Saturday , February 10, 2018 - 10:00 PM
(c) 2018, The Washington Post.
Sergey Chemezov is one of the most influential people at the intersection of Russian business and politics. He runs Rostec, a state conglomerate of arms manufacturers and other industrial companies that is now looking for foreign and private investors for many of its more than 700 subsidiaries, such as gunmaker Kalashnikov. He also is a close associate of Russian President Vladimir Putin, having worked with him in the KGB in Dresden, East Germany, in the 1980s. The U.S. Treasury Department targeted him for sanctions after Russia’s annexation of Crimea in 2014, describing him as “a trusted ally of President Putin.”
Chemezov recently sat down for an interview with The Washington Post at his company’s Moscow headquarters, during which he offered to sell Russia’s S-400 antiaircraft missile system to the United States, warned of a new arms race, reminisced about his friendship with Putin and held out hope that President Trump would yet keep his promise to improve relations with Russia. He predicted, without irony, that Putin would win the March 18 presidential election. Here are lightly edited excerpts of the conversation.
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In what direction do you expect Russian defense spending to go?
I don’t think the expenditures on defense will grow. I don’t think there will be any growth, actually. I believe they will remain the same. In order to develop, Rostec companies need additional products which they will be able to sell. And these products can only be civilian. And these products should not be irons or frying pans - we had this sad experience in the ‘90s - but today we produce more sophisticated high-tech products, which are in demand not just in Russia, but also abroad. And we have many examples: medical products and medical equipment that are quite competitive and that we sell to European countries and, of course, to Asia.
How do you see the U.S. sanctions on Russia?
I must say that we are industrialists and not politicians. From the point of view of business, this is a simple example of unscrupulous competition. We are manufacturing in a way that is better in terms of technical characteristics and more affordable than European or American analogues. That’s why the Americans are doing everything they can to push us out of and not allow us to operate in markets where they’ve always felt comfortable.
The S-400 antiaircraft missile system still seems to be seeing a lot of demand.
When the political situation in the world is tense, every country tries to ensure its security and, of course, to ensure the safety of its airspace. That is why the demand for missile defense systems is high. Many countries would like to buy such systems, and we have many orders. I am not saying that we do not compete with Americans - of course we do. But according to my information, our system is better.
Your latest deals include Turkey and Saudi Arabia.
Yes, we have signed a contract with Turkey. We have already started production, and we should start deliveries in 2019. And with Saudi Arabia, we are in the process of negotiations - no final decision yet.
Are there deals with other countries in the pipeline?
Yes, but I can’t talk about them now.
From a strategic point of view for Russia, what is the reasoning behind selling the S-400 to a NATO ally country - Turkey?
The S-400 is not an offensive system; it is a defensive system. We can sell it to Americans if they want to. So, there is really no issue from the strategic point of view. And I don’t see any problems for Russia from the point of view of security. On the contrary, if a country is capable of ensuring the safety of its airspace, it will feel more secure. And those who might have intentions to attack this country will think twice.
What’s your feeling about where U.S.-Russian relations are heading?
I think that the sooner we establish normal relations between Russia and America, the better it will be for the world. Because look at what’s happening in the Middle East: If we had not helped Syria, it would’ve been the same there as in Libya or Iraq or Afghanistan. It was quiet there before America got there. Of course, I wouldn’t say that there were ideal leaders there, but it was quiet and calm.
When you talk about establishing normal relations, do you mean renewing the New START treaty, for instance?
Yes, that, too. The closer relations are between Russia and America, the more arms should be reduced - first and foremost nuclear arms. And what do we see now? The United States is adopting a new program. This will not lead to an improvement in the situation in the world.
What will it lead to?
It will lead to another arms race, because we will have to do the same as the Americans. This will keep building up and building up, and then a mere spark will be sufficient. With the number of weapons in the world today, there will be no winners. The world will be destroyed.
But the new U.S. Nuclear Posture Review actually talks about responding to Russian low-yield nuclear weapons.
We were the ones who suggested starting talks on reducing nuclear weapons. But no one is engaging on this.
Are you optimistic on New START?
Under the condition that, first of all, political relations move to a more trustworthy level. Until such trustworthy relations are established, how can we talk about further negotiations about arms reductions when we don’t trust each other?
But Trump has said that he wants to improve relations.
Yes, that’s what he says. But he doesn’t do anything. And in reality, it’s on the contrary: Look, there are new lists. What is this? Does it improve relations? I doubt it. I realize that these are only lists now - like a scarecrow, “Look, we know all about you, and we can put you on the hook at any time.” They think that people on the list will start getting upset and come to the Americans and say, “Yes, we are with you, and let’s overthrow Putin together.” But this is stupid. On the contrary, it had the exact opposite effect. All the people who are on the list support Putin. I am sure that the elections will show Putin’s high level of support. Already today, nobody any longer has any doubt that he will win.
These bad relations and the danger of a new arms race - what does it mean for your company?
Most of our companies are defense companies, and they produce weapons. But . . . our task is to increase the share of the civilian production to 50 percent. We need to do it as soon as possible so that even if there is a decrease in the number of military orders, the companies will still be able to function. We may then increase the volume of civilian production even more so that we can diversify our production and start replacing military production with civilian. So, when the process of detente starts, we hope that we won’t have to close our companies but will manufacture civilian products.
To the extent that an arms race is already happening, in what spheres is Russia more successful and competitive than the United States?
Let’s not talk about military goals! [Laughs.] This is not a topic for discussion.
A year ago, at the start of the Trump presidency, did you have expectations that something would change in terms of sanctions?
Yes, I did. He declared in his campaign that he would reexamine relations with Russia after entering office and that he would remove the tensions caused by the Obama government. Unfortunately, this hasn’t happened yet, because he himself has gotten caught under various kinds of scrutiny. It’s probably not easy for him, either. Let’s see, maybe he will gain the strength to create some opportunities that will allow him to change something regarding Russia.
What did you expect?
We were expecting normal relations to be reestablished, as things were under George W. Bush. That was a period of renaissance in our relations. Many joint ventures were created, and there was a great deal of contact.
What would this have meant for your company?
First of all, we would have continued to develop our relations with Boeing. We were planning to create a joint venture for maintenance and to sell airplanes not only in Russia, but also . . . Asia and Africa. But now one of our companies, which was supposed to do a leasing business with Boeing, among others, is having trouble attracting financing. We had big plans, alas.
What has remained of the Vladimir Putin you knew in Dresden?
Putin is one of those people who is always learning, not just on his own, but also from others. That’s why his professionalism is constantly growing.
What’s an example?
After we arrived and met in Dresden, he nevertheless continued to perfect his language skills. He was learning the language. He worked hard at it. And then when he returned to Russia, he started learning English. His English is, of course, not better than his German, but still, he can converse quite well. I know that he was able to talk to Trump in English, for example.
And how did he change?
He changed for the better. If before he was sometimes, perhaps, a little bit unrestrained, today he no longer has this characteristic. He is calm and makes decisions in a very balanced way. He never listens to only one opinion. He’ll always make sure to check again, to ask someone else one more time.
Analysts are predicting a period of instability amid uncertainty over Putin’s successor. How do you see this?
You know, for now, no one is talking or thinking about this because there are still six years left. Let’s see what happens in these six years. But I believe that our president is a reasonable person and will do what’s necessary.
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