Status of Russian Military Industrial Complex (MIC)

GarryB wrote: helmet mounted sights with high off boresight AAMs

To be fair I think the South Africans were first with that

https://flotprom.ru/2019/%D0%9E%D0%B1%D0%BE%D1%80%D0%BE%D0%BD%D0%BA%D0%B054/

The manufacturer-monopolist of microelectronic devices for the defense industry announced the closure of the plant


The plant "Lenteplopribor" - the only manufacturer in Russia of software-time microelectronic devices UVPM-1, used, for example, in creating rocket-torpedoes of the 85RU anti-Rastrub-B missile system - declared its liquidation. According toTass, the corresponding decision was made by the board of directors of the enterprise, and then it was approved by the general meeting of shareholders.

UVPM-1 is intended for switching electrical circuits with certain predetermined time delays and is also used in equipment designed to maintain the functioning of the Strategic Missile Forces of the Armed Forces of the Russian Federation. Back in 2016, the Federal Antimonopoly Service (FAS) of Russia recognized Lenteplopribor as a monopolist in the production of such devices.


As follows from the company's report, 95% of product customers are enterprises that fulfill the state defense order. The company's revenue in 2018 decreased by 59% compared with 2017 and amounted to 56 million rubles (in 2017 - 95.97 million). At the end of 2018, the plant received a loss of 3.2 million rubles (a year earlier a profit of 9.3 million was recorded). "The negative dynamics is related to the volume of output of OHMP-1 in 2018," the document explains.

Difficulties in the production of this product arose, among other things, due to the implementation of the FAS decree on lowering the price for UVPM, which had a negative effect on the financial condition. In 2016, the FAS ordered to reduce the monopoly high price for these products.

The company was founded in 1955 as a pilot plant "Lenteplopribor". It is considered the ancestor of the development in the country of the first semi-automatic devices for monitoring and recording the parameters of technological processes in the most diverse areas of the national economy of the USSR. In 1995, it was reorganized into OJSC "Plant" Lenteplopribor ".

That is clearly an attempt to strong arm mod.

Won't work. They can close the plant. Someone else (Rostec) will pick up development.

Otherwise mod would have stepped in.

AST Center Director on the state of the Russian military-industrial complex

The Russian military-industrial complex (MIC) against the background of many other branches of the domestic industry seems to be an island of prosperity. According to the state armament program (already the third in a row), fairly modern equipment is entering the troops. In terms of arms exports, Russia is firmly in second place in the world. But is the situation in the Russian defense industry so cloudless? Ruslan Pukhov, director of the Center for Analysis of Strategies and Technologies, spoke about the challenges that our defense industry has faced .

On the "citizen"

- Our defense industry today faces two challenges and one big problem. The first challenge is import substitution. Here the process is generally quite successful. The bulk of import substitution falls on products manufactured by Ukrainian enterprises.

There was localized the production of, for example, gas turbine engines for ships of the Navy. Powerful turbojet power plants for large military transport aircraft (for example, D-18T for An-124 Ruslan and An-225 Mriya) were also produced only in Ukraine.

In this part, the main task is not even to reproduce the old Soviet products, but to develop and produce their analogues immediately at a new technological level. That was done with helicopter engines, and with ship gas turbine engines. Gradually, there is also an import substitution of more high-tech systems that, until 2014, Russia imported from France (for example, thermal imagers for night vision tank sights) and other European countries, as well as Israel.

The second challenge is diversification, that is, building up the production of dual and civilian products at the facilities of military enterprises. This is a very complex process, which requires both the defense industry companies themselves and the state to make large investments and tremendous organizational and marketing work. The goals here are ambitious - to achieve 30% output of the “citizen” by 2025 and 50% by 2030. As of last year, this share was 20.8%, according to the statement of the Deputy Prime Minister of the Government Yuri Borisov. It should be understood that for some sectors, diversifying production is much easier than for others. For example, in aircraft, helicopter or shipbuilding, this is easier to do, but it is much more difficult for developers and manufacturers of missile weapons and air defense systems. Nevertheless, at MAKS-2019, the Tactical Missile Arms Corporation, for example, demonstrated a number of interesting types of civilian products - medical equipment, simulators, and metallurgical products.

What do finance sing?

Finally, the most pressing defense industry problem today is the very difficult financial situation of a large number of enterprises and companies. The debt load of the industry is monstrous - 2 trillion rubles. Almost all the profit that the defense industry enterprises manage to get — and this is 135 billion rubles — goes to paying interest on the debt. At the same time, the body of debt itself is not repaid and, in general, can hardly be repaid without special measures.

In part, this story is rooted in the 2012 decision to partially fund the State Armament Program for 2012–2020. due to state guaranteed commercial loans. Even then, opinions were expressed that the main beneficiaries of this decision would be banks, not defense industry enterprises or the state. But taking into account the fact that the rearmament had to be launched as quickly as possible, in general, such a decision was justified.

The second reason is the too high cost of money in the Russian economy. Even now, with unprecedented low inflation, the cost of a loan is 8-10%. Moreover, the profitability of most defense industries and engineering enterprises as a whole is at best 4–5%, and often fluctuates around zero.

And finally, about profitability. In general, according to the law, when fulfilling a state defense order, the customer must ensure such a price level that the profitability is at least 20%. In reality, as I said, it is good if 4%. The problem is that with such a profit, the development of a high-tech industry is impossible. There will not be enough funds for the purchase of new equipment, the construction of new, modern industrial sites, staff training and retraining. That is, such a low profitability for state defense orders dooms the defense industry to stagnate and lag behind competitors.

Where is the exit?

