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President of Russia Vladimir Putin: Good afternoon, colleagues,

We will review the results of our military technology cooperation in 2013 today. As the results confirm once again, Russia is a global leader on this market and is solidly in second place in arms supply volumes. I remind you that the USA holds 29 percent of the market, Russia 27 percent, Germany 7 percent, China 6 percent, and France 5 percent. Russia’s exports of military technology cooperation goods and services grew by 3 percent last year and came to more than $15.7 billion. This is slightly more than the 2012 result.

Our military technology developers and manufacturers took part in 24 international exhibitions and signed new long-term contracts for a total of $18 billion. This brought our total export order portfolio up to a record level of more than $49 billion. Russia supplies goods to 65 countries and has signed and is implementing military technology cooperation agreements with 89 countries. We are seeing rapid growth in military technology ties with our traditional partners: the CIS and CSTO countries, India, Venezuela, Algeria, China, and Vietnam. We are also developing new arms markets too, especially in Latin America.

We continued our efforts to improve the legislative framework regulating military technology cooperation and gave the sector’s actors broader powers. Manufacturers can now carry out product modernisation independently, set their own research and development policy, and establish joint ventures with foreign partners. At the same time, company directors now bear greater responsibility for the decisions they make. 

I want to thank the defence industry specialists and workers for the results they have achieved. Their work has shown us yet again that Russia has what it takes to design and manufacture the most advanced and sophisticated military technology and compete with success on global arms markets. It is important that we not rest on our laurels but continue active efforts to upgrade industrial facilities, spread the latest technology, and broaden the scope of research and development work.

We need to be clear about our priority objectives in developing military technology cooperation with our partners abroad. If we want to continue our programmes and promote our goods on foreign markets effectively, we need to learn how to use modern financial and marketing instruments such as state and commercial loans for longstanding and reliable partners, supplies as payment of foreign debt (this is also something we are doing), exports based on various types of offset deals, and high quality service and maintenance.

Exports of Russian air defence technology require particular attention. This segment accounts for a large share of the international market. Russia accounts for around a third of international air defence system supply deals. The share of these arms in our exports went up from 13 to 20 percent in 2013. This is a big increase and represents major progress. 

More than 70 countries use Russian air defence technology. It is also the basis for the unified air defence system in Russia, Belarus and Kazakhstan. Russian air defence technology is being sold to countries in the Middle East, Southeast Asia, and North Africa. There is also growing interest in Latin America.

Air defence systems such as the S-300, S-400 and Pantsir-C1 are undisputed leaders on the global market in terms of their technical and military characteristics, reliability and simplicity of use. We should build up capacity to manufacture the most in-demand air defence systems and also develop production of high-precision weapons used in air defence. 

Let me say a couple of words about cooperation with Ukraine, which has been a reliable military technology cooperation partner over many years now. The serious state crisis Ukraine is currently going through has left its defence industry with practically no state support at all. Two thirds of the companies producing related components for the industry are here in Russia. We all know very well that any potential disruption in these cooperation ties could be critical for Ukraine’s defence industry and for the people working in this sector and their families. This is obvious given the unclear prospects for getting wages paid and developing the companies themselves. And yet it is in the interests of both Russia and Ukraine to preserve this research and development potential that we have built together.

I propose that we discuss these and other important issues for the Russian defence industry’s development at this meeting today.

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