Interview of FSMTC of Russia Deputy Director V.K.Dzirkaln to VPK Weekly

Contracts are still many
What are further prospects of products of the Russian military-industrial complex in the arms market?
//Vyacheslav Dzirkaln, Evgeny Druzin

Recently, more and more claims have been made to performance of the national military-industrial complex. First Deputy Defence Minister Alexander Sukhorukov stated them in his recent report. Our military department for the first time for many years has made decision to buy for the Russian army and the Navy models of arms and combat materiel of foreign manufacture. Results of a number of tenders held by such largest world importers of arms and combat materiel as India are among the recent failures. In addition, a number of mass media, including Indian, publish more often critical comments about products of the national defence industry. So, what is a real situation now? Can our defence enterprises manufacture products to successfully compete on the world arms markets? The answer to these and other questions were given in the interview to the Voenno-Promyshlenny Kuryer newspaper by Deputy Director of the Federal Service for Military-Technical Cooperation (FSMTC of Russia) Vyacheslav Dzirkaln.

– Vyacheslav Karlovich, some experts have expressed many negative comments about the Russian military-industrial complex already for many months. They more often remind of losing the race by MiG-35 in the tender under the MMRCA program for delivery of 126 light fighters to the Air Forces of India, a victory of AH-64D US strike helicopter over Mi-28N in the other large Indian tender, and not clear situation with joint development of MTA transport aircraft with Indians. Taking into account all these circumstances, please, give your assessment of further prospects of our cooperation with India. In what areas will it develop, and how do you characterise a Russian position in this market as a whole?

– First of all, I want to draw your attention to process of international tenders, which results are not the only reliable description of efforts in MTC. According to the Indian Government, it intends to pursue a policy of diversification of deliveries of arms and combat materiel. Not a secret, that most of combat materiel available with India is of the Soviet and Russian origin. It is natural that in some areas, our competitors have stronger positions, we recognise it, but let speak otherwise. That tender for 126 aircraft mentioned by you, and in which we participated, so far, has not yet closed, its results are still at the approval stage, and it is far from the fact that it will happen. As sometimes, our competitors do not take good faith steps in this competition, and now, when results of the tender must be approached in practical terms, it becomes clear that the scope of the technology transfer will not correspond to those requirements, which were stated in the tender documentation. Besides, price quotations have changed. So, here, it is too early to speak about the end result.

As to the plans of the Indian party to diversify deliveries of arms, it is normal. The policy of India is based, above all, on national interests. The Indian Leadership has been in the process of ongoing analysis of the level of development of arms in different states. They do not care about developments of the last century, India is keen to purchase cutting edge models, and it arranges tenders for this purpose, in which we actively participate. The analysis of achievements and offers of our competitors also gives a kick to the development of the Russian industry. It is quite normal. Here, we may not rely on the hope that India is a Russian strategic partner, and, hence, a niche in the Indian market is fixed for us forever. Not so at all.

I will add that besides combat performance of arms and combat materiel, evaluation of the results of tenders takes into consideration political aspects that frequently appear to be the determinants in selecting the winner in the competition. And our equipment on all parametres has equal footing with western peers.

– One more question, concerning quality of our military equipment. The Defence Minister makes more and more comments on this issue. The quantity of claims is too many. At the same time, it is necessary to highlight a stable growth of demand for products of the national defence-military complex in foreign markets. Is there any controversy?

