Promexport merges with Rossiiskiye Tekhnologii

Published: 5/2/2000

A decree was signed on Friday 28th April by President elect Putin effectively merges two of Russia"s defence equipment intermediaries, Promexport and Rossiiskiye Tekhnologii, (RT) although little detail has emerged about the mechanics of the deal. The two organisations have existed in parallel since 1997, when state unitary enterprise Promexport became responsible for the export of existing weaponry, spare parts and ammunition and RT was formed to be responsible for the export of weapons technology. The merger therefore creates an organisation that will now stand alongside Rosvoorzheniye the largest of Russia"s export agencies with sales of $2.8bn in 1999, dwarfing the $20m attributable to RT and substantially higher than Promexport"s sales of $150m. The Director General of Promexport, Sergei Chemerzov was appointed, according to reports, at the behest of Putin and has apparently been an active proponent of the merger of Promexport with Rosvoorzheniye. The merger of the two enterprises would eliminate unnecessary competition between the entities, which has been evident in the past with the agencies often vying for the same market segments. For Promexport, at one time tipped as a real competitor for the power of Rosvoorzheniye, the dominance of light military orders in its mix has been its downfall, as sales of surplus equipment and firearms were never likely to match the weight of fighter aircraft and other large military equipment orders. The interesting development that may emanate from the changes, will be who will run the potentially merged enterprise if Friday"s merger is the first step to such a goal. Rosvoorzheniye has a close association with the powerful group previously close to Yeltsin, known as the Kremlin “family", who are reported to enjoy t close links with he agency"s large amounts of hard currency. For many, Putin"s agenda with this group is as yet undecided and there is active debate as to whether he will clip their wings or simply leave them alone on the basis he has enough on his plate elsewhere. If he follows the wishes of Chemerzov however, and through him takes direct control of the sales arm of an industry that constitutes 40% of Russia"s industrial output, he will be sending a clear message of who is in the industrial driving seat. Associated articles: www.concise.org Used military equipment major seller for export agency: 10th June 1999 Marriage made in heaven: 5th March 1999

Article ID: 1551