Prime Minister Vladimir Putin chaired a meeting on defence industry issues at the Energomash Research Labs in Khimki


"Next year state defence orders will be boosted considerably, specifically to 1.75 trillion roubles. We hope that this decision will not only allow us to begin the upcoming modernisation of the defence industry, but will also provide significant support to related companies and encourage the introduction of high technologies and the manufacture of cutting-edge materials and components."

Prime Minister Putin's introductory remarks:

Good afternoon,

You might have seen television notifications of my forthcoming televised question and answer session. Questions are being received already, and several of them caught my attention.

Here are some of them: When will we start dealing with defence industry problems and launch new engine production instead of repairing old engines? Another question: What options do you see for reviving the Russian defence industry?

These questions relate to today's agenda. I would like to draw your attention to the fact that people are concerned about this topic for several reasons. The first reason is saving jobs and creating new jobs that require advanced skills and pay a proper salary. But also, as you know, the general public has always taken Russia's defence capabilities very seriously. It has always been so, and it is the case today as well. And I am sure that it will be so in the future. People are concerned about it; they worry and ask us about the future of the defence industry.

At the previous meeting I mentioned that despite the overall economic and industrial decline caused by the global economic downturn, the defence industry has grown by over 3% - to be exact, by 3.7% to 3.8% - primarily thanks to state support. That's not bad.

But you and I agreed to discuss the problem in detail for specific branches of the military. As agreed, we will continue the series of meetings to consider the large-scale project of equipping the Army and the Navy with cutting-edge arms and equipment, and to review the issues that the Russian defence industry faces with regard to this.

Today we will discuss in more detail the situation in the rocket and space industry, and will decide on the funding for the promising Angara Complex project.

It is not by accident that we chose to meet here, at the Energomash Research Labs named after Valentin Glushko. The engineers at this centre are working on the engine for Angara carrier rockets. They are developing new engines.

I would like to remind you that the state provided significant support to defence companies during the challenging economic situation. As for Energomash, we decided to allocate two billion roubles from the budget to boost the association's share capital.

By the way, when I toured the production facilities today and talked with people, the company's employees raised one of the most acute social questions, namely the hosing problem. After the company-owned flats were transferred to the municipal government, rents skyrocketed.

Payments are a separate question. I have just spoken with Governor Boris Gromov. We arranged it so that the government of the Moscow Region would support the municipal government. I hope that rent will be fair. It must be economically justified but fair. Is the Mayor of Khimki present today? No? Okay, Governor Gromov will arrange it with him, and, I repeat, will support Khimki with regional budget allocations.

However, this is not a remedy for the company's housing problem in general. We agreed with Mr Dmitry Pakhomov (Energomash Director General) that the state would assist with funding the construction of a new block of flats to resolve the housing problems of the company's employees.

As I mentioned, this year we decided to increase the Energomash share capital by two billion roubles. We will increase this allocation to 2.25 billion roubles for the construction of the block of flats. Experts estimate that the cost of building the block of flats will amount to 240 to 250 million roubles.

Given that we will have to follow all the necessary procedures to increase the share capital, the money, 240 to 250 million roubles, will come a bit later. But you will be able to embark on construction as soon as you receive two billion roubles.

By the way, this applies to other defence companies. Judging by this example, one can say that social projects are critical. And, of course, the social service network must be upheld as well. However, this will place an additional burden on the company's finances.

According to Director General Pakhomov, only half of the people living in the flats that Energomash has spent billions of roubles on annually to maintain are employees at the company. The other people certainly need support too, but they are not employed at Energomash, and the company has to bear this burden nonetheless.

This is why social issues must be addressed. Optimal solutions must be found that do not hurt the companies' finances but create more favourable conditions for the people employed at these companies, thus increasing the efficiency of these companies and boosting salaries. If actual salaries rise, it will be possible to resolve these social issues. This is the best solution.

As for the block of flats, we came to an agreement and made a decision. Please start the job as soon as you have received the money.

We expect that the significant research and development potential of the defence industry will play an important role in the modernisation of the Russian economy after the downturn is over.

Next year state defence orders will be boosted considerably, specifically to 1.75 trillion roubles. We hope that this decision will not only allow us to begin the upcoming modernisation of the defence industry, but will also provide significant support to related companies and encourage the introduction of high technologies and the manufacture of cutting-edge materials and components.

This will result in a considerable increase in the efficiency of the rocket and space industry.

All the more so, because in 2010, defence companies are to supply over 30 ground-based and sea-based ballistic missiles and 11 space shuttles to the Armed Forces.

This objective should undoubtedly be fulfilled.

Cutting-edge rocket and space technology is an essential element to ensure a country's security and defence and serves as an effective nuclear deterrent.

In addition, the coordination and mobility of the Russian Armed Forces largely depends on information and monitoring systems, of which space technology is an indispensable component.

Meanwhile, one must bear in mind that manned flight, communications, navigation, television broadcasting and Earth remote sensing programmes rely on products manufactured by the defence industry.

This is why we will continue to attend to the issue of funding the rocket and space industry in spite of any difficulties.

This approach has shown positive results. In 2009, the rocket and space industry is expected to grow 18%. I mentioned that the defence industry will grow by 3.7% to 3.8% overall, but the rocket and space industry will grow by 18%.

However, increasing production is not always accompanied by an improvement in quality.

Despite our efforts, many Russian orbiter spacecraft still fall behind their international analogues.

There is another persistent problem: the failure to meet deadlines to develop new technologies.

I believe that we must fix this problem as soon as possible

The quality and reliability of the defence industry's products must be improved significantly, with all measures taken to ensure its competitiveness in international high-tech markets.

Let's get down to work.

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