Defense Contracts In Doubt

The country's defense industry lacks the resources to meet all its arms export contracts, Russian Technologies chief Sergei Chemezov said Thursday.

"Russian industry cannot meet some of the signed contracts," the state corporation's press office quoted Chemezov as saying at the Farnborough air show in Britain.

"A growth in the number of government orders and export contracts has overloaded defense enterprises, whose productivity has not changed," he added.

The country has had a number of problems with weapons contracts in recent years, including falling behind on a $1 billion contract to modernize the Soviet-built Admiral Gorshkov aircraft carrier for India.

The arms trade, which brings Russia annually around $7 billion, is a source of national pride. But a chronic lack of funds for modernization and problems with retaining staff have badly hit the defense industry over the years. The problems became more acute after an economic boom allowed the government to place new orders.

Russian Technologies, which controls most state-owned defense enterprises except for those engaged in aviation and shipbuilding, was created to channel state resources into modernizing the industry.

The Kremlin on Monday said President Dmitry Medvedev had approved a plan to consolidate 426 state-owned stakes in Chemezov's corporation.

(Reuters, MT)