Russia Defence and Security Report Q2 2010

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Russia's economy is expected to improve in 2010 but the recovery process will be fragile and protracted. We expect economic growth to rise to 3.4% in 2010, as much driven by re-stocking and base effects as productivity gains and an expansion of new consumptive capacity. Unemployment was 8.1% in November 2009 ' up from the previous month ' reinforcing our view that seasonal effects are likely to push the jobless rate higher through to the early part of 2010. Unemployment is likely to rise to 8.5% by end-2009. The stabilisation of oil prices above US$60.00/bbl and the recapitalisation of domestic banks will underpin the macroeconomic recovery beyond 2009. Windfall oil revenues should help to bolster the government's ability to maintain support of the country's domestic capital market; and also to pay down external debt and build up a stabilisation fund to help safeguard public finances. Domestically, democratic conditions came under increased scrutiny through October and November with allegations of electoral fraud at regional elections held on October 11. According to official results from the Central Electoral Commission, the governing United Russia Party, led by Prime Minister Vladimir Putin, won a landslide victory in almost every one of the 76 regional legislatures. In the worst terrorist attack in Russia outside the North Caucasus region for 5 years, a bombing on November 28 on a Russian train ' on the Nevsky Express main line, which operates between Moscow and St Petersburg ' left dozens dead and over 100 injured. Chechen separatist militants claimed responsibility for the attack and, in turn, Russian Prime Minister pledged to destroy any terrorist groups. The bombing highlights the persistent security risks in Russia. Violence in the North Caucasus remains high and has increased since the start of 2009. Russia's vast size (comprising one eighth of the world's landmass) means that it inevitably has interests across the entirety of Eurasia. In the West, Russia continues to view NATO with suspicion. In the South- West and South, Moscow continues to seek hegemony over the Caucasus and Central Asia, and limit the spread of militant Islam from Afghanistan. In the East, Russia continues to court China as an ally, but remains vigilant about potential Chinese designs on its Far Eastern region. To its North, Russia is becoming more assertive in staking its claim to Arctic resources. Russia also continues to view the US as a major threat. By 2020, Russia will possess modern nuclear weapons that that would deliver guaranteed 'unsustainable damage' to any aggressor on first-strike. Nuclear weapons and equipment to be ordered include: 36 new silos, 66 Topol-M intercontinental ballistic missiles (ICBMs), 30 Bulavas (the submarine-launched version of the Topol-M), Tupolev Tu-160 and Tu-95 bombers carrying Raduga Kh-555 and Kh-101 cruise missiles. Conventional weapons and equipment to be ordered include: 700 T-90 tanks, 1,500 BTR-80 armoured personnel carriers, BMP-3M infantry vehicles, Su-34 fighter aircraft, Yak-130 jet trainers, 156 helicopters and S-400 missile systems. There will be further development of the Sukhoi Future Air Complex for Tactical Air Forces fighter programme and Borey-class nuclear submarines. The State Programme of Armaments (GPV-2015) is the blueprint of the current defence force modernisation, through to 2015. It covers purchasing, upgrades and maintenance worth a total of RUB5,000bn. Russia's defence policy supports a minor but growing commitment to international peacekeeping operations. President Medvedev has spoken of increasing Russia's presence in peacekeeping, in part to increase Russia's international profile. Although Russia is reluctant to rely on other countries for defence procurements, as the industry becomes less state-controlled, greater multinational involvement may lead to products being sourced from overseas.

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Russia Defence and Security Report Q2 2010

