OREANDA-NEWS. Dmitry Medvedev: Ladies and gentlemen, I’d like to begin our meeting by congratulating everyone present and all those who worked or are working in the defence sector on the 60th anniversary of the Military Industrial Commission.

The commission has always played a special role in developing the country’s defence sector. I’d like to remind you that it was established in 1953 as a special committee, was later transformed into the Military Industrial Commission of the Presidium of the Council of Ministers and was revived in its present capacity in 2006. Today, the Russian defence sector comprises 1,300 organisations and enterprises employing around 2 million people. These are not just figures, they offer powerful evidence of the traditions, unique experience and huge potential of the sector, which has been set the challenging task of re-equipping the army and navy. I’d like to remind you that the share of modern weapons and equipment must be increased to 70% by 2020, with the overwhelming majority of these modern weapons and equipment manufactured at Russian defence enterprises.

The rearmament programme was launched simultaneously with the programme for modernising the defence industry. Completely unprecedented funds have been earmarked in the budget for these two programmes.

These funds are also allocated because the defence sector and industry in general have not been properly financed for many years. We must make the most of these funds. The main goal is to restructure the defence sector as soon as possible.

By investing such funds in the defence industry, we are expecting serious results.  In 2013–2015 we expect a growth rate of 10%, which is much more than in many other industries. The growth of labour productivity should be about 20%, which is very important for our economy, industry and particularly the defence sector. But this won’t happen by itself – we need to work toward this end. We must create instruments for reaching these goals, and I will mention them in brief.

First, one of our priorities is to establish large integrated agencies. This approach has stood the test of time. It is important to consolidate forces in the most diverse areas of the defence sector. We cannot build a modern army and navy in a hurry in cooperative societies. I hope everyone understands this.

Second, we must continue improving our legislation. The law On the State Defence Order entered into force on January 1. The State Duma is completing a discussion of the draft law on the federal contractual system of purchasing goods and services that will replace the legendary or, if you will, the notorious 94th law. We should launch the system of long-term contracts. Only in this case will our defence enterprises become economically profitable, which we are looking forward to very much. Experts are drafting methods of price formation. This is a difficult and conflict-prone issue but we should resolve it. It is inadmissible to bargain on prices over the course of a whole year, ignoring the need to fulfill the defence order on time. These issues are related and top managers of enterprises must bear personal responsibility for fulfilling the defence order.

Third, we occupy serious positions on the world arms market – we are second in the volume of sales. That said, it is more difficult to keep these positions with every passing year. We must move forward all the time. We must master new high technology to make modern competitive products. Nobody will feel sorry for us. If we relax, other countries will leave us behind. You know who is right behind us. Therefore, we must create a high-tech potential for the commercial production of modern arms and military equipment. We need a ramified system of support for innovative projects at all stages, starting from R&D up to commercial results. We must have a competitive R&D sector in our defence industry, which has traditionally been very advanced in this country. It must generate new technology. The fund for advanced research has been established recently to support it.

Fourth, we should use the mechanism of private-public partnership, considering that we are part of the global market. It should attract additional funds for high-tech defence projects. This mechanism is broadly used all over the world. We won’t invent anything new, but we must use this partnership more actively, abiding by all requirements, such as information protection. Recently the Military Industrial Commission set up a Council on Private-Public Partnership that should help reach these aims.

Fifth, it is necessary to develop and encourage the transfer of technology. Advanced technology of the defence industry can produce breakthroughs in the civilian sector and yield enormous economic results. You are well aware of examples of dual-use products that have changed the world: jet planes, space technology, communications and the Internet. 

It is important that our clients – security and law-enforcement agencies – should start cooperation. The Defence Ministry and the Emergencies Ministry are already cooperating on robotics. At any rate, unification makes it possible to reduce costs and simplify equipment maintenance. It is abundantly clear that some products should be made under a common order from different ministries. It makes no sense to toss the money to the wind when everyone is dealing with the same thing.

Sixth, the personnel issue. The brain drain from the defence industry has practically stopped. This is the result we have achieved also because of increased funding. That said, we must know how to deal with the generation change in the next few years. The Soviet defence industry was proud of its personnel and for good reason. Many outstanding scientists, engineers and designers came from the defence sector. This country is rightly proud of Kurchatov, Tupolev, Ilyushin and Kalashnikov. Their successors are still keeping afloat our best design bureaus and research centres.

One third of personnel in the defence industry are not older than 35 and it is critical to keep these people there. This depends on salaries and resolution of social issues, primarily housing. Young specialists will not stay without this. We must pay special attention to continuous upgrading of skills. The federal targeted programme on the development of the defence industry to 2020 provides for the training of about 200,000 engineers and technical specialists. This is very important.

The work of the Military Industrial Commission and the defence sector as a whole is crucial for this country if we want to see it modern, strong and effective. Our defence potential and our economic advancement in general largely depend on you. The Russian defence sector is consistently resolving this task but we understand that its potential has not been revealed in full. We had a difficult period that we all remember quite well. But now it is gone and I’m sure we have a lot of interesting work and achievements ahead.

This is what I wanted to say in the beginning of our plenary meeting. Now I'll present the workers of the defence industry with Government awards, which I’m very pleased to do. I’d like to congratulate you once again on the commission's 60 year-long work. Let’s start the awards ceremony.