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President of Russia Vladimir Putin: Good afternoon, colleagues,

Last December, we made a preliminary summary of the military technology cooperation results for 2012 and agreed to hold a final review of the year’s results in 2013, once all the necessary data had come in. 

We can now make this review and, as we noted last year, we can say that the situation in the sector is satisfactory. We had growth of 12 percent in the sector and our total arms exports came to $15.2 billion. 

This is one of the best results in this sector and it gives us reason to state confidently that the Russian Federation is an undisputed leader in arms and special equipment sales. Only the USA can match us. We have more than a quarter of the global market. As I just said, only the USA is slightly ahead.

All of the other countries, our partners in this sector, sell much smaller amounts of arms, though they are countries with advanced technology and are certainly leaders in the particular high-tech fields that are widely used in arms production.

Russia sells military goods to 66 different countries, and has signed military technology cooperation agreements with 85 countries. In other words, there are opportunities for developing our relations in this sector with quite a large number of countries.

It is good to see that our orders portfolio got a substantial boost last year and currently has orders worth $46.3 billion. We need to keep building on these positive trends because this not only brings in solid revenue for the country’s budget but also helps to develop high technology, boosts our defence companies’ earnings and helps them to preserve jobs and invest in promising new research and development.

At the same time, there are also problems, difficulties that we will discuss today. As you know, these problems are related above all to the difficult situation in the global economy. Some countries are simply short of money at the moment and find it more expedient to prolong the service life of the arms and equipment they already have and postpone new import contracts. Other countries look to obtain manufacturing licenses and develop their own defence industries.

Our work has to take into account all of these things. This is the reality that we need to be aware of, and we need to respond promptly to the changes taking place in the world. In this respect there are several points I want to make.

”The Russian Federation is an undisputed leader in arms and special equipment sales. We have more than a quarter of the global market.“

First, our work on strengthening cooperation ties with our main partners should focus particularly on long-term cooperation programmes and the special intergovernmental commissions’ work. We have enough of these commissions and we need to work actively with them and make greater use too, of the practice of providing state export loans.

Of course, these loans must be based on market principles and not be like the loans the Soviet Union used to accord for ideological reasons, and that no one ever saw again. Our work in this area is built on market principles and we need to develop it. This is a normal practice around the world, including in countries with recognised market economies. 

Timely loans made on market terms will help to promote our goods and create markets for subsequent maintenance of goods and for later sales of additional equipment and spare parts. I will not list right now the countries with which we are already working this way – you know them anyway. I just want to say that we already have positive experience with this kind of work and we need to develop it and make broader use of it. 

Finally, we need to attract potential buyers with convenient and attractive new payment methods. This is also something we have discussed in the past. It is important to develop not just maintenance and post-sales services, but in the appropriate cases to also organise joint production. 

This is all the more important because, as I said, if our companies earn timely and substantial export revenue, they will be able to pursue timely research and development too, carry out design work, introduce new goods and technology and market them on the military goods market. This will all enable our companies to stay a step ahead. 

Further, we need to open up new markets for our main exports. To do this we need to be more active in offering a full range of services from maintenance to personnel training. This is tried and tested method for gaining a more solid footing in the market.

Of course we also need to improve the military technology cooperation mechanisms themselves. The steps in this direction that we have already taken demonstrate that this is necessary work, and we need to continue it. What steps am I referring to specifically? 

We authorised some defence industry companies not just to sell goods through the organisation that operated essentially as a monopoly in this area, but also to make direct export sales of spare parts, repair and modernisation services for military goods, and carry out joint research and development. Military exports have increased as a result. This is a positive experience and we should keep this in mind. 

I also want to mention the new military technology cooperation development agreement that we signed with Belarus. It provides for simplified military export procedures. As a result, advanced new arms models are being delivered more rapidly and we have built more effective cooperation chains. 

It was maybe easier to do this with Belarus than with other countries, given that we have longstanding cooperation in this sector that in the case of some companies goes back to the Soviet period. But it is in any case a positive result and is certainly something we could develop with our other partners in this sector.

Let’s discuss all of this. Let’s start work.

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