Producer of cruise missiles rejects intermediary of Rosoboronexport

11.08.2011 Russian corporation NPO Mashinostroyenia prepares export contract with Vietnam by-passing state company Rosoboronexport, writes Kommersant. The matter is delivery of mobile coastal missile systems Bastion on account of Russia's government credit. The corporation has already obtained a permit from President Medvedev for independent preparation of export contract, although the permit has not been legalized yet. Only after formalization of the presidential permit NPO Mashinostroyenia would have a right to sign export contract without intermediary of Rosoboronexport.

If the agreement with Vietnam is signed, that would be the first blow to monopoly of Rosoboronexport which is the only Russia's exporter of ready-made defense products, writes the newspaper. At present, parties specify the contract's preliminary terms: exact amount of equipment, extent of state credit, and delivery dates. Provisionally, deliveries will unlikely happen earlier than 2013-2014. The problem is that Russian party has to prepare amendments to the legislative budget in order to grant Vietnam export credit.

NPO Mashinostroyenia had been exporting some kinds of military products independently up to 2007 and has certain experience in this area. However, Russian arms export market had been shaped in 2007 and only one state-led company Rosoboronexport became legal exporter of finished military products, being an intermediate party at arms sales. Only 21 Russian companies are allowed to export military production independently, but only if it is spare parts or maintenance of previously delivered equipment.

Except for Rosoboronexport, today only two defense companies have a right to export finished products – Zvezdochka shipyard (Severodvinsk) and Admiralteyskie Verfi shipyard (St. Petersburg). Both of them are members of United Shipbuilding Corporation (USC) which promulgated own development concept in Nov 2010 and claimed for the status of "subject of military technical cooperation". Such status gives company the right to export products without assistance of Rosoboronexport.

Status of subject of military technical cooperation does not entitle to export finished products, but gives the right to deliver spare parts or maintenance services to foreign customers.

Presently, Rosoboronexport controls major part of Russian military export. In 2010 Russia exported weapons to the amount of $10 bln including $8.6 bln through intermediary of Rosoboronexport. To compare, in 2009 those figures were $8.8 bln and $7.4 bln respectively.