This year will most likely provide many long-awaited answers on the direction and focus of the Russian economy in the medium term. The Russian leadership perceives the high-tech sector as a possible growth engine.
Prime Minister Mikhail Fradkov signed the document, "Government Priorities until 2008," earlier this month. According to this document, "in the medium term, priority status should be given to such important areas of development of the high technology sector as the defense industry, the nuclear and aerospace industries, telecommunications, pharmaceuticals, and biotechnology."
It is no surprise that the defense industry is at the top of the list of priorities, as defense projects generate innovative ideas and high technologies, which could possibly underlie a future economic breakthrough.
Putting emphasis on the defense industry solves several practical problems at the same time, and not only in the medium term.
However, the issues are whether this sector really deserves that much state attention and how the state intends to recoup its investment in the near future.
International cooperation within Russia's space research program, to which defense research organizations and production enterprises are key contributors, is inseparably tied to the defense industry.
While 2003 was a record breaking year in terms of defense exports, with the year's turnover of almost $5.6 billion, an official spokesman for the Federal Service for Military and Technical Cooperation of Russia said earlier this month that defense exports in the first half of 2004 amounted to over $3 billion. The source said that this figure confirmed President Putin's wisdom in choosing the strategy for this sector three years ago. The order portfolio for Russian-made weapons, the spokesman said, amounted to about $14.6 billion.
Space programs on a contract basis have also increased recently. The bulk of the profits from the space sector are from the export of Russian carrier rockets, which are used to launch international cargo from the Kourou Space Center in French Guiana. The center is owned by the European Space Agency.
"The total cost of the Soyuz-ST launch pad at Kourou is about 344 million euros, 121 million of which goes to Russian producers," chief of the Federal Space Agency of Russia Anatoly Perminov said at the end of July. "According to the project, there will be no less than 50 Soyuz-ST launches from Kourou in the next 15 years."
There is also an intergovernmental space agreement with Australia. One of its points is the construction of a space center to launch satellites on the Christmas Island on a contract basis. Similar Russian-Italian and Russian-Belgian projects are being considered.
Mr. Perminov said that such international cooperation could attract several billion rubles in investment until 2015 and prevent the loss of about 150,000 jobs in the Russian space industry.
In summary, the development of Russian high-tech defense enterprises makes the national economy move steadily forward.
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