Transcript of the beginning of the meeting:

Vladimir Putin: Esteemed colleagues, today I would like to discuss the results of military-technical cooperation in 2011. It is common knowledge that Russia is the world’s second largest exporter of special-purpose equipment and weapons systems. Work in this area is located at the intersection of international relations and the economy. The sale of special-purpose equipment and weapons systems on global markets amounts to more than just business operations – it is also an element of foreign policy. This has always been the case, with all countries, and Russia is no exception.

But we are focusing on economic issues today. I would like to ask you to report on the 2011 results, and I would like to discuss two more issues. The first issue, or the second issue, to be more exact, concerns the effectiveness of our decisions to change the procedure of work in the sphere of military-technical cooperation. This concerns everything linked with maintenance, components and everything having to do with fulfilling the requirements of our partners. And the third problem. I would like to discuss specific proposals, if any, regarding efforts to improve our subsequent work in the sphere of military-technical cooperation. Let’s get down to business. What do we have in terms of specific results? Who will start? You? Please, go ahead.

Alexander Fomin, (First Deputy Director of the Federal Service for Military-Technical Cooperation): Mr Putin, colleagues, I would like to report on the results of the work of the Federal Service for Military-Technical Cooperation as regards the export of military products in 2011 and the projected export of military products in 2012. On the whole, the Russian Federation’s military-technical cooperation with foreign states posted positive results last year. Russia’s overall military exports reached $13.2 billion, exceeding 2010 results by $2.8 billion, or 26%.

Vladimir Putin: Almost by one-third.

Alexander Fomin: Yes. These results have been approved by the Commission for Military-Technical Cooperation with Foreign States. The parties involved in military-technical cooperation received foreign currency proceeds worth $11 billion. Last year, the Russian Federation maintained military-technical contacts with 81 states. New countries and new markets emerged. Russian-made military products were delivered to 65 countries. India was the main recipient, accounting for 25%, or $3.3 billion, of total shipments. This process also involved some other countries that are Russia’s strategic partners in the sphere of military-technical cooperation. Countries, members of the Collective Security Treaty Organisation, received shipments worth about $80 million. The previous year’s volumes have been exceeded by more than two times.

Vladimir Putin: The year before last?

Alexander Fomin: Yes, exactly. The corresponding contract portfolio also more than doubled on 2010, totalling $492 million on January 1, 2011. Major weapons deliveries include such systems as S-300PMU2 Favorit surface-to-air missile systems, Mi-17-1V and Mi-17-V5 helicopters, Su-30MKI warplanes, Yak-130 combat trainers, Pantsir-S1 anti-aircraft missile/artillery systems, upgraded old tanks and new tanks, infantry fighting vehicles, Smerch multiple launch rocket systems, Gepard class frigates, aircraft engines, Kamov helicopters, MiG-29 and MiG-29SE fighters, Mi-35 helicopter gunships, Buk-M2E surface-to-air missiles, Molniya class guided missile speedboats and new T-90 tanks.

Vladimir Putin: Tell me, please, what were the results of our previous decisions regarding improved domestic procedures, equipment maintenance and components deliveries? And do our partners appreciate such decisions?

Alexander Fomin: Objectively speaking, the system of post-sale maintenance is probably the main parameter in the sphere of military-technical cooperation. Indeed, this parameter highlights the serious approach that weapons suppliers take towards their clients. I would like to say that the system of granting additional rights to enterprises developing and manufacturing military products has proved its worth and has facilitated far more effective components deliveries. Speaking of deliveries in this sphere, such exports topped $2.5 billion last year together with Rosoboronexport shipments. This substantial amount shows that the entire system of post-sale maintenance has improved considerably.

Russian legislation as regards components licensing was also modified in this direction. In 2010, the institute of general licenses and multiple licenses was created and has been working, making it possible to considerably simplify the licensing of components and accessories being shipped by us after end product deliveries. This system has been simplified considerably up to the point at which enterprises ship products under common general licenses on the basis of additional lists. No further coordination is required any longer.

Vladimir Putin: I would now like to ask everyone whether you have any requests or ideas which could be implemented in order to take additional steps improving our work in the sphere of military-technical cooperation.

Dmitry Rogozin, (Deputy Prime Minister): Mr Putin, there is one issue that I would like to raise. You see, many production facilities that manufacture our weapons and military equipment have been located outside the Russian Federation since Soviet times. Unfortunately, many countries, including those that consider themselves civilised, do not respect the copyright of original Russian manufacturers. The manufacture of Kalashnikov assault rifles in Eastern European countries is the most glaring example. Apart from being a specific assault rifle brand, Kalashnikov is Russia’s own brand. It appears that we must now focus on maintaining respect for our copyrights in the framework of military-technical cooperation. We honour their respective copyrights and combat pirated products, etc. … In reality, they are continuing to turn out assault rifles, with just a few changes in the design. In effect, they are making our assault rifles. They are continuing to manufacture and sell them, without paying us anything. In reality, their assault rifle versions are worse than Russian equivalents. Consequently, they are undermining our export positions.

Vladimir Putin: Yes, such a problem exists. It concerns this and some other weapons systems. Let’s discuss this and some other issues in greater detail.