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President of Russia Dmitry Medvedev: Good afternoon dear colleagues!

Today is the Commission's first meeting since its composition was updated. We will discuss the preliminary results of military-technical cooperation in 2008 and talk about the future prospects for interaction with our many partners.

Military exports represent an important means for providing cash to the budget and the implementation of contracts that have already been concluded generally strengthens our reputation as one of the world's leading industrial powers. Collaborative research in this area and industrial cooperation both represent a powerful stimulus for the development of the Russian defence industry and encourage the development of innovative strategies. This is particularly important now, during a financial crisis. Russia has many institutional and financial tools to support major defence enterprises. (I have repeatedly talked about this, gave direct instructions to the government cabinet, and would like the cabinet to bear this in mind in their daily activities.)

I will briefly discuss some issues that I feel are topical today. Naturally, we will continue to work: we will supply weapons and technical equipment solely for the defence of our partners. Along with this, as the events of August 2008 have shown, not all members of the international community adhere to such an approach.

We know about the assiduity with which some states supplied weapons to Saakashvili's regime, something that certainly encouraged his aggression. And now these states are actually implementing plans to re-equip his regime with new sorts of weapons. Unfortunately, a number of our friends were involved in this. We will not forget this and will naturally take it into account in our policies. I would like everyone to be aware of this.

Now a few words about this year's preliminary results. We would describe them as satisfactory. As of 1 October 2008 our total military exports exceeded last year's figures, foreign exchange earnings have increased, and defence orders increased markedly – they are now estimated at more than $ 30 billion. Russia's partners in this field include 81 states. With many of them the legal basis on which we engage in military-technical cooperation is being strengthened. A good example of this is the recent framework agreement with Saudi Arabia.

New opportunities have opened up in our contacts with CSTO countries (and for us, perhaps this is one of the key areas of our cooperation), especially during work on a joint air-defence system, CSTO regional communications and command and control systems.

More than 80 percent of our defence exports are conducted by our state intermediary Rosoboronexport. From year to year the company is increasing its available inventory, amount produced, and the package of services that accompany a given product. In general, others involved in military-technical activities are also coping successfully with their targets.

We believe that our defence industry has good prospects for growth. This will strengthen Russia's position among the world's leading exporters of military equipment. But, like any such activity, it always has another side and someone has certainly lost no time. Not long ago, at the initiative of the State Department the United States once again imposed unilateral sanctions on Rosoboronexport. We have repeatedly said (and I have talked about it) that we believe such sanctions are short-sighted. This is unfair competition, simply an attempt to prevent us from fulfilling defence orders and, most importantly for us, the sanctions have virtually no effect on Russia. So whoever imposes them should bear this in mind.

Now regarding the key priorities for the near future. First, we need to understand that the growing volume of orders, especially since it comes at this time, represents a serious test for the Russian defence industry and the production capacities of our businesses. Therefore Rostechnology, Rosoboronexport and others involved in military-technical cooperation must make sure that they fulfill the orders and do so on time.

The second task involves providing and maintaining very high-quality products and timely services. Russian weapons have traditionally been known for their reliability and defence enterprises must, of course, fulfill these expectations. Any decrease in quality must be assessed in the most critical way, because when negotiating with foreign buyers it is bad for everyone if the quality is not what is being promised. There is enough room for maneuver to prevent such problems from happening. We understand how sensitive this market is and how attentively all these issues are investigated.

And finally, the third issue. We need to implement various forms of support and engage in the joint development of new technologies more actively. I think that we must collaborate with our closest partners in this regard (I have already talked about this), with CSTO member states. In addition, we must lay down a full-fledged basis for cooperative programmes, including in the medium-term. In the future we need to transfer to a similar cooperative regime with other states as well.

We must take into account the general economic situation. Work in this very important sector is now urgently needed to support the general well-being of our economy. We must take into account the trends of world markets and, of course, strengthen Russia's position when cooperating with other nations. Therefore, I am waiting for specific proposals from all those present here.