Russia's defense industry to attract private capital

Russia's Deputy Prime Minister Dmitry Rogozin continued to restore order in the area of defense. On Wednesday, while participating in the Government Hour in the Duma, he promised to pursue the corrupt defense officials as he would accomplices of the enemy against the state. He promised domestic producers to abandon procurement of foreign equipment.

Dmitry Rogozin became a deputy of Vladimir Putin on the area of the development of the domestic defense industry to everyone's surprise because experts predicted he would be given the title of Minister of Defense.

However, it seems that he is not thrilled with the prospect of remaining a wedding general. Dmitry Rogozin announced the adoption of the ill-fated armed missiles "Bulava" as weapons and talked about the terms of the commissioning of the radar "Voronezh" in Kaliningrad region designed as the answer to America's European missile defense program. He boasted of labor productivity growth in the defense industry, which is allegedly considerably higher than in civilian industry. 

Two weeks ago, the military-industrial commission under the government headed by him created a draft federal program to modernize the defense industry by 2020 with the financing of three trillion rubles. The Deputy Prime Minister is going to personally monitor these funds.

On Wednesday, at the Government Hour meeting in the Duma he continued these initiatives. Dmitry Rogozin prepared both a carrot and a stick for the industry he oversees. As a stick, he promised to toughen the punishment for corrupt officials entrenched in the defense.

"Those who like to warm their hands on the state budget and the defense should know that corruption in the sphere of state defense order execution will be punished at the maximum limit. Those who take bribes in the industry will be equal to potential enemy collaborators," "Vedomosti" quoted the Deputy Prime Minister. He also said that the authorities intend to identify violations. State military orders will be monitored by the special State Automated System (SAS). "We will monitor the situation on-line and if necessary, will respond quickly," said Dmitry Rogozin to the parliamentarians.

As a carrot, the Deputy Prime Minister promised to abandon the purchase of imported military equipment currently widely practiced. "There will be no serial purchases; the only exception can only be one-off designs to develop new technologies. I think that soon we will abandon any purchases abroad," said Rogozin.

He reminded the people's elected representatives that in the next ten years 23 trillion rubles will be spent on the defense sector. However, it is not very clear how this money will be spent. The domestic military-industrial complex is facing some extremely complex problems whose successful solution is vital for modernization.

They include the loss of competence that occurred during the chronic under-funding of the production of defense goods. There are simply no experts left. It is still unknown whether this personnel problem can be solved.

It is also necessary to increase the efficiency of public spending in the MIC. However, this is a hard task even in the civilian world, let alone the classified industry.

The third question is whether the defense can be a stimulus for the development of other economic sectors. In this regard the special role belongs to private businesses. Will the government manage to interest private businesses in this area? The Deputy Prime Minister mentioned the need to establish public-private partnership in the military sphere, which should improve the efficiency of defense spending, but the specific mechanisms have not been mentioned.

Also in this regard, Dmitry Rogozin has high hopes for the creation of specialized "fund for ordering and tracking of high-risk breakthrough research and development in the interests of defense," which, apparently, is envisaged as the Russian equivalent of DARPA - the U.S. Agency for Defense Advanced Research Projects. This fund will be run by a few dozen highly skilled military professionals. They will determine the future of any developments in the field of defense industry.

"At the moment it is difficult to assess Rogozin's statements. We need to see what happens in practice. The proposed measures are progressive, but there are no criteria for evaluating their performance at the moment. We can only say that the trillions promised to modernize the national defense are not enough. To do this a lot more money is required and there is a need to grow people, and it's quite a lengthy process," said Alexander Khramchikhin, head of analytical department of the Institute of Political and Military Analysis in an interview with Bigness reporter. However, he believes that the idea of ​​attracting private capital to the military construction has its future.

"Actually, in the 1990s many companies became private in Russia, and it did not bring any troubles. In America and England all military companies are private and it seems to work just fine," the expert said.

Sergei Podosenov.

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Author`s name Dmitry Sudakov