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RESEARCHERS AT ISEAS – YUSOF ISHAK INSTITUTE ANALYSE CURRENT EVENTSSingapore | 5 May 2022

The Russia-Ukraine War and its Potential Impact on Russia’sArms Sales to Southeast Asia
Ian Storey*

Russian President Vladimir Putin attends an ASEAN summit via a video link at his residence outside
Moscow on 28 October 2021. Evgeny PAULIN/Sputnik/AFP.

*Ian Storey is Senior Fellow and co-editor of Contemporary Southeast Asia at the ISEAS –Yusof Ishak Institute.
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EXECUTIVE SUMMARY•

Russia has been the largest exporter of arms to Southeast Asia over the past two
decades but since 2014 the value of its defence sales to the region has fallen sharply.

•

Russia’s invasion of Ukraine will not only make it difficult for the country’s defence
industry to revive sales but will likely lead to a further decline in arms exports toSoutheast Asia.

•

Economic sanctions imposed by the United States, European and Asian countries
will make it harder for Russian defence companies to conduct financial transactions
while export controls will restrict their access to high-tech components.

•

The Russian armed forces’ poor performance on the battlefield has caused
significant reputational damage to Russian-manufactured military hardware.

•

If Russia becomes more dependent on China for economic and military assistance,
Beijing may apply pressure on Moscow to reduce sales of offensive weaponry toVietnam.

•

The problems facing Russia’s defence-industrial sector will create market
opportunities in Southeast Asia for other countries, including China.

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INTRODUCTION
Since President Vladimir Putin took office in 2000, Russia’s defence-industrial sector (DIS)
has played a key role in the country’s military modernisation programme, enabling the
Kremlin to pursue a more assertive foreign policy in the post-Soviet space, Europe and the
Middle East. In addition, Russia’s DIS provides employment for over a million workers andgenerates foreign currency revenues through the sale of military hardware to overseas
customers.
Today, Russia is the world’s second largest arms exporter after the US. In Southeast Asia,
however, it ranks number one. Between 2000 and 2021, the value of Russia’s arms exports
to the region was US$10.87 billion, followed by the US (US$8.4 billion), France (US$4.3
billion), Germany (US$2.94 billion) and China (US$2.9 billion).1
Russia’s most important defence customers in Southeast Asia are Vietnam, Myanmar,
Malaysia and Indonesia (see Table 1). Russia has offered for sale to these countries a fullrange of military equipment (from fighter jets and submarines, to tanks and small arms) at
prices which are cheaper than those manufactured in the US and Europe. In addition,
Russian defence companies have been willing to accept part-payment in commodities,
pursue joint production, and, unlike the US and European countries, they do not take into
consideration a country’s human rights record when selling arms. Moreover, somecountries, such as Vietnam until 2016, and Myanmar, Cambodia and Laos to date, havebeen unable to procure Western-manufactured arms due to sanctions, leaving them little
choice but to buy from Russia or China.2
Table 1: Russia’s Arms Sales to Southeast Asian Countries, 2000-2021 (US$ millions)Cambodia
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Indonesia

Laos
7

11
229
27

Malaysia

Myanmar

1
46
16

87
134

4
41
165
191
58
19
351
54

398
400
399
14

2
12

120
137
151
127
14
14
47
382
144
55
28
12
69
72

66

3

Thailand

3
20

14
14

Vietnam
2
89
54
2
294
164
16
2
164
53
149
974
760
313
1,056
735
702
465
333

Total
9
177
245
247
441
301
171
527
622
631
387
1,434
939
731
1,138
761
702
534
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2019
18
31
137
186
2020
17
64
20
9
110
2021
5
9
3
72
89
Total
5
1,155
129
1,274
1,688
71
6,545
10,867
Source: Data compiled from Stockholm International Peace Research Institute (SIPRI),
https://www.sipri.org/databases/armstransfers

Figure 1 shows arms exports to the region by the top five country suppliers over the past 21
years. While the value of sales from all five countries has fluctuated, Russia’s arms sales toSoutheast Asia have declined sharply over the past seven years―from US$1.2 billion in2014 to just $89 million in 2021. Four main reasons account for this.
Figure 1: Arms Exports to Southeast Asia From Top 5 Country Suppliers, 2000-2021(US$ million)

Source: Data compiled from Stockholm International Peace Research Institute (SIPRI),
https://www.sipri.org/databases/armstransfers
First, Moscow’s annexation of Crimea and support for separatist forces in the Donbass
region of Ukraine in 2014 led the US and European countries to impose sanctions and export
controls on Russia’s DIS. In addition, the conflict brought to an abrupt end longstanding
and extensive cooperation between Ukrainian and Russian defence companies, especiallyin the production of engines for surface ships, helicopters and aircraft. 3 As a result of
Moscow’s actions in Ukraine, the DIS’ manufacturing processes were disrupted and its
reputation for quality and timeliness of deliveries was negatively affected.

