Leaders of the Russian Military-Industrial Complex are steadily revolving

Judging from this, the situation with the government defense order for the year following Putin's personal interference in the military contracts has worsened, as in October 2011 the Ministry of Defense has achieved 95% of the order placement. Moreover, actual termination of MIC statistics disclosure by the Ministry of Industry and Trade (the last data published in May covers only the first four months of 2012) implies poor results.

We find it difficult to agree with the statement of D. Rogozin, that "in financial terms everything looks much better than a year ago..." Apparently, speaking about "financial terms", he does not take into account growth of prices for military products, which significantly exceeds the estimates of the Ministry of Economic Development, even regardless the confidential information, to say nothing of the CPI. For example, last year's value of the relevant index was 109.0%, i.e., in fact, it has exceeded the baseline forecast by 2.1 p.p.

It is hard to say, "only" or "as much as" 2.1 p.p., because we have no complete picture of price growth dynamics with regard to the confidential information. However, it is clear that Russian producers are well aware how to take advantage of the lack of transparency of the government defense order.

Surprisingly, it was namely Mr. Rogozin, who on April 10 at the meeting of the working group on the "Open Government" formation was demonstrating excellent understanding of the situation, saying: "often the price jumps up because there is one goon in the production chain, who produces a single bolt, but he is the only manufacturer in the country and cannot be avoided, and he does with that bolt price whatever he wishes, never thinking of losses of anything else”. He even mentioned that "due to the so-called confidentiality, we do not provide an opportunity to a potential partner from private sector to understand the scope of services and production of the entire military-industrial complex".

Therefore, the Deputy Prime Minister’s statement made on November 19, that the key problem is observed "particularly in the lack of consistent planning of defense orders" is at least ridiculous and looks like a degradation of his position. Expectations of the Russian military-industrial complex that the Ministry of Defense orders transfer to another Government authority, a special presidential decree on the weapons program implementation procedure (in addition to the relevant rules, approved by the government in the period of the vice-prime minister Sergei Ivanov), as well as adoption of an updated law on the Ministry of Defense order will somehow improve the situation do not seem more reasonable. It is common knowledge, that the attempts to take such measures in the past had no effect (there were a number of attempts; the forthcoming state military program is the fourth one to the president).

Any "thorough analysis of material (sic!), technological capabilities of industry" without effective and therefore, transparent statistical data on orders, prices and supplies of the Ministry of Defense is pointless, and the situation in the MIC will remain in manual control mode.

Looks like it's time for President V.Putin to recall his words on a new approach to the principles of information exchange, on the revision of outdated approaches to the protection of confidential information and even on «transparent military economy".

V.B. Zatsepin,  Ph.D. in Defense, Head of  Economics of the Military-Industrial Sector Department