Two important events linked with the nation’s defense and security took place last Tuesday. Firstly, the Russian Conventional Arms Agency finalized the results of its activities. It should be noted that over 50% of Russia’s weapons and military vehicles are produced under the aegis of the Agency. Secondly, the Security Council considered a draft of the foundations of the military-technical policy of the Russian Federation until 2015 and further prospects. These events are interrelated. Alexander Nozdrache, Director-General of the Russian Conventional Arms Agency, attended both meetings because the former began in the morning, and the latter in the evening (at 17:00 p.m.). The Security Council meeting was attended by all permanent members of the Council and leaders of other defense agencies (the Russian Ammunition Agency, the Russian Control Systems Agency, and the Russian Airspace Agency). Defense Minister Sergei Ivanov was the main reporter at the meeting.

President Vladimir Putin opened the meeting. In particular, he pointed at several principal issues, which must be taken into account when preparing Russia’s military-technical policy.

The president said: “We must understand what military hardware is needed for solving defense and security tasks efficiently. We must understand what military hardware is needed today and what in the future.” Putin also emphasized the necessity of forecasting the phases and timing of the creation of new military hardware and determining the actual economic capabilities of the state and its military-industrial complex.

The president noted that the phases and timing of the creation of new weapons “must be grounded and realistic”. This is why it is very important to synchronize this timing with the cycles of development of the military industrial and scientific complexes.

On the economic capabilities of the state, the president noted that defense expenses must not become a burden for the people nor hinder economic growth and solution of topical social problems. Putin also noted that the education system must be improved, and this process must be linked with the creation of a professional army.

The nation’s defensive potential and capabilities of the Armed Forces depend on the quality of military hardware, not the quantity. The president noted that business companies can give incentives to their employees. Enterprises of the military-industrial complex cannot do this. Putin said that defense enterprises must create special foundations for giving incentives to workers.

Problems outlined by President Vladimir Putin are well known. The foundations of the military-technical policy have been prepared exactly for solving these issues. It is difficult to say why Putin decided to speak about approaches to solving the defense industry’s problems, which are already mentioned in the document. Perhaps, the document was so crude that the president had to make principal amendments. It is not ruled out that the president’s consultants prepared the wrong speech.

Vladislav Sherstyuk, First Deputy Secretary of the Security Council, said that “the main objective of the document is to create multifunctional weapons on the basis of unified components and units”. Alexei Moskovskii, Deputy Defense Minister for Armament, noted that “the document indicates the timing of the beginning of the army’s rearmament”. He said that the creation of prospective weapons will be finished in 2006-10, and the Army will start receiving these weapons in 2008-15. The Security Council said that the document on the foundations of the military-technical policy prepared by scientists and representatives of the defense industry has proven to be “realistic”.

Mr. Sherstyuk said: “This is an executable document from the economic point of view because it is based on the Ministry for Economic Development’s forecasts of the basic indications of the country’s medium-range socio-economic development.”

Meanwhile, Sherstyuk and Moskovskii say that the situation is not as good. It is evident that the defense industry will receive the minimum support from the state. The state will not be able to support all enterprises. This is why their plight will depend on their arms business and conversion programs. The foundations of the military-technical policy are aimed at supporting research and development, retaining production facilities, and training skilled personnel.

Vladimir Putin noted at the Security Council meeting that the situation with financing of defense expenses has stabilized. In the meantime however, the director-general of the Russian Conventional Arms Agency acknowledged that the state does not have enough money for developing enterprises of the military-industrial complex. According to him, the deterioration of the basic assets of defense enterprises has reached 82%. The average age of people working in the defense industry is increasing from year to year. Enterprises lack contracts with the state because the share of the State defense order at defense plants amounts to only 7%. Defense enterprises manage to survive thanks to export contracts and civil products. However, civil products cannot save the defense industry. At the same time, the state does not create incentives for developing the defense industry. It should be noted that the Defense Ministry’s debt to defense enterprises has reached 0.8 billion rubles.

Officials hope that Herman Gref’s ministry has calculated everything correctly, and the forecasts of the development of the defense industry are optimistic. Meanwhile, the experience shows that Russia’s programs and forecasts always contain unrealistic ideas. There were two rearmament programs in the 1990s. They failed. Another program is underway. Meanwhile, we will soon understand that another economic crisis will break out in Russia if oil prices fall, and the state will forget about the defense industry.