Customised defence deals offered to offset sanctions impact, says senior Russian military official

Dmitry Shugaev, Director of the Federal Service for Military-Technical Cooperation of Russia, says Moscow’s “countermeasures” against sanctions consist of a tailored approach to each of their customers.

Updated - August 19, 2022 12:51 pm IST

Published - August 19, 2022 03:00 am IST - MOSCOW:

Dmitry Shugaev, Director of the Federal Service for Military-Technical Cooperation of Russia. File

Dmitry Shugaev, Director of the Federal Service for Military-Technical Cooperation of Russia. File | Photo Credit: The Hindu

Russian exporters of military products, today, are operating in a new reality and payments for defence deals in U.S. dollar and euro have been reduced to a minimum and they are adopting various measures to offset the impact of sanctions including switching to payments in national currencies, according to Dmitry Shugaev, Director of the Federal Service for Military-Technical Cooperation (FSMTC) of Russia.

“In connection with the current political events, certain logistical problems may arise, which entails changes in the timing of the supply of military products to foreign customers. However, the measures we are taking together with partners, including the Indian side, to find and implement alternative ways of supplying military products will neutralise the barriers erected by Western countries against Russia in the field of military-technical cooperation,” Mr. Shugaev said in response to a question from The Hindu.

Elaborating on the steps being taken to streamline payments, Mr. Shugaev said Russian “countermeasures” against sanctions consist of a tailored approach to each of their customers, offering attractive conditions when concluding contracts, adjusting the payment forms and “providing more flexible schemes, abandoning the dollar and switching to other currencies, including national ones.”

“Many of the anti-sanction measures developed by the FSMTC of Russia are welcomed by our partners, as they are mostly in line with their national strategic interests,” he asserted. We are establishing new production and logistical chains, while adapting the tools and capabilities to the changing conditions in order to minimise the negative effect of the “technological blockade” of Russia imposed by unfriendly countries, he added.

Indian Defence Ministry officials had stated that in addition to apprehensions about timely deliveries of spares and equipment due to the war in Ukraine, another issue that has arisen is payments for deals underway since Russia was shut out of the global SWIFT system for money transfers.

The Central banks of the two countries had extensively discussed this issue and small payments have been resumed, officials stated that modalities to undertake larger payments are still being worked out.

India and Russia have already agreed to conduct payments through the rupee-rouble arrangement. With several big-ticket deals including the S-400 under implementation, there are large volume of payments to be made.

Meeting timelines

With respect to meeting the timelines, Mr. Shugaev declared that Russia is ready to fulfill its contractual obligations and maintain the previous level, and in some areas even intensify military-technical cooperation with foreign partners. “Believe me, the issues arising in military-technical cooperation are not much different from the common problems in foreign economic activity. They are resolved during negotiations. There is generally no immediate urge to impose penalties on the other side, as relations with partners last long and have a good history. As a rule, we meet halfway,” he asserted.

On the ongoing India-Russia defence cooperation, Mr. Shugaev said in addition to upgrades of military hardware in the inventory of the Indian armed forces, there are other areas of cooperation between our countries, such as creating conditions for servicing the delivered weapons and equipment in India, as well as jointly producing various types of equipment and weapons for sale in third countries.

Stressing they are aligned to the “Make in India” initiative, he said, “The emphasis is on setting up the production of weapons and military equipment of Russian design in India and conducting joint research and development.”

However, on joint projects, he added that it should be taken into account that agreement on the terms of cooperation, including in the field of joint R&D, and the “practical implementation of such cooperation require careful study and take quite a lot of time.”

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