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?
- 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