Economics of the AK-47


Economics of the AK-47


By Chris Solomon for Global Risk Insights

The Avtomat Kalashnikova year model 1947, better known as the AK-47 or the Kalashnikov, is one of the most widely used weapons in the world. A Russian assault rifle developed in the wake of the Second World War, the lingering myth that is was designed after the capture of Nazi Germany’s Sturmgewehr 44 is still up for debate.

Despite its age, the AK-47’s durability and ease of use makes it one of the world’s most popular and recognized weapons. Though not particularly accurate and limited in range compared to similar caliber weapons, the AK-47’s dominance is largely owed to the mass production and relative freedom from copyright restrictions during the days of the Soviet Union.

The weapon is produced at the Izhmash plant in Izhevsk, Russia. Izhmash and the Izhevsk Mechanical Plant formed a merger after Izhmash went bankrupt in 2012. As of 2013, the corporation is now reinstituted as Kalashnikov Concern (also called Kalashnikov Group). Despite Western-imposed sanctions, Kalashnikov Concern’s signature product is still highly profitable. Production in 2014 and earnings increased by 28% to $45 million. After buying shares from ZALA Aero and Euroyachting Rybinskaya Shipyard, Kalashnikov Concern is now expanding into drones and boats.

Kalashnikov Group is also in the process of rebranding the famous weapon as an instrument of security and counter-terrorism. The effort has largely been criticized by humanitarian groups as the arms company embarked on a marketing blitz.

Oxford professor Paul Collier’s book, Wars, Guns, and Votes, describes the cycle of arms stockpiling by African governments to safeguard against or fight off rebellions only to have poorly paid conscripts siphon Kalashnikovs from local armaments for illegal resale elsewhere. Small arms cannot be easily shipped off the continent, so they tend to stay local. This is one reason why countries with neighboring civil wars are also vulnerable to civil war themselves. Troubled countries make for a troubled region.

Poor governance is also considered in assessing the AK-47’s destructiveness. However, in Phillip Killicoat’s 2007 World Bank study, “Weaponomics: The Global Market for Assault Rifles,” he found that purchasing power parity (PPP) income measure was not so much an indicator of government efficiency but rather a sign of demand in the local market.

AKs in Africa

Though the illegal trade of Kalashnikovs has long been thought to have been unleashed into the developing world by the collapse of the Soviet Union, recent studies have shown otherwise. Conflict Armament Research, an organization founded by former UN monitors, has noted that the proliferation of small arms in Africa comes not from the former Soviet Union but from China, Iran, and Sudan.

Mikhail Kalashnikov, inventor of the ubiquitous AK-47. (RIA Novosti)

All too often, supplying weapons to bolster local governments results in the very instability the suppliers are trying to prevent. South Sudan, currently embroiled in a civil war, was the recipient of a sizable arms sale in the summer of 2014. Prior to the outbreak, China North Industries Corp. (Norinco) transferred 9,574 automatic rifles to the Sudan People’s Liberation Army (SPLA) for some $20 million.

China’s economic investments in South Sudan paid a price for the arms deal but, in the long run, cemented China’s role as a power broker in the country. As investment in resource-rich, impoverished African countries continues, the unchecked flow of small arms will hamper development.

The AK-47 has also appeared in the Central African Republic (CAR), though France is not a main supplier of the weapon. Military spending in the CAR was the highest in ten years (2.5% of GDP) before the start of the ongoing conflict there. CAR’s riches in diamond and gold resources also contributes to the violence. As France enhances security cooperation in Francophone Africa, the specter of the Kalashnikov’s role in lone wolf attacks at home as become elevated in recent years.

AKs in the Middle East

With the overlapping conflict in Syria and Iraq, the weapon has been a key component in the black market trade for the various armed groups. Following the collapse of Russia’s patron in Libya and a burgeoning partnership with Yemen, Russia facilitates the flow of small arms to Syria to back its only remaining ally in the region.

The Syrian government is not short on weapons, but rather on people to serve in its ever shrinking Syrian Arab Army (SAA). Syria continues to procure the weapons to strengthen the bilateral relationship. A variant of the Kalashnikov family, the AK-74M, has become exceedingly popular with the SAA and the opposing rebel forces. Following a high level military delegation’s visit to Russia in 2012, the AK-104 was soon allocated to the Syrian government’s security forces, as well.

Iraq, another resource-rich country, faces its own legacy regarding the Kalashnikov. During the US occupation, AK-47s were purchased by the US for Iraqi security forces from Jordan at $60 per unit. At the start of the conflict, 350,000 AK-47s were sourced in Serbia and Bosnia by private security contractors in Iraq. Later in the war, 110,000 AK-47s allocated for the Iraqi government were unaccounted for.

The weapon’s legacy in Iraq still endures with today’s sectarian violence. Iraqi government forces and Shia militia recovered the Baiji oil refinery from Islamic State.

Cause or effect?

The AK-47 alone isn’t to blame. Cuba, for example, utilizes the weapon for its military, but does not suffer from internal instability. The correlation appears to exist between poor governance, the availability of cheap weapons, the resource trap, and proximity to neighboring conflicts.

Regardless, the assault rifle’s longevity and abundance is all too apparent. The AK-47 and its variants continue to wreak havoc and have a long term negative impact on the security and economic failings of resource-rich states. This makes the Kalashnikov a key ingredient for disaster in the developing world.


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