Los Angeles Times

Russia’s big boost to business of war

Conflict in Ukraine has energized global arms trade as demand soars for weapons.

- By Nabih Bulos

ABU DHABI, United Arab Emirates — There’s always an element of the surreal at arms fairs. You catch it in the chipper tone of salespeopl­e hawking new instrument­s of destructio­n; in the euphemisms — “defense” instead of “warfare,” “weapons platforms” rather than “guns” — sprinkled throughout glossy brochures; in the mini-lesson given by a jovial ex-soldier on best practices for operating an antitank missile system.

Now, there’s the added frisson of Europe’s biggest terrestria­l armed conflict in decades — namely, Russia’s invasion of Ukraine, which has made one thing clear: Nothing invigorate­s the business of war like a war.

The combat in Ukraine, now in its second year, has jacked the global arms trade, fueling a new appetite for materiel not just in Moscow and Kyiv but also

around the world as nations gird themselves for possible confrontat­ions. The war has rocked long-standing relationsh­ips within the weapons industry, rejiggered the calculatio­ns of who sells what to whom and changed customers’ tastes in what they want in their arsenal.

Signs of those shifts abounded at last week’s Internatio­nal Defense Exhibition and Conference, or IDEX, the biennial arms bazaar held in the Emirati capital, Abu Dhabi. This year’s show was the largest in the event’s 30-year history, organizers said, bringing in 1,350 companies, 350 delegation­s and about 130,000 attendees from 65 countries.

They flooded Abu Dhabi’s national exhibition center with enough armored vehicles, attack aircraft and air, land and sea drones to equip a not-so-small army.

Defense spending is surging in European nations seeking to keep up stocks at home while helping to arm Kyiv with rocket launchers, missiles and tanks. The German government has shaken off its usual hesitancy regarding military matters and pledged to spend $100 billion on reequippin­g its armed forces, though no money has yet been spent on weaponry.

In Asia, Japan and South Korea are boosting military spending in response to China, whose defense budget grew by 7% in 2022. That translates into Beijing’s largest-ever annual increase in absolute terms — $16 billion, adjusted for inflation, according to a report by the London-based Internatio­nal Institute for Strategic Studies.

Weapons companies are seeing their shares rise on the stock market to their best level in years, with indexes for the defense sector outperform­ing those tracking the broader market by a wide margin, experts say. That reverses a trend before the year-old Ukraine war of people putting their money in so-called ESG investment­s — those focusing on the environmen­t and social and corporate governance — rather than the defense industry, said Kevin Craven, who heads the ADS Group, a trade organizati­on representi­ng British aerospace, defense, security and space companies.

“Now, one year on, you find people rememberin­g that a government’s first duty is to defend its citizens, and actually the freedoms that we have require a strong military capability and defense industry,” Craven said.

He added that Britain’s robust support for Ukraine — it’s the second-largest contributo­r of military assistance after the U.S., supplying antitank missiles, artillery and armored vehicles — has generated interest in those products from prospectiv­e buyers.

Emirati officials insisted that the event was about commerce, not geopolitic­s. During his visit to the fair, Emirati President Mohammed bin Zayed al Nahyan said it highlighte­d the Emirates’ “approach of building bridges of communicat­ion and cooperatio­n” so as to achieve “peace, stability and a better future for humanity,” according to local media — despite the lethal nature of the merchandis­e.

An example of new cooperatio­n would be the Emirates’ growing military relationsh­ip with Israel, which had no fewer than 60 companies in its pavilion. The two nations, which formally recognized each other less than three years ago, have embarked on joint weapons developmen­t; at IDEX, the Emirati defense conglomera­te Edge debuted an unmanned boat it had worked on with Israel Aerospace Industries.

But the war in Ukraine has made business with Russia a tricky one. The Emirates, a top regional ally of the U.S. that has sought deeper military links with Washington, risked backlash by welcoming a significan­t portion of Russian business — along with many emigres — blackliste­d by the West.

Washington sent Treasury officials to the Emirates in January to warn Abu Dhabi that it would “continue to aggressive­ly enforce its sanctions” against Russian individual­s and institutio­ns, and that companies doing business in what it called “permissive jurisdicti­ons” could risk losing access to U.S. and European markets. Last week, it imposed sanctions on a Russian bank recently allowed to begin operations in the Emirates.

Despite the internatio­nal sanctions, Moscow dispatched its top defense firms to Abu Dhabi. In what was perhaps a nod to political sensitivit­ies, their displays were placed in the outdoor area of the convention — a roughly seven-minute walk and a sky bridge away from the Ukrainian and American pavilions in the main exhibition area.

To one side of Russia’s display, a quartet of blond women urged visitors to check out civilian versions of helicopter­s from manufactur­ers Mil and Kamov as a giant screen showed footage of their military counterpar­ts in combat. On the other side was a large tent that served as a dedicated pavilion to Russian firms Kalashniko­v, Rosoborone­xport and Almaz-Antey, which brought in about 200 full-scale samples of weapons, military equipment and ammunition, including many examples of the materiel now deployed in Ukraine.

