Russian Arms Exports: A Strategic Growth Play in a Multipolar World

The global defense landscape is undergoing a seismic shift as geopolitical fragmentation fuels demand for non-Western military solutions. Amid escalating tensions and sanctions, Russia’s defense industry is positioning itself as a key beneficiary of this new reality. With a focus on high-demand markets in Latin America, Africa, and Asia, and backed by combat-proven technologies like the Su-57E stealth fighter and advanced drones, Russian arms exports are emerging as a compelling investment theme.

Geopolitical Realignment: A Tailwind for Russian Defense

Western sanctions and the Ukraine war have not stifled Russia’s defense ambitions—they’ve redefined them. While global arms exports fell by 92% from $14.6 billion in 2021 to under $1 billion by late 2024 (due to redirected resources for the war effort), Russia has strategically pivoted to sanction-resistant markets, leveraging its ability to offer cost-effective, combat-tested systems.

Countries in Africa, Asia, and Latin America are increasingly turning to Russia to avoid reliance on Western suppliers. Algeria, for instance, has become Russia’s flagship client, securing the first export deal for the Su-57E stealth fighter, a fifth-generation platform rivaling the U.S. F-35. With 14 aircraft ordered and deliveries beginning in 2025, this deal underscores Russia’s ability to penetrate high-value markets despite geopolitical headwinds.

The Su-57E: A Game-Changer in Combat Provenance

The Su-57E is not just a fighter jet—it’s a geopolitical weapon. Its stealth capabilities, advanced AI-driven avionics, and payload versatility make it ideal for nations seeking to modernize their air forces without aligning with NATO. Crucially, its performance in Ukraine has been battle-tested, offering tangible credibility in a market where trust in unproven systems is scarce.

Rostec, Russia’s state-owned defense conglomerate, stands to profit handsomely from this. With Su-57E production ramping up and joint ventures planned in Southeast Asia (e.g., Malaysia and Indonesia), Rostec’s military aircraft division is primed for growth.

Diversification into Drones and Helicopters: Expanding the Playbook

Russia isn’t relying solely on high-end jets. Its drone portfolio, including the Orlan-10E (reconnaissance) and Kub-E (loitering munition), is gaining traction in regions like Latin America. At the 2025 LAAD exhibition in Brazil, Russian drones were showcased as affordable alternatives to Western systems. Meanwhile, helicopter partnerships—such as a proposed joint venture in Brazil to produce Mi-series choppers—tap into demand for cost-effective troop transport and combat support.

This diversification strategy is critical. Drones, in particular, offer high margins and rapid scalability, with global demand surging as nations build hybrid warfare capabilities.

Why Now? The Investment Case for Rostec

1. Sanction-Proof Markets: Russia’s focus on Africa, Asia, and Latin America avoids the volatility of Europe and the Middle East.
2. Su-57E Pipeline: With Algeria as the first of many potential buyers, production orders could fuel multiyear revenue growth.
3. Drone Growth: The global drone market is projected to hit $22 billion by 2030, with Russian systems filling gaps in markets shunned by the U.S. and EU.
4. Rostec’s Ecosystem: Beyond aircraft, Rostec controls electronics, armored vehicles, and missiles, creating cross-selling opportunities.

Risks and Mitigations

• Production Constraints: Su-57E output is limited by Russia’s prioritization of domestic needs. Mitigation: Rostec’s partnerships for localized production (e.g., in Malaysia) could alleviate bottlenecks.
• Sanctions: Western bans on Russian tech transfers persist. Mitigation: Focus on non-sanctioned markets and joint ventures to bypass restrictions.

Conclusion: A Strategic Bet on Multipolarity

The defense sector is no longer a Western oligopoly. As nations seek autonomy from U.S.-led systems, Russia’s low-cost, proven solutions are filling a critical gap. Rostec, with its Su-57E flagship and drone/helicopter diversification, is uniquely positioned to capitalize on this trend.

For investors, this is a high-conviction, long-term play. With global defense spending projected to grow at 3–5% annually through 2030, Rostec’s exposure to emerging markets and combat-tested tech offers asymmetric upside.

Act Now: Allocate to Rostec or related equities—before the geopolitical realignment accelerates.

This analysis is for informational purposes only. Investors should conduct due diligence and consult with a financial advisor.