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Outside View: Russtech eats arms firm

By OLEG MITYAYEV, UPI Outside View Commentator

MOSCOW, July 1 (UPI) -- It was announced on June 20 that Russian Prime Minister and former President Vladimir Putin had signed a resolution transferring Russia's only authorized arms exporter, Rosoboronexport, to Russian Technologies Corp.

The Russian government also coordinated a draft presidential decree on transferring state-held shares in 480 other enterprises to the corporation.

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Russian Technologies is growing into an industrial behemoth with assets in many sectors, from defense to automotive to civil aviation.

The corporation was conceived in November 2007, when Putin, who was then still president of Russia, signed a decree for its establishment. Initially, Russian Technologies was to incorporate approximately 250 federally owned companies and predominantly state-owned joint-stock ventures in the defense sector.

Apart from Rosoboronexport, the huge corporation was to include Oboronprom, a company that specializes in helicopter manufacturing; Defense Systems, a company that specializes in air-defense and electronic equipment; Oboronpromleasing, a company that specializes in leasing; Russia's largest automaker, AvtoVAZ; the titanium producer VSMPO-Avisma; RusSpetsStal, a company that specializes in special steels for the defense industry; High Technologies R, a company that specializes in the creation and use of databases and information resources; the Industrial Energy Co., which specializes in providing electricity and gas supplies to defense enterprises; and R.E.T. Kronshtadt, a company that specializes in manufacturing flight and sea simulators, and navigation systems and equipment.

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But this has not sated the appetite for expansion of Sergei Chemezov, the head of Russian Technologies. It is rumored that this latest list of assets to be handed over to the corporation had swelled to 600 companies, but the Russian Finance Ministry and the Economic Development Ministry clipped it to 480 companies in all.

The first asset transferred to Russian Technologies in late May 2008 was the state-held stake in the air alliance, AiRUnion. Russian Technologies chief Chemezov has proposed that several other civilian carriers be turned over to his gigantic and still-growing corporation. This would cut the number of civilian air carriers to only two giant companies, both of which are state controlled: Aeroflot and the group of companies incorporated in Russian Technologies.

Russian Finance Minister Alexei Kudrin stepped in at the last minute, saying in early June that Russian Technologies was trying to divert part of the Russian federal budget's revenue and furtively privatize the federal property transferred to it.

The final list of state-controlled assets to be incorporated into Russian Technologies has not been revealed, but the transfer of Rosoboronexport to the corporation was an unfortunate development for the opponents of the super-corporation.

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(Oleg Mityayev is an economic commentator for RIA Novosti. This article is reprinted by permission of RIA Novosti. The opinions expressed in this article are those of the author and they do not necessarily represent those of RIA Novosti.)

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(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

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