The EU says its sanctions against the Kremlin in the light of Russia’s intervention in Ukraine could involve suspending some military co-operation.

The ambiguities of national positions and limitations of Western leverage aside, there is one particular area which should immediately be on the table for discussion - exports of military equipment and military technology transfers that are taking place between some EU countries and Russia.

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A few years ago, the Baltic states were considered “hysterical” for raising objections to the French agreement to sell Moscow its state-of-the-art Mistral-class amphibious assault (also known as “projection and command”) ships.

The deal came soon after the Russian invasion of Georgia in 2008 - a conflict which unnerved many Nato Allies.

It not only boosts Russia’s “power projection” capabilities, but also involves transfer of some sophisticated military technology that Russia will be all too glad to incorporate into developing its domestic defence industrial base and future military capabilities.

A powerful signal was sent to everyone concerned: no matter what the Kremlin is up to in its immediate neighbourhood and beyond, no matter how much selling arms to it upsets allies, and no matter what are the long-term strategic consequences of such policy, earning a buck (billions, actually) is a higher priority.

The Mistral, as it turned out, was also - figuratively speaking - an ice-breaker.

Other projects and deals followed, such as joint Franco-Russian development of a new generation of Infantry Fighting Vehicles. Thales, a French electronics and defence technology giant, is also helping to equip the Russian armed forces with thermal-vision, or night-operations, capability.

As recently as last month, Dmitri Rogozin, Russia’s first deputy prime minister in charge of the defence industry, declared a new era of Franco-Russian military co-operation, involving joined competences and deeper exchange of information.

Germany is also expanding its military exports to Russia.

Its Federal Security Council, headed by the Chancellor, has made a habit of dolling out export permits left and right to sending German-made military equipment to countries which have dubious human rights records and which could potentially misuse the materials to suppress domestic dissent or to stir up regional conflicts.

Russia is among them - getting up to 500 export permits in 2011 alone, according to the Military Equipment Export Report.

One recent sale is particularly worrying: German authorities have agreed to sell to Russia a state-of-the-art brigade-level training facility, which is currently available only to the most technologically advanced Western nations.

For Rheinmetall Defence, one of Germany’s largest producers of military equipment, the order is worth over €100 million.

It will enable Russian brigade-sized units to test combat readiness for combined-arms operations, using Rheinmetall equipment to simulate realistic battlefield conditions and assess troop and staff performance.

This will be not a step, but a leap forward for the Russian armed forces and their capability to conduct large-scale conventional military operations.

Putin’s logic

While modest in financial terms next to the French Mistral contract, the German deal constitutes a significant transfer of technology, with sensitive computing and communications hardware and software ending up in the hands of the Russian military - to be studied, copied and built-upon in the future.

It means that for Germany - but also to France, Italy, and other Western nations that sell military equipment to Russia - Moscow is a partner, despite its behaviour in Georgia and now in Ukraine.

And a lucrative partner at that.

It is helping to keep European production lines and shipyards humming, jobs intact - not something to turn a blind eye to when times are tough economically. Not least when politicians want to get re-elected in constituencies which host major defence industry facilities.

There is perhaps an underlying assumption that military equipment sales to the Kremlin might bring about a measure of influence over its behaviour, which the selling side may choose to leverage at critical points in time.

But Russian leader Vladmir Putin’s logic is different: if the Georgia war did not put a dampener on military technology transfers, why should occupying a part of Ukraine be any different?

He seems to think the military co-operation is too valuable to Berlin and Paris for them to take tough action. And he may be right.

It poses the question: who is influencing whom at this stage, the producer or the client?

Sanctions

Enter the EU. Perhaps, the situation will start changing if sanctions to Russia are really put on the table.

It would be obvious and natural to include terminating any military exports and armament co-operation as well as cutting any transfer of military (or even dual-use technology) to Russia into the overall package of sanctions.

But this might prove to be a rather naive expectation, given how much the fragmented European defence industry needs cash from sources other than the dwindling defence budgets of Nato and EU nations.

Do EU countries not see that the current situation is, slowly but surely, contributing to the erosion of Western technological dominance in military affairs? That it is strengthening an increasingly aggressive geopolitical rival and deepening regional military imbalances?

In the long term, there will be costs.

The ambition to have more integration in EU countries’ military-industrial complexes - both on the demand and on the supply side - will remain hostage to national interests and fears, diminishing the prospect of the EU ever emerging as a powerful entity in international security affairs.

Some Nato and EU nations bordering Russia will be increasingly driven to trust less those allies who sell weapons to Russia and to rely even more heavily on the US as a security guarantor.

Meanwhile, if push comes to shove, Nato planners will find themselves facing a far more capable military rival.

The law of holes says that if you are in a hole, you should stop digging.

But do Paris and Berlin even realise they are digging a hole, both for themselves and their allies?

The impact of the current crisis on their military exports, armament co-operation and technology transfer policy vis-a-vis Russia will give an answer to this question.

Tomas Jermalavicius is a research fellow at The International Centre for Defence Studies (ICDS), a Tallinn-based think tank. Kaarel Kaas is editor-in-chief of Diplomaatia, an Estonian journal of international affairs published by ICDS