– Let's divide this subject into two components. The first is delivery of arms for own needs, the second is export deliveries. Unfortunately, difficulties of the 90s and the beginning of the 2000s badly affected the Russian military-industrial complex. It experienced rather heavy losses: first of all, in human resources, in addition, physical facilities became by and large obsolete. During this hard time, the Defence Ministry completely refused purchases of arms and combat materiel, and defence enterprises survived exclusively thanks to export orders. Therefore, all our new developments were not tested in the army and the navy. Actually, new equipment was based on R&D results, and immediately delivered to a foreign customer. As a result, our Armed forces did not receive similar products. The most vivid example is Su-30MKI multi-role fighter. Operating experience, its adaptation, and tuning was tested in the process of the use of that aircraft by the Indian party. Therefore, in a similar situation, to speak about quality loss is not absolutely correct, as new developments have passed by our Defence Ministry. And if so, to link amounts of export deliveries and quality dropdown would be wrong. Now, all of us are still affected by consequences of the crisis in the 90s when the Russian defence industry was on the verge of survival. A dramatic outflow of qualified personnel also had a huge negative effect. Now, this process has stabilised. Young and competent specialists join the military-industrial complex, i.e. the situation has been gradually improved.

– Now, Vyacheslav Karlovich, let’s consider conditions in the Chinese market. Recently, China has lost its position of the world leader in the import of arms and combat materiel, and increases it capabilities in the export of military purpose products, ranking No 6 in the world. Don’t you think that as a result of implementation of the Russian-Chinese MTC strategy, we have created a competitor to ourselves?

– I disagree with the argument that we have fostered a dangerous competitor, thus, contributing to own harm. The matter is that China is a self-sufficient country that is able to develop certain arms and manufacture them. The fact that one more competitor appeared in the market is anticipated, and quite normal. I think that it is beneficial for the Russian manufacturers as it makes them become more committed to their work as the monopolism in the market has never been useful to anybody. Therefore, formation of China as independent player in manufacturing and selling arms in our traditional markets works for our advantage because it is an additional stimulus for manufacturing and developing improved versions of arms.

At the same time, China was and remains a Russian strategic partner. Over the recent years, the scope of military-technical cooperation between us has essentially grown, and now, we are reaching the figures of the late nineties and the beginning of the 2000s. As we complete different programs in China, we start working on purchase of relevant combat materiel. It is obvious that it is impossible to buy endlessly different versions of arms and combat materiel: it is done strictly to meet specific goals and objectives. Those objectives were set, and the Chinese party has met them.

– China has almost completely refused acquisition of finished products of the Russian defence industry, and, basically, is interested in high technologies. What is the strategy of the Russian-Chinese military-technical cooperation in this respect? Are we ready to transfer to China the latest technologies, especially in view of the fact that we experience great difficulties in this area?

– Answering your first question, I will repeat: China has not departed from acquisition of finished goods of our military-industrial complex. In the recent years, we have signed and implemented large-scale contracts with China. Russia has sold a large batch of Al-31FZ engines, and this year, we have concluded a contract on delivery of 55 Mi-171 helicopters. It means that purchases of our finished items continue. Certainly, the Chinese party shows interest to acquisition of new technologies. This process is absolutely normal, and we do not keep it secret that there is interest on our part in the exchange of such technologies. Agreements have been reached in different areas, and such work is already underway. A similar exchange is a standard world practice. In the long term, we plan joint R&D works. Similar strategy is characteristic not only for relations with China, but also with other developed economies, and an effective system of R&D establishments. Coming back to China, I make a point that China develops in its own area, and developments of its experts, appearing on the market, make our military-industrial complex work harder on improvement of quality and combat effectiveness of its products.

– Vyacheslav Karlovich, many thanks for your answers. I would like to wish further successes in your work, and express hope that it will be more and more successful.


Interview of FSMTC of Russia Deputy Director M.V. Petukhov
We are rewarding best arms makers
Successes of authors’ teams and representatives of more than hundred of enterprises of the military-industrial complex are highly acclaimed
//
Mikhail Petukhov, Oleg Falichev

This December, a solemn ceremony of the Golden Idea National Award will take place for the 12th time, competition for which has already begun. On whom can it be conferred? What products should applicants for the award from among the enterprises of the national defence industry present? The interview of the Federal Service for the Military-Technical Cooperation (FSMTC of Russia) Deputy Director M.V. Petukhov will give answers to these questions.