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Second, Russia’s biggest customer in Southeast Asia, Vietnam, has paused its militarymodernisation programme, partly because of concerns over Moscow’s ability to fulfill
orders but also due to an anti-corruption drive.4 Vietnam’s last defence orders with Russia
were in 2016 (for 64 T-90 tanks) and 2019 (for 12 Yak-130 training/light combat aircraft).
To make up for falling orders in Vietnam, Russia’s DIS has tried to penetrate new markets,
including US allies Thailand and the Philippines, but with limited success.5 Following the
February 2021 coup in Myanmar, Russia moved quickly to strengthen relations with thejunta, with a view to increasing defence sales to the country and displacing China as its
primary arms vendor. 6 Although the junta has responded positively to Moscow’s
overtures―Myanmar was the only ASEAN member to explicitly endorse Russia’s invasionof Ukraine7 ―it has yet to place any major defence orders with Russia since the coup.
Myanmar’s government has alluded to the potential problems the Ukraine conflict may
cause to future Russian arms exports to the country.8 If Russia cannot fulfill the junta’s
military requirements, Myanmar may be forced to increase its reliance on China.
Third, in 2017 the Trump administration signed into law the Countering America’s
Adversaries Through Sanctions Act (CAATSA). CAATSA allows the US government toimpose sanctions against individuals or countries that have commercial dealings with
Russia’s DIS, although the President can ask Congress for a waiver on national security
grounds. The Trump administration used CAATSA selectively, sanctioning only entities in
China and Turkey.9 However, the threat of CAATSA sanctions appears to have been thedecisive factor in the Philippines’ decision not to pursue a defence contract with Russia forthe provision of two submarines in 2020, and Indonesia’s decision to cancel an order for 11
Russian-made SU-35 Flanker fighter jets in December 2021 in favour of US and French fast
jets.10
Fourth, Russia’s DIS has faced growing competition from American and European defence
corporations, as well as relative newcomers from countries such as China and South Korea.

POST-INVASION FACTORS AFFECTING RUSSIAN ARMS SALESTO SOUTHEAST ASIA
Russia’s invasion of Ukraine on 24 February 2022 will make it difficult for the country’s
DIS to revive sales, and will in all likelihood lead to a reduction in Moscow’s arms exports
to Southeast Asia. This is due to the imposition of tighter sanctions and export controls by
a number of countries, the reputational damage caused by the poor performance of Russia’s
armed forces in Ukraine, and its need to replenish battlefield losses. Over the long term, if
Russia becomes more dependent on China, Beijing may pressure Moscow to reduce salesof certain kinds of weaponry to Vietnam.

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Sanctions and Export Controls
Following Moscow’s invasion of Ukraine, the US, European Union (EU) and Britain
tightened economic pressure on Russia by imposing new and more wide-ranging economic
sanctions and stricter export controls on dual-use technologies. They were soon joined byseveral advanced industrial economies in Asia including Japan, South Korea, Taiwan andSingapore. These measures are designed to punish Russia for its military aggression in thehope that economic hardship will force the Kremlin to withdraw its forces from Ukraine.
These measures will impact Russia’s DIS in two important ways.
First, sanctions on Russian banks, and their exclusion from the Society for Worldwide
Interbank Financial Telecommunication (SWIFT) international payment network, will
make it harder for the country’s DIS to conduct financial transactions with overseas clients.
An early indication of the problems faced by Moscow became clear when the majority ofRussian defence companies―including state-run Rosoboronexport which is responsible forthe country’s defence sales― were forced to withdraw from the 17th Defence Services Asia
(DSA) Exhibition and Conference held in Kuala Lumpur from 28 to 31 March because they
could not pay the exhibition fees.11 At the 2018 DSA, 14 Russian defence companies had
exhibited their products.12 For the same reason, no Russian defence firms participated in the
Asian Defense And Security (ADAS) exhibition in Manila in late April.
Regarding CAATSA, as yet, there is no indication that the Biden administration will apply
CAATSA sanctions more extensively against countries that buy arms from Russia,
including Vietnam. At this point in time, it seems unlikely that Washington would impose
CAATSA sanctions against Vietnam. The Biden administration has made improving ties
with Vietnam, and upgrading their relationship to a strategic partnership, a priority inSoutheast Asia.13 In addition, as noted earlier, Vietnam has not placed any major orders
with Russia over the past few years, though it is reportedly interested in buying additional
Russian-made fighter aircraft such as the SU-3514 and possibly even fifth-generation SU57 or SU-75 ‘Checkmate’ stealth fighters.15 However, Washington may use the prospect of
CAATSA sanctions to persuade Hanoi to procure non-Russian arms, as it did withIndonesia. But even if Vietnam does decide to proceed with further arms purchases from
Russia, the Biden administration could request a congressional waiver in view of Hanoi’s
disputes with Beijing in the South China Sea.
Second, export controls imposed on Russia will restrict its DIS access to advanced
technologies critical in the manufacture of modern military hardware and which Russia
itself does not produce and cannot easily purchase from other countries.16 These include
semiconductors, microelectronics, machine tools and software. This will not only affect the
production of military equipment for use by Russia’s armed forces and overseas buyers, butalso the provision of spare parts, munitions and upgrade packages to existing customers. As
a consequence, foreign buyers may decide to switch to more reliable sources of military
hardware.