There is only one way out: to ensure higher profitability of orders of the Ministry of Defense. Moreover, the more high-tech products, the greater should be profitability. And the most high-tech branch of the military industry is the production of aircraft engines (these are generally the highest technologies in mechanical engineering) and air defense systems. You must understand that the Russian military receive world-class weapons at unbelievably low prices, especially if you take the dollar equivalent. If we compare the prices of all major weapons systems and assemblies, we will see that the cost of Western analogues is tens of percent, or even several times higher. But miracles do not happen, and this state of affairs cannot persist indefinitely. To maintain the high competitiveness of Russian weapons and military equipment, the defense industry needs to pay more. But now, defenders complain, the Ministry of Defense keeps the defense industry on a starvation diet.

Large microchips

The defense industry also has other problems, both inherited from the Soviet past, and those that appeared relatively recently. The main of those that arose during the USSR is the elemental base. Remember the joke that our chips are the largest in the world? Since the time of the USSR, things were not well with the elemental base. A short-term cooperation with the United States in the 1990s, including on the ISS, when we were eagerly sold electronics for both space and defense, finally ditched it. Then they imposed sanctions on Russia, blocked the faucet - and we were left without radio electronics at all.

Speaking of sanctions. One point of view is that weaning industry from high Western technology kills this industry. The exact opposite claims that, on the contrary, it forces them to develop more intensively. Both opinions are true and false in their own way. On the one hand, sanctions are really very painful. On the other hand, this is a chance to break the vicious circle in which the defense industry has been for more than a decade. I mean a shortage of new ideas and projects. Say, it is known that the Russian Su-30 and Su-35 aircraft are a further development of the Soviet Su-27 fighter. And so, not only in aviation. Until Armata began to enter the army en masse, the main tank remained the T-72, which was put into service in 1973. There are many examples. The plus from sanctions can be this: if you adapt to them faster than they are introduced, they will not cripple you. Everything that does not kill you makes you stronger.

I have read today but am unable now to find the link article where it is stated that Nabulina supports idea about writing off huge parts of debt Russian MIC has accumulated. Problem is described that because Russian MIC rise lots of credits now all the profit goes to Russian banks which produce nothing stalling further expansion and investment. It was stated that one third of all MIC debt should be written off which would than leave nice sum of money annually meant for its investments. Will certainly hear about it more if it gets to it.

She seems to have lightened up a bit. I also read that too. She said she also wants to drop interest rates even more.

It would be overall good.

Viktor wrote:I have read today but am unable now to find the link article where it is stated that Nabulina supports idea about writing off huge parts of debt Russian MIC has accumulated. Problem is described that because Russian MIC rise lots of credits now all the profit goes to Russian banks which produce nothing stalling further expansion and investment. It was stated that one third of all MIC debt should be written off which would than leave nice sum of money annually meant for its investments. Will certainly hear about it more if it gets to it.

Borisov was talking about this recently as well

There seems to be a struggle between the Defence lobby and the Economic "team" for the allocation of funds...here's another report on the subject

The head of the Duma Committee on defense Vladimir Shamanov commented on the draft Federal budget for the year 2020 and the targets of the budgets of 2021 and 2022. The General subjected the project to harsh criticism.


According to General Shamanov, the Cabinet continues to ignore the requests of the defense Committee of the state Duma to index military pensions, and also to allocate additional funding for housing subsidies for military personnel.

Shamanov also noted that the Committee of the lower house of Parliament urged member governments to take the decision to increase wages for civil employees of the Armed forces of the Russian Federation. But in the draft budget, prepared by the economic block of the government, there is no reaction

According to the assessment made by the Deputy of the State Duma is ignoring initiatives. The Committee invites the government to return to discussion of such norms. Otherwise, the queue for housing from the military will grow, additionally erased the distinction in the wages of employees with low and high qualifications. About it writes RBC, noting that in the document the term "the government of ignoring the initiatives of the Committee on defense and needs of the Russian army" is used five times.

The Committee of the state Duma, headed by Colonel General Shamanov, "strongly recommends" the Cabinet of Dmitry Medvedev to take into account all the remarks made on the draft budget for the next three years.

https://topwar.ru/163376-deputat-gd-rf-general-shamanov-obvinil-kabmin-v-ignorirovanii-potrebnostej-armii-rossii.html

Majority of MiC falls under Rostec and Rostec has their own bank. So technically Rostec is profiting from its own loans to its own entities.

Even if bankrupt these companies won´t die. Look what happened to the to companies producing the Kalashnikov rifles. They went bankrupt and were re-organised into one single company which is now bigger and better then ever.

Hole wrote:Even if bankrupt these companies won´t die. Look what happened to the to companies producing the Kalashnikov rifles. They went bankrupt and were re-organised into one single company which is now bigger and better then ever.

What a lot of people don't know but I paid much close attention to is how Rostec obtains the companies.

Essentially, they convince the government to let them go bankrupt. So that they don't have to pay the banks a large sum in order to obtain said companies. Rostec will not fully take a company until it either resolves debt issues or it completes it's bankruptcy. The latest ones of this year were Kurganomash and Uralvagonzavod, both of which where eventually added to rostecs company profile but it took a couple of years for Kurganomash to declare bankruptcy. They plan to now merge the two companies into one armor holding company.