– Mikhail Vladimirovich, few awards especially existing on money of sponsors can brag of such enviable longevity as the Golden Idea National Award. How was it originated, what are conditions for qualifying participants, and winners?

– Indeed, it is one of the sustainable and successful projects. It enables at the government level, annually, to evaluate performance of entities of the military-technical cooperation, enterprises of the military-industrial complex, authors’ teams and individual representatives of MIC, those who have brought a appreciable contribution to design of new models of combat materiel, escalation of manufacture, including for export, of advanced weapon systems.

The Award was established by FSMTC of Russia in 2001 after the last decade of the past century, which was the hardest for our defence industry. All of us perfectly remember how it had to survive in the 90s. Virtually, negligible state order, small sales of military purpose products abroad, poor financing... It is enough to say that export of arms and combat materiel was just three billion USD, and today, it is 13 billion. Therefore, it was extremely important to encourage people, so, they would not run away. At that time, our department that deals with the military-technical cooperation, put forward a proposal to motivate employees, and MIC enterprises. For many teams, the Award became a sort of lifesaver. It allowed them to survive, and retain staff.

Now, every summer, the organising committee holds a session to announce the competition for the Golden Idea National Award. Next, we announce acceptance of applications according to the approved regulations. They are gathered, and then, evaluated by a group of experts from different ministries and departments involved both in the organising committee, and expert groups. Afterwards, presented works are rated, and winners are determined. It is a large and many stage work as dozens of materials are accepted for the competition.

– How many nominations are in the Golden Idea, and who has more chances to win?

– Originally, the Award was conferred on winners in four nominations. For years of conducting the competition, its organisation has been considerably improved, the quantity has been increased, the names of nominations have been specified, the mechanism to qualify winners has been elaborated, aimed to encourage engineering of competitive versions of arms and military equipment, and, ultimately, boost military-technical cooperation between the Russian Federation and foreign states.

Six nominations of the Golden Idea cover all main MTC aspects. For example, we separately reward organizers of exhibitions of military purpose products, and personal merits of winners. We give a priority to young specialists personifying the future of Russian military-industrial complex. It is not by chance that a relevant nomination includes five, a maximum number of winners. After all, the award organising committee is interested in a wide participation of young people in the competition, motivation of their achievements, maintenance of continuity of generations, and retention of personnel potential in hi-tech industries.

– What is the system for evaluating projects of competitors, who provides financial support to you, and with what are winners awarded?

– We use a two-level evaluation system. At the first stage, applications received by FSMTC of Russia are thoroughly examined by experts. By results of the examination, the integrated level of the presented works is formed. The membership of the expert group, by the way, always includes the Head of the Research Council of Rostekhnologii State Corporation Yury Nikolaevich Koptev. Noboby can have any doubts about his knowledge and a wide experience. All of our experts are of such level.

The total rating grade of the application is reported to members of the organising committee as recommendation for the final voting.

More than 40 qualified officials of the Military-Industrial Commission at the Government of the Russian Federation, the Defence Ministry of Russia, leading federal authorities, specialised organisations and NGOs participate in evaluation and collective decision making in respect of received materials.

– No errors?

– Errors can be anywhere. You cannot insure from them, as humans are not machines, though even machines make errors. But I say once again: an expert group makes a consolidated opinion to be further discussed by the organising committee. And believe me, heated arguments and opinions are exchanged at its sessions. It also happens that the opinion of the organising committee differs from a general opinion of experts.

– And any cases of lobbying, telephone justice?

– We are adults and independent. Any calling for favors? So what. If the product conforms with our criteria, telephone justice cannot work. Besides, the cash amount of the award is determined by the amount of donations collected by us, and it is unknown in advance. Winners of competition also receive honourable diplomas of FSMTC of Russia, and memorable prizes made of precious metals. Members of the Government of the Russian Federation, and the Director of the Federal Service for Military-Technical Cooperation take part in the solemn ceremony of rewarding winners.

– Today, the country differs from that in the 90s. Is the award still on the agenda?

