In the 2014 year, Russia may receive less export earnings from the sale of weapons. According to Anatoly Punchuk, Deputy Director of the Federal Service for Military-Technical Cooperation, since the beginning of the year, Russia's military exports amounted to 9,8 billion.
For comparison, last year Russia set a record by selling abroad weapon and military equipment worth 15,7 billion. Previously, the management of the FSMTC predicted that the figures for the current year would be no less than the previous one.
It can be assumed that the reduction of export earnings this year was influenced by the sanctions imposed by the West, including in relation to defense enterprises. In particular, restrictive measures touched such giants of the Russian defense industrial complex as Almaz-Antey, Kalashnikov Concern, Izhmash, Basalt, Uralvagonzavod and Instrument Design Bureau.
Another factor working against our exporters was the limited access of domestic banks and corporations to Western financial markets.
He draws attention to the fact that in the face of a worsening price situation on the global energy markets, the export earnings of Russian gunsmiths are of particular importance from the point of view of filling a fairly thinner budget. Not to mention the fact that in the modern world, the supply of weapons and military equipment contributes to the spread of geopolitical influence and the promotion of Russia's national interests as one of the two leaders in the elite club of "security exporters".
Given that many contracts are being closed at the end of the year, 9,8 billion dollars over nine months is a normal figure. At the end of the year, our arms exporters may well repeat the last year’s record, said Vladimir Shvarev, deputy director of the Center for Analysis of the World Arms Trade.
- At the moment, I have no reason to assert that the volume of sales of Russian weapons in terms of value will decrease.
"SP": - Is it possible to predict how the ban on the transfer of dual-use technologies to the Russian Federation, as well as sanctions against the leading defense enterprises, will affect our export potential? How self-sufficient is Russia in the military-technological aspect?
“Not even the most developed country can independently satisfy the needs of the military-industrial complex on 100%. This concerns both the needs of our own army and export supplies - everything is done in cooperation. Moreover, in terms of equipment (machines, conveyors, etc.) we are seriously lagging behind in a number of positions. In this sense, the ban on the export to Russia of high-tech equipment for military-industrial complex enterprises, of course, will have a negative effect. Both on the implementation of the state defense order and on export contracts.
2014 year we finish on the old baggage, one might say, by inertia. But then it will be more difficult. So a certain decline in the production of weapons in the next year is quite possible. This is likely to lead to a prolongation of the term for the execution of contracts, both internal and external.
"SP": - How do you assess the potential of the Russian defense industry in terms of import substitution, both in terms of the nomenclature and in terms of implementation dates? What is our “Achilles heel”?
- Dmitry Medvedev recently announced a new government plan, in which everything is written in detail. The most vulnerable spot is the machine tool industry. Simply put, we do not produce the necessary machines. The second huge gap is the electronic component base. In recent years, the Russian military industrial complex has reduced its lag at a heightened pace, but this is not a one-time process. And we will need considerable time to achieve an acceptable quality of the domestic electronic component base. The lag in these segments may affect the fulfillment of our obligations on state defense orders and external contracts.
"SP": - Is the government’s stated increase in defense spending on 1 trillion sufficient? rubles in 2015-2017 for successful import substitution?
- Not sure that this will be enough. Because this increase only takes into account the expansion of the state defense order. So, during the transition period, we will probably have to reorient (in addition to import substitution) to other exporters. In particular, to China, which has its own electronics and even sells it in the United States. It is no secret that in the American missiles and a number of weapons systems there is an electronic component base of Chinese production. Although deliveries from China will not cost us cheap. It is clear that he will try to take advantage of the fact that Russia has now been ordered the way to the Western markets for dual-use products. In addition to China, we will have to buy microelectronics in other countries of Southeast Asia. Something is produced in Latin America.
Plus, Beijing will offer us to buy military-technical products not for rubles and not for yuan, but to fork out for dollars, which is becoming more expensive. Accordingly, it will be quite expensive. In any case, there will be a rise in price, which will affect the competitiveness of the final products of the Russian military-industrial complex on foreign markets.
"SP": - China manufactures microelectronics under license?
- Let's just say, in different ways borrows technology, including producing under license. The quality is obviously lower than that of Western counterparts, but quite acceptable. The problem is that the import substitution program will be implemented at least 2-3 of the year. But we cannot freeze state defense orders or export deliveries for this time. If 2014 is the year we somehow skip, then in 2015-2016. can thoroughly sag.
"SP": - Our competitors will be able to benefit from this situation, having displaced the Russian Federation on the world arms markets?
- I do not think that they will succeed. If only because most contracts are long-term in nature. In this sense, we have some time in stock. In the extreme case, if we do not enter into new contracts, this will be offset by the actions of the old ones. There is no tragedy, but you need to act quickly.
"SP": - Confrontation with the West objectively works to strengthen Russia's reputation as an independent supplier, ready to sell weapons without regard to Washington and Brussels?
- First of all, it is attractive for those countries that are in tense relations with the United States. Naturally, Russia today is not so dependent on external pressure in terms of the supply of defensive weapons in comparison with the US allies. Another thing is that there are not many such countries in the world. Even our BRICS partners do not want to quarrel with America. And even if we open up some new markets, they do not compensate for the old ones that are closing due to aggravating relations with the West.
Of course, in the event of the UN lifting the arms embargo, we can resume full-scale cooperation with Iran. But the same Syria is now in a pre-default state and asks us for a loan of one billion dollars, and not a purchase of weapons. She just can't pay on contracts.
"SP": - What could lead to a break in cooperative ties with Ukraine?