The development of the Russian defense industry: two challenges and one critical problem

One of the most important achievements of state building in the last ten years has been the creation of a qualitatively new Armed Forces of our country. The troops, which forced Georgia to peace in 2008, had only one (though fundamentally) advantage. The 58th army was for the most part staffed by officers and soldiers fired upon during the Chechen wars. In all other respects, the situation was catastrophic. Our Armed Forces not only remained at the technological level of the eighties of the last century, but were equipped with equipment on the verge of complete physical deterioration: they operated with primitive and archaic control systems, communication at some point was carried out by mobile phones. There was practically no intelligence at the tactical level, the troops were blind and deaf, no one in the army had heard of drones ten years ago, says Ruslan Pukhov , director of the Center for Analysis of Strategies and Technologies, in an article for Expert magazine.....

Full article: https://bmpd.livejournal.com/3807879.html

Some useful OPK details from Promsvyazbank's Igor Nuzhdin. He said OPK enterprises in 2018 sold 4.8 trillion rubles worth of products, 48% as part of the the state defense order, 31% from arms exports, and 21% from civilian products.
He said total OPK debt is between 1.8-2 trillion rubles and 700 billion rubles of that requires restructuring (Borisov gave the same figure), which enterprises can only repay the interest but not principal. Only 0.9–1% of the loan portfolio is overdue (~18–20 billion rubles).
The defense industry register contained 1,319 enterprises at the end of 2018. Of these, 140 enterprises had an operating loss, accounting for 9% of OPK's revenues and 23% of the OPK's debt, and they have a high risk of defaulting on their loans.
Another 142 enterprises had an operating profit, but their Net Debt-to-EBITDA Ratio exceeds 5.2. Those 142 enterprises account for 17% of the OPK's revenue and 33% of its debt. They face restrictions on attracting new loans and a risk of defaulting on their loans.
Less than half of OPK enterprises, 583 of them, are in a strong position with a net debt-to-EBITDA ratio below 2.3 on average The account for 51% of the OPK's revenue but only 12% of its debt. Officials are still discussing how to restructure 700 billion rubles of this debt.
The more radical options like writing off this debt or paying it off from budget subsidies have been dismissed. The main creditors, Sberbank, Gazprombank, VTB, and Novikombank, were against the 1st option and the Ministry of Finance against the 2nd.
Putin has given the goal of increasing the OPK's share of civilian production to 21% in 2018, 30% by 2025, and 50% by 2030, but debt is hindering the OPK's efforts. Promsvyazbank says the OPK should increase civilian sales by 2.2 times by 2025 and by 6.3 times by 2030.
State orders, national projects, and state support measures: like a ban on extending the service life of old train cars, renewal programs for the fishing fleet, a medical helo program, etc. But Promsvyazbank believes the OPK needs 1.9 trillion rubles in investment too.
The OPK is making 145 billion rubles worth of interest payments annually. Promsvyazbank said Rostec accounts for 42% of the defense industry, Almaz-Antey for 14%, United Shipbuilding Corporation for 9%, Roskosmos for 8%, and Rosatom for 5%.

NOTE: doing the math that would leave 454 enterprises in the middle with 23% of OPK's revenue and 32% of it's debt.

https://www.vedomosti.ru/business/articles/2019/10/17/813972-oboronnie-predpriyatiya

Debt problem of defense industry enterprises resolved - VTB head

https://www.militarynews.ru/story.asp?rid=1&nid=525954&lang=RU

01/23/2020 19:41:06
*** The decision on the restructuring suits the banks of

Davos / Moscow. January 23. INTERFAX - The problem of the debt of enterprises of the Russian defense industry complex (MIC) has been resolved, said Andrey Kostin, President and Chairman of the VTB Board.
“Everything was decided. At the end of last year, the president had a meeting with all interested participants, a presidential decree was adopted, however, is nature is confidential , so I would not comment on it,” Kostin said in an interview with Russia 24 (VGTRK ) on the sidelines of the World Economic Forum in Davos.
"But on the whole the problem has been resolved, there is active participation of the budget and preferential restructuring by leading banks, but it is so feasible, it is reasonable, it really takes into account the risk that the banks took, therefore, we are generally satisfied with this decision. I think the government also. Therefore, this program is being implemented. I believe that we will not be returning to this topic now, "said the head of VTB.
On December 27, Deputy Prime Minister Yuri Borisov announced that measures had been worked out to improve the financial condition of key defense industry enterprises, and loans worth 700 billion rubles would be cleared.
“This year we managed to develop measures for the financial recovery of the main enterprises of the defense industry complex. This means clearing bad loans, we are talking about a huge amount of over 700 billion rubles. They are mainly concentrated among the finalists - UAC, USC, UEC, Roscosmos. For financial market measures have been worked out, agreed upon with our colleagues from our economic bloc, the Central Bank, creditor banks, ”Borisov told the channel.
"Two mechanisms will be used: it is the capitalization of enterprises in order to pay off these bad debts and the restructuring of long-term credit debt at a reduced rate," said the Deputy Prime Minister.
According to Borisov, these are one-time and forced measures.
"Enterprises will be required to take counter obligations - to increase revenue, reduce production costs, get rid of non-core assets," Borisov said.
In an interview with Interfax last July, Borisov said that loan debts in the Russian defense industry are concentrated in several integrated companies.
“90% of debts are owed to several integrated structures: UAC (United Aircraft Corporation), USC (United Shipbuilding Corporation), Uralvagonozavod, to some extent these are Vysokotochka (High-Precision Complexes) and Almaz-Antey, - said Borisov

Also in the news: Doctors spent several days removing significant quantity of footwear from lower intestinal tracts of more than several high ranking industrial and financial officials.

