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In an earlier February 1, 2006 report, DID noted that a $4 billion arms sale was brewing between Algeria and Russia involving fighter aircraft, tanks, and air defense systems, with the possibility of additional equipment. Those options would appear to have come through, as numerous sources are now reporting that a high-level Russian delegation in Algeria has closed $7.5 billion worth of arms contracts. The Algerian package would be post-Soviet Russia’s largest ever single arms deal, and compares to annual Russian weapons exports to all customers of $5-6 billion per year over the last couple of years.

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Reuters South Africa quotes Rosoboronexport chief Sergei Chemezov as saying that “Practically all types of arms which we have are included, anti-missile systems, aviation, sea and land technology.” Reports regarding the exact composition of the deal vary, and many don’t add up when measured against a $7.5 billion total. DID has found reports that seems closer to the mark based on the package’s value, however, and the structure of the deal itself and Algeria’s past pattern of arms acquisitions are highly consequential and so worth discussing.

So, too, are recent developments, as Algeria’s complaints over weapon quality are causing something almost unheard-of in the global arms market: a refund request. The rumors are flying. What’s going on? Could a large chunk of Russia’s arms order book be in jeopardy? What’s really behind it? And how does this tie in to larger industrial issues for Russia’s arms industry, as shown in contracts like the Gorshkov carrier refit? DID explains, as the MiG-29 deal crashes, and the ripple effects begin stalling other elements of the arms package. What has happened to Algeria’s delivered MiGs, and could RAC MiG still pull out a deal?

• Detailing the Deal: The Algerian Package [updated]
• Structuring the Deal: Anatomy of a Euro Squeeze Play
• Updates & Developments [updated]
• Appendix A: Algeria’s Appetite for Advanced Arms
• Appendix B: Russia’s Arms Industry Woes
• Appendix C: Additional Readings [updated]

Get inside the machinations of this international arms deal, which is revealing about the state of the Russian defense engineering industry. The rest of this article highlights:

• The evolving components of a Russian arms package: MiG-29SMT and SU-30 fighters, Yak-130 Mitten trainers, AT-13 Metis-M and AT-14 missiles, M1 Tunguska gun/missile systems, T-90S tanks, MI-24 hinds and more
• 9 photos of the purchased defense products
• Payment terms that include the development of Algerian oil and gas resources by Russia, and why that deal is geopolitically significant
• Other Algerian arms purchases from Russia

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