Introduction by Nicu POPESCU and Richard A. BITZINGER
One of the major publications published by the Institute for Security Studies, then under the aegis of the Western European Union, was entitled ‘Nationalism, Internationalism, and the European Defence Market’.2 Like most papers on European defence industries and technologies published over the last couple of dec- ades, it was mostly concerned with intra-European issues: how should EU member states’ defence industries cooperate and integrate, and what pan-European insti- tutions could help that process? And when it came to ‘external’ aspects, it mostly referred to interaction with the US armaments industry. Since then, much has been achieved, but much remains to be done to boost defence industrial cooperation and integration within Europe. But that is not the concern of this Report. Rather, this volume deals with defence industrial base issues and problems beyond the European and transatlantic spheres.
Putting the US and European defence industries aside, this Report turns the spotlight on two other major players in the global defence industry: Russia and China. For decades, Europe and the United States have maintained a decisive military-technological edge over these two countries, but in the years to come this superiority may prove to be increasingly unsustainable. While both countries in general still lag behind the West, in a few critical sectors China and Russia have be- come near-peer competitors, and in others they may even have a technological edge over their American and European counterparts.
Any signi cant loss of this military-technological superiority could have a serious impact on the West’s ability to deter or counter Russian or Chinese threats. Such a situation would not only have signi cant security and defence implications, but it could also have far-reaching economic repercussions, as it would likely affect the global map of defence trade patterns and security relationships around the world.
At the same time, the Russian and Chinese defence industries are both very dif- ferent, as are their respective global footprints when it comes to arms exports. For its part, Russia retains its place as the number two player in the global arms in- dustry by virtue of its position as the world’s second-largest arms exporter and in terms of the wide range of arms it can produce. As the direct descendant of one of the two superpowers during the Cold War, the Russian Federation inherited a wide
array of defence technologies and arms industries. At the same time, however, the USSR’s bloated defence sector is one of the factors that provoked the collapse of the Soviet economy, the political system, and ultimately the Soviet state itself. Yet, in terms of defence technologies, it has also bequeathed to post-Soviet Russia plenty of know-how, industrial capacity, and global brand recognition, thereby ensuring that the country remains a key arms exporter in the world almost three decades after the dissolution of the USSR. However, this position is increasingly shaky. In an industry that is more and more de ned by cut-throat global competition and changing international power alignments, Russia can hardly afford to rest on its laurels. Instead, it must continue to plough money and manpower into maintain- ing its military-technological edge.
China’s military-industrial complex faces a different set of challenges. Technologically speaking, the Chinese defence industry does not possess the range or high degree of technological pro ciency exhibited by Russia (let alone Europe or the United States). Nor is China about to overtake Russia as a sizeable arms exporter (in value terms) anytime soon. At the same time, the growth of China’s domestic capacity in the armaments industry has been staggering. For the past 20 years, China has been engaged in a massive, concerted effort to modernise and upgrade its arms industry. It has dramatically ramped up military spending and invested aggressively in new defence technologies. And these efforts have paid huge dividends in recent years, in terms of better and more capable military systems. Correspondingly, China’s ability to raise its pro le in the international arms markets has also been increasingly felt. At the same time, critical weaknesses remain. China’s defence industry still appears to possess only limited indigenous capabilities for cutting-edge defence R&D, and Western armaments producers continue to outpace China when it comes to most military technologies.
Bearing these considerations in mind, this Report will examine recent trends and developments in Russian and Chinese defence industries and technologies and the implications of these developments for Europe. The Report is thematically organ- ised according to three sets of concerns: (i) the domestic outlook for the Russian and Chinese defence industries; (ii) Russian and Chinese arms exports; and (iii) the implications of stronger indigenous defence industries for Russian and Chinese strategic plans and imperatives, and, ultimately, for Western security in general and for Europe’s defence industries in particular.
The rst section of this Report deals with Russia, and the second section with China; at the same time, both sections mirror each other. Each section begins with a chap- ter addressing these countries’ respective defence industries and defence technology bases; in this case, Andrey Frolov and Kenneth Boutin investigate and assess the do- mestic situation of the Russian and Chinese arms industries and defence technolo- gies respectively: how they perform, how they balance autarky and international cooperation, how much they are affected by Western sanctions, and how successful they have been at plugging the gaps in their needs through domestic production of components and equipment formerly imported from external suppliers.
The Report then looks at how Russia and China are faring as arms exporters. Cyrille Bret (focusing on Russia) and Richard A. Bitzinger (focusing on China) look at the key data and the main trends in defence exports, at Russia and China’s best-selling weapons and best-buying partners. They explain the current slump in Russian arms exports, and how China came to be the third-largest global arms exporter through a combination of high-quality niche products, ‘friendship pricing’ and ruthless com- petitive practices, affecting Russia, as well as Europe and the United States. At the same time, the road ahead in maintaining their current status as leading arms ex- porters is not automatically smooth for either country.
The third set of chapters in Sections 1 and 2 addresses how Russia’s and China’s defence industries t into these countries’ foreign policy and military strategies. Gustav Gressel and Michael Raska look respectively at the link between strategic goals and the character and strengths and weaknesses of the Russian and Chinese defence industries. The chapter on Russia, for example, delves into the military re- forms undertaken in the past few years, and how the domestic arms industry is try- ing to meet Russia’s needs when it comes to land, air and naval-warfare reforms. The chapter on China looks at how Chinese arms exports tie in with Beijing’s foreign policy goals, and particularly how China’s emergence as a leading arms exporter is affecting the ongoing arms race in Southeast Asia.
The third and nal section of the Report focuses on Europe. Complementing the earlier chapters which bring to light how rising Chinese and Russian defence in- dustries affect the European security environment, Zoe Stanley-Lockman looks at the implications for the European defence industry itself. Her chapter examines the trilateral dynamic of cooperation and competition between Europe, Russia, and China, particularly focusing on how defence industrial interactions between the three blocs impact on the competitiveness and future direction of the European defence industrial base. By exploring the changes incurred in the past three to ve years, due largely to the imposition of sanctions on Russia and a shift in policies un- der President Xi in China, the chapter comments on how these changes are likely to affect the European defence industry in an increasingly globalised context. Finally, the concluding chapter by Richard A. Bitzinger and Nicu Popescu examines how the Russian and Chinese defence industries present different, but equally compelling, challenges for Europe.
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