****The ending of the Cold War was a blow for the Russian military industrial complex. Billions of dol lars worth of weapons are going begging in Russia and other republics as a result of the deterioration and break-up of the Soviet armed forces. More than 200 fighter planes and 1,000 tanks are waiting for buyers. Gemini News Service reports on the woes of the ex-Soviet defence industry and the cut-throat auest for exoort orders.****

TO a degree that no one could have foreseen six years ago. the post-Cold War world has become a bonanza for arms dealers. While East and West remained locked In confrontation, most of the big powers' arms output was taken by their own armed forces. The rest was exported to Ideological proteges for whatever they could be persuaded to pay towards production costs.

Times have changed for everyone: but most of all for Russia. For it and other exSoviet republics arms deals are no longer a matter of politics but a desperate way to keep the wheels of Industry rolling and turn superfluous stocks into cash.

Three-quarters of the former Soviet defence Industrial complex is located in the Russian Federation. It consists of 1.700 factories working on military production and employs six million people-one in six of the adult population. Yet only 10-25 per cent of its export capacity is used

Most of the workers of the payroll are idle now. Iheir wages adding dally to the huge budget deficit.

According to the chairman of the committee officially charged with overseeing the conversion of arms plants to other use. the total value of surplus arms in Russia is about $100 billion.

Factories have more than 200 fighter planes and 1,000 tanks waiting for buyers. This is in addition to billions of dollars worth of second-hand weapons going begging in Russia and other republics as a result of the run-down and break-up of the Soviet armed forces.

As the flood of arms depresses world prices, the Russian defence industry is fighting for its life against old and new rivals. Factory managers say they will have to make 50-60 per cent more export sales merely to cover the cost of filling state orders. What are

their chances of getting the sales? Or. to see the problem from the other side, which Third World countries are in line for the sales push?

American experts say that Russia has no hope of competing with the United States in the production of high technology weapons. But it does have a potentially large market for less sophisticated arms, such as the MiG-29 fighter, the T-72 tank, a variety of ground-to-air missiles, and small arms like the Kalashnikov AK4 7 assault rifle.

The MiG-29, though no longer in production for the air force, is in such demand abroad that between 1991 and 1993 its price tag went up from $14 mil-

lion to $24 million. Another Item in International demand is the Zenith S-300 rocket installation. Russia's counterpart of the US Patriot, for which Russian dealers ask $3 million.

But competition is taking a toll of both sales and profits, as Russia's salesmen discovered earlier this year, when a contract to sell MiG-29s to Malaysia was derailed at the last minute by an American offer by General Dynamics to sell F-19s at $3 million less.

Another chastening experience has been with the T-72. which Russians call the best tank in the world, fire-power for money. The Ministry of Foreign Economic Relations is currently

trying to raise the price to $2 million, compared with $5.2 million for the American Abrahams and $4.5'mlllion for the British Challenger. But sales at the same tank built under licence in Slovakia and Poland have cut the world price to $500,000.

The standard model Kalashnikov AK47 still costs $150, and SVD supersniper $1,000, according to the official price list. But in the course of three years the price of another popular Russia-made small arm. the 9mm Makarov pistol has tumbled'from $100 to $60-70. due to competition from a Chinese copy but also sales (or thefts) from ex-Soviet stocks in Germany and Eastern Europe.

One of the biggest problems for the Soviet arms industry has been the shifting of government policy regarding sales methods. Under the strict rules Imposed by Soviet governments up to the mid-1980s, all foreign arms orders had to go directly to the Ministry of Defence and be finally approved by the Council of Ministers and the Central Committee of the Communist Party.

The procedure was cumbersome and orders could take years to be complete, with KGB and GRU ( military intelligence) officials involving themselves in every stage of the bureaucratic process. Nevertheless, in the lush conditions of the Cold War. it could be highly profitable.

With the confusion caused by lhe precipitate Soviet withdrawal from Eastern Europe, the break-up of the Soviet Union and the rush of its successors Into a "market" economy stupendous irregularities blossomed.

Ships of the Baltic fleet were "privately" sold by senior- commanders to Italy and Spain; an illegal consignment of T-72s was Intercepted by customs as it was waiting to be shipped from the Black Sea port of Novorossll.sk, to a still unnamed customer. Later, defence offi- ' clals swooped on a plan by Black Sea navy officers to sell seven warships to Greece

But the heart of Russia's problem has been its salesmen's inexperience in a highly competitive market, where Cold War rules no longer apply

Except for sales to India and China ( Moscow's biggest customers. with whom dealing continues to be direct) the Yeltsin government decided to put arms sales in the hands of posrednlkt — middle men or brokers.

At first these were state-owned firms working under the Ministry of Foreign Economic Relations: but then, last year, in a market-inspired move to dilute the government monopoly, private firms, and even individuals. were allowed to set up as posrednlkt in quest of the customary commission.

Results were often amateur-

ish.

Among 1 7 emissaries sent to Malaysia In connection with the abortive MiG deal was the popular singer and millionaire businessmen. Yusslf Kobaon. Another Intermediary, touting sales of planes and tanks In Australia, turned out to be a veterinarian of a scientific visit

The strangest story of all concerned General Dmitri Volkogonov. Yeltsin* defence adviser. In a post mortem on the Malaysia deal, it transpired that for a deal which would put Russia Into direct competition with the US, Volkogonov had recommended as a middleman a friend of the US military attache.

Th^a has never haan any special training for Russian arms sellers something which recently caused the administration head of the arms producing Vladimir region to complain that amateurish salesmanship was losing local factories half their market.

Today there is pressure from the industry to return to the use of experienced broker*, to prevent established markets being taken over by newcomers such as Austria. Sweden. Switzerland and Brazil.

In response to the foreign invasion of its old markets, Russia, with a client list of 47 states, is now seeking new ones: in South-East Asia. Latin America and the Gulf.

There is even talk of what a few years ago would have seemed Impossible partnerships. South Africa has inquired into the possibility of using SS-25 rockets to launch satellites: Taiwan has asked about the MiG-29; and Pakistan has shown Interest in the US-27.

But so long as Moscow dare not risk offending existing customers, such things will still be theoretical; and experts see its main clients in 1994 as India. China. Syria and Iran.

ANDREI MARTOV Is a Russian defence analyst.