Prime Minister Mikhail Fradkov on the Merger between the European Steel Company Arcelor and Russia’s Severstal:
Yes, literally a few days ago – on May 25 to be precise – these two companies signed a merger agreement. One might say that in our recent economic history, this merger is one of a number of classic examples of mergers and consolidations. We should note that this is a friendly merger because these companies have already been cooperating for a long time. As a matter of fact, it is a strategic partnership.
Two joint enterprises have already been established. One of these enterprises is designed to produce zinc-plated steel sheets which can be used within the automobile industry. Arcelor is the second largest steel company in the world and excels in using new technologies and high-quality steel. In other words, the opportunities Severstal will receive by gaining access to these technologies and management skills will allow our business to really enter the metallurgical industry’s international market. And as might be expected, the leadership of Severstal will be represented within the new management.
The process to coordinate this agreement is now under way. We hope that by mid-July this transaction will be complete. It will require coordinating both European and Russian antitrust departments. There is still a great deal of work to be done here. And it is important to do this quickly because the market is highly competitive. There are other companies who would like to purchase companies such as Severstal and Arcelor. Therefore our agencies are involved in this work and we are providing all necessary support to help resolve any persisting problems.
It is important to note that Severstal’s subdivisions on Russian territory shall remain part of the company. They will continue to pay both federal and local taxes. However, the expansion of our metallurgical industry – and I consider that this expansion deserves our support – will help them enter new markets, increase budgetary income because of an increase in taxes and create new jobs within the automobile industry. And perhaps other sectors that require high-quality metallurgical products with a special coating will also benefit from the advantages resulting from this transaction.
Vladimir Putin: In other words, you know this agreement and you support it?
Mikhail Fradkov: Yes, we support it.
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Deputy Prime Minister and Defense Minister Sergei Ivanov on the Forthcoming Session of the government’s Military Industrial Commission:
On 2 June 2006 at the session of the government’s Military Industrial Commission we will examine the state weapons programme for 2007–2015. All power agencies and departments, the Trade and Economic Development Ministry, the Finance Ministry, the Industry and Energy Ministry and three Russian agencies – Roskosmos, Rosatom, and Rosprom – have already agreed to this programme.
Of course it was mainly the Defense Ministry that drew up this programme and we started from the fundamentals of military technological policy, from the plan for developing the Armed Forces which you confirmed as Commander in Chief, and the various programmes for military and technological cooperation.
This nine-year programme has one special feature – while the current programme is basically concerned with research and development to help provide the Armed Forces with new weapons and equipment, the new programme is even more oriented towards purchasing large quantities of weapons. Over 63 percent of all the financial means allocated to this programme will be used for purchasing weapons and technical equipment. We will keep what I see as a normal equilibrium between the necessary task of maintaining and developing our strategic nuclear forces and our conventional forces. This will allow us – actually we have already begun this year but in 2007 this tendency will be even more pronounced – to switch to a new regime whereby we do not purchase any one sample of military equipment but namely ensure the comprehensive reequipment of separate sectors and divisions, whether it be squadrons, artillery batteries, or land battalions. And as of 2007 the planned reequipment of the Armed Forces will take place. This is the most visible tendency.
In addition to this I would like to point out another tendency. If this programme is adopted, then already in 2007 we will be able to start the fiscal year by buying weapons according to the new programme and at the same time adopt the new federal target programme to reform the military industrial complex. This will be possible since this programme, which directly concerns the industry, will allow it to switch to producing the necessary high-tech weapons. In this respect the priority will be given to the companies of the military industrial complex that are able to produce just what the Defense Ministry needs and with the most up-to-date technologies. Excuse me, in other words we will buy not what industry would like to give us but to just what the Armed Forces and other power agencies require.
And the last thing concerns the programme’s financial and economic indicators. In total over the next nine years we are proposing to allocate slightly less than five trillion rubles for the state weapons programme. To be more precise, the amount consists in 4,939 billion rubles and slightly more than four trillion will be allocated to the Defense Ministry’s direct needs. And the other trillion will, roughly speaking, go to the other power agencies. This is the programme that we are going to examine.
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Deputy Prime Minister and Defense Minister Sergei Ivanov on the Results of the Government’s Interdepartmental Commission on Export Controls:
Last week I held the session of the government’s interdepartmental Commission on Export Controls in which we examined issues concerning the non-proliferation of weapons of mass destruction and tightening up our system of export controls.
The Foreign Ministry participated actively in this session since we examined Russia’s participation in implementing the UN Security Council Resolution 1540 that was made in 2004. This resolution was taken at Russia’s initiative and concerns a number of issues linked with non-proliferation. Everything is satisfactory in this respect.
We also examined Russia’s plan of action within the group of nuclear suppliers. And this was also connected with our plans to develop cooperation with India in nuclear energy for peaceful means and, of course, the difficult situation surrounding the Iranian nuclear dossier.
In addition, we also looked at offers concerning the preconditions for Russia to become a member of the Australia Group. This is a unique international organization that specializes in issues linked to non-proliferation of weapons, including chemical and biological ones.
We also considered the report by Energomash, a major company in the space sector. This company exports approximately 30 billion rubles per year of dual-purpose products linked with missile technologies. The company’s director reported on establishing export controls within the company – this is a modern version of export controls and we decided that in the future we will listen to other directors of major companies to better understand if export controls within a major company are more effective than state export controls.
And the last thing. Tomorrow evening I am planning to fly to Baku to participate in the 50th meeting of the Council of Defense Ministers of the CIS member states. We will consider issues of cooperation between military departments in the sphere of antiaircraft defense, communications, as well as operational and combat training. And as per usual there will be bilateral meetings, including with my Ukrainian partner, on issues concerning bilateral cooperation.
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