The Russian and Russian-backed separatist incursion into Crimea that has led to the current conflict in Eastern Ukraine has dominated the Eastern European and Russian markets for many businesses – including Security. Until 2014, when the incursions happened, the old security cries from the Cold War had become no more than a whisper.
However, since 2014 when the word “security” is used in the same sentence as Russia and Eastern Europe, the old Cold War connotations have once again crept back in and this has only been reinforced with Russia’s more aggressive stance in sending out long range military air patrols and naval exercises, as well as unveiling new Tanks at the traditional May Day parade.
So what of the Russian security market?
According to the annual Security and Safety Technologies forum (TB Forum) held in Moscow, the Russian security market is expected to grow. But is it? What influences it? What are the issues?
Russia, as a market for those who operate there, is complex and time consuming and when looking from the outside trying to understand the market can be daunting.
The economic crisis in Russia, caused by the global oil price drop, Putin’s increasing alienation from the West over Ukraine and a large number of internal issues have affected many segments of its physical security market.
The security market in Russia is closely connected with sectors such as construction and oil and gas, as well as the private and commercial sector and anything that influences growth in these areas will have a commensurate impact on the Russian market.
So what is the TB Forum view of where the security sector is going? According to their research they believe the public sector will be the greatest contributor to the growth of the physical security market in Russia. This started in 2009 with an increasing number of federal, commercial, and oil and gas projects.
There has been an effect through international sanctions on many of these projects, but the Russian government is continuing to spend on in country capital projects. For example, the government is reporting that it will spend around 10.5bln rubles ($227m) on new stadiums across the country as it prepares to host the 2018 FIFA World Cup.
At time of publishing, the crisis in FIFA has had no impact on this. As sport traditionally transcends political issues it is likely that, despite the Ukraine crisis, international participation and support in preparation for the World Cup will remain.
Before the Ukraine crisis, video surveillance and access control were the most dynamic segments of the Russian electronic security market, with compound annual growth rates of 13 percent and 7 percent. Part of this growth was fueled by investments in the 2014 Winter Olympic Games in Sochi, Universiade 2013 in Kazan and APEC Summit of 2012 in Vladivostok.
The IT security market grew by up to $78m before the current crisis and domestically the Russian government has issued a decree to develop capability internally rather than rely on imports. This is not just in the electronic and security sectors but across the board. It is expected that internal investment in Russian technologies will increase.
As the threats in Russia increase and develop there is also the ongoing need for the replacement of older electronic security equipment in many of the State-owned Russian conglomerates.
The Russian economy generally is improved through stronger ties between Russia and China, and Chinese growth impacts positively in Russia.
According to UK Trade and Industry figures the Russian economy grew by 1.3% between 2010 and 2013 but this is predicted to fall due to the global economic position and the impact from international sanctions over Ukraine and Crimea.
However, within the security market the development trends that are expected are:
- Integration of security sub-segments (video surveillance, access control, intrusion detection).
- Movement from analogue to hybrid solutions and further network-based systems.
- Migration to IP brings hardware and IT distributors and system integrators all together in the distribution chain.
- Increasing number of new vendors in video content analytics, network cameras and IP video surveillance software markets (high potential in Russia).
- Greater “Russianisation” of currently imported technologies.
Though this a quick synopsis of the current security market vertical, it is wider internal politics and external politics that will have a greater influence on where the market will go, rather than technological development or trends.
The internal factors influencing the Russian domestic security market hold true with other areas around the globe. Russia’s officials have not yet found an effective approach to maintaining domestic security—one of the most basic functions of government.
In a report first published in The National Interest, Dimitri K. Simes and Paul J. Saunders highlighted a number of factors. These generally fall into the domestic terrorist threat, the state of the Russian domestic security services, corruption and the rule of law.
The Russian domestic terrorist problem is greater than many are aware. Its vast geographic size combined with historical religious and ethnic diversity make Russia a melting pot for home grown terrorism. As we hear from around the world, a lot of Russia’s domestic terrorism stems from Muslim minority states within the country.
Russia has over 10 million Muslim citizens and though the vast majority are moderate and peaceful, many, especially in the North Caucasus, resent Russian rule. Much of the current activity comes from deep historical roots, from people who remain isolated and oppressed in the poorer areas where tribal communities exist in a similar way to those in the North West of Pakistan. Arguably, Russia’s domestic terrorism problem may be worse than in Pakistan as Moscow can’t risk using (or tactically permitting) armed drone attacks in its own territory.
Contrary to Western conventional wisdom, Russia is not a police state. The Russian government imposes significant limits on civil liberties, but generally permits free movement. Widespread restrictions on travel inside Russia would both violate the country’s existing laws and provoke destabilizing opposition.
Likewise, Russia’s electronic surveillance capabilities are less extensive than generally recognized due to limited funding and shortages of advanced equipment. President Putin may have been only half joking when he said at a press conference in 2013 that he envied President Barack Obama’s domestic surveillance.
Like almost every other problem in Russia, the terrorism challenge is magnified by pervasive corruption. The Simes and Saunders article describes this as something “that turns roadside checkpoints into tollbooths and neighborhood sweeps into shakedowns. Those who can pay often find a way through restrictive security measures.”
The final element to some of Russia’s domestic issues revolves around its investigative agencies. In many cases they just don’t work that effectively. With conviction rates in Russian courts reported to be as high as 99 percent, giving a near certainty that anyone arrested will go to jail, why waste time and effort on detailed investigations to produce unnecessary evidence?
Further to criminal investigations, Russia’s security services rarely employ pro-active techniques that have become both common and effective elsewhere. Proactive operations to trap individuals with suspected sympathies to terrorism or organized crime simply don’t happen through fear that Russia’s police and security agencies could face significant public backlash if they tried the same tactics; especially based on an anonymous tip.
Alongside Russia’s domestic woes we are seeing a resurgence of a bombastic Russia on the international stage. Rather than give concessions to ease sanctions, the Russian Government’s sabre rattling has grown and is returning to what was seen during the Cold War.
[su_button url=”https://www.securitynewsdesk.com/newspaper/” target=”blank” style=”flat” background=”#df2027″ color=”#ffffff” size=”10″ radius=”0″ icon=”icon: arrow-circle-right”]To read the full Regional Focus in the SND13 Newspaper click here[/su_button]
