MOSCOW — ANATOLY BARANOV, a long-time activist on the Russian left, now holds a prominent post as public relations director for one of the country's leading military-industrial corporations, which produces the famous MiG fighter aircraft. Baranov was formerly the deputy chief editor of the newspaper Pravda.
For a journalist with this record to be appointed public relations director for a large corporation might seem quite logical. But in post-Soviet Russia, it was unthinkable until recently, for political reasons. But, after the financial crash of August 1998, the geriatric President Yeltsin was forced to name Yevgeny Primakov prime minister, and to agree that the role of first vice-premier in charge of the economy should be given to Communist Party parliamentarian Yury Maslyukov.
From that point, it became possible to make new appointments to a number of key industrial posts previously held by right-wing liberals, who in practice had acted as liquidators. Eventually, it also became possible to speak of a rebirth of Russia's near-moribund industries.
Baranov spoke to Green Left Weekly's BORIS KAGARLITSKY last month.
Question: What has happened to Russia's largest military-industrial corporation in the past year?
Nikolai Nikitin, the new head of the MiG corporation, came into the firm with his own program for restructuring production and management. When the new team took over, the situation was simply catastrophic — we owed the state the equivