Regarding the F-22 discussion, it's irrelevant. The most likely enemy are Chinese fighters, Mirages, the occasional F-16, Su-27, and of course numerous MiG-29 of different versions. Except for Iran maybe, which will be buying Sukhoi's. And Syria would also have to deal with Israeli fighters, so that's why it want more than just Fulcrums. But eh, seems they're not getting any MiG-31 or Su-30, so who knows. Imagine the MiG-29, M2000, Israeli F-16 or F-15, Su-27 as your enemy. You notice anything? They're all equipped with off-boresight targetting with highly agile IR, you'd want TVC then. You can't get stealth, and besides on a non-wartime QRA visual ID is required... how will you do that from BVR? ( no need to answer)
The MiG-35 is an improved MiG-29 for the export market, primarily for India, but consider this: "SMT upgrades not good enough, M/M2 too close to competitors, you know what, here's the MiG-35.... see the number, it's brand new, just as capable as a Su-35 or F-35, and it has TVC. It's even better than anything the Americans can offer you *** see disclaimer. Ow the USA wouldn't sell to you? But you're not interesting in MiG-29M/M2, ow okay, you want Flankers instead, can you afford it, no? Here's the MiG-35. Ow wait, you can afford it, can you assembly them yourself? No? Let's upgrade your MiG-29s to SMT standard, or wanna swap planes? Ah, your neighbour has got those... well, what about the MiG-35 then, did I mention it has TVC!"
Russia is upgrading their Fulcrums to SMT or less comprehensive versions. It has more than it needs. And before the -35 would have entered Russian service, the Flankers are upgraded with A-S capability, bombers will have better stand-off and precision weapons. Even the MiG-31 are fitted with more A-S capability. So upgraded Fulcrums makes more sense. Especially with the T-50 coming up.So yes, funding is low and slow, especially since MiG has made sure it faces almost no competition in Fulcrum upgrade market, than in new fourth generation aircraft. However you don't need that much funding, because you can lend so much from earlier M/M2 projects, SMT, and the Zhuk radars are developed anyhow.
My view on the "blown sales" nonpilot pointed out:
Austria: as far as I know, no RFP was issued to the Russians, which basically means you can't bid. They didn't want Russian, besides no MiG-35 back then.
Algeria: Russia has many MiG-29s, it is upgrading them with the SMT package. They are cheap, especially when Russia takes back your old MiG-29s. I saw one source as quoting 1.5 billion for 50 aircraft, complete package, before the option of taking back old aircraft was discussed.. That's probably cheaper than new-built MiG-29Ms, and the SMT has better range as far as I know, which Algeria would need.
Poland: No MiG-35 back then. I think Poland couldn't have overhauled/upgraded their MiG-29s with anyone other than MiG itself. Would you buy from them again then. And yes, of course it wants to break away from Russia. It's a NATO member. All the compatability issues would need to be solved (again).
Yemen: Yemen is not that wealthy. They are SMT upgrades of their existing fleet as far as I know?
India: No they wouldn't because it's a lengthy bureaucratic process with a bid. If they stretch it long, the USA (new dev F-16s, Super Hornets, and for future F-35 possibility) and France (M2K production stopped, oferring Rafale now?) start offering more advanced aircraft. And that's even before bidding has begun. When bidding begins, I wouldn't be surprised if you see all parties revising their offers. But India needs a combat aircraft, not a (dog)fighter, so I don't think they will ultimately care about the TVC (if they're smart they put that Zhuk-MAE in, and offer it in a late batch or retrofit program for the Flankers currently on order). However because of the commonality with the K/KUB of the Navy, and previous MiG-29 experience in both IAF and HAL, it has a good chance! But because Russia is selling to China, and India is closening its ties with the west, I would put my money on the yanks. India making same mistake as Pakistan did...maybe?
But I can give you this one:
Venezuela: by offering the M or SMT, they put themselves out of the selection because it was clear (at least to me) that Chavez could afford some good planes and wanted the best. They lost to Sukhoi. Of course, Rosoboronexport is selling them. I don't know if Sukhoi/KnAAPO has better ties with the state export company than the new RAC MiG has. But I wouldn't be surprised! Anyway, would the -35 have been available, it would have made a good chance. Even the option of second hand Su-27 was considered, because it was not sure they could get the new Flankers.