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Reputational Damage and Recapitalising Russia’s Armed Forces
Contrary to the expectations of Western analysts―and presumably the Kremlin
itself―Russia’s military campaign in Ukraine has to date gone very badly. In the openingstages of the conflict, Russia’s armed forces failed to capture the capital Kyiv and replace
the government of President Volodymyr Zelenskyy with a pro-Moscow regime. Russia’s
air force failed to destroy Ukraine’s air defences and gain air superiority. Moscow failed to
anticipate the strong resistance of the Ukrainian armed forces and people, and the Zelenskyy
government has gained the upper hand in the information war. Russian tanks, armoured
vehicles and trucks have been destroyed in large numbers.17 Estimates of Russian military
personnel killed in action range from 10,000 to 20,000, plus tens of thousands of battlefieldcasualties.18
The poor performance of Russia’s armed forces can be attributed to a number of factors,
including poor planning and leadership, inadequate training, low morale among Russian
troops and weak logistical support which has left soldiers on the frontlines without food,
fuel and munitions.19 The Russian army’s high attrition rate of military vehicles is partly the
result of the Ukrainian army’s effective use of Western-supplied shoulder-fired missiles(such as US-made Javelins and the Anglo-Swedish Next Generation Light Anti-tank
Weapon) and Turkish-manufactured Bayraktar TBT drones. Russian vehicles also appear
to have been poorly constructed and maintained.20 On 14 April the Ukrainian armed forcesused anti-ship cruise missiles to sink the guided-missile cruiser Moskva in the Black Sea,
the largest naval vessel to be destroyed since World War Two. Endemic corruption within
the armed forces―resulting in modernisation funds being misappropriated― may also havebeen a factor in its poor performance.
The war in Ukraine is a public relations disaster for Russia’s DIS. Images of wrecked andabandoned vehicles call into question the quality and reliability of Russian-manufactured
military hardware. In addition, much of the equipment deployed by Russia is based on
Soviet-era designs (such as the T-90 tank which is based on the 50-year old T-72) andhighlights the lack of innovation within the country’s DIS. Some of the military equipment
which has been destroyed on the battlefield has been purchased by Southeast Asian
countries. These include tanks (Vietnam and Laos), infantry fighting vehicles and armoured
personnel carriers (Indonesia), military attack and transport helicopters (Indonesia,
Malaysia, Myanmar, the Philippines and Vietnam) and air defence systems (Myanmar).
Russia’s most lucrative defence export to the region is combat aircraft, including SU-27/30
Flankers and MiG-29 Fulcrums. The reputation of Russian manufactured jets took a hit on
7 April when one of its most advanced fighters, a fourth-generation-plus SU-35, was shot
down by an anti-aircraft missile over Ukraine. As mentioned previously, Vietnam hasreportedly considered purchasing the SU-35, though to what extent this incident will
influence its procurement decision remains to be seen.21
The high attrition rates of equipment suffered by Russia’s armed forces may have other
implications for the country’s defence exports. To replenish its heavy losses, Moscow may
direct the DIS to divert military equipment manufactured for export to recapitalise its own

