Suprisingly fires heads of both agencies as well (250 words)

Published: 11/6/2000

President Putin has dismissed the heads of two arms export agencies and merged the two major export agencies Rosvooruzhenie and Promexport into one entity called Rosoboronexport.

The move of merging the two agencies together was not a particular surprise and there had been rumours of the event for a number of weeks. The firing of the head of Promexport Sergie Chemezov, formerly viewed as a Putin insider and the prime candidate for heading the new agency is a surprise. Particularly when head of the new agency is Chemezov's deputy Andrei Belyaninov, reinforcing the view that Promexport has the upper hand in the merger. The departure of Alexei Ogaryov, as head of Rosvooruzhenie, is no surprise. He was seen as being too close to the Kremlin family and his association with what is a very lucrative cash flow from export sales was always viewed as being unacceptable to the incoming administration.

More generally the overlap between the tow agencies has become extremely evident over the last couple of years with the agencies literally competing against each other for contracts in Malaysia and more recently in South Korea. While the elements of administrative efficiency undoubtedly influenced the restructuring, it seems likely that at the forefront of the minds of everyone involved was the $2.95 billion of sales attributable to Rosvooruzhenie out of total exports of $4 billion expected in 2000; with the possibility of even larger sales in 2001, with the coming to fruition of a number of long negotiated Indian contracts.

Article ID: 2179