Alexander Ivanovich, how do you estimate the current situation in arms trade? What is the result of 1999 and the perspectives for 2000? 

The situation on the arms market is considerably favorable for Russia now. First of all it was formed by the number of military and political factors. It may sound cynically but firstly the war in Chechnya positively influences the arms market extension and secondly the war in Yugoslavia influenced it. The last spring NATO air strikes on Yugoslavia made the number of states seek new military and political pole in de-facto considerably multipolar world. This search leads them to Russia. The leaders of very many non-West and some of the West countries understand that they can always appeal to Russia in military and technical sphere if the military and political situation becomes strained. They can do it not only in military-technical sphere but in military-political one as well. Let's recall what Boris Eltsin said in China about Russian opportunities in nuclear sphere. I think Russia's independent behaviour on the international arena only strengthens our position on arms markets in the eyes of our third-countries partners. 

"Rosvoorouzhenie" leaders promised not more than US$ 2.5 billion early last year. Though this rather modest figure sounded unattainable after two years of fall. Since the new team came to the Company we managed to shake up the professionals, to bring fresh ideas into "Rosvoorouzhenie". As the result in reality we have got US$ 2.8 billion for US$ 2.5 billion cost contracts. On the whole Russia exceeded the figure of US$ 3 billion. It is already serious. In December for the first time in the Company's history the cost of "Rosvoorouzhenie" orders exceeded the sum of US$ 10 billion. 

It is difficult to say precisely what will happen next year. But I'm sure that only final "Rosvoorouzhenie" result will exceed US$ 3 billion but maybe US$ 3.2 billion. We have ideas allowing us to make more courageous forecasts. 

The maximum sales level reached by Russia in the reforms period is equal to US$ 3.6 billion. To your opinion , what is Russia's limit on arms market? What should be done to reach it? Can you point out elimination of what negative factor will lead to sales growth? 

Considering Russia's place in the world economic and military-political systems the limit for Russia is US$ 5-5.5 billion in a year. I mentioned the same figure four years ago. It allows us to reach the second place and to approach the USA closely. 

The demand for arms isn't elastic, the market volume is stable so a new share should be taken from somebody. The system of military and technical cooperation (MTC) must be reformed to reach this level. 

Firstly, the procedure of issuing license for arms and military equipment (AME) export should be more simplified. Having recently been looking through the list of the people who coordinate the Government's decisions on AME supplies I realized that no more than the third of them understood what they had signed. Secondly, only one or two persons from those who sign such documents have concluded even one somehow important contract. Incompetence produces corruption. Unprofessional are easily influenced by different interest groups. As the result the struggle starts for submarines repair order or some ship supply. It means that objectivity and economic rationality of the process estimation are lost. I can mention dozens of examples when the governors punished the whole Russian Federation for hundreds of millions dollars because of the subjective interests of the respective region. 

The MTC system must be simplified while the responsibility of particular persons should be increased. Consultative structures should be excluded because their enormous quantity leads to the diminution of responsibility and the leakage of information. Arms trade is a very delicate sphere so why should we make life easier for those who work in the foreign embassies and have a duty to look after this theme? 

All our ministries and organizations particularly in MTC create an enormous quantity of legislative acts for justification of their existence. For example, agencies on particular arms began to trade arms instead of concentrating on the problems of their branches restructurization. Another problem is whether it's necessary to issue the Government's decree for delivery of two spare parts sets for SU-30 fighter to India? Indeed there are the List 1 and the List 2 which determine the index of the countries and of the goods allowed for selling in these countries. There is the Ministry of Trade which has a duty to coordinate MTC. The responsibility of particular persons in the Ministry of Trade must be increased, but if they don't want to take such responsibility the issue about professionalism must be raised. Speaking about possible violations and abuses their danger shouldn't be exaggerated. I remember only three, maximum five really serious violations. Two of them ended pitiably: eight tanks arrived in Croatia instead of Bolivia, "Tunguska" air defense system and T-80 tank were delivered to Great Britain instead of Marocco under the fake certificates. 

The Ministry of Trade has recently returned to "Rosvoorouzhenie" about 40 draft Government's decrees, the sum of suspended contracts is about US$ 1 billion. It was done because a comma had been placed wrong or the factory the Ministry's official didn't like had been mentioned. By the way the Ministry of Trade is still unable to implement the President's order on the terms of MTC documents consideration. How do we look like in our partners' eyes after that? 

That's why now I'm trying to work out and to offer for discussion an understandable vertical MTC system. It must be understandable for all its participants but closed for our competitors. The inner competition among the MTC subjects must be excluded. This system must severely stop and even punish those legal and private persons who try to trade arms passing the system. 