– Time passes, all changes, thank God, to the best. Amounts of the national state defence order have grown. Naturally, it prevails in the output of the enterprises of the national MIC, and it is a priority for them. It means that nowadays, the award is no longer associated only with export component, and has become a high-profile award among the awards in the defence industry. Therefore, we reward not only for the successes in the export of arms and military equipment, but also for achievements in the defence industry as a whole.

Let's recollect that different ministries and departments at different time also established different awards, but they were short-lived. Today, the Golden Idea is the most prominent, and, I think, authoritative, and it enjoys an outstanding reputation. I would like to quote such example. We are tracking the story of our winners, in particular, in the nomination «Young talents». These are 25–30 year old young people. I can tell with pride that all awarded either have made a brilliant career at the enterprises, or have received lucrative offers from business structures.

It means that only high-grade specialists become winners. Our expert group is composed of authoritative scientists, and captains of the industry. Ratings are weighted. The overall objective is to award the worthy.

The most prestigious award (though they all are about equal) in the nomination «For personal contribution». Among its winners are the member of the Academy Arcady Georgievich Shipunov, honourable General Designer of VPK NPO Mashinostroeniya (Mechanical engineering) OAO Herbert Aleksandrovich Efremov, and Director of Takticheskoye Raketnoye Vooruzhenie (Short range ballistic missiles) Corporation Boris Viktorovich Obnosov. They are the people who have hugely contributed not only to export of arms and combat materiel, but also strengthening of the Russian defence industry as a whole.

We have the nomination «Best Co-Contractor Enterprise». A number of enterprises were awarded twice, naturally, for different developments, for example, FSUE Konstruktorskoye Byuro Priborostroeniya (Instrument making Design Office) (Tula), Sukhoi Company OAO, etc. There are no such restrictions that the award can be conferred only once. It is only in the nomination «For personal contribution» that it was conferred only once.

– What types of arms are more often among the winners?

– It is easy to explain. The export structure has been stable from year to year. Arms and combat materiel designed for aircraft, navy, air defence rank first or those products which dominate in the total export amount of the military purpose products. They are notable for the most of all innovations, new developments, and achievements.

– In terms of air defence, what could you highlight?

– Pantsir- S1 anti-aircraft gun-and-missile system. S-300 was also awarded earlier.

– Do your contacts with members of the Military-Industrial Commission and the Government somehow work for the National Award?

– The organising committee is composed of members of the Military-Industrial Commission at the Government of the Russian Federation, Directors of all defence ministries and Departments. All are in close contact, as well as FSMTC of Russia, a federal authority within the governmental vertical. For many years Sergey Borisovich Ivanov as vice-premier in charge of the military-industrial complex chaired the ceremony. I hope that Dmitry Olegovich Rogozin will do us honour and be present at the President hotel in December 2012, traditional venue for the ceremony, and award winners.

– Are you as organizers of the competition happy with the status quo of the competition or is there any extra work to do?

– In general, all works normal. It is enough to look at the list of nominations of 10-11 years ago, and current, and at once, you will see that they are strikingly different. After all, life is not at standstill. For example, you will not find a mass media nomination in the list of a decade ago. Now, we have it. There was no «Best Co-Contractor Enterprise» nomination. Now, it is here. We seek to quickly address arising problems, and we try to update the competition procedure.

We also have such idea: to make the award not simply a single annual event, but a living organism, a sort of a business club where enterprises, and business could communicate online; to conduct workshops on subjects of mutual interest, and arrange study tours to the best enterprises for specialists to exchange experience. But this initiative is still to be implemented.

To wrap up the interview. The victory in the competition is a good chance to make a name at the all-Russia level, and get a public recognition of achievements. For 11 years, the quantity of applications for award competition has considerably increased, their geography has become wider, and quality of projects has improved. Authors’ teams and representatives of more than 100 organisations of the military-industrial complex became Golden Idea winners.


Date of publication: 25.09.2012


 


 

 


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