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Russian Tanks Roll Into a Marketing War

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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Russia's new supertank, the T-14 Armata, is getting its first taste of battle -- against  two virtual rivals on the global market: China's VT-4 and Ukraine's BM Oplot. 

Russia has more than 15,000 tanks, more than any other nation, but the vast majority of these are ancient T-72s and T-80s. These tanks have apparently been supplied to the rebels in eastern Ukraine, not least because Russia doesn't have much use for them. Among other problems, they are death traps: A direct hit on the manned turret often causes the shells within to explode, killing the crew. That's why the Soviet army, famously unconcerned with personnel losses, needed so many of them. 

Under President Vladimir Putin, the Russian army has been professionalizing, and keeping tank crews alive has become a priority. The Armata, unveiled with much pomp before the Red Square parade last month, offers a radical feature: An unmanned turret and a capsule for the crew within the tank's body. "Unlike previous Soviet/Russian vehicles, crew safety (survivability) and comfort appear to be a concern," a recent report from the U.S. Foreign Military Studies Office said of the T-14. 

Compared to Western vehicles such as the U.S. M1 Abrams, the British Challenger, the French Leclerc and the German Leopard 2, the T-14 is a spaceship. It's so complicated that Russian tank crews struggle to operate it. During a rehearsal for the Victory Day parade, an Armata tank stalled in Red Square and couldn't be pulled away until a more experienced driver from Uralvagonzavod, the company that makes it, arrived and got it moving. 

Norinco, the Chinese maker of the VT-4, recently used the episode to promote its tank. In a post on the WeChat messaging service, the company teased: "The T-14’s transmission is not well-developed, as we saw through a malfunction taking place during a rehearsal before the May 9 parade. The VT-4 has never encountered such problems so far." 

According to the Norinco post, "if an international client wants to buy a new tank, it can only choose between China and Russia." Indeed, the choice is extremely limited: though Western tanks have been heavily modified and equipped with the latest electronics, the basic models are decades old. There are, however, other alternatives: Korea's K2 Black Panther, put into service last year and already contracted to Turkey, and Ukraine's BM Oplot, first unveiled in 2011 but only just entering service. 

After Russia presented the Armata, Ukrainians ridiculed it on the social networks. "This is a coffin on treads," blogger Mikola Gritsenko wrote on Facebook. Soon, a Ukrainian TV program produced a global ranking of tanks, putting the Oplot on top and Armata in fourth place.

Oplots are not fighting Russian tanks in eastern Ukraine, however. According to Sergei Pinkas, an executive at Ukroboronprom, the state holding company that produces the new tank: "It's more efficient to export the Oplot than to use it in the war. It sells for $4.9 million overseas. It's better to sell it and use the money to fix and modernize 10 T-64s." 

Indeed, this year Ukraine has resumed Oplot exports to Thailand, and hopes to deliver 39 tanks.

Norinco has already seen interest in the VT-4 from Cameroon and Pakistan. The Chinese tank, according to the producer, is $3 million cheaper than the M1 Abrams, which cost about $6 million in 2012. A newly developed tank at such a price is an incredible bargain.

No expense was spared in developing the Armata, which sells for about $7.8  million. No export customers have been lined up, in part because of the high price tag for an untested machine, and in part because Russia is keen to rearm. The first exports are planned for 2020, according to Russia's Military Industrial Commission. 

One can only hope the war in eastern Ukraine will not last long enough for Russia to be able to send the T-14s against Ukraine's antique Soviet tanks. A market rivalry would be much healthier.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor on this story:
Max Berley at mberley@bloomberg.net