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armed forces. This will result in delivery delays and possibly cancellations, further
damaging the DIS’ reputation for reliability.
The China Factor
China has refused to condemn Russia’s invasion of Ukraine and instead blamed the conflicton NATO’s eastward expansion. As the war looks set to drag on for months and possibly
years, and sanctions increasingly disrupt Russia’s economy, Moscow’s dependence on
Beijing may deepen. Although Russia’s invasion violates a number of China’s cherishedcore foreign policy principles (including respect for the sovereignty, territorial integrity andindependence of states), Beijing will probably provide Russia with economic support andmilitary assistance in the form of equipment and munitions. In return, China will seek quid
quo pros, probably including discounted energy imports, increased access to the Russian
DIS’ most sensitive military technology and greater support for its ‘core interests’ in Asia
such as Taiwan and the South China Sea. On the South China Sea, Beijing may prevail upon
Moscow to draw-down its commercial energy operations in Vietnam’s exclusive economic
zone (as Russia’s biggest energy company Rosneft has already done)22 and phase out salesof offensive weaponry to Hanoi that complicate China’s irredentist aims in the South China
Sea. Russia would be loath to reduce military sales to Vietnam as it is the Kremlin’s closest
defence partner in Southeast Asia and pressure by Beijing to do so might open a potential
fault line in Russia-China relations. If Moscow does reluctantly agree to Beijing’s requests,
it would be a major blow to Vietnam as over 80% of its military hardware is manufactured
in Russia and its armed forces will be dependent on Russia’s DIS for spare parts, upgrades
and munitions for many years to come. Although changing suppliers would be very costly
and time consuming, the strengthening of the Russia-China nexus as a result of the war will
likely force Hanoi to seriously consider alternative sources of arms imports.

CONCLUSION
Russia’s invasion of Ukraine is likely to create severe problems for its DIS, resulting infalling overseas arms sales, including to Southeast Asian countries. Sanctions will make it
difficult for Russian defence companies to receive payments from foreign customers, andexport controls will severely restrict their access to high-tech components. The Russianarmed forces’ dire performance in Ukraine has damaged the reputation of Russianmanufactured equipment, and export orders may be diverted to replenish battlefield losses.
The DIS will look for workarounds, including closer collaboration with defence companies
in countries that have not imposed sanctions and export controls on Russia, including in
China and India. Moscow may be more willing to accept larger part payments incommodities from countries such as Vietnam and Myanmar. Russia’s problems will create
market opportunities for defence companies in other countries, such as Europe, Israel,
Turkey, China and South Korea.

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ENDNOTES
Acknowledgements: The author would like to thank Darren Cheong at ISEAS for his research
assistance.
1
Data compiled from Stockholm International Peace Research Institute (SIPRI),
https://www.sipri.org/databases/armstransfers.
2
See Ian Storey, “Russia’s Defence Diplomacy in Southeast Asia: A Tenuous Lead in Arms Sales
but Lagging in Other Areas”, Perspective, No. 33 (18 March 2021), https://www.iseas.edu.sg/wpcontent/uploads/2021/03/ISEAS_Perspective_2021_33.pdf.
3
Tomas Malmlöf, “Russia’s Arms Exports: Successes and Challenges”, Revue Défense
Nationale 7, No.802 (2017), https://www.cairn.info/revue-defense-nationale-2017-7-page-64.htm.
4
Le Hong Hiep, “Will Vietnam be able to Wean Itself off Russian Arms?”, Fulcrum (4 April
2022), https://fulcrum.sg/will-vietnam-be-able-to-wean-itself-off-russian-arms/; Nguyen The
Phuong, “Why is Vietnam’s Military Modernisation Slowing?”, Perspective, No. 96/2021, ISEASYusof Ishak Institute (22 July 2021), https://www.iseas.edu.sg/wpcontent/uploads/2021/06/ISEAS_Perspective_2021_96.pdf.
5Storey, “Russia’s Defence Diplomacy in Southeast Asia”.
6 Ian Storey, “The Russia-China Strategic Partnership and Southeast Asia: Alignments andDivergences”, Perspective, No. 117 (6 September 2021), https://www.iseas.edu.sg/wpcontent/uploads/2021/08/ISEAS_Perspective_2021_117.pdf.
7“Myanmar’s Military Council Supports Russia’s Invasion of Ukraine”, VOA, 25 February 2022,
https://www.voanews.com/a/myanmar-s-military-council-supports-russia-s-invasion-0fukraine/6458527.html
8“Junta Watch: Myanmar Military ‘Not Worried’ as World Shuns Main Supplier Russia”, The
Irrawaddy, 5 March 2022,https://www.irrawaddy.com/news/burma/junta-watch-myanmarmilitary-not-worried-as-world-shuns-main-supplier-russia.html
9Lesley Wroughton and Patricia Zengerle, “U.S. sanctions China for buying Russian fighter jets,
missiles”, Reuters, 21 September 2018, https://www.reuters.com/article/us-usa-russia-sanctions/us-sanctions-china-for-buying-russian-fighter-jets-missiles-idUSKCN1M02TP.
10
Frances Mangosing, “US sanctions could kill PH plan to get heavy-lift choppers from Russia”,
Philippine Daily Inquirer, 17 December 2020, https://globalnation.inquirer.net/192739/ussanctions-could-kill-ph-plan-to-get-heavy-lift-choppers-from-russia; Yannick Smaldore,“Euronaval: Naval Group Confirms Negotiations With The Philippines For Submarine Sale”,
Naval News, 19 October 2020, https://www.navalnews.com/event-news/euronaval2020/2020/10/euronaval-naval-group-confirms-negotiations-with-the-philippines-for-submarinesale/; Mike Yeo, “Indonesia gives up on Russian aircraft purchase, instead turning to US andFrench options”, Defense News, 23 December 2021,
https://www.defensenews.com/air/2021/12/22/indonesia-gives-up-on-russian-aircraft-purchaseinstead-turning-to-us-and-french-options/.
11
Two Russian companies did participate in DSA 2022 though both only sold software and had
Malaysian subsidiaries. Adrian David “Russia, Belarus and Ukraine out of DSA 2022”, New
Straits Times, 10 March 2022, https://www.nst.com.my/news/nation/2022/03/778600/russiabelarus-and-ukraine-out-dsa-2022.
12
See DSA 2018 Exhibitors’ Index, https://www.dsaexhibition.com/data/editor/images/productindex/37-76_DSA%202018%20Dir_2-Exh%20Index_R2.pdf.
13“US priority is upgrading relationship with Vietnam: US Ambassador”, Vietnam Express, 20
April 2022, https://e.vnexpress.net/news/news/time-to-upgrade-us-vietnam-relationship-says-usenvoy-4453788.html.