Russia has substituted imports for Ukrainian motors

Interview with Bekhan Ozdoev from Rostec, about the development of the weapons sector of the company and important programs:

https://ria.ru/20201127/ozdoev-1586506217.html

The RBC news agency, under the headline “I am not a diplomat, I must prepare for the worst,” published an extensive and interesting interview with Deputy Prime Minister of the Russian Federation Yuri Borisov (quoted here with abbreviations). Deputy Prime Minister of the Russian Federation Yuri Borisov

- What results can you sum up regarding the industry, which you still supervise along with the defense industry complex?

- We did our best to open the domestic market to domestic producers. Thanks to government support (price preferences, second and third excess, etc.), the share of Russian products in government and corporate purchases increased from 13.3% in 2019 to 24.2% in 2020. For two years, this is about 10 trillion rubles, which remained in Russia.

These are data from automated control over government and corporate purchases through the unified information system of the Ministry of Finance. It already works great and from next year will become the basis for monitoring quotas. Let me remind you that from 2021, mandatory minimum shares of purchases of goods and services of Russian production will be established in government and corporate purchases. We expect that the share of domestic products in purchases will grow even more significantly.

Now about the defense industry. Three years ago, Vladimir Vladimirovich raised the issue of diversifying the defense industry: by 2025, 30% of the defense industry should go to the civilian segment, and 50% by 2030. Analysis of the starting positions showed that the picture by industry is very varied. In aviation, one share of the defense industry's presence in the civilian market, in space - another, in the radio-electronic complex - a third. Try to rebuild the economy and the technological chain, which have been formed for decades and have been sharpened to ensure defense and security, and enter the civilian market with competitive products. There are completely different rules of the game: you are not paid for R&D with a full ruble, as with a state defense order, markets are not guaranteed, that is, the purchase of products in full. Solid risks. Of course, this was a serious challenge for the defense industry.In 2019, the indicator reached 24.1% (against the planned 17% in 2020). By the end of 2020, we plan to increase the production of civilian products to 25.1%.

We have managed to improve the overall financial position of defense enterprises by freeing them from bad debts. Let me remind you that the defense industry complex was burdened with old debts, the nature of which is completely different, they had accumulated since the nineties.

- Can you give specific examples?

A contract was signed in aviation, and then, for some reason, it did not take place. What to do about it? The money has already been taken and spent, but there is no sale. Or another example: "Almaz-Antey" is already at the stage of implementation of the contract on air defense systems for Iran, and then sanctions are being imposed on the country. Then the supply of MiGs to Algeria was disrupted.

Enterprises servicing bank loans must still fulfill the tasks set by the president. Therefore, they run here, to the government: increase the volume of R&D for us, give us subsidies. Because their own money is spent on servicing bad bank loans.

In the course of a serious dialogue with financiers and bankers, we came to the understanding that there is no other way but to write off bad debts and restructure problem ones at a preferential rate for a long time. The solution is definitely revolutionary. In my memory, this is the only case when the state consciously took such measures. Written off through additional capitalization of enterprises 350 billion rubles. toxic loans. It has already been restructured for about 260 billion rubles, and there is a reserve for another 150 billion rubles.

According to preliminary estimates, the enterprises of the military-industrial complex will annually free up at least 50 billion rubles, which they previously used to pay interest to banks. Now they will be able to invest in development.

- A couple of years ago you said that the total debt of defense enterprises is 2 trillion rubles. He has changed?

- Now I was talking about toxic assets that will never be returned. This is a much smaller amount. And the volume of credit funds attracted by defense industry enterprises is about 3 trillion rubles, this money is constantly circulating in enterprises, and this is normal.

“The President, of course, had to be involved”

- By what criteria was it determined who to write off debts and who not?

- Among the main debtors are UAC, OSK, Uralvagonzavod (UVZ), GK NPTs im. M.V. Khrunichev "and RSC Energia. The criteria are purely economic. If the enterprise has more than six debt to EBITDA - additional capitalization, if in the range from three to six - restructuring. The commission under my leadership began to work in January. In July, I reported to the President that the main goals had been achieved. At least the issue of writing off 350 billion has been resolved. And not voluntarily, but as a result of serious discussions.

The main task was not just to pay off debts, but to understand what would happen next. Each enterprise applying for write-off or restructuring presented a financial recovery program, which was discussed in detail. Our task was not only to make healthier, but to see the future, so that the company would not come to ask for money again in two or three years. It was a one-time action. There will be no repetition.

- How did the banks agree to this? Did you have to involve the President?

- I will not hide, of course, I had to. All this was born very hard. You don't need to be a prophet: a banker is interested in getting a guaranteed income. But they, too, are sane people. The improvement of enterprises will shape their future economies. Companies are getting on their feet, expanding their market presence. They have free funds, they create new products, increase their turnover, make profits, attract more funds from the market in order to implement their plans.

- Regarding the enterprises that you have listed - UAC, UVZ, NPTs im. Khrunicheva - what is their debt now?

- The task was to keep the debt to EBITDA below three. Somewhere we have achieved this, somewhere we understand when and at what period we will achieve it - it is impossible to do everything at once. For some enterprises, the “debt to EBITDA” ratio was simply indecent, calculated in double digits. And today it is within reason - from three to six and below three.

- Which companies were the most indecent?

- UAC, she got the most. And she had the worst economy ever. But this is a complex problem of aviation as such, especially of the civilian unit. Let's remember the fate of the landmark MS-21 project, which they began to do before the sanctions in broad cooperation with foreign partners. But then we were denied the supply of composite materials for the wing. With already concluded contracts and obligations assumed. The President of Russia recently called it rudeness. And this is really rudeness. We seem to be in the WTO, and we seem to play by all the rules. And they tell us: listen, we will not supply you with composites. What does it mean? Of course, this seriously aggravates the situation. We had to spend serious resources on import substitution, because there is no other way. We cannot live constantly under orders - we will sell, then we will not sell ... This is impossible.

