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 Document 3 of 4                                                  Page   1
 Classification:   UNCLASSIFIED       Status:        ISTAT]
 Document Date:    30 Jun 93          Category:      [CAT]
 Report Type:      JPRS report        Report Date:
 Report Number:    FBIS-USR-93-090    UDC Number:
 Author(s):   Yuriy Grigoryevich Naido, director of.the Center for
 Structural and Industrial Research Under the Russian
 Academy of Sciences Institute for Economic and Political
 Research, and Stanislav Iosifovich Simanovskiy, chief of
 the Section on Innovative and Industrial Policy: "Not
 for the Print-Media Family: Export of High Technology
 Will Give an Impetus to Western Research")
 Headline:  Impact on Market of High Technology Export
 Source Line:  934F0838A Moscow ROSSIYSKIYE VESTI in Russian 30 Jun 93
 p5
 Subslug:   [Article by Yuriy Grigoryevich Naido, director of the
 Center for Structural and Industrial Research Under the
 Russian Academy of Sciences Institute for Economic and
 Political Research, and Stanislav Iosifovich Simanovskiy,
 chief of the Section on Innovative and Industrial Policy:
 "Not for the Print-Media Family Exhort of-High-Technology
 Will Give an Impetus to Western Research")
 FULL TEXT OF ARTICLE:
 1.  [Article by Yuriy Grigoryevich Naido, director of the Center for
 Structural and Industrial Research Under the Russian Academy of
 Sciences Institute for Economic and Political Research, and Stanislav
 Iosifovich Simanovskiy, chief of the Section on Innovative and
 Industrial Policy: "Not for the Print-Media Family: Export of High
 Technology Will Give an Impetus to Western Research " ]
 2.  [Text] Russia's conversion has scarcely managed to take its first
 few steps, and its military-industrial complex has still not flung
 its doors wide open to the international community. But even the
 "peep" that American experts have succeeded in taking has allowed
 them to count thousands of technologies and developments exceeding
 the world level. As noted at the Congress on Problems of Converting
 Military Production Facilities, which was held in December last year
 in Moscow, Russia has the capacity for creating superpowerful
 scientific and technical systems for defense, information science,
 astronautics, and the nuclear power industry. Along with North
 America, West Europe, and Japan it could become a fourth side in the
 global technological rivalry.
 3.  The practical attainment of Russia's potential in the field of
 35
 Approved or Release
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 high technology and scientific exports requires considerable
 preliminary effort on our part, as well as on the part of the
 international community.
 4.  As to Russia itself, the measures necessary for expanding its
 international technological ties relate primarily to the competence
 of the state. It is obvious that first and foremost among them we can
 cite state subsidization of, and extension of credit to, global
 technological developments and those with particularly good future
 prospects, international projects, as well as providing economic
 incentives for technological exports. With the aid of measures in our
 tax, credit, currency, finance, and customs policy, we must provide
 for the most rapid possible adoption of a package of laws designed to
 furnish a whole complex of measures for protecting and safeguarding
 our industrial and intellectual property. We need laws on state
 requisition orders in the defense field and on the transfer of
 technologies from the defense sectors to civilian sectors of
 industry. We need encouragement as well as active economic and legal
 cooperation with regard to diversifying the forms of property
 ownership in the scientific and technical sphere. We cannot get by-of
 course-without creating a favorable investment climate for domestic
 and foreign investors, including the formation of national and
 international funds for insuring investments against political risks,
 as well as the economic encouragement of risk-type-financing of-
 technological developments and innovative activity.
 5.  Russia's acute need for currency assets and the above-mentioned
 measures with regard to liberalizing international technological
 contacts must not, however, blind us to the necessity of solving yet
 another urgent problem.  What we have in mind here is preserving and
 safeguarding Russia's national technological security, naturally, as
 adapted to the conditions of an open market economy. But this matter
 requires special examination and consideration.
 6.  As to the international community, from the latter Russia is
 entitled to expect-at a minimum-the complete elimination of
 discriminatory measures along the lines of Cocom, and in the sphere
 of bilateral trade relations-being granted most-favored-nation
 status. It is obvious that-from the West's viewpoint-this would be
 the best way to assist the Russian democratic reforms.  It would be
 aid, which in the future would be returned to the West in the form of
 the largest possible economic and political dividends, stemming from
 the opportunity to operate in the vast Russian market.
 7.  Turning now to some specific technological possibilities of our
 country's VPK [military-industrial complex], we should bear in mind
 that Russia is already prepared to propose a number of major projects
 and offer them to the international community. For example, the
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 Program for a Satellite Telecommunications System.(STSS) for
 providing business digital transmission between stationary and mobile
 subscribers at any point in the world.  In all, three satellites in a
 geosynchronous, high orbit allow the creation of a global
 communications system for 60-80 million populated points in virtually
 any region on Earth. The principal components of this system-
 including the space vehicle and the satellite, the means for putting
 it out there and bringing it back, guidance controls, the
 communications lines from the space vehicle to Earth, the land-based
 controls, etc.-have already undergone successful testing within the
 framework of defense programs. The STSS would save 200,000 jobs for
 personnel employed in enterprises being converted.