China and India are Russia's main clients in the MTC field for the last decades. There are few large sales to other countries - Malaysia, Greece. Can Russia go out of the Indian-Chinese reservation patterns?

Imagine a reservoir where the water is limited and you must overcome the jungle to reach it. Our Russian bear headed for one path - there is a herd of elephants there, it headed for another - a herd of buffaloes, on the third there is a herd of not less formidable animals. And all of them look at us severely. They all happen to know their path and don't intend to share it. Having got bumps and abrasions our bear could find only two paths - to China and India. We got used to them, they got used to us. They got used to our bear's side, some of our antipathies to other "kinds of nature" also coincide. 

Though we have breaks. Egypt - the country receiving the second largest US aid after Israel, buys arms from us. We paid great attention to new markets when I was the General director of "Rosvoorouzhenie". Then the share of China and India fell till 65%, the new markets had the rest. Now the share of China and India has risen up to 80% again. In that period we opened for Russia such different countries as Cyprus and Brazil, Kuwait and Columbia. We resumed cooperation with Peru. And what a break with Indonesia unfortunately failed because of subjective and objective reasons?! Before I came to the Company Malaysia had already been opened. The cooperation with Sri Lanka and Bangladesh was resumed later. The contracts with the CIS countries are being prepared. I suppose by 2002 the share of China and India will fall till 60-65% again, the new markets will have the rest. 

Russia has several weapons system with high potential for promoting on the world market which aren't for sale for some reason. They are, for example, the simple and cheap SU-25 fighter-"soldier", the revolutionary helicopter KA-50, the unique MiG-31M interceptor. What is the reason these systems aren't been sold? Why are the Russian tanks so unpopular? 

First of all, it's a bad marketing. Secondly, it is difficult to sell what own army doesn't buy. It is very difficult to explain to the potential customer that the systems aren't bad but the Russian army simply doesn't have money to buy them. There are other reasons. Speaking about KA-50 it didn't represent a perfect weapons system until lately. It was the well-designed platform but the weapon-control system failed at Abu-Dabi arms exhibition in 1997. The helicopter hasn't been finished because of the lack of finances. But we didn't abandon this theme. And now we see that KA-50 has successfully passed all tests in Turkey. All targets have been hit during the shootings. High-accuracy weapons were not integrated in SU-25 until lately. Now it's done. And these systems will be sold yet. 

Why does the Company have no strategic analysis and forecast unit? 

Such unit - the Strategic Analysis and Forecast Department - existed until autumn 1997 and after that it was liquidated. Then a lot of things in the Company were liquidated just because they were associated with my name. It was not just hatred to me but to the whole MTC system which allowed Russia to reach the sales level of US$ 3.6 billion. For example, the very expensive-furnished room for receiving foreign delegations was destroyed. This luxurious room was specially designed to prevent anyone's thoughts that Russian trader could be bought for lunch. I always told my employees to be dressed well, to wear expensive watches, ties, socks. That's why the wages in the Company were always high allowing a person to have it all and to look respectively in foreign partners' eyes. 

Does the Company have a lot of people with non-standard way of thinking, capable of courageous, unordinary acts leading to breaks through new arms markets? For example, the arrest of General Pinochet in Great Britain gave Russia a unique chance to break through this market. Isn't it the reason to send delegations to Santiago, to start negotiations? 

There are not more than ten people in Russia, capable of concluding contracts. Only two or three persons are able to work on the whole contract cycle. The forced veterans - Admiral Sergey Krasnov and General Valentin Trofimov can be mentioned among them. Unfortunately even these few persons don't always happen to be required. A lot of people in the Company work on the principle "don't ask for trouble". It's extremely difficult to get rid of this ballast. 

Speaking about Chili you are absolutely right - the time has come and we can't waste our chance. We were in Chili in 1995, but our own Ministry's position was "He is a dictator". Unfortunately the Foreign Ministry supported it. We wanted to invite General Pinochet in Russia and then to give a start for the contracts. Chili is a rich, dynamically developing country which rearms its Armed Forces. The Chilean Army is just perfect and highly professional. The General has mostly made the country like that. The General taught Chili to work, this is the country where the greater part of the population doesn't get social aid but does business. It's pity because the General wanted to visit Russia very much. He was in Russia in 1973. The crash of the communism in Russia meant for him that his choice on the 11th of September 1973 was right. I felt it when we talked for two hours instead of planned forty minutes while the British deputy defense minister was waiting in the reception room..