- By the way, about the MS-21. Experts criticize the PD-14 engine for this aircraft - it is allegedly half a ton heavier than the Pratt & Whitney engine. It turns out that an extra ton per plane will kill the entire economy. Or do you have a different opinion on this matter?

- Where did you get this strange data? They are not true. For engines of foreign production and the Russian PD-14, the same technical task was formulated with a large set of parameters, not only in terms of weight. According to the UEC, the PD-14 engine meets all the declared characteristics. And on December 15, MS-21 successfully completed its first flight with the domestic PD-14.

- Is it true that after American-made Sukhoi spare parts are replaced, they are not returned due to sanctions? How will this problem be solved?

- Since the imposition of sanctions against Russia, we did not sit idly by and, of course, understood that we needed to move away from import dependence in the SSJ100 project. Whatever our “partners” do, we will cope and the SSJ100 will not only continue to fly, but will also become the locomotive of domestic regional aviation, which we intend to revive and develop. Today SSJ100 is operated by 11 Russian and four foreign carriers. SSJ100 aircraft are being serviced and are gradually reaching a good level of operational reliability and efficiency. The main efforts of the aircraft manufacturer are focused on improving the PPO system - a very important factor in the success of the entire project. Recently, some progress has been made in this direction. The serviceability of the park is gradually increasing.There are no contradictions between Russian aircraft manufacturers and foreign partner companies, but the policies of individual governments make it difficult, I will not hide.

"Roskosmos has one of the worst budget cuts this year"

- At a meeting on November 2, Vladimir Putin said that the country's priorities were to improve its own space infrastructure, create a promising line of missile systems, and so on. Is this formulation of tasks linked to the recommendations of the Ministry of Finance to cut Roscosmos' costs?

- The easiest way is to switch the arrows to Anton Germanovich [Siluanov] and say that you don’t give us work, you don’t give money. Everything is much more complicated.

- Dmitry Rogozin complains that the Federal Space Program has been cut by 150 billion. At the same time, Roskosmos does not have time to absorb the already allocated budget funds. The Ministry of Finance all the time recommends cutting costs. And the president gives instructions to build missiles ...

- The truth is always somewhere in between. On the one hand, the passport of the program provides for larger numbers, and the Ministry of Finance is really short of supply. But this is rather due to the financial and economic situation in the country. On the other hand, what is the Federal Space Program? This is a collection of different activities. Who formed them? That's right - Roscosmos. But in the process of implementation, the author constantly proposes to seriously change this program. And every time this entails serious bureaucratic agreements. Yesterday you came with one tablet, now with another.

These are all questions of good planning. And if every year after the adoption of the program you come to the government and try to seriously change the financial parameters, this will certainly cause bewilderment. Think for yourself: the year has begun, the program is being adjusted for nine months - there are three months left for the implementation of measures. Of course, it is almost impossible to accomplish anything.

Therefore, there is such a paradox: with a theoretical lack of money for the planned activities, Roscosmos has a low utilization of the already allocated budget funds. A particularly vivid confirmation of this is the Vostochny cosmodrome, when some amounts are announced, but in fact others are being mastered. As a result, requests to transfer funding to the next year. And the Ministry of Finance is right in demanding careful planning and efficient spending of the funds that are brought in.

Recently, the government has summed up preliminary results for nine months of this year's budget. And "Roskosmos", to put it mildly, is not among the leaders. Unfortunately for me, as I am in charge of this direction, he has one of the worst indicators for cashing the budget of this year. There are prerequisites for the fact that January 1 will come and the Ministry of Finance will ask again: how do you ask for money when you could not spend what you have?

- How to solve this problem?

- Roscosmos is working on improving the cassation mechanism. There is nothing tricky about this: to conduct tenders on time, conclude contracts and then monitor the progress of fulfillment of obligations. The colleagues have every chance to organize work in this direction.

Back in 2019, Roskosmos, before reaching them with budgetary funds, began trading with suspensive conditions in order to save time and begin the actual implementation of contracts at the beginning of the year. A very large percentage of these contracts were concluded in this way. This made the procedure faster. But the “tails” from the past get in the way. Take, for example, the same East. There are serious concerns that by the end of the year we will have to persuade the Ministry of Finance again - they say, it happened, and we need to transfer money, add it to the already allocated budgets for next year. And to say that the Ministry of Finance is deliberately offending Roscosmos and does not give money is wrong. Because even with the reduced budget - and we went for a 10% reduction in the context of a pandemic for the next three years - we defended Roskosmos approximately at the level of previous years - 203.9 billion.

On November 2, at the meeting, it was indeed recorded that the Sphere and STK programs were not adopted, and the funding of scientific space was cut. But the Ministry of Finance has arguments that also need to be heard. For example, "Sphere". The discussion has been going on since May 2018. Is there a Sphere program with a clear roadmap and a description of the result, fixed deadlines? As a set of events not for a month, not for two, not for a year or three, but for the entire program period. The federal agencies that allocate money, the same Ministry of Finance and the Ministry of Economy, must understand what the result will be obtained for this money.

“For two and a half years we have been talking about what Sphere

is. What is the state of this project now? Will Sphere be the Russian answer to the American Starlink satellite system from Elon Musk and the British-Indian OneWeb?