- This is just a disaster for our military industrial complex. I'm not talking about Ukrainian anymore.
"SP": - Passed information that Moscow can put in Egypt several C-300 complexes. How true is this?
- According to the existing, but unconfirmed data, the contract has already been concluded. We are talking about long-range air defense systems.
"SP": - When will the export version of the C-400?
- The first samples will be delivered to Kazakhstan, Belarus and China, but not earlier than 2016-2017. C-400 have already begun to be adopted by the Armed Forces of the Russian Federation. First we must meet the needs of our own army for these weapons. We supply weapons to Kazakhstan at domestic prices. This decision was made in the framework of the CSTO. A barter scheme will be applied to Belarus. In exchange, Minsk supplies platforms for Topol, Yars and other systems.
"SP": - Russian military industrialists raise prices for their products. This can not lead to a decrease in competitiveness and the loss of part of foreign markets?
- In terms of price, we are only approaching, but still far from Western counterparts. So for the price, our weapons will have an advantage for a long time. In this regard, we still have a groundwork for increasing 4-5 years.
"SP": - What is the reason for this trend?
- Production costs are rising, products are becoming more expensive - people have to pay decent wages.
"SP": - Do our authorities use the scheme of subsidizing military-technical exports?
- As far as I know, our state is practicing a different scheme in the form of providing state guarantees for loans from military-industrial complex enterprises. This year alone, guarantees were issued in the amount of 400 billion rubles. Let me explain, in this case, loans are cheaper.
Andrei Frolov, editor-in-chief of the Arms Export magazine, does not see a direct relationship between Western sanctions and the dynamics of domestic arms sales on world markets.
- The plan for this year is the amount of 13,2 billion dollars. I think this figure will be achieved. In addition, annual plans are drawn up on the basis of a conservative (cautious) scenario. So our manufacturers in the military-industrial complex have the opportunity to repeat last year's result.
Of course, if the sanctions regime is maintained in the long term, this can make life difficult for our “defense industry”. But the exact scale of the problems is difficult to assess.
"SP": - Will it be possible to quickly find a replacement for imported components from the same Ukraine?
- First of all, the situation with ship and helicopter engines worries. The Russian leadership has already announced plans to create its own production of two types of helicopter engines instead of the previous suppliers from Motor Sich from Zaporozhye.
"SP": - This year, the MiG-35 fighter, which lost the tender in India to the French Rafale plane, unexpectedly got off the track.
- The contract has not been finally signed, so Delhi can still change the decision.
"SP": - What specifically does not suit our Indian partners?
- Prices that were higher than those that were expected, and problems with technology transfer. The rupee exchange rate fell against the dollar and the aircraft began to cost more. Plus, the French agreed to transfer the technology that interested the Indians.
"SP": - In terms of trade in military products, the United States firmly staked out a Middle Eastern niche. Can Russia try to squeeze into this highly liquid export patrimony of the White House?
- Of course, for example, we are trading well with Iraq. Baghdad is showing interest in the promising Pantsir complex, the Mi-28 helicopter.
"SP": - The United States unexpectedly did not interfere with the supply of our rotary-wing vehicles to Afghanistan. It is hard to believe that this step is explained by generosity that is absolutely not inherent in Washington’s foreign policy.
- It's trite cheaper. In addition, Afghans are better acquainted with our technology.
"SP": - The military departments of Russia, South Africa and Brazil have agreed on joint development of weapons and military equipment in the framework of BRICS.
- While on projects in this area can not hear anything. This is more like a verbal declaration, which is not yet supported by anything concrete.
Director of the Center for Strategic Market Studies Ivan Konovalov recalled that the Russian military is in greatest demand on foreign markets aviation.
- In this segment we do not need import substitution. For example, the Indian contract involves not only our, but also the French and Israeli element base. But it should be borne in mind that foreign companies are also interested in promoting Russian products using their components.
"JV": - Western companies periodically "walk on foot in spite of the conductor" ...
- I am now in Paris and, as far as I can tell, the same contract for the supply of Mistral will be executed. In addition, the element base can be supplied by companies from third countries. It is no secret that we buy electronic components in China and Taiwan. These products are not subject to sanctions.
"SP": - The United States can block these shipments by revoking licenses from Asian exporters?
- Taiwan manufactures electronic component base under license. But a license can only be revoked if a particular company is owned by a person from the USA. Or a resident of a country that agrees to block supplies to the Russian Federation. I think that this situation may occur in a maximum of 10-15% of cases. And so our partners banal copy ECB and sell us.
"SP": - And what about the production of the means of production?
- Machine tools are a problem, but even it is gradually being resolved. We have replaced a lot in recent times. The most important in the production of metalworking machines. Today it is 40% Russian equipment. Moreover, the replacement occurred in those sectors that are crucial for us. This is aircraft manufacturing, rocket science, where we retain our leading positions.
Another problem is that earlier China, India purchased finished products, and now they require technology transfer. Naturally, we do not want to do this. The output was a sharp increase in domestic state defense orders from 2008 of the year, to the implementation of which our enterprises were reoriented. One of the negative consequences of this was the sinking of their positions in the external market. Unfortunately, the Russian military industrial complex is not flexible enough to respond quickly to the challenges of the time. The system is too centralized and bureaucratic. At the same time, the decision-making procedure was simplified to full primitive. In modern realities it is impossible to compete successfully in world markets, if you work according to the principle, if you need to create a "feeder" for someone, it will be created. This affects the final price of the goods. I think our authorities understand that reforms in the military-industrial complex have matured.