign customers.

There were also rumors in the Russian press that Iran and Russia would sign
the controversial deal for the delivery of four S-300 anti-air systems at
MAKS, but Deputy Prime Minister Dmitry Rogozin announced at the show’s
opening on Aug. 25 that no signing would take place.

Instead, the two sides signed a memorandum of understanding that the deal
will eventually take place.

“They say the Iranians are trying to squeeze juice out of us ... [They are]
trying to get technology access, technology transfer, a good price, good
terms of delivery, and they are pressing us by pointing out that we already
cheated on them twice,” a source close to the Defense Ministry told Defense
News, requesting anonymity.

“They are also trying to leverage us by saying we need them as a market for
civilian technologies such as the Sukhoi Superjet-100 and Tupolev Tu-204
passenger planes, so they are trying to get as much out of us as they can,”
the source said.

Russia also failed to sign any deals with their large and traditional
trading partners such as China, India and major helicopter customers in
Latin America.

“I think Moscow expected this, which is why they decided to bring in
high-profile Arab delegations trying to show that the current crisis in
relations with the West actually helped Russia to pivot to other parts of
the world,” Barmin said.

In terms of attendance, MAKS achieved some success in demonstrating this.
Chinese officials looking at Russian air defenses could be seen walking the
exhibitions, as well as Iranian, Indian and other Eastern nations. Iran’s
space program set up shop to display its work on ever bigger rockets.

“So, politically, the show was a success: President Putin got to demonstrate
his brotherly relations with Arab leaders and Russian officials got to boast
about the defense industry’s impressive order portfolio,” he added.

Anatoly Isaikin, the head of Russia’s state arms export agency,
Rosoboronexport, said that Russia’s export backlog of aviation hardware is
worth over $18 billion, making up nearly half of Russia’s $40 billion
backlog.

Email: mbodner@defensenews.com

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