- I had an instruction from the president to manually tighten these directions until December 10. For two and a half years we have been talking about what "Sphere" is. Either one or the other. Who should shape this all? Ministry of Finance, Ministry of Energy or Roscosmos? I'm already taking serious action. On December 4, we talked about this with Dmitry Olegovich [Rogozin], and I promised that at the supervisory board I would raise the issue of taking action against those people - these are specific names - who were responsible for developing the program. Let them explain why we have been discussing for two and a half years - what we will eventually launch. It's a matter of planning quality.

What is "Sphere"

Vladimir Putin announced the appearance of the Sphere satellite system in 2018. It is planned that it will include 542 spacecraft, and the deployment of the groups is expected from 2024 to 2028. According to Roskosmos, only about 150 rockets will be needed to launch all satellites, the production of which will cost over 300 billion rubles.

It is assumed that "Sphere" will become a competitor to foreign systems OneWeb and Starlink, which are designed to provide communication and Internet access throughout the world.

Another example is GLONASS. The program dates back to Soviet times. Thank goodness we have restored the group. Today we are just talking about improving navigation performance and maintaining the constellation's performance. The first option for the continuation of GLONASS for the next program period, with which Roscosmos came along, was over 1 trillion rubles. Today we have finally come to a consensus - it is 484 billion rubles.

- Roscosmos asked 1.5 trillion rubles for the Sphere project, what is the government's position on this?

- First, Roskosmos estimated the Sphere at 3.3 trillion rubles, of which 2.8 trillion rubles. - budgetary. The next iteration was 1.8 trillion rubles, of which 1.46 trillion were budgetary. Apparently, you are talking about this option. But there is also a third figure - 800 billion rubles, which Roscosmos announced before the presidential meeting. You need to understand what exactly to ask for money: goals, objectives and KPIs.

- Just wanted to clarify with you.

- There is no sane program yet, so there is no definite answer to your question either. But even in conditions of complete uncertainty, the Ministry of Finance took unprecedented measures, laying in funds for the priority measures of the program: 7 billion rubles. for 2021 and 14 or 15 billion rubles. for 2022 and 2023.

The same goes for scientific space. I think we are already at the finish line and will definitely accept GLONASS for the next program period in December.

- Alexander Ivanov from the military-industrial complex subordinate to you said that in the future Roskosmos plans to attract private investments in the Sphere for 350 billion.

- Yes. The order of the numbers is correct.

- Whose investment is this?

- Now many already commercial structures and corporations, in particular Rosatom, are interested in creating space groupings in their own interests. MegaFon announced work to create broadband access, in fact, a low-orbit constellation.

- China asked twice for this project. Why didn't we let him in?

- I have no information that China asked to come here, but we did not let him in.

- Last year, the United States imposed sanctions, according to which, from January 1, 2023, the Pentagon cannot enter into contracts for commercial satellite services with a foreign legal entity if this "creates an unacceptable cyber security risk" for the country. How does Roscosmos intend to make money from 2023 on the launch services market?

- We do not and have never had contracts with the Pentagon. As for the sanctions in general, we will behave with dignity and honor. We have been living practically all our life in conditions of various sanctions. Sometimes more, sometimes less. The Soviet Union lived, modern Russia lives in them. We have rich experience in organizing our activities in such conditions.

- And what will we do when our foreign partners, who used our missiles to take out their satellites, say: now we are afraid of losing more profitable contracts with the Pentagon, so we will not cooperate with you?

- The war plan will show. Let's wait and see what we will do. We have enough of our own internal problems. We need to form our own grouping. In an amicable way, all launch services can be in demand within Russia. This is one of the exits. In addition, we have never refused international cooperation. And in fact it continues - with the same Americans. The most striking example is the ISS. We need to work more actively with China on large-scale projects for the exploration of deep space or the Moon.

“Will there be landings? There will be ”

- Another difficult topic is“ Sea Launch ”.

- I specially flew to the Far East to see it with my own eyes. He walked around and looked. Leaving the platform unattended or cutting it up for scrap would be foolish. I am absolutely convinced that Sea Launch needs to be restored. I convinced the president of this.

The question is how to commercialize the project? This is the whole point. The search for a business model is underway. Perhaps a public-private partnership is appropriate here. It was not for nothing that [Vladislav] Filev bought Sea Launch. This economic situation made him sit down with us at the negotiating table today. Because, well, he does not have enough financial capacity. Otherwise he would have done without us.

According to expert assessment, the vessels are in satisfactory technical condition, after repair they can be operated.

- But since Filev acquired Sea Launch, there has not been a single launch from this platform.

- He bought Sea Launch in one political structure, then there was Ukraine, sanctions, a break in relations with Yuzhmash. Filev was focused on launching Zenit missiles. But Zenit is not. But today it is absolutely clear that Soyuz-5, which is being developed by the Progress SRC, can stand on this platform without any major modifications.
As for the platform equipment, it is possible to restore it within a reasonable time frame for a reasonable price. The Americans dismantled mostly outdated equipment. The most important thing is the launch pad and equipment for launching carrier rockets (launch, refueling, etc.). Everything is done there almost automatically. Three hours before the start, there is no one on the platform, the ship is three kilometers away, and everything is controlled by radio. After all, there were also unsuccessful launches, but they did not lead to catastrophic consequences, as is the case at cosmodromes, when, excuse me, everything around is blown away. All this should be used.

- If it is decided to keep the Sea Launch, will the Slavyanka port be re-equipped for it? How much will it cost?

- There are four possible options for a permanently based port: Ulysses Bay (Vladivostok), Bolshoy Kamen Bay, Nerpa Bay and a promising port to be created in the Far East. Any of them will require the construction or modernization of hydraulic structures (pier, landing stage, breakwaters) and, if necessary, deepening the bottom. A specialized operator of the Sea Launch project will have to estimate the cost of the work.

