Russia’s new game plan: civilian tech deals. How will it hold up against US and China?

By Nicholas J. Myers

The post-Soviet Russian economy suffers from low technological innovation. Since the disintegration of the Soviet Union, Russian research and development spending has been stuck at just over 1 per cent of GDP, compared with an OECD average of 2.3 per cent. Nevertheless, the Russian government considers technological development projects key to achieving strategic aims. In addition to developing its military technology, Russia is working towards civilian technology deals with developing countries where it faces competition with the United States and China.

Russia’s traditional technological strength, military technology, no longer offers the decisive edge it once did. The Soviet government dedicated considerable funding to military research to maintain power parity with the US. In the latter half of the Cold War, Western analysts even suspected that Soviet defense spending was actually double the official figures. Russian hard power has been on display in theaters such as Syria and Ukraine, but its struggling economy continues to impede development of military technologies. The Kremlin has hailed the hardware technologies such as the Su-57 stealth aircraft and the T-14 Armata main battle tank as technological triumphs, but both of these have fallen short of expectations and suffered setbacks. For example, the government has decided not to mass produce the next generation of the Su-57, partly because of an overstretched defense budget and partly because of technical difficulties that need to be overcome. Similarly, the T-14 Armata has yet to be deployed, despite regularly reported tests and halfhearted speculation on where it will first be deployed.

While the government is working to develop military technologies with mixed success, 2018 has seen a rise in Russia’s diplomatic efforts to use non-military technology as a bargaining chip to support strategic partnerships in the face of US and Chinese competition for influence overseas. To date, Russia has signed memoranda of understanding (MOUs) on non-military technology-transfer trade deals with Sudan, Mongolia, Zimbabwe, and Egypt. This is an increase from last year, when Russia signed only one MOU with Venezuela. By comparison, the United States government has only facilitated one and China two strictly limited to non-military technology in 2018.

Increasingly alienated from the west, Russia has turned to the developing world as a potential market to export technology. These technology agreements play a critical role in Russia’s strategy of global re-engagement, and the Kremlin has done much to publicly promote these diplomatic efforts, even when they are not as successful as hoped. In the case of July 2018’s INNOPROM in Yekaterinburg for example, Russia put much effort into hosting an event that would showcase Russian technology and industry, but no major deals emerged from it. However, Russia faces competition from China in carving out spheres of influence in developing countries both outside and on the fringes of the west’s orbit.

The four countries with which Russia has signed civilian technology MOUs in 2018 – Egypt, Mongolia, Sudan, and Zimbabwe –are all areas of competing influence between the Russian and either the US or China. The fourth, Egypt, is a traditional US ally whose relations with the United States have chilled since the Arab Spring. In May, a comprehensive deal was reached with Egypt to create an industrial zone in the Suez canal region that would produce high quality tech products. This deal also aims at improving metallurgy, delivering railway cars, and developing nuclear power in Egypt. Putin has followed up the deal with low level engagements with Egypt, such as a phone call with President Sisi, and a 2+2 foreign and defense ministers’ meeting in Moscow on 14 May. Meanwhile, the US is also making overtures towards Egypt. Then Secretary of State Rex Tillerson visited Cairo in February, Trump phoned President Sisi to reaffirm their strategic partnership in April, and the US Navy conducted two PASSEX maneuvers with the Egyptian Navy.

The other three countries are places where Russia faces competition with China. Mongolia, a Cold War-era ally of the Soviet Union, is now politically, economically, and militarily balanced between China and Russia. All three are part of the China-Russia-Mongolia Corridor initiated by the Chinese as part of the Belt and Road Initiative. China is one of Mongolia’s most important traders and investors, but Russia is working to assert its economic presence there as well. Earlier this summer Mongolia hosted the Mongolia-Russia Initiative 2018, an event aimed at enhancing the “strategic partnership” between the two countries. The initiative was an opportunity for Russian firms to showcase an array of civilian technologies, from agriculture to industrial goods – an indication of the role tech has played in maintaining the relationship between the two countries

Russia is also making deals with countries where it faces competition from China on the African continent. Sudan has long been deemed a pariah state by the west because of the government’s abuse of human rights and role in the wars in Darfur, leaving it open to both Russian and Chinese overtures. China has made use of its peacekeeping presence in Sudan to establish the influence of the state run China National Petroleum Company in the country’s energy sector. This suggests that Russia might be using its technology agreement on grain machinery to similarly support its larger policy of trying to assert itself as a powerbroker in North Africa. Further south, Zimbabwe has been tentatively reaching back out to the world since longtime strongman Robert Mugabe’s fall in November 2017. This year, new President Emerson Mnangagwa was hosted by Xi Jinping in Beijing and was visited by Russian Foreign Minister Sergei Lavrov on his March African tour. The Zimbabwean technology agreement that established a Russian industrial zone in the country seems to be aimed at establishing a permanent Russian economic presence in a region where China has been making deep inroads.

The question hanging over this Russian diplomatic pattern is its competitiveness vis-à-vis the Chinese. How long will Russian technology transfers have an appeal in a world where China is happy to export its industrial overcapacity to much of the developing world in the form of the Belt and Road Initiative? Predictions of political backlash against coercive Chinese “soft power” and predatory practices in countries such as Sri Lanka have not materialized into any serious political consequences for China yet. It is unlikely that Russia can close its competition gap simply with technology transfer deals, especially given that Russian efforts to foster investment with specialty zones and other incentives been of limited success in the Russian Federation itself.

Russia uses these civilian technology deals as one of several tools to stake out its independent challenge to the western-led international order, drawing upon its extensive legacy of scientific and technological accomplishments. Unlike its previous attempt to play this role as the Soviet Union, Russia today competes not only with the west but also with an increasingly technologically viable China; the costs to compete for great power influence, as President Putin has suggested he wishes to do, have accordingly risen and it is unclear whether Russia can pay them on a sufficient scale in the purely civilian-use arena.

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