President Sergey Chemezov of Rosoboronexport, the official Russian arms exporter, in 2005.
Photo: PhotoXpress
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Sergey Chemezov Scores a Monopoly
// Rosoboronoexport Becomes Russia's Lone Arms Exporter
A second export monopolist has appeared in Russia: joining Gazprom CEO Alexey Miller is Rosoboronexport head Sergey Chemezov. Russian President Vladimir Putin has signed a decree making Rosoboronexport the lone Russian arms exporter as of March 1, 2007, a move that will net the company more than $600 million in annual sales abroad. Independent producers of military technology will now be allow to export only spare parts and repair previously-sold items. Experts note that for Mr. Chemezov, who on December 2 joined the supreme council of Mr. Putin's "United Russia" party, the decree has at least as much political as economic significance.
The decision was adopted on December 7 at a closed session of the commission on military technology cooperation. According to an anonymous source who attended the meeting, "Sergey Chemezov made a case for the advantages of trading weapons only through a government middleman, and the president approved that proposal."
Rosoboronexport told Kommersant that "the decree will allow us to avoid domestic competition between Russian producers of military technology on the foreign market." Rosoboronexport has around 40 representatives abroad and claims that "no negotiations are opened without first consulting the embassies in the appropriate countries."
The signing of the decree is a coup for Mr. Chemezov: Rosoboronexport has been pitching the proposal to the president since at least February 2005, but until now Mr. Putin has withheld his support and even publicly criticized the idea.
As a result of the decree, four companies will lose their export licenses for finished military technology products, including the fighter jet producer MiG. According to information from the federal commission on military technology cooperation, in 2005 the four companies together sold $626 million worth of finished products abroad, of which a share of $306 million belonged to MiG. Last year, Rosoboronexport sold arms worth $5.2 billion, a number that is now expected to rise by more than 10%. The company's commission is 5-15% of the sum of a contract.
Experts note that Rosoboronexport head Chemezov, who served with Mr. Putin as a KGB officer in Germany before the demise of the Soviet Union, is not interested in the extra 10% so much as in the political implications of the president's decision to sign the decree. Mr. Chemezov's star has been rising fast, and Mr. Putin's sudden support for the export monopoly bill is a sure indicator of the president's favor and trust in Mr. Chemezov, particularly in the wake of his new membership in the United Russia party's supreme council.
www.kommersant.com
All the Article in Russian as of Dec. 15, 2006
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