- You spoke about the creation of a specialized operator that will be engaged in launch services from Sea Launch in August. It was assumed that this company will have several founders: Roscosmos, Rosatom and S7 ...

- Today Rosatom is in the negotiation process with Filev. The state corporation is the main player in the Arctic region and is thinking about the need to create space groups that will provide all the information. You can correctly plan the need to produce the required number of icebreakers, as well as what class they should be.

- Let's get back to the Eastern topic ...

- Will there be landings? There will be.

- What are the names?

- They have already begun. You yourself wrote about it. The director of the TsENKI branch, the deputy general director for construction was detained. A personnel decision was made for the general director of TsENKI, on whose assurances and promises a lot was built. He was removed from office.

- What are the new dates for the commissioning of Vostochny facilities?

- There have been no revisions of the dates yet. So far, the one that is determined by the presidential decree is in force.

- Back in the summer it was announced that the Ministry of Construction had been attracted to re-evaluate the 39-billion-dollar contract with the PSO Kazan for the second stage of the Vostochny. What is the total amount?

- For objectivity's sake, the launch pad for "Angara-A5" with PSO "Kazan" has been contracted. Another "Angara-V" with a hydrogen engine is planned. And maybe the original requirements will be changed. But this must be proved at the stage of adjusting the working design documentation, according to which it should be built. This work has not yet been completed. And today it is too early to talk about the timing or attraction of this amount. Nobody has come yet and has not said anything reasonably.

“Directed Energy Weapons

Are No Longer Fiction” - Has the pandemic affected the implementation of the state defense order?

- I could not help but influence. I mean the process. The results were not affected. I think we have promptly taken comprehensive measures to support the defense industry enterprises. I do not foresee any catastrophic exit situations. Contract indicators are now better than last year's by 1–2%. Cash execution metrics also improved. We provided the enterprises with advance payments on time, and I see no prerequisites for disruptions. There are more than 3 thousand contracts there. There are certain kinds of shifts in terms of time, but the percentage of fulfillment will not be worse than before. And most importantly - even if we do not achieve it, then we will certainly come close to the magic figure of 70% of staffing with modern and advanced weapons for all branches of the armed forces.

- How much has the defense industry lost due to the pandemic in monetary terms?

- The money for contracts under the state defense order was transferred in full. And how much it took to comply with all quarantine measures - masks, personal protective equipment, new logistics, testing, organization of multi-shift work - has yet to be calculated. These costs came from the profits of enterprises, and not from funds for the state defense order.

- What defense contracts had to be postponed due to the pandemic?

- All contractual obligations are fulfilled on time. I have no data on the failure of export contracts. And the package of our orders has not decreased. And the figures that the president announces following the results of the commission on military technical cooperation are still the same. Nothing has diminished in this regard. Our presence in the global arms market is stable.

- When preparing the budget for 2021–2023, the Ministry of Defense and the defense complex had to take measures of budgetary savings: in particular, the financing of the GPV was reduced by 5%. How much is it in money and how will this decision affect the country's defense capability?

- You say so - cut the budget. How did we compensate for this? Under a credit scheme, at the expense of a reasonable rate of Promsvyazbank. This is a bank that supports the defense industry, which, due to the large resources concentrated there, primarily the state defense order, can lend to enterprises at a rate close to that of the Central Bank. When everyone gave loans at 8-9%, [Petr] Fradkov gave loans at 6.5%. This saves a lot of money. In addition, part of the subsidies will come from the Ministry of Industry and Trade.

Of course, the enterprises themselves will also have to shrink: to reduce the cost, to lose part of the profit as a result. But in this situation, volumes and loading are more important. These are compromise and balanced decisions that have already been made. And the state defense order will not suffer, even with the announced reduction in funding by 5%. This is good news.

- In 2023, the state armaments program will be adopted until 2033. What new trends will it reflect, how will it fundamentally differ from the old GPV? Are new conflicts taken into account, including in Nagorno-Karabakh?

- The planning of such an important program for the country as the state armaments program begins almost three years before its adoption. Because you need to take into account a lot of factors and realize all the trends in scientific and technological development in this industry. In terms of trends, look at how the nature of military conflicts with the use of unmanned vehicles has changed. This is already a steady trend. First, these are reconnaissance assets, today they are also strike assets.

Karabakh showed how they work. Syria has taught a lot. And the high-precision weapons that we used in Syria, I mean "Caliber", X-101 and so on? Here are some stable trends. I will even say this: the weapon of directed energy is no longer a fantasy, but a reality.

“We have good export prospects for the Su-57”

- Since we have moved on to the topic of promising military equipment, tell us what will the sixth generation fighter be like?

- Most likely, we will move more towards unmanned technologies. At least at some stage, the work of manned and unmanned vehicles will be combined.

- That is, the sixth generation fighter will be unmanned?

- As an option. Although the fact that there will not be a person inside physically does not exclude the possibility of controlling it from the ground or from a nearby aircraft. This is no longer fantasy. The Ministry of Defense last year demonstrated the joint work of the Hunter and the Su-57 - they flew in pairs. First, excuse me, it's better to risk a piece of iron than a human life.

- What will the new fighter look like?

- The main thing is that it will definitely be there, you cannot stop progress. Unless we reach an agreement with the entire globe to bury our pistols and cannons and say: “That's it! Peace, friendship. " What will the sixth generation fighter be like? There are certain criteria for what the transition from generation to generation is. For example, the fifth generation is a supersonic flight in non-afterburner mode, stealth. I don’t even remember everything now ... Most likely, it will not be just a fighter, but an aviation complex of the sixth generation. Including in a combination of unmanned and manned vehicles. Now there is a trend towards effective aircraft systems, rather than just combat units with wings.

