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The President stressed the need to substantially increase the capabilities of strategic, military, and military transport aircraft to address the challenges they face, including outside the country as part of allied operations. Mr Putin also stressed that defence companies must fulfil the state defence order with due quality, on time and at economically sound prices.

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President of Russia Vladimir Putin: Colleagues,

We are beginning an essential part of today’s meeting. As you recall, almost everyone in this room (with few exceptions) worked to organise and hold various meetings last year on preparing branches of the military-industrial complex to fulfil the state armament programme through 2020, and we covered nearly all the branches in great detail. We discussed and analysed their preparedness to fulfil the programme. As a result of this work, a plan was drafted to modernize the military industrial complex at a total cost of nearly three trillion rubles [$100 billion]. Now, the Government of the Russian Federation must make sure that this plan is carried out.

Today’s meeting opens a new series of meetings. At each of these meetings, we will analyse how the implementation of the state armament programme is progressing in all the most important aspects, we will discuss what has been done, what was not done and for what reasons, and we will review the timeframes, quality and prices of the goods produced for the state defence order.

Today we are holding our first such meeting and we will analyse how the state armament programme is being implemented to provide the Army and Navy with aircraft. Present here are the senior officials of the Defence Ministry and military-industrial complex representatives. I expect that our conversation will be specific and results-oriented. We must examine all of our problems in detail, including cooperation and relations between the customer – the Defence Ministry – and the suppliers in all key areas pertaining to aviation technology.

I should note straight away that our modernisation plans for the Armed Forces include a special priority position for aviation. The share of air forces within the Armed Forces will grow. This approach fully corresponds to the development trends in modern military doctrine; experience from local conflicts in recent years also speaks to this. You know that the role of aviation in armed combat is increasing. We can see that aviation systems play a decisive role in achieving military success: strike force, reconnaissance, and transport aircraft. Thus, it is imperative for us to significantly increase the battle capacity of our strategic, army, and military transport aviation, so that the Air Force can be guaranteed to resolve the challenges before it, including outside the Russian Federation – for example, in cases when we are fulfilling obligations to our allies.

We will be bolstering the aviation of the Armed Forces qualitatively and quantitatively by 2020. I already stated at a meeting with flight crews of the military base we are visiting, that we are planning to budget over four trillion rubles [$130 billion] toward these goals, while a bit under three trillion (some 2.9 trillion) rubles for the entire military-industrial complex. But aviation, the state armaments procurement for aviation needs, will get more than four trillion. As you see, it accounts for almost one quarter of expenditures within the entire state defence procurements.

Here are some other matters that I find particularly important and would like to draw your attention to.

First is the leng-term development of the aerial component of the Strategic Nuclear Forces. This will include advancing the development of the new generation long-range aircraft. I know how expensive and difficult this is; and we spoke about it many times with the Defence Minister and the Chief of the General Staff. This challenge is ambitious from a research and technology standpoint, but we are to launch this work. If we do not start it in a timely manner – I am referring to the timeframe for accomplishing separate components of this programme – then we may miss our chance, because we cannot keep using and upgrading existing technologies forever.

It is nevertheless imperative to modernise our strategic Tu-160 and Tu-195MS missile carriers. Incidentally, we have already introduced a new airborne long-range cruise missile to arm the warcraft.

Second, the tactical component of the Air Force will also require serious renewal. Here, I will note the modernization of the Su-25SM fighters, the delivery of new frontline Su-34 strike aircraft, and of course the fifth generation frontline fighter aircraft. Besides, in the next five years, we should implement the A-100 early radar warning aircraft project.

Third, we should very actively develop unpiloted aircraft programmes. According to experts’ recommendations, this is the most important direction in aviation development. Here, we need the full line, including automated strike aircraft, reconnaissance drones and other systems. As you know, unpiloted aircraft are being used more and more actively in armed conflicts. And I must say, they are being used effectively. It is imperative to involve best engineering and science bureaus and centres in this effort, to review opportunities for international cooperation, to accumulate R&D capacities and production facilities. And the necessary resources have been allotted for the purpose: over 400 billion rubles are allocated toward this purpose through 2020.

Let me draw your attention to the fact that we can and should use know-how from our foreign partners; but keep in mind that nobody will give us the most advanced, leading technologies. We must design them on our own, using what we already have, but we must do it ourselves. I repeat, there should be full use of everything we have at our disposition, as well as of whatever foreign technologies available; we are to take advantage of it, but we must break new ground of our own as well.

The military has already begun to receive new airplanes and helicopters. We have now supplied 30 aviation squadrons with fully modern military technology of improved battle features. By the way, new warcraft are being supplied here, to the units of the 393^rd Air Force base of the Southern Military District.

Overall, by 2020, we plan to increase the share of modern aviation technology in our military to 70 percent. As I said at our previous meeting, which was devoted to the 100^th anniversary of Russian Air Force, over 600 new airplanes and 1,000 new helicopters should be delivered to the military units in the nearest future, and that’s not including the upgraded systems. Serious attention will be given to modernising airfield infrastructure as well. Over the last four years we have brought about seven new modernised airfields into operation per year – 28 in four years – and another nine airfields are being renovated now in Severomorsk, Chkalovsky, Engels, Aktyubinsk, Krymsk, Yeysk, Lipetsk, Chkalovsk in Kaliningrad Region, and Korenovsk. Within the framework of their modernisation, contracts have already been signed worth over 40 billion rubles [$1.3 billion]. The work is underway, and I hope that it will be fulfilled on time, with high-quality results.

The large-scale production of aviation equipment is a serious challenge for Russia’s military-industrial complex. We will have to renew and expand the capacity of defence and aviation companies. I already said it at the beginning of my speech and we discussed this in detail last year: I hope that everything we agreed upon will be fulfilled. We need to modernise the factories producing new materials and aircraft components, including radio-electronic facilities. We will need to build the entire technological cooperation chain. The Government will provide the necessary support to our industrial and engineering companies.

That said, the demands will be strict: we expect proper execution of contracts. The deadlines, delivery scopes, quality and reasonable prices should all the ensured. When I refer to sound prices, I do mean that profitability for suppliers should also be taken into account, and as I discussed it with the Defence Minister, the profits may be as high as 15, 18, or perhaps even 20 percent. Moreover, the Defence Ministry has taken a generally unprecedented step, making 100 percent advance payments in certain cases for some state armaments procurement contracts. But these prices must be justified for the client.

I would like to draw your attention to the fact that the Defence Ministry directly represents the interests of the state. There will be no extra money, no greater funding in excess of what we have allotted through 2020. I have already repeated this a hundred times, but at one of the recent meetings, I once again heard suggestions to increase something. We would be happy to increase the budget, but we do not have the money. Moreover, let me remind you that almost everyone present here participated in the preparation of those drafts and plans, and the prices were agreed upon at the time. Most of these contracts are long-term, and are valid until 2015 to 2018.

I would also like to make note of another mechanism and opportunity. These are long-term contracts that use credit arrangements under state guarantees, allowing companies in this sector the opportunity for steady, stable operation.

Incidentally, aviation technology contracts worth nearly 2.5 billion rubles have already been signed within the framework of the state defence order for 2012.

I would like you to report on the progress in fulfilling the state armaments procurement programme for the Air Force. Please do not just mention the problems. If there are any, I would like to hear specific suggestions on how to resolve them. By the way, all other similar meetings will also have the goal of identifying problems and looking into suggestions to overcome them.

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