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14“Vietnam Orders $350M Combat Training Jets From Russia – Vedomosti”, Moscow Times, 29
January 2020, https://www.themoscowtimes.com/2020/01/29/vietnam-orders-350m-combattraining-jets-from-russia-vedomosti-a69074.
15“Vietnam To Become 1st Country To Get Russian SU-57 5th Generation Fighter Jets”,
Eurasian Times, 8 January 2019, https://eurasiantimes.com/vietnam-to-become-1st-country-to-getrussian-su-57-5th-fighter-jets/; “Russia unveils stealth fighter jet to compete with US F-35s”,
Straits Times, 21 July 2021, https://www.straitstimes.com/world/europe/russia-unveils-stealthfighter-jet-to-compete-with-us-f-35s; Vladimir Karnozov, “Russia targets low cost, highperformance with SU-75 Checkmate fighter”, Flight Global, 21 July 2021,
https://www.flightglobal.com/defence/russia-targets-low-cost-high-performance-with-su-75checkmate-fighter/144693.article.
16
Paul Goble, “Russia’s Defense Industry Struggles to Deliver Putin’s Promised Weapons”,
Eurasia Daily Monitor 17, No. 28 (27 February 2020), https://jamestown.org/program/russiandefense-industry-struggles-to-deliver-putins-promised-new-weapons/.
17
Lexi Lonas, “Ukraine claims over 20,000 Russian troops killed during invasion”, The Hill, 16
April 2022, https://thehill.com/policy/international/3270702-ukraine-claims-over-20000-russiantroops-killed-during-invasion/.
18
Ibid.
19
Bonnie Berkowitz and Artur Golacha, “Why the Russian military is bogged down by logistics in
Ukraine”, Washington Post, 30 March 2022,
https://www.washingtonpost.com/world/2022/03/30/russia-military-logistics-supply-chain/.
20“Poorly made Chinese tires – A new theory on Russia’s slow advance”, Defence Connect, 4March 2022, https://www.defenceconnect.com.au/land-amphibious/9612-poorly-made-chinesetires-a-new-theory-on-russia-s-slow-advance; Serina Sandhu, “Ukraine war: Burst tyre on army
truck suggests Russia has failed to keep military kit maintained, expert says”, i-news, 3 March
2022, https://inews.co.uk/news/world/ukraine-war-burst-tyres-army-truck-shows-russa-failedkeep-military-kit-maintained-expert-1496186.
21“Vietnam Orders $350M Combat Training Jets From Russia – Vedomosti”, Moscow Times, 29
January 2020, https://www.themoscowtimes.com/2020/01/29/vietnam-orders-350m-combattraining-jets-from-russia-vedomosti-a69074.
22 Storey, “The Russia-China Strategic Partnership and Southeast Asia”.

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