- Is this an initiative development or by order of the Ministry of Defense?

- Research and development work is being carried out by order of the Ministry of Defense. Various options are being considered and evaluated at the level of engineering notes. Future performance is calculated. Then a lot of money is spent on this. You have to understand from the very beginning what will happen in the end.

- And when is this fighter or, as you said, the sixth generation aviation complex supposed to appear?

- Work on such a project from the start of the ROC takes about five to seven years. And the engine has an even longer cycle, work on it will have to start earlier.

And then, with regard to combat aviation, I think we have quite good positions. There is the Su-30, which has proven itself in real conflicts and has real demand. Su-35 proved to be excellent. And we have excellent flight performance, confirmed by numerous tests, of the Su-57. And good export prospects for them. And the effectiveness of the sixth generation fighter will be determined not only by its flight performance, but to a greater extent by the complex of onboard equipment and aircraft weapons. That is, how far accurately he can see, detect the target. After all, he does not take the enemy to ram, he shoots.

- You said about the good export potential of the Su-57. Do you already have specific agreements with someone?

- Work in progress. We will not give out commercial secrets of Rosoboronexport. But our army has always been and will remain a priority - we do not sell anything abroad until we satisfy all the needs of our troops. I can say that there is a contract signed with the Ministry of Defense for 76 vehicles - so the hammers are knocking.

- India wanted to localize the production of fifth generation fighters. Is there any progress on this issue?

- Moving forward.

- And at what stage?

- And what answer do you want from me?

- Final.

- The final one is the signing of the contract. They constantly show interest, they do not have their own developed aviation industry. It is a sovereign country with a billion people, which pursues its own independent policy. You can't impose anything on her. You still have to follow them to buy. There is a serious struggle for the market, and at any moment they can say: yes, we are friends, but there is a better, cheaper and better quality product. And we must prove the opposite. In addition, the Americans are very interested in changing the structure of their exports and are constantly making various proposals to their Indian colleagues.

- Are there any plans to divide Uralvagonzavod into civilian and military divisions?

- This is complete nonsense. How do you imagine that? For half an hour, the machine works on a track for a tank, and the rest of the time - on a wheel for a tram, or what? Technological processes overlap too much: both machine batches and the entire technological line. And the product line and its promotion to the market is a completely different matter.

Authors Inna Sidorkova, Vyacheslav Kozlov

the way, about the MS-21. Experts criticize the PD-14 engine for this aircraft - it is allegedly half a ton heavier than the Pratt & Whitney engine. It turns out that an extra ton per plane will kill the entire economy. Or do you have a different opinion on this matter?

- Where did you get this strange data? They are not true. For engines of foreign production and the Russian PD-14, the same technical task was formulated with a large set of parameters, not only in terms of weight. According to the UEC, the PD-14 engine meets all the declared characteristics. And on December 15, MS-21 successfully completed its first flight with the domestic PD-14.

Pls kill me...

PW-1400G is almost equal in weight with the PD-14.

KoTeMoRe wrote:

the way, about the MS-21. Experts criticize the PD-14 engine for this aircraft - it is allegedly half a ton heavier than the Pratt & Whitney engine. It turns out that an extra ton per plane will kill the entire economy. Or do you have a different opinion on this matter?

- Where did you get this strange data? They are not true. For engines of foreign production and the Russian PD-14, the same technical task was formulated with a large set of parameters, not only in terms of weight. According to the UEC, the PD-14 engine meets all the declared characteristics. And on December 15, MS-21 successfully completed its first flight with the domestic PD-14.

Pls kill me...

PW-1400G is almost equal in weight with the PD-14.

You know, experts usually = bullshit.

the way, about the MS-21. Experts criticize the PD-14 engine for this aircraft - it is allegedly half a ton heavier than the Pratt & Whitney engine. It turns out that an extra ton per plane will kill the entire economy. Or do you have a different opinion on this matter?

- Where did you get this strange data? They are not true. For engines of foreign production and the Russian PD-14, the same technical task was formulated with a large set of parameters, not only in terms of weight. According to the UEC, the PD-14 engine meets all the declared characteristics. And on December 15, MS-21 successfully completed its first flight with the domestic PD-14.

This sort of 5th columnist drivel shouldn't be left unanswered. This is a typical m.o. by NATzO propagandists to make an impression that Russian engines are inferior to their NATzO counterparts. These so-called experts need to be found and identified and have PD-14 factual specs Plastered in their faces.

PhSt wrote:

the way, about the MS-21. Experts criticize the PD-14 engine for this aircraft - it is allegedly half a ton heavier than the Pratt & Whitney engine. It turns out that an extra ton per plane will kill the entire economy. Or do you have a different opinion on this matter?

- Where did you get this strange data? They are not true. For engines of foreign production and the Russian PD-14, the same technical task was formulated with a large set of parameters, not only in terms of weight. According to the UEC, the PD-14 engine meets all the declared characteristics. And on December 15, MS-21 successfully completed its first flight with the domestic PD-14.

This sort of 5th columnist drivel shouldn't be left unanswered. This is a typical m.o. by NATzO propagandists to make an impression that Russian engines are inferior to their NATzO counterparts. These so-called experts need to be found and identified and have PD-14 factual specs Plastered in their faces.

Maybe shoot them in their fucking faces?

Seriously, do you think before you type?

What the information is always plastered around for everyone to see. "Experts" say their own shit cause either they are paid to or just want attention. They aren't experts nor smart. Ignoring them and letting them get real jobs like McDonald's is better option.