Opening Remarks at Meeting on Defence Industry Development
Opening Remarks at Meeting on Defence Industry Development
October 26, 2009,
Moscow Region, Reutov
Opening Remarks at Meeting on Defence Industry Development
PRESIDENT OF RUSSIA DMITRY MEDVEDEV: Colleagues, we are meeting today to discuss the defence industry’s development. The idea of holding this meeting came up during discussion of a number of issues during the military exercises in Kaliningrad. Some of those who I met with then are present here today too. We agreed to meet and discuss the different issues, first publicly, and then behind closed doors. I will outline what I consider the most important issues we will be looking at today.
Today, I visited NPO Mashinostroyenia [Military and Industrial Corporation MIC Mashinostroyenia open joint-stock company]. This is certainly one of the defence industry leaders and its workers have much to be proud of. Our armed forces use the products they have designed and developed on their own and in cooperation with others. But this does not mean that all is well and that other defence industry companies are in just as good a situation. Even here, of course, they are not without problems. This is why we want to analyse today the situation in Russia’s defence industry and the prospects for its development, and also examine specific measures that I hope will make the sector more competitive and enable us to develop new arms and new-generation military equipment.
As I said, it was our work in Kaliningrad and the number of serious issues raised there that incited us to hold today’s meeting.
I will outline the biggest problems.
First, we all know that a lot of money has been invested in modernizing and developing the defence industry in recent years. But I think the results so far do not measure up to our expectations. Unfortunately, the policy of ‘patching the holes’ is still in place and, to be frank, the sector has not achieved the goal of upgrading its technology to the latest standards. This directly affects the quality of products delivered to our armed forces and to markets abroad. You are all well aware of this situation. One of the solutions to this problem is to adopt a targeted federal programme for developing the defence industry. We will discuss this.
The second matter is very important. The heads of the relevant state agencies and the company directors need to take measures to bring down the cost of the goods the sector produces. This is a question of survival. The cost of arms and equipment should be such that the armed forces can make batch purchases rather than buying one item at a time. Prices should also be attractive for our partners abroad. This is particularly important. Many of our military goods are losing their attractiveness. The costs are such that it makes less and less sense to buy them. Cost is a crucial factor for our competitiveness.
Bringing down the cost is a complicated issue. Visiting NPO Mashinostroyeniya before, I spoke with the director about the fact that there is this huge, old and unwieldy infrastructure that needs constant investment. It is not even so much a question of upgrading the production modules as keeping the infrastructure running, because this takes money and energy and has an impact on the products’ costs. We need to find solutions to this problem. We cannot explain either at home or abroad that our enterprises cover 150 or 200 hectares in area and that we need to keep all of this running, and this is why our costs are so high.
Third, we need to improve the laws regulating state defence procurement. Procurement orders have been increasing from year to year and this is good. Defence procurement has more than doubled over the last five years. But we need now to lay down very clear rules and regulations on planning and placing state defence procurement orders. We need a system that will function effectively, avoid ambiguity, and give us effective oversight of the tasks to be carried out. Moreover, we need to attain greater coordination between the relevant state agencies and we need to boost their discipline and responsibility. We need a stringent result-based approach that also covers quality and timely delivery of arms and equipment. And there should be no difference in this respect between deliveries for the export market and deliveries for our own needs, for building up our own defence capability.
Fourth, the state defence procurement programme invests considerable funds in producing sophisticated weapons. The situation in this area has improved substantially since the 1990s, when practically all work ground to a halt. We all remember those years. This is a crucial issue for our country’s defence capability. But priority should go to genuinely promising new models and not be wasted on simply clinging to old products or developing goods that might not ever get used. This is also something we encounter.
The worst thing is when money gets wasted on modernising what is already outdated or is set to become outdated in the next few years. We often try to tell ourselves that these are promising models and so on, but we need to take a wider view.
Research and development work sometimes lasts not years but decades. Of course, we are talking about very complex undertakings, but even so this is an unacceptably long time. For obvious reasons this situation suits those who placed the orders, and every year they shift the deadlines for work to be completed, while the developers are happy with the share they get out of it and keep the situation going year after year.
Fifth, the strategic outlines for the sector’s future development have already been set: structural reorganisation of the armed forces will be complete in two months time.
The next task is more complex - providing the armed forces with modern arms and equipment - and this will require a greater effort from the defence industry.
I will not make commonplace statements. You all realise that the situation in the defence industry has a direct bearing on the lives of our soldiers and officers, especially in combat situations, which unfortunately can arise even in circumstances in which we could not have foreseen such a turn of events. But how can we plan strategy and tactics if our arms are inferior? We have made it our goal to modernise our armed forces’ arms and equipment by 2012. We need to make serious progress in this area and then keep the development going.
Finally, another obvious issue is that the quality of the goods our defence industry produces is vital for our country’s competitiveness on the global arms market. We cannot on any account lose the ground we fought so hard to win. This would damage the reputation of our arms, and thus our entire country’s reputation. As it is, our reputation is still quite good and our arms are seen around the world as effective and exceptionally reliable. We need to keep it this way.
