Russia set to regulate arms prices

MOSCOW, February 25 (RIA Novosti) - The Russian government is planning to use price regulation mechanisms for state defense contracts, a deputy prime minister said on Wednesday.

"I believe it is extremely important to enshrine in law the concept of 'the state regulation of prices for arms and military and special equipment,' and apply this mechanism to all defense contractors," Sergei Ivanov said, addressing the country's lower house of parliament.

He also said the government was determined to intensify "anti-trust regulation" with regard to suppliers of major technical resources, raw materials, parts and components used in the production of arms and military equipment.

He said Russia's defense industry would need 295 billion rubles ($8.2 billion) in loans this year to ensure the smooth operation of its enterprises.

Ivanov also said Russia's 2009 arms exports would remain at the previous year's level.

The Federal Service for Military Cooperation previously said that arms exports would rise from $8 billion (2008) to $8.5 billion this year.

Russia's deputy defense minister said last Monday that state defense contracts would not be subject to cuts this year despite the ongoing financial crisis.

The Defense Ministry is to transfer 65 billion rubles ($1.9 billion) to producers before the end of this month, with 35% of military contract payments to be transferred in the first quarter of 2009.

The government is to disburse a total of 1.3 trillion rubles ($37 billion) to defense contractors this year.

The state arms production budget for 2009-11 has been approved at 4 trillion rubles ($115 billion).