Published: 5/1/2000

As the aerospace industry awaits the makeup of President Putin's first administration -due to be announced in early May - and a decision on the future of figures such as Deputy Prime Minister Klebanov, there is still a sense of status quo. Projects proliferate and the Russian Aerospace Agency (RAA) struggles to bring a semblance of order to an industry that has yet to determine its future path. Long-standing negotiations to form the integrated Ilyushin, Tupolev and Sukhoi companies continue, although the independence of some of the constituent elements delays their conclusion. There is a school of thought that, so far, Putin has soft-pedalled some of the industry's more pressing issues, such as consolidation, in order to preserve pre-election support. Post-election, this could be replaced by a much tougher line, forcing the creation of two or three major aerospace entities as outlined by Klebanov at the end of 1999. Any aggressive amalgamation of the various entities will require a steely nerve on the part of the government. Many of the plants are located in Siberia and the Far East, where governors are suspicious of Moscow's motives and concerned about potential losses of employment and tax revenues. A recent meeting at the RAA with the First Deputy General Director responsible for aerospace, Yury Bardin, suggested that it would put pressure on the individual manufacturers. It was made publicly clear that the financial support available to the industry will be channelled into a few strictly selected programmes and not some of the plainly unviable projects that the producers continue to nurse. The recent attack on the agency and on its director, Yury Koptev, by Moscow daily, Kommersant, owned by Boris Berezovsky, implied internal corruption involving Koptev's son and suggested that Koptev's position is under review. It seems that someone is trying to whisper in the new administration's ear that change at the RAA may not be a bad thing. One of the unnamed sources cited contacts within the Ministry of Economics, which, last year, saw its responsibility for the industry pass to the RAA. A change at the top would aggravate existing problems with the US, which is unhappy with space cooperation in general and, according to diplomatic sources, would take a dim view of what it saw as a further bout of counter productive uncertainty. In the context of Russia's generally Byzantine mixture of power and court politics, this may be no more than jockeying for position. The military sector is considered to have rich pickings through export contracts and the RAA may be considered to be a barrier to control or influence. The attack also coincides with a promised post election anti-corruption drive where the identification of scapegoats could divert attention from the real culprits. The role in Putin's Russia of the so-called Kremlin family, closely associated with the previous administration, has been the subject of considerable debate. The family's influence at Rosvooruzheniye, the arms exporting agency, which earns the substantive part of its revenue from aerospace exports, is some evidence of a keen interest in the industry. This is a view supported by Rosvooruzheniye's recent entry into the manufacturing of navigational avionics, through a joint venture with St Petersburg company, Karstadt, with a brief to look for upgrade business. This suggests that it is becoming actively involved both at the front and back ends of the industry, as speculated by the Segodnya newspaper in December 1999. When tt published reports of a new company with military support targeted at the lucrative military upgrade market.

Article ID: 1542