 8.  A project involving global space communications with the aid of
 Gonets [Messenger] low-orbit satellites is of great interest. As
 early as 1994-1995 there will be 36 satellites in this system's
 orbital grouping. They will provide their subscribers with
 communications within a system of electronic mail, telex, telefax,
 exchange of computer data, and-in the future-radio-telephone
 communications. The practical operation of this system has been shown
 in Australia, and it demonstrated a stable communications link
 between Melbourne and Moscow.
 9.  The future prospects for utilizing-
 possibilities of the military-industrial complex are shown by the
 following simple list:
 10.  -a project for launching artificial satellites from mobile
 stations;
 11.  -utilizing aerospace possibilities in navigation, research and
 exploration of natural resources, cartography, meteorology,
 .forecasting natural phenomena, and protecting the natural environment
 from pollution.
 12.  -obtaining new materials and preparations on orbiting stations;
 13.  -creating the wide-body EKIP [expansion not given] space
 vehicles in the form of "flying saucers." The production of
 hypersonic PVRD [ramjet] aviation engines.
 14.  At the present time Russia is working to prepare a contest for
 conversion projects to involve foreign partners in 10 sectoral lines
 of activity, including the following: programs for developing
 motor-vehicle manufacturing, railroad transportation, civil aviation,
 communications media, electronics and information technologies,
 creation of machines and equipment for civil engineering
 construction, development of electric power complexes, development of
 UNCLASSIFIED
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 the production of agro-engineering equipment and machinery,
 conversion, and ecology.
 15.  In order to finance such projects, targeted investment funds can
 be created, including international ones, and in order to carry them
 out-joint ventures, consortiums, and other types of associations. As
 a result, the Russian military-industrial complex is capable of
 substantially advancing Western research and development in the
 high-technology field.
 16.  Up to now the complexities and difficulties here have been
 connected with the incompleteness of the legal and economic mechanism
 of conversion. Nevertheless, elements of the new economic relations
 and attitudes- corresponding to the spirit of an open market
 economy-are gradually being approved and affirmed not only in the
 economy as a whole but also in the defense industry.
 17.  An essential role in forming a legal mechanism for conversion
 was played by the Law "'On Converting the Defense Industry in the
 Russian Federation," as adopted in March 1992. Even though last year
 enterprises in the military-industrial complex turned out to be in an
 exceptionally difficult situation because of the curtailment of
 defense orders by 60 percent, many of them-thanks to the
 above-mentioned law-were rendered strong state support. The 1993
 budget has provided allocations for targeted              -Russian- -
 State Space Program and the Program for Developing Civil Aviation),
 in which a great role will also be played by the participation of the
 conversion enterprises. They will be subsidized for the purpose of
 paying wages, for social needs, and for maintaining custom-made,
 special purpose, bench-type equipment.
 18.  But even prior to the adoption of the law on conversion, life
 itself had engendered some utterly new forms for us by way of
 carrying out economic activity within the framework of the
 military-industrial complex. In particular, various types of
 joint-stock companies had begun to appear, attesting to the beginning
 of the processes of radically changing the forms of property
 ownership in the military-industrial complex.
 19.  Among them is Ural-Kosmos, which has set as one of its tasks the
 commercial utilization of rockets which were originally constructed
 as military missiles but whose service life has expired or is about
 to expire, or rockets which are scheduled to be destroyed in
 connection with the arms reduction program. In place of warheads,
 communications satellites will be installed on them.
 20.  The Aviatika joint-stock company has established itself in those
 shops where MIG-29's used to be produced. It now turns out an
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 ultra-light aircraft for sports aviators and farmers. This product is
 now being exported. And during just the first quarter of the current
 year more than 200 orders have been received from the United States,
 Italy, Spain, France, Britain, and other countries.
 21.  The Balakirev Machine Plant (which used to produce artillery)
 has also been converted to a joint-stock company. One part of it
 continues to turn out defense products, while another part is
 preparing to make American Case tractors.
 22.  At the present time work is also progressing on solving the
 problem of creating other comprehensive organizational-marketing
 structures for the military-industrial complex. We can cite four such
 structures as examples. A business center which is a semi-state
 organization designed to expand the development of contacts with
 domestic as well as foreign entrepreneurs; a finance company, which
 includes the Defense-Industry Bank; the Russian Defense-Industry
 Insurance Company; and an information association.
 23.  However, the changes that have taken place so far do not bear
 the imprint of an integrated, systematic approach to solving the
 problem of conversion in Russia. To a large extent they are of a
 spontaneous nature. Nevertheless, their logic corresponds, with no
 ambiguity at all, to the process of the_ emergence of market-type
 relations in our country's economy, as webs to t~:e appearance o-
 fundamentally new entities for managing the defense industry. And
 that means that the complex's high technological potential is being
 reinforced-albeit slowly- by the appropriate market mechanisms and
 its implementation at the national, as well as the international,
 level. And it would be no surprise at all if the military-industrial
 complex-which was renowned as the conservative portion of our
 economy-with the appropriate state support were to become the
 locomotive and principal financial source of Russian economic reform.
 A pledge of this is its high decree of competitiveness and
 material-technical preparedness for inclusion in the international
 division of labor.

