23 May 2004 15:59
Russian TV examines prospects for military-industrial complex
Russian arms exports have grown significantly over the past few years, says a report on Russian NTV Mir's weekly
magazine "Personal contribution". Despite this, says the report, the Russian defence industry, which employs
2.5m people, faces an uncertain future, and will have to finance new projects if it is to continue to perform well on
international markets. The report also examines the problem of domestic defence procurement and the way the defence
industry is being restructured, and briefly looks at how two defence enterprises in St Petersburg are coping with the
need to modernize. The following is the text of the report broadcast by Russian external TV service NTV Mir on 22 May.
Subheadings added editorially:
[Presenter] Who does Russia belong to now? That is the name of a joint project by "Personal contribution"
and the Kommersant-Vlast magazine. The first topic is the military-industrial complex, which has had a golden time in
Putin's [first] four-year term. Global instability, wars and terror are stimulating a growth in exports of Russian
arms and military technology. Economic growth and high oil prices have significantly increased the domestic defence
order.
Here reporting on the renaissance of the military-industrial complex is Ilya Zimin.
[Vladimir Putin, archive footage from Nizhniy Tagil on 14 July 2000] There are no weapons in the world better than
Russian ones.
Putin's comrades in control
[Correspondent] The arms market is the stage where agents of the Russian special services play the role of business
patriots. Having become experts on the trade in Russian weapons, two former intelligence officers are in charge of the
military-industrial complex. Andrey Belyaninov controls the defence order, and Sergey Chemezov all the exports.
[Ilya Klebanov, presidential plenipotentiary representative for the Northwest Federal District] This was a very sound
personnel decision.
[Correspondent] One doesn't trust billions to strangers. The new commanders are the president's
comrades-in-arms. They worked with him in the intelligence service in the German Democratic Republic.
[Klebanov] They will complement each other very well in these two key departments.
[Correspondent] For the first time the volume of exports was on a par with the defence order for Russia's own
armed forces. The money in question is 5bn dollars. Andrey Belyaninov is responsible for this money. He has already had
experience of the export issue [He was previously director-general of Rosoboroneksport].
[Andrey Belyaninov, director of the Federal Service for the Defence Order] They are trying to force us out of our
markets.
Industry reform
[Correspondent] Now the question of which enterprises will survive, having received the state defence order, depends
on him.
Russia inherited a horrible military-industrial monster as a legacy from the Soviet Union. The Yeltsin era saw not
only major privatization, but also the beginning of reforms. These reforms continued under Vladimir Putin. But he made
it clear that officials are trying to regain lost control of the sector.
Today the military-industrial complex comprises 1,700 firms and enterprises scattered from Kaliningrad to
Vladivostok. More than half are bankrupt if judged by Western criteria. The sector employs 2.5m people.
The plan is to dispense with what is superfluous, and if not to overtake the USA, then to occupy second place. The
reform was written by [then] Deputy Prime Minister Ilya Klebanov.
[Klebanov] Out of four plants of the same type the idea is to leave one, which will be part of some sort of holding,
a compact, flexible holding.
[Correspondent] Under an old Soviet brand name, behind the back of Lenin [statue] in St Petersburg, work is being
conducted on high technology. The award-winning Leninets plant is an example of a western corporation. A third of
production is for military purposes, the rest for civilian.
[Mikhail Minayev, director of the experimental plant of the Leninets holding] To find milling-machine operators and
lathe workers to work on a plant that is 20-25 years old is completely unfeasible. The only way is a technological
overhaul.
[Correspondent] Leninets has an aggressive management. They make money themselves and do not pester the government
for funds. They represent an advanced type of defence industry manager.
[Minayev] It shouldn't be all about the defence industry. There should also be a civilian or market element.
[Correspondent] Ilya Klebanov is a child of the garrison. His father flew fighter planes, threatening capitalism. The
son has become an ideologue of reform, putting forward a new export system. Instead of three selling companies, which
buffeted each other, dumping on the world market, a monopolist was born.
[Klebanov] The initiators of this project were really given a hard time. But the initiators didn't pay
attention. A single company was set up. Now in the course of the last four years the volume of weapons exports has gone
up three times.
[Correspondent] Each year Russia exports 50-60 military planes, one or two ships, more than 100 tanks and a 100
anti-aircraft complexes. However, the domestic armed forces are on hunger rations. This year the military promise to buy
just six ballistic missiles, one bomber, six pieces of space apparatus, 15 tanks, five fighters and one strike
helicopter.
The military-industrial complex has gone from being the forgotten stepson to being the favourite son who is expected
to bring hard currency and jobs.
[Konstantin Lantranov, special correspondent of Kommersant-Vlast] The state has effectively moved from the sale of
defence enterprises to a still slow and covert nationalization of them. This is beautifully illustrated by the
helicopter holding which is being formed by Rosoboroneksport.
[Correspondent] Investing in the production of a new strike helicopter, the government plans to take a private
enterprise into a state holding.
Instead of people there are machines. Metal is cut with millimetre precision. This modern shop floor, the best in
Europe, is the boast of Baltiyskiy Zavod. The former defence giant left the state and ended up in private hands.
[Oleg Shulyakovskiy, director-general of Baltiyskiy Zavod] There are countless examples where state firms went under.
The same is true of private companies. That is not the point. The point is how effective the owner is.
[Correspondent] The struggle for a big Chinese contract is being called an industrial war. Two private giants,
Baltiyskiy Zavod and Severnaya Verf, have joined battle on the Neva over two destroyers, and, in essence, for the
loyalty of the state officials, who allocated the order.
[Shulyakovskiy] What is the state? It is just this or that official. Today it is this one, tomorrow another. And so
on. Because of this they have started to say there are no rules, no proper, long-term, clear and simple rules.
[Correspondent] Although sales peaked last year, these were old reserves from the arms race. Modernized Russia
aircraft are still cheaper, and that's why they sell like hot cakes.
But if the new projects are not paid for, the banquet will end.
[NTV Mir] |
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