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President Vladimir Putin: Good afternoon, dear colleagues,

As is tradition, at this first meeting of the Commission for Military-Technical Cooperation this year we will examine last year’s results and outline promising future directions for military-technical cooperation.

I want to start by saying that Russia’s military exports have reached a new milestone. We over-fulfilled our plan for 2005 by 20 percent and our exports exceeded $6 billion. This is an absolute record for us in recent times and I congratulate you on this result.

This result was made possible by well-coordinated work at every level. Along with the state intermediary – Rosoboronexport – the other participants in military-technical cooperation also worked to a very high standard. Among them I would name the MiG Corporation, the Machine-Building Design Bureau, the Machine-Building Development and Production Company and the Instrument-Making Design Bureau.

To say a few words on the new participants in military-technical cooperation who have received authorisation to export spare parts, they are not only moving confidently into foreign markets but are increasingly active in developing their own niches. The companies with the best results in this respect are Sukhoi, Moscow-based Salyut and the Urals Optics and Mechanics Plant. I hope that this positive growth will continue and increase.

We expanded into some new export markets in 2005. We had set this kind of expansion as one of our priority tasks in this area. Russia exported military goods to a total of 61 different countries last year. The People’s Republic of China and India remain our biggest partners.

Among last year’s successes I would name the promotion of our naval technology and equipment and increasingly active cooperation with the members of the Collective Security Treaty Organisation and the CIS and with countries in Southeast Asia and the Middle and Near East.

One of the examples of our work to enter new export markets is the agreements signed during my recent visit to Algeria. These agreements provide for large deliveries of Russian military equipment and arms and all the defence industry companies engaged in carrying out these orders should work in a planned and systematic manner.

Overall, Russian defence industry companies saw their order portfolios increase considerably in 2005. These are orders that have been placed rather than contracts actually carried out, but we are nonetheless talking of an increase of 61 percent.

Important changes have been made to the laws regulating military-technical cooperation. Decree No. 1062 that was issued in September 2005, for example, clarifies the distribution of responsibility in the management vertical and removes excessive red tape. I hope that the benefits are already making themselves felt in practice.

I am sure that these measures will make military-technical cooperation more effective, spur more dynamic growth in the Russian defence industry and provide new incentives for promising scientific and applied research in what is a very important sector for the state.

I would like now to give a brief overview of the main tasks today in the sector. As before, one of the priorities is precise and timely fulfilment of all contractual commitments and work to improve post-sale service. These are basic tasks that require constant attention from the defence industry companies themselves and from the relevant state bodies. It is important to continue developing modern forms of cooperation such as working jointly with our partners to create new arms. This kind of cooperation can comprise many different stages, from working on a product’s development to carrying out series production and organising deliveries for our own needs and for the needs of third countries. You are all aware that if we do not produce equipment for our own needs, selling it to third countries can be complicated.

Of course, we must also make more active use of the potential of joint ventures in the military-technical cooperation sector. By integrating our partners’ possibilities we can better meet today’s demands and can take our products to new levels of competitiveness. Aside from anything else, we also are all well aware that this raises the level of trust between the countries that are our partners.

These are just some of the issues that we need to examine at today’s meeting. We are also to discuss the current situation and future prospects for military-technical cooperation with individual countries, as we usually do at our meetings.