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Maley is being allowed to use one republic, Udmurtiya, as his test bed for this policy. The republic is all behind him, for understandable reasons: no less than 86 percent of its industry is defense-related! Maley has invited Arab nations and others to invest in Udmurtiya to help implement his policy.

Much could—and should—be said about the consequences of Russian defense industry staking its hopes on the international arms trade. Not least among these consequences is what it implies for policies regarding transfer of dual-use technologies from the West. In my remarks in this paper, I have tried to look at the economic incentives for military conversion facing the individual firm. However, what makes sense for the individual firm may not make sense for the nation as a whole, or even for other firms. One of the social (as opposed to firm-level) costs of a policy of large-scale arms exports will be political restrictions, including restrictions on the transfer of dual-use technologies, to the Russian economy. A clear statement of what those costs might be, and who would bear them, would be useful in the current Russian policy debate.



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