Russia » Economics
Author`s name Michael Simpson

Natural Monopolies Are a Drag on Defense Industry

Prices and tariffs of natural monopolies hamper development of hi-tech defense enterprises
Director General of the Russian Agency for Conventional Weapons Alexander Nozdrachev thinks that activity of natural monopolies is a serious obstacle for development of the defense industry. He says that problems of Russia's national security won’t be settled while average wages in natural monopolies are several times higher than wages in the defense establishments and in the army. The statement was made at an interdepartmental conference dedicated to implementation of the RF Security Council's resolutions developed for defensive, industrial, scientific, technological and military safety of the country. The conference was held in the Russian city of Omsk.

RF Security Council Secretary Vladimir Rushailo and presidential envoy in the Siberian federal district Leonid Drachevsky took part in the conference.

In the words of Alexander Nozdrachev, ITAR-TASS reports, Russia is the only country in the world where the disparity in wages paid to workers in hi-tech and technological spheres (the defense establishment, oil and gas industry, power and metallurgy industries) is so large. Prices and tariffs of natural monopolies hamper development of hi-tech defense enterprises.

Earlier Alexander Nozdrachev reported that depreciation of the basic assets at enterprises of the Russian Agency for Conventional Weapons made up 75%, while the renewal rate was 1% instead of 6-7% per year that is essential for steady activity. Debts of many defense establishments are much higher than their assets.

Re-equipment of the industry is possible only with off-budget finance and with the help of vertically integrated structures. The Agency for Conventional Weapons is going to have 9 structures of this kind. Alexander Nozdrachev says that these structures will be used to send some part of the export profit received by 54 exporting enterprises for solution of top-priority problems of the defense industry.

Prime TASS

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