  1. 1. Find Industry reports, Company profilesReportLinker and Market Statistics >> Get this Report Now by email!Russia Defence and Security Report Q2 2010Published on February 2010 Report SummaryRussias economy is expected to improve in 2010 but the recovery process will be fragile and protracted. We expect economic growthto rise to 3.4% in 2010, as much driven by re-stocking and base effects as productivity gains and an expansion of new consumptivecapacity. Unemployment was 8.1% in November 2009 up from the previous month reinforcing our view that seasonal effects arelikely to push the jobless rate higher through to the early part of 2010. Unemployment is likely to rise to 8.5% by end-2009.The stabilisation of oil prices above US$60.00/bbl and the recapitalisation of domestic banks will underpin the macroeconomicrecovery beyond 2009. Windfall oil revenues should help to bolster the governments ability to maintain support of the countrysdomestic capital market; and also to pay down external debt and build up a stabilisation fund to help safeguard public finances.Domestically, democratic conditions came under increased scrutiny through October and November with allegations of electoral fraudat regional elections held on October 11. According to official results from the Central Electoral Commission, the governing UnitedRussia Party, led by Prime Minister Vladimir Putin, won a landslide victory in almost every one of the 76 regional legislatures.In the worst terrorist attack in Russia outside the North Caucasus region for 5 years, a bombing on November 28 on a Russian train on the Nevsky Express main line, which operates between Moscow and St Petersburg left dozens dead and over 100 injured.Chechen separatist militants claimed responsibility for the attack and, in turn, Russian Prime Minister pledged to destroy any terroristgroups. The bombing highlights the persistent security risks in Russia. Violence in the North Caucasus remains high and hasincreased since the start of 2009.Russias vast size (comprising one eighth of the worlds landmass) means that it inevitably has interests across the entirety ofEurasia. In the West, Russia continues to view NATO with suspicion. In the South- West and South, Moscow continues to seekhegemony over the Caucasus and Central Asia, and limit the spread of militant Islam from Afghanistan. In the East, Russia continuesto court China as an ally, but remains vigilant about potential Chinese designs on its Far Eastern region. To its North, Russia isbecoming more assertive in staking its claim to Arctic resources. Russia also continues to view the US as a major threat.By 2020, Russia will possess modern nuclear weapons that that would deliver guaranteed unsustainable damage to any aggressoron first-strike. Nuclear weapons and equipment to be ordered include: 36 new silos, 66 Topol-M intercontinental ballistic missiles(ICBMs), 30 Bulavas (the submarine-launched version of the Topol-M), Tupolev Tu-160 and Tu-95 bombers carrying Raduga Kh-555and Kh-101 cruise missiles.Conventional weapons and equipment to be ordered include: 700 T-90 tanks, 1,500 BTR-80 armoured personnel carriers, BMP-3Minfantry vehicles, Su-34 fighter aircraft, Yak-130 jet trainers, 156 helicopters and S-400 missile systems. There will be furtherdevelopment of the Sukhoi Future Air Complex for Tactical Air Forces fighter programme and Borey-class nuclear submarines. TheState Programme of Armaments (GPV-2015) is the blueprint of the current defence force modernisation, through to 2015. It coverspurchasing, upgrades and maintenance worth a total of RUB5,000bn.Russias defence policy supports a minor but growing commitment to international peacekeeping operations. President Medvedev hasspoken of increasing Russias presence in peacekeeping, in part to increase Russias international profile.Although Russia is reluctant to rely on other countries for defence procurements, as the industry becomes less state-controlled,greater multinational involvement may lead to products being sourced from overseas. Table of ContentExecutive Summary ......6SWOT Analysis..8Russia Defence and Security Report Q2 2010 Page 1/5
  2. 2. Find Industry reports, Company profilesReportLinker and Market StatisticsRussia Security SWOT ... 8Russia Defence Industry SWOT . 8Russia Political SWOT... 9Russia Economic SWOT 9Russia Business Environment SWOT ... 10Global Political Outlook, 2010 .11Table: Election Timetable, 2010..... 11The United States .. 16Latin America .... 17Europe ... 18Middle East . 20Africa..... 21Asia . 23What Could Surprise Us In 2010 .. 24Central And Eastern Europe Overview ...26Political Overview .28Domestic Politics .. 28Domestic Politics .. 29Security Risk Ratings .36BMIs Security Ratings 36Table: Europe Security Risk Ratings ... 36Table: Europe State Terrorism Vulnerability To Terrorism Index . 37Russias Security Ratings .. 38City Terrorism Rating.. 38Table: BMIs Central And Eastern Europe And Central Asia City Terrorism Index .. 39Security Overview 41External Security Situation ...... 41Internal Security 50Table: Russia Insurgent Groups ..... 53Armed Forces And Government Spending .54Armed Forces .... 54Table: Regional Armed Forces, 2007 (Including conscripted, 000) .... 54Defence Budget.. 57Historical Strength 57International Deployments 58Table: Russias Foreign Deployments 2008 .. 58Weapons Of Mass Destruction . 59Market Overview ...62Industry Trends And Developments 65Table: Key Players In Russias Defence Sector, 2005 ...... 65Arms Trade Overview.. 67Procurement Trends And Developments..... 67Industry Forecast Scenario 69Table: Russias Armed Forces, 2005-2014 (000 personnel)... 69Table: Russias Government Defence Expenditure, (2005-2014) .. 69Macroeconomic Outlook ... 70Table: Russia Economic Activity, 2007-2014..... 72Company Profiles .74Irkut 74Kazan Helicopters 76Russia Defence and Security Report Q2 2010 Page 2/5
  3. 3. Find Industry reports, Company profilesReportLinker and Market StatisticsRosoboronexport State Corporation .... 78Russian Aircraft Corporation MiG (RSK MiG) .... 80Sukhoi Aviation Corporation ... 82United Aircraft Corporation .... 84Uralvagonzavod. 86Country Snapshot: Russia Demographic Data ..88Section 1: Population... 88Table: Demographic Indicators, 2005-2030 .. 88Table: Rural/Urban Breakdown, 2005-2030 . 89Section 2: Education And Healthcare .. 89Table: Education, 2002-2005 .. 89Table: Vital Statistics, 2005-2030... 89Section 3: Labour Market And Spending Power ... 90Table: Employment Indicators, 2001-2006. 90Table: Consumer Expenditure, 2000-2012 (US$) . 90Table: Average Annual Wages, 2000-2006. 91BMI Methodology .92How We Generate Our Industry Forecasts . 92Defence Industry 92City Terrorism Rating.. 93Table: Methodology..... 95Sources .. 96Russia Defence and Security Report Q2 2010 Page 3/5
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