OREANDA-NEWS. December 14, 2010. Vladimir Putin's opening remarks:

Ladies and gentlemen, We've just visited Sevmash, a major Russian shipyard. Let me thank all the people working here and in related companies for their professionalism, which has become all the more evident in recent years.

A fourth-generation nuclear-powered submarine, the Alexander Nevsky, has been successfully launched today. It is the first boat of Project 955. Let me remind you that its construction began in 2004, and it is to be commissioned to the Navy at the end of next year. The ship has been in the making for six years all in all, and if we do commission it in 2011, we will meet the pace we have set over the past few decades.

I cannot but agree with those who argue that because technology has advanced over the years and we have more money, the manufacturing process could well be shortened. With this in mind, we expect our subsequent projects to prove more efficient both in terms of money and the time we invest.

As for this particular vessel, it has yet to be fitted out and tested. Ships of Project 955 carry modern, high-quality hardware of the sort that all our armed forces will require in the near future.

According to our targets, the ratio of modern hardware in the Army, Navy, and Air Force will have grown to 30% by 2015 and to 70% by 2020. The government's arms programme through 2020 should form the basis of this large-scale effort. We expect to finalise this strategic document at our meeting today, setting all the right priorities.

We have already prioritised areas of focus in our effort to overhaul Russia's military.

According to our plans, the main emphasis should be placed on strategic nuclear forces. We also intend to provide our troops with advanced systems of missile defence, communications, command, and reconnaissance, in addition to the production of a fifth-generation fighter jet and other modern aircraft.

We must finally overcome the legacy of those years in which the Army and Navy were sorely underfunded, and, faced with only sporadic supplies of new hardware, they had to survive on old reserves and arsenals. That's why we've earmarked a handsome sum to support the arms programme. The sheer amount is staggering – 20 trillion roubles. But it's a well calculated figure. The defence minister and the chief-of-staff have both approved the prospective allocations and have justified the need to appropriate so much money by the looming decommissioning of outdated hardware.

This amount – 20 trillion roubles – increases the sum allocated under the current programme by threefold. Threefold, mind you. Of the designated sum, some 4.7 trillion will go to reequip the Navy, and one-third of it will be distributed over the next five years.

In the Navy, arms are to be renewed and strengthened; a strategic marine nuclear squad is to be formed from fourth-generation nuclear subs; modern surface vessels are to be purchased; and the operational hardware is to be repaired and upgraded.

To be able to cope with the challenges of enhancing the country's defence capacity, the Navy must be developed in a level fashion, including the development of strategic nuclear forces alongside general-purpose naval forces.

Here are several points I'd like to bring to your attention.

First of all, we've carried out a thorough inventory of the defence industry this year. We've examined it piece by piece, scrutinising naval equipment, aircrafts, armoured vehicles, artillery systems, and missiles.

The bottom line is that our military industrial complex boasts a high capacity, with far-reaching projects and groundbreaking developments, both old and new.

At the same time, we should understand that it takes time to modernise facilities for handling large serial orders. Manufacturers need to install modern equipment, adopt advanced technologies, and master the use of new materials. We should budget the necessary funds through the federally targeted programme for the defence industry through 2020. That’s our second priority.

I’d like developers and manufacturers to mobilise their resources and organise work properly. Please keep in mind that the schedule for arms supplies set by the Defence Ministry should be met without delay and that regulation in the field will be severe. Our plans for the industry in general depend upon the effective realisation of these massive initiatives.

Allocations made by the Defence Ministry must go to manufacturers that are capable of fulfilling our orders. If it is necessary to reequip a facility, it should be reequipped before it receives a production order. Otherwise, this work will have no other purpose than raising the cost of production. And we don’t need just spend money; we need things: we need carriers and missiles, if we’re talking about our strategic nuclear forces. In metals, we need production in other areas of industry – and you know what I mean.

Second, this programme has been designed for the purchase of over 1,300 articles of machinery and equipment. To produce 220 of them, it would be necessary to build new facilities or expand production at existing ones. We already need to begin thinking about how these facilities will be used in the future once the main package of state orders has been fulfilled. They must not stand idle; all decisions regarding the construction of new facilities should be weighted, well considered, and based on long-term plans for the use of these facilities.

Third, I am asking you to review measures to preserve and support the facilities that will not receive any major orders from the Defence Ministry over the next few years. Clearly, the demand for certain arms is now low, but it will inevitably grow in the near future as those arms will be replaced in a planned manner. Therefore, we have no right to let these industries’ valuable research and development potential – their highly qualified niche – dissipate. We need to find temporary orders for idle facilities and address the issue of employment, including through the use of retraining programmes.

We also need to address the specific issues that defence contractors such as these face. I am referring to the distribution of work and the ratio of state defence orders to civil industry orders. I understand that the Defence Ministry would like such companies to pool all their resources on defence. We all would like these companies to focus on this main priority. But international practice shows that a portion of these facilities should also be charged with civil industry orders – that’s the right approach. More to the point, in various industries, notably in the aircraft industry, companies can take production to a new level through civil industry orders that allow them to appropriate new materials and technology. They may then take advantage of these gains to the benefit of the defence industry, and in receiving civil contracts, these companies are presented with an excellent opportunity both to expand their production and modernise their facilities.

Next, we need an effective programme for building the potential of research and development institutions in the field of arms and equipment. We need to encourage the development of breakthrough technologies and solutions that can meet demand in both the defence and civil industries. I would like the Defence Ministry and the Ministry of Industry and Trade to attend to this issue.

In closing, the state programme for arms procurement should be finalised in the near future – by the end of this year. We now need to concentrate our efforts, even if everyone is already thinking about the holidays. We’ll have enough time to celebrate… Don’t worry, the holidays will be long… But for now, we need to work out the details and finalise this programme.

I’m sure it’s clear that while working on this programme, we cannot forget to address relevant social issues – in particular, the need to raise allowances for service members. The Finance Ministry and the Defence Ministry should work through a plan for increasing these allowances, and in addition, we should continue pushing through major programmes in the public sector, including programmes for providing our servicemen with permanent housing as well as temporary housing for the duration of their service.

Let’s get down to work.