Russia has taken steps to consolidate its aerospace sector and recent contract wins suggest the industry is staging a revival. Ivan Goncharenko, deputy general director of Rosoboronexport state arms-trading company, talks to Vladimir Karnozov about his organisation's plans and ambitions.
Q: What success has Russia had in the weapons market since the last Paris airshow?
A: Russia has increased its presence on the international weapons market. In 2002 exports reached a record value of $4.8 billion, in which Rosoboronexport's share was 80%. Aviation accounts for about 70% of my company's export.
Rosoboronexport participates in a number of international tenders for multirole fighters and helicopters. Our proposals have stayed at the top of the list on price/quality ratio, while our offset and technology transfer offers have tended to become more attractive.
This year saw the signing of two contracts, with Malaysia and Indonesia, for Sukhoi fighters and Mil helicopters. Russia and these Southeast Asian countries intend to develop military-technical cooperation further. Taking account of the customer's wishes in Singapore, we updated our proposal on the Su-30MK in the hope of remaining short-listed.
In Latin America, Colombia has become the largest user of Mi-17 helicopters, having taken delivery of about 20 machines. We hope for helicopter orders to come from Chile and Venezuela among other South American countries. In Brazil we face tough competition with Dassault, but hope to win with our proposal of Sukhoi fighters.
Russian aircraft remain popular in Africa thanks to being well-suited to the tough environments. Their reliability and ability to keep operating under enemy fire was demonstrated during hostilities in Angola, Congo, Zimbabwe, Ethiopia and so on.
Rosoboronexport is working with Egypt; it operates Mi-8/17 helicopters and MiG-21 fighters. Ethiopia bought Su-27/25s and Mi-24s, Cyprus has procured Mi-35Ms. We have good sales prospects, especially for helicopters, in Uganda (for peace-keeping forces), Chad and other countries.
Q: Any new contracts to be signed at Le Bourget?
A: I have always been against staged signings at an airshow - it's not the place where deals get concluded. Any arms export contact is signed after a long period of negotiations.
Signing is like the final curtain in a play. We could have made it to Le Bourget with the Malaysian or Indonesian deal, but everybody in the business understands it would have been artificial.
Q: On the Malaysian and Indonesian deals, media reports suggest a large share of barter is involved, 40% and 80% respectively being paid with local products such as palm oil and resin. How do you respond to reports that the Russians accept barter because their aircraft do not sell for cash?
A: My viewpoint is that the main factor in our victories in Southeast Asia is the quality of Russian aircraft and munitions that come with them. It is true that certain Russian-made avionics items are not up to modern requirements. On request, we agree to use the equipment of foreign suppliers on our aircraft. Also, in contrast to 20 years ago, today's Russia does not deliver weapons for free, on hire purchase or credit. All recent deals have been of a normal business nature. Russian manufacturers receive payment in cash, without which they would not be able to maintain production.
It is true that not all client countries can pay in hard currency. As with other exporting countries such as the US or UK, Russia accepts offset conditions. In each case, the volume of offset is a subject for negotiations. We accept both offset and barter schemes if they are economically attractive; when our client has insufficient resources in hard currency but does have local products selling internationally. We have mastered selling such products on the world's commodity exchanges. As for our Asian partners, barter deals have been used for longer than a decade.
Q: How would you describe co-operation between Rosoboronexport and French firms? Any prospects for joining forces on the upgrade of Mil helicopters in the East European inventory?
A: Cooperation between Russian and European, notably French, industries has experienced a rise recently. France is a traditional partner of ours. The Russian side negotiates with the French defence ministry's main weapons directorate and leading French companies Thales, Sagem, MBDA, Snecma and others. Talks on Mil helicopter upgrades have been going on. We have made more progress in consultations with SAGEM than other foreign firms willing to take part in the upgrade work. But it is up to the helicopter owners, not us, to make decisions on the final shape of their helicopters.
We are not in a position to determine which country or firm should take part in any project on new or upgraded aircraft. It is up to the customer. In some cases customers ask for our recommendations.
We prepare a report on whether certain customer-chosen equipment can be integrated. We work with foreign companies that offer their upgrade services on Russian-made aircraft, be it in-service or planned for delivery. But only if the customer so wishes. For instance, Malaysia expressed a wish to install French and German avionics on the customised Su-30MKM. We accepted it. The design house is now working on it.
Q: Are Russian firms participating independently or en masse at Le Bourget this year?
A: Unlike two years ago, my country is represented at this show by a united national exposition. In 2002-3, the state authorities made great efforts to consolidate the Russian industry and its participation at international exhibitions. Firm actions have been taken by the Committee for Military-Technical Co-operation and the Russian government itself to ensure co-ordinated participation. Unfortunately, organisers cannot always find the required space in one spot. For that reason we are in two pavilions here at Paris. But our national exposition is united, coordinated by Rosaviacosmos and organised by Rosoboronexport.
We represent 47 defence industry enterprises, including Sukhoi, Mil, RSK MiG, Yakovlev, Ilyushin and so on. A total of 300 equipment items are on display in the form of models, posters, leaflets and other handouts. Among the most up to date are Su-30MK and Su-35 export multirole fighters. Special attention is paid to upgrade programmes on the Su-27 fighter and Mi-8/17/24 helicopter families as the most popular Russian products on the international weapons market.
Source: Flight Daily News
