`Listen Take 20 Mi Gs And I'll Throw In Some A Ks'

It seemed like a Hollywood farce about the arms business. First, a leggy brunette modeled an assortment of machine guns. Then, muscular special-forces troops in battle dress ran about the exhibit hall firing pistols loaded with blanks. Later, buses took guests to a nearby army combat range where they got to fire machine pistols with silencers, Dragunov sniper rifles, and other high-tech weaponry.

The Russian defense Establishment can be forgiven if the five-day show at Vladimir, 250 km east of Moscow, seemed a little over the top. The late-May affair was one of the first arms bazaars on Russian soil, and it indicates just how desperate the Russians are to boost sales. Not long ago, they were the world's largest weapons exporters. But now, with the cold war over, business is slumping badly (chart). Unless orders perk up, the industry faces big layoffs and the loss of its technological edge.

STINGER MISSILES. So Russia's arms dealers are on the march. They're looking for hard-currency sales in new markets, from Southeast Asia to Latin America. In a break from the past, they are offering some of their most modern weapons systems, including MiG-29 and Sukhoi-27 fighters, Kaman-50 attack helicopters, and the shoulder-launched Igla, Russia's answer to the U.S.-made Stinger antiaircraft missile.

The sales effort is led by Rosvoorzhennie, the state-owned arms-export company, though Russia's arms makers are free to market their wares independently. They still need government approval on sales, however.

As part of the sales blitz, the industry has launched a slick new magazine, Military Parade. One recent article featured a machine gun that shoots underwater. The idea for the magazine came from a U.S. citizen, Victor Bondarenko, who emigrated from Russia in 1978 and returned in the late 1980s to sell stretch limousines. Bondarenko says pushing weapons sales is a natural moneymaker, since up to 80% of the economy is military-related.

Still, Russia's death merchants have to overcome some big problems. The most troubling is the dismal showing of Soviet-made arms in the hands of Saddam Hussein's troops during the Persian Gulf war. Potential clients also worry that if they buy a weapon now, the Russian maker won't be around to provide support and ammunition later. "Without logistics and backups, no weapons system is of any use," says Christopher F. Foss, military technology editor of Jane's Defense Weekly in London.

Another problem is that many of Russia's traditional clients--such as Angola, Cuba, and Syria--are now deadbeats or broke. Altogether, unpaid weapons bills are an important part of the $120 billion that other countries owe Russia, according to Keith Bush, director of Radio Liberty Research in Munich. By contrast, Russia owes Western bankers $85 billion. Other longtime clients, including Iraq and Libya, are off-limits because of U.N. embargoes.

BLACK MARKET. The Russians are having some success elsewhere. They have sold scores of Sukhoi-27 fighters to China, and they may let Beijing produce them under license. Iran has also been a big customer for fighters, tanks, and other weapons. Malaysia plans to buy MiG-29s. Abu Dhabi has bought BMT-3 infantry combat vehicles, and Kuwait is considering the Smerch multiple-launch rocket system.

The Russians also see a growing market in Latin America. Former Chilean dictator and now defense chief Augusto Pinochet will soon visit Moscow for talks on arms buys. But, says Richard F. Grimmett, a defense specialist with the Congressional Research Service, "there are very few clients with cash that want Soviet systems." And the Russians are hardly in a position to offer easy credit.

A lot of Russian weapons seem to be getting out despite bans. Russia appears to be a main supplier to the Bosnian Serbs, for instance. The black-market arms business is thriving. Gangsters have seized late-model tanks, and the Russian navy has been forced to place mines around arms depots in the Far East. But none of this is of much help to the foundering mainstream weapons industry. Unless it can sign up some major new clients, much of the industry will wind up on history's ash heap.

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