Let’s begin work.
October 26, 2009,
Moscow Region, Reutov
Opening Remarks at Meeting on Defence Industry Development
PRESIDENT OF RUSSIA DMITRY MEDVEDEV: Colleagues, we are meeting today to discuss the defence industry’s development. The idea of holding this meeting came up during discussion of a number of issues during the military exercises in Kaliningrad. Some of those who I met with then are present here today too. We agreed to meet and discuss the different issues, first publicly, and then behind closed doors. I will outline what I consider the most important issues we will be looking at today.
Today, I visited NPO Mashinostroyenia [Military and Industrial Corporation MIC Mashinostroyenia open joint-stock company]. This is certainly one of the defence industry leaders and its workers have much to be proud of. Our armed forces use the products they have designed and developed on their own and in cooperation with others. But this does not mean that all is well and that other defence industry companies are in just as good a situation. Even here, of course, they are not without problems. This is why we want to analyse today the situation in Russia’s defence industry and the prospects for its development, and also examine specific measures that I hope will make the sector more competitive and enable us to develop new arms and new-generation military equipment.
As I said, it was our work in Kaliningrad and the number of serious issues raised there that incited us to hold today’s meeting.
I will outline the biggest problems.
First, we all know that a lot of money has been invested in modernizing and developing the defence industry in recent years. But I think the results so far do not measure up to our expectations. Unfortunately, the policy of ‘patching the holes’ is still in place and, to be frank, the sector has not achieved the goal of upgrading its technology to the latest standards. This directly affects the quality of products delivered to our armed forces and to markets abroad. You are all well aware of this situation. One of the solutions to this problem is to adopt a targeted federal programme for developing the defence industry. We will discuss this.
The second matter is very important. The heads of the relevant state agencies and the company directors need to take measures to bring down the cost of the goods the sector produces. This is a question of survival. The cost of arms and equipment should be such that the armed forces can make batch purchases rather than buying one item at a time. Prices should also be attractive for our partners abroad. This is particularly important. Many of our military goods are losing their attractiveness. The costs are such that it makes less and less sense to buy them. Cost is a crucial factor for our competitiveness.
Bringing down the cost is a complicated issue. Visiting NPO Mashinostroyeniya before, I spoke with the director about the fact that there is this huge, old and unwieldy infrastructure that needs constant investment. It is not even so much a question of upgrading the production modules as keeping the infrastructure running, because this takes money and energy and has an impact on the products’ costs. We need to find solutions to this problem. We cannot explain either at home or abroad that our enterprises cover 150 or 200 hectares in area and that we need to keep all of this running, and this is why our costs are so high.
Third, we need to improve the laws regulating state defence procurement. Procurement orders have been increasing from year to year and this is good. Defence procurement has more than doubled over the last five years. But we need now to lay down very clear rules and regulations on planning and placing state defence procurement orders. We need a system that will function effectively, avoid ambiguity, and give us effective oversight of the tasks to be carried out. Moreover, we need to attain greater coordination between the relevant state agencies and we need to boost their discipline and responsibility. We need a stringent result-based approach that also covers quality and timely delivery of arms and equipment. And there should be no difference in this respect between deliveries for the export market and deliveries for our own needs, for building up our own defence capability.
Fourth, the state defence procurement programme invests considerable funds in producing sophisticated weapons. The situation in this area has improved substantially since the 1990s, when practically all work ground to a halt. We all remember those years. This is a crucial issue for our country’s defence capability. But priority should go to genuinely promising new models and not be wasted on simply clinging to old products or developing goods that might not ever get used. This is also something we encounter.
The worst thing is when money gets wasted on modernising what is already outdated or is set to become outdated in the next few years. We often try to tell ourselves that these are promising models and so on, but we need to take a wider view.
Research and development work sometimes lasts not years but decades. Of course, we are talking about very complex undertakings, but even so this is an unacceptably long time. For obvious reasons this situation suits those who placed the orders, and every year they shift the deadlines for work to be completed, while the developers are happy with the share they get out of it and keep the situation going year after year.
Fifth, the strategic outlines for the sector’s future development have already been set: structural reorganisation of the armed forces will be complete in two months time.
The next task is more complex - providing the armed forces with modern arms and equipment - and this will require a greater effort from the defence industry.
I will not make commonplace statements. You all realise that the situation in the defence industry has a direct bearing on the lives of our soldiers and officers, especially in combat situations, which unfortunately can arise even in circumstances in which we could not have foreseen such a turn of events. But how can we plan strategy and tactics if our arms are inferior? We have made it our goal to modernise our armed forces’ arms and equipment by 2012. We need to make serious progress in this area and then keep the development going.
Finally, another obvious issue is that the quality of the goods our defence industry produces is vital for our country’s competitiveness on the global arms market. We cannot on any account lose the ground we fought so hard to win. This would damage the reputation of our arms, and thus our entire country’s reputation. As it is, our reputation is still quite good and our arms are seen around the world as effective and exceptionally reliable. We need to keep it this way.
Let’s begin work.