One consequence of COVID-19 is that many arms export deals will likely be postponed or canceled. As an example, India's defense industry has suggested that India divert funds from arms imports to local industries, 40% of which could soon face bankruptcy.
economictimes.indiatimes.com/news/defence/g…
economictimes.indiatimes.com/news/defence/g…
That was from an Ernst & Young study that said that more than 40% of India's small and medium-size defense companies face closure within 3 months absent government action. In addition, India's federal Ministry of Finance has reduced defense spending. 2/
janes.com/article/95431/…
janes.com/article/95431/…
It seems highly likely that India and other large arms importers will have to delay or cancel many of their existing import contracts and future tenders. Of course, this would place greater pressure on arms exporter governments like Russia to support their defense companies. 3/
I wouldn't be surprised if India delays or reduces the number of S-400 battalions it receives, as a result. For other countries, the risk of angering the US and possibly getting slapped with CAATSA-related sanctions is even more problematic with the global economic downturn. 4/
This is already the case with Turkey, which isn't using its S-400 regiment (even though it is technically ready) because of economic needs and concerns related to CAATSA. 5/
Even though the US has employed CAATSA haphazardly, reducing its deterrent effect, COVID-19 has now reversed this because few countries can risk any kind of economic retaliation. Not to mention, many countries may need US financial support to recover. 6/
The threat of CAATSA was enough to stop Indonesia from completing its purchase of 11 Russian Su-35 fighters before COVID-19, but Egypt apparently continued with its purchase of Su-35 fighters despite threats from the US. Will that deal still go through? 7/
India isn't at significant risk for CAATSA-related sanctions, but many other countries will likely view the prospect of CAATSA amidst COVID-19 as too risky, which will almost certainly hurt Russia's ability to sign new arms contracts this year and next year. 8/
And if India seriously considers the recommendation from its defense industry, that would likely mean cutting some of its arms deals with Russia (>$15 billion over the past 3 years). India has accounted for a large % of Russia's new arms export contracts since October 2018. 9/
So for Russia, and other arms exporters, its defense industry will likely simultaneously face two serious challenges with reduced domestic defense spending (particularly for procurement) right as many export contracts are canceled or delayed. 10/
Oh and another thing to mention. Many of Russia's arms customers are hydrocarbon exporters who are highly dependent on oil prices (including Russia). So the collapse in global oil prices is just one more way COVID-19 threatens to hurt Russian arms exporters. 11/