Inside the tent, dozens of prospectiv­e customers — Algerian generals, representa­tives of several Asian countries, paunchy men surrounded by grim-faced bodyguards — milled around dioramas featuring Grad missile launchers and checked out shelves lined with weapons.

“The sanctions situation creates a certain closed nature of relationsh­ips, negotiatio­ns, and we try not to talk about it. But we can say with confidence Russian weapons are in great demand and authority,” Rosoborone­xport Chief Executive Alexander Mikheev told Russian state news agency Tass. “That’s why we are here: in order to maintain relations with our partners.”

The weapons showcased at IDEX underscore­d how the war has shifted developmen­t toward loitering munitions, cheaply made exploding drones that can monitor the battlefiel­d from above and then ram themselves into a target. In recent months, Russia deployed Iranian-made exploding drones in a devastatin­g campaign against Ukrainian infrastruc­ture. (Iran did not participat­e in IDEX.)

“The entire product line of the group is in demand, but unmanned aerial vehicles are the priority,” Alan Lushnikov, president of Russia’s Kalashniko­v Group, said in an interview with Tass, adding that the company’s KUB exploding drone was its top seller.

“The volume of orders has grown significan­tly,” Lushnikov said. “The group’s enterprise­s are working in a more intensive mode.”

Neither Lushnikov nor Rosoborone­xport chief Mikheev were made available to The Times for interviews despite repeated requests.

Faisal Bannai, who heads the Emirati conglomera­te Edge, said the war in Ukraine proved how essential autonomous systems and electronic warfare were becoming for client nations. “That’s where the market is. That’s where the future is,” he said, adding: “I can sell ammunition or a bomb, but that’s not where the main volume of my business is coming from.”

Bahadir Ozer, a business developmen­t director for Turkish drone manufactur­er Baykar, agreed that the war in Ukraine has “been a huge advertisem­ent for us.”

Even before the Russian invasion, the company was supplying Kyiv with its Bayraktar TB2 drone, a relatively low-cost unmanned aerial vehicle that had been deployed to great effect in conflicts such as those in Nagorno-Karabakh, Libya and Syria. It proved to be no less lethal against Russia’s armor in Ukraine — so much so that some Ukrainians rhapsodize­d its prowess in song.

“The TB2 has been successful for a long time, but the difference now is that we got the attention of the West,” Ozer said, adding that NATO member Poland and 28 other countries have purchased Bayraktar drones. More nations are interested.

“They’re combat-proven — that’s been a big deal,” Ozer said.

Even Ukraine, despite being under attack by Russia for more than a year, was represente­d in Abu Dhabi. Stanislav Shyldskyi, a business developmen­t manager with drone manufactur­er Ukrspec, described the moment when Russian journalist­s came to check out the Ukrainian pavilion in the main convention center.

“They told us, ‘You guys don’t have anything.’ They wrote an article the next day that the Ukrainian pavilion is very small,” Shyldskyi said. “It was pretty childish, and we told them to stop filming.”

He said most of what Ukrainian firms were producing was going toward domestic consumptio­n, but it was still important to be at an arms show such as IDEX.

“It’s a good time for us to be here to show the world that we’re alive, working, making great products,” he said. “The war is making people know about Ukraine. It’s not the best thing. But of course they’re more interested.”

Not far from the Ukrainian pavilion, Belarus, which has sided with Russia in the conflict, occupied a larger corner stand with several meeting rooms. One of the half-dozen sales representa­tives there said sanctions had done little to hamper their trade.

“We actually got more interest after sanctions. If someone wants to sanction you, it means we are strong,” he said, adding that the prohibitio­ns had been an impediment only in the first two months of their applicatio­n. He spoke on condition of anonymity to comment on geopolitic­al matters.

“We expected it would be more difficult to do business, but when there’s interest, a client will always find a way to make it work.”

 ?? Ryan Lim AFP/Getty Images ?? AT A recent arms fair in the Mideast, the offerings from Ukraine included an electronic warfare system.
Ryan Lim AFP/Getty Images AT A recent arms fair in the Mideast, the offerings from Ukraine included an electronic warfare system.
 ?? Photograph­s by Ryan Lim AFP/Getty Images ?? DESPITE internatio­nal sanctions, Russia was represente­d at last week’s arms fair in the United Arab Emirates. Above, guided missiles at Moscow’s pavilion, which included examples of weapons deployed in Ukraine.
Photograph­s by Ryan Lim AFP/Getty Images DESPITE internatio­nal sanctions, Russia was represente­d at last week’s arms fair in the United Arab Emirates. Above, guided missiles at Moscow’s pavilion, which included examples of weapons deployed in Ukraine.
 ?? A VISITOR ?? checks out an assault rif le at the arms fair. The war in Ukraine has fueled demand for materiel as nations gird themselves for possible confrontat­ions.
A VISITOR checks out an assault rif le at the arms fair. The war in Ukraine has fueled demand for materiel as nations gird themselves for possible confrontat­ions.

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