Russia becomes largest arms seller to Third World

Russia has overtaken the United States to become the developing world's arms dealer of choice for the first time since the collapse of the Soviet Union, striking a record number of arms deals last year.

According to a report prepared for the US Congress, Russia captured almost one quarter of the arms market in the developing world in 2005, winning new business worth $7bn (£3.6bn), up from $5.4bn in 2004. The report covered government-to-government arms deals but excluded agreements by commercial dealers.

France, the US and the UK took second, third, and fourth place respectively, with deals to supply the developing world with arms worth a collective $15.28bn in 2005. The report showed Russian sales included missile defence systems to Iran, military aircraft to China, heavy battle tanks to India, and multiple consignments of the ubiquitous Kalashnikov assault rifle.

The report by Richard Grimmett, an expert at the Congressional Research Service, said Russia's state arms industry had staged a remarkable comeback since the Soviet collapse.

Moscow has been helped by the fact that the developing world is in the grip of an arms race. Government-to-government deals totalled $30.2bn last year, the highest figure in real terms for the past eight years.

Entitled Conventional Arms Transfers to Developing Nations, the report named China, India and Iran as the Kremlin's best customers and predicted Russia would dominate an "intensely competitive" market for the next decade.

Russia has yet to open up a commanding lead though; France was rated as the second biggest arms dealer in the developing world with new business last year worth $6.3bn while, with sales of $6.18bn, America was pushed into third place.

The report showed that Britain signed arms deals with developing countries worth $2.8bn in 2005, placing it fourth.

The report said India struck more arms deals last year than any other country, with agreements worth $5.4bn. With $3.4bn, Saudi Arabia came second, while China was ranked third with purchases worth $2.8bn.

The report put Russia's success down to the fact that it has abandoned its post-Soviet policy of only accepting hard currency.

It is now open to more flexible financing packages that extend to debt forgiveness, and offers better after-sales service. Russia's prices also often undercut Western rivals and it has a large range of military equipment.

Its arms deals are not uncontroversial. Last year Moscow signed a $700m deal to supply Iran with surface-to-air missile defence systems which American military planners fear could prove a serious obstacle if Washington ever decided to bomb Tehran over its nuclear plans. But although Russia is now the biggest weapons supplier to the developing world, the report also showed that the biggest arms dealer on the planet remains the United States.

It made arms deals last year worth a total of $12.8bn and was involved in almost one third of all transactions.

The Russian media has compared the arms-sales race to the Cold War era. "Only this time," said the daily Nezavisimaya Gazeta, "it's not a political confrontation between two powers with different ideologies; it's economic competition and a battle for international influence."

Top exporters

* RUSSIA $7bn

* FRANCE $6.3bn

* UNITED STATES $6.2bn

* UNITED KINGDOM $2.8bn

Deals with governments in developing world.

Source: US Congressional Research Service