Russia stands to lose one of its biggest arms client, Libya. The United Nations voted on sanctions and an arms sales ban on Libya this past week.
Russia could lose almost $4.0 billion in arms export contracts to Libya after Moscow joined other world powers in slapping an arms embargo on Moamer Kadhafi’s regime, a report said on Sunday.
The Interfax news agency quoted a military source as saying that Russia had an order book for contracts from Libya worth $2.0 billion while negotiations had been in progress for deals worth $1.8 billion more.
“Among the countries of the Middle East and North Africa, Libya is one of the main buyers of Russian weapons,” the source, which was not identified, told the agency.
“As of today, contracts for military hardware of around $2.0 billion had been agreed with Libya.
“Work on contracts for aviation equipment and air defence was also in the final stage. These were valued at $1.8 billion,” the source said.
Russia was initially slow to echo Western condemnation of Kadhafi amid his bloody crackdown on an uprising but on Saturday it joined other UN Security Council members in ordering an arms embargo against Libya and other sanctions.
Another report last week said Russia could lose a total of up to $10 billion in arms sales from the wave of unrest currently destabilising regimes in north Africa and the Middle East.
The Interfax source recalled that Libyan Defence Minister Yunis Jaber had gone on a major spending spree during a January 2010 visit to Moscow, signing 1.3 billion euros ($1.8 billion) worth of deals including for six Yak-130 military planes.
Meanwhile, Libya had also been expected to become the first foreign buyer of Russia’s new Su-35 fighter and a contract worth $800 million for 12-15 planes had been ready for signing, the source said.
A range of other contracts for helicopters and missile systems were also being discussed.
Libya had also shown great interest in Russia’s new S-400 missile defence system, its T-90S tanks, submarines and rocket launchers, the source said.
The Soviet Union had delivered a huge amount of military hardware to Libya before the collapse of the USSR, including 350 fighter jets between 1981 and 1985 as well as 4,000 military vehicles and tanks.
As well as its economic value, Russia’s arms deals with the Middle East was also a crucial component of its bid to reassert its clout in the region which waned after the collapse of the USSR.
This is a huge set back for the Russian arms industry given the fact the it has had problems modernizing ever since the fall of the Soviet Union. Arms sales are the only real substantive form of Trade that Russia has with most African nations. For the last 20 years there has been very little diversification in Trade relations between both sides. Recently Russia has been trying to make new inroads in resource minerals, oil and energy sectors of countries like Algeria, Ethiopia and Namibia. This new African dash has been largely motivated by not wanting to be left behind by the likes of China, Europe and the U.S.