Who is the Victim, Who is Winner: Sanction on Russia’s Defense Import?

With the increasingly tension in Eastern Ukraine, the US imposes the tougher sanction against Russia, which covers Putin’s ‘inner circle’ and the restrictive measures on defense exports to Russia, on April. 28, 2014.

 

Through the recent indicators on Russian domestic economy, Kremlin has tasted the pains from the weakening economics that “Capital flight in the first three months of 2014 is thought to exceed $60 billion. The stockmarket is down by 20% since the start of the year and the rouble has dropped by 8% against the dollar. Worries about the devaluation feeding through to consumer prices have prompted the central bank to yank up interest rates, from 5.5% at the start of March to 7.5%. The IMF reckons the economy is in recession; this week it cut its growth forecast for 2014 from 1.3% to 0.2%”. [1]The worsening situation has been acknowledged by Russian high-official in this March. "The economic situation shows clear signs of a crisis," Deputy Economy Minister Sergei Belyakov said on a local business conference.[2]

 

The sanction is to coerce the targeted actor into changing its action through the vulnerable economic pains. As the options of sanctions, I am afraid that the defense export to Russia just as symbol that the Western cuts off the defense connections with Russia, not really make tough suffer for Russia in short-term. Since the end of the Cold War, oil, nature gas and defense export has been significant for Russian economy. Compared with Russian’s export, import is obviously not worth mentioning. According to the data of international arms transfer, at SIPRI, Ukraine has been the top one 1991~2013, whether trend indicator values or deliver quantities. The delivered weapons made in Ukraine included 84 turbofans for Yake-130 trainer/combat aircraft produced in Russia in 2009~17, 100 Kh-59M/AS-18 ‘Kazoo’ Air-Surface Missile (ASM), and 34 feeder liner/ transport aircrafts.[3] Through these data, the conclusions can be reached that the export to Russia plays the important role in Ukraine defense economy. Someone guess that the present sanction on Russia will hurt Ukraine. In fact, aviation engines and shipbuilding, Russia still heavily depends on Ukraine. Russia has to invest resources into updating its existing　establishment inherited from the Soviet Union, without Ukraine import. Not mention the large-scale investment, for Russian, it is difficult for looking for the ideal alternative in the former Soviet Union.

 

Besides Russian, Chinese has been the major custom for Ukraine defense export. Ukraine follows up the US-led sanctions on Russia, the economic hurting to Ukraine defense is limited, if Ukraine can guarantee Chinese order can be met in the following years. Maintaining the stable supply to China will be the way to approach China to balance Kremlin’s escalation. Unfortunately, the defense industrial bases are concentrate in the eastern regional in turmoil. In recent years, the capability-building of strategic project obviously has been listed as the priority by Chinese air-force. To some extent, the policy-making community in Beijing understand Russian broke the contract the IL-76 transporter and IL-78 aerial refueling tankers as strategic mistrust. The integrated industrial base for heavy transporter is the key for Kiev to attract Beijing. China, a delicate bystander, maybe benefits from this sanction, if Kiev’s efforts to stabilize the situation in the eastern region.    

 

The US has expressed concerns on French’s decision that it would sell amphibious assault ship to Russia. Under the tension circumstances, the future of contract is uncertain, although French President Francois Hollande said France would implement the contract. However, the cold response from Russian. Russian Deputy Defense Minister Yury Borisov told reporters on 20 March 2014. "Of course, Russia will defend its right to the end in accordance with the agreements concluded and will demand repayment of all damages we could sustain in the case that the Mistral contract is broken off".[4] Whether the implementing contract or not, Russian naval projection capabilities will not be improved fundamentally in the foreseeable future. However, the economic loss for contract cancellation should be accepted by French. Russian loses the opportunities to access the Western expertise of project management what   revitalizes Russia’s naval defense sector. If Kremlin determines its role as global player, the question that whether the investment on shipbuilding infrastructure is beyond the affordability of vulnerable economy will not be the agenda of policy-making communities. In the geopolitical history of Russia, seeking seaport and safeguard it has been as the top priority of national strategic decision.   

 

In the short-term, the sanctions on the defense export to Russia should not get any considerable fruits, on the contrary, the Western has to pay for the cost as French defense sector. Through months-last turmoil in the eastern, no one can assess Ukraine defense export on the remnant of its defense industrial base. Without the help of Ukraine, China has to be closer with Russia on its defense modernization. From the Eurasian geopolitical perspective, the implications of China-Russian closer relations, although not alliance, will be one pillar level with the EU and NATO.