This story has been updated to clarify a statement made by Rostec’s Victor Kladov regarding Turkey’s aircraft acquisition plans.
DUBAI, United Arab Emirates — While sanctions have blocked Russian aircraft from appearing at high-profile European air shows like those in Paris and Farnborough in recent years, the Dubai Airshow has revealed itself as more laissez-faire, with both Russian and NATO jets parked on the ramp.
Therefore, the presence of Russian aerospace giant Rostec at the 2019 Dubai Airshow was no surprise. A Yak-130 trainer aircraft conducted flying demonstrations and Rostec executives met with military leaders from around the world.
Defense News spoke with Victor Kladov, Rostec’s director for international cooperation and regional policy, on Nov. 18 about aircraft sales, the impact of U.S. sanctions and the ongoing S-400 air defense deal with Turkey.
How are discussions going at the show? What can you share about sales opportunities in the Middle East for equipment like the Su-57 and Su-35 figther jets as well as the S-400?
It’s a never-ending process. Air shows like Dubai Airshow give a splendid opportunity. It provides for platform for further discussion. So we continue different negotiation processes, meet up with our partners worldwide and discuss details, sign agreements. So it’s business as usual.
We’re hearing the United Arab Emirates continues to express interest in Russian equipment. What can you share about the progress on such talks?
We have laid down our proposals for the government’s perusal. So the ball is on the other side, and it’s up to the Emirati government to decide when and what to discuss next. So we are patient, we can wait.
What did you propose to sell to the UAE?
Everything. We are open, we are as much open as we can for supplies, for industrial partnership, for transfer of technologies. And whenever our partner wants to gather technology, we look at how much a partner can absorb the technology.
The UAE is very big on local production. Does that factor into your talks? Does it change how you approach initial proposals?
Yeah. It’s well-known that [an] Emirati company, [Tawazun Holding], owns certain shares of Russian Helicopters. So they’re involved already, involved as a shareholder. And of course they have great interest toward helicopter technologies.
The United States is also trying to sell equipment to the UAE. How do you balance the U.S. saying: “If you take Russian equipment such as the S-400, you aren’t going to get an advanced fighter like the F-35”? How do you offset the potential loss in capability for the UAE?
Every country has its own advantages. So our main advantage is we are a very reliable supplier. We never apply any political tags. Then we are ready to transfer technologies. And the last but not the least, what we propose to our customers is value for money. So if you compare Russian helicopters to Western helicopters, ours come at a cheaper price.
They may be not so much sophisticated in terms of electronics, but then electronics fail, especially in harsh conditions. Ours are reliable.
A good example, the U.S. purchased 70 Russian Mi-17s to be used in Afghanistan. And we are supporting [that] by [providing] spares and services through American companies, selling them spares. Because Mi-17 is quite resilient and reliable in Afghanistan, harsh conditions.
There are reports about Russia possibly selling the Su-57 to Turkey. Is that imminent?
There’s no such thing like selling Su-57, and we never had talks with Turkey on that specific item. There is a contract for delivery of air defense system S-400.
How's that going?
That has been delivered already. And officers undergo final stages of training. After training is completed, the system will be put on combat alert.
You touched upon this subject, aircraft. Turkey is very much focused on acquiring state-of-the-art aerospace technologies. They’re working on their own aircraft. [Turkey has plans to acquire the Su-57. Rostec is also holding preliminary discussions for Turkey to buy other aircraft, like the Su-35]. Why not? And the immediate interest was after the U.S. declared to cancel plans to supply the F-35. Then [Turkish] President [Recep Tayyip] Erdogan visited the Moscow air show, and he was keen to see Su-35 as well as Su-57.
There are reports Turkey plans to buy 48 Su-35s. Can you comment on that?
I'll be glad if this happens. I would be glad as a supplier.
Regarding the S-400, once those weapons are operational or when those missiles are operational in Turkey, how much Russian support would remain to help the country use the device?
Well, we are now going into the second stage.
Our first stage, that is a delivery of ready-made equipment, has been done already. So second stage, Turkey wants very much to acquire advanced technology. So we are now in the process of discussing what technologies they would like to acquire related to the S-400 system, what specific components and equipment they want to produce locally. So it’s a long and very sophisticated process of discussions. In the first place, technical discussions. So we are at this stage now.
Turkey is developing its own fifth-generation aircraft, the TF-X. When you’re talking technology transfer and things like that, would Rostec be interested in helping Turkey develop that?
