Small, Minority-Owned Superpower

Two different actions came to my attention recently.

1. During the Bush administration, the Russian state-owned arms agency was sanctioned for supplying a massive amount of weapons (said to be more than three-quarters) to Syria.

2. During the Obama administration, the defense department entered into a contract that was eventually worth a billion dollars with a small, minority-owned business.

There is an odd connection between these two stories: The business officially classified as a “small business concern” and “minority owned” by the Obama administration IS the Russian government arms corporation, Rosoboronexport. The Obama administration had to lift the ban on dealing with this company (accomplished in 2010), then end the purchase of US helicopters for supply to Iraq and Afghanistan in order to buy Russian ones instead.

Note that the Obama administration considers an entity owned by the Russian Government to be “minority owned” so that it gets special treatment and special rates. There was, of course, no bidding process involved in this acquisition. I understand that the Russian government entity has just been removed from the “small business” list — but the Obama administration still lists the Russian government entity as “minority owned.” The NYT is even critical, though they state that the listing as a small business was only done “briefly.” Of course it was brief — two years ago, it was a sanctioned foreign government entity.

A little background, from Wikipedia: The Obama administration declared as “minority-owned” a business that was “set up by a Decree of the President of Russia and is charged with implementation of the policy of the State in the area of military-technical cooperation between Russia and foreign countries.” That doesn’t sound anything like my little businesses.

And the Obama administration declared as a “small business concern” this government corporation that:

  • Accounts for more than 90% of Russia’s annual arms sales.
  • Represents intellectual and production potential of Russian Defense Industrial Complex consisting of more than 1500 research institutes, design bureaus and manufacturing plants.
  • Has cooperated with more than 60 countries during its 50-year history.
  • Central headquarters in Moscow, representative offices in 44 foreign countries and in 26 major industrial regions in Russia.
  • India is major client, other leading partners are China, Algeria, Vietnam and Venezuela[1].

Of course, Wikipedia says nothing about any contracts between the US government and the Russian arms agency, noting mildly only that the sanction against Rosboronexport was lifted in return for Russia’s cooperation on a UN vote against Iran. (Rosboronexport, of course, had Iran as a client.)

Of course, this may not be a healthy topic to pursue: It seems that one reporter in Russia looking into them (Rosoboronexport, not the Obama administration) experienced “forcible suicide” from a stairwell window.

===|==============/ Keith DeHavelle