We have had initial contacts. And what we explained to our Turkish partners, we need specs, like future aircraft what the thrust is going to be, what’s the weight is going to be. So starting from that point, we’ll look into what kind of engines do we have, and which one will fit their aircraft. Then we sit down and talk. So we need specs.
It may be either available Russian power unit engines, or they may set up their specs for future development of new engines. It can be as well joint development. But there is a question of market size. So before you start doing something, you look at the market. What is the market economy scale?
There have been talks at the show of many countries, such as Malaysia and Indonesia, possibly buying the Su-57 and the Su-35. Where are those talks at? What are you hearing from those countries?
We are at the initial stage of marketing this brand-new aircraft. The decision to permit sales of Su-57 came only recently, some half a year ago. It got this letter “E,” which means export — Su-57E. So it happened just half a year ago. It’s a recent development. So we are now free to propose to our partners.
It takes certain time before decisions are there. And every nation, they take options, which is better to make a procurement of, let’s say, another 20 or 24 standard, well-proven aircraft like Su-30 or Su-35. Or opt for four or eight next-generation aircraft. Which is of course much more expensive than previous generations.
But looking at the possibility of exporting the Su-57, serial production hasn’t truly begun. What’s the latest on this?
Yeah, it is now in serial production for the needs of the Russian Air Force. So we equipped certain units of the Russian Air Force with the Su-57 as a standard machine. Not as experimental; now as a standard machine. We have acquired certain experience how to use it, even in combat conditions. It was tried in Syria, and it performed very well in Syria. So we can offer it to our customers. And during the last air show in Moscow in August, we showcased the Su-57 for the first time actually.
Customers are always interested in cost. How much do these things cost? How does the Su-57 price compare to the F-35?
There are certain requirements for the fifth-generation aircraft. That is supersonic cruise speed, stealth capabilities, thrust vector engine, agility, mobility. There are certain technical requirements for avionics, for onboard equipment, guided equipment. So it fits to these technical requirements. It’s in the same league with the American F-35 or F-22 Raptor — similar technologies.
So with cost, is there a number you could share?
No idea, honestly. But it’s more expensive than the Su-35. That’s definite.
American sanctions like the Countering America’s Adversaries Through Sanctions Act have been in the news lately. What is Rostec doing to get around those sanctions, to still have business?
Let me start with my personal view on that, my personal impression. To me, sanctions that have started sometime ago in 2014 have long lost the initial goal — to be a political tool. It’s no longer a political [tool], it’s a tool of competition. Unfair competition. Because it’s used as an excuse to take the slice of a pie, to remove us from the market and to take over our market. And that’s it. Full stop.
I'll give an example. China has never taken any Crimea. China has nothing to do with Ukraine. And the United States is waging a trade war against China, much more severe than against Russia. So sanctions is not about politics. It's about seeing the danger, getting some excuse, putting the pressure to remove your competitor and to come in. That's it.
Now, how do we move on in present conditions? We just do what we ought to do. We do our business. And it’s up to the customer to decide whether to go ahead with the rest of the equipment or whether to switch to other suppliers. At the end of the day, it is decided by the quality of equipment, value for money. And even when India buys from Russia, it explains to the American government [that] India needs it. And then America cannot supply the same kind of equipment because quite obviously [the] Russian-made S-400 system is better than the American-made Patriot system.
This is all about quality of equipment at the end of the day. Of course transactions have become more difficult, initially. But we adjusted our systems with many nations, we switched to different currencies. That’s a rupee and ruble, when it comes to India. That’s renminbi, yuan with the Chinese, and again Russian ruble. We change the terms and conditions of payment, and that’s it. That’s the banking story. And the rest is all solvable. It’s all solvable.
Of course certain things and components we are not getting from the West. It has a minus, it has also a plus. It stimulated our local production and R&D [research and development]. We have done a lot of efforts to replace Western equipment by Russian-made equipment. We are now offering our customers systems that are totally 100 percent produced by Russia. In fact, this is a requirement of the customer.
Many nations say: “We don’t want any foreign-made equipment to be placed on this platform.” I ask them: “Why?” They say: “Because we fear that at a certain stage some other countries will stop supplying, and then we’ll have problems.” So this is a balanced story.
Of course we have changed our ways since sanctions first appeared. And if you look at the result at the moment, our arms export is very stable. It’s around the same figure, and we had some 6.7 percent of growth last year and registered a record high. And we plan to maintain the same level this year, same level of export. Our long-term planning, we’ll keep this level for years to come. We have a portfolio of order, some $50 billion worth of already hard contracts of purchased equipment.
And we are signing more and more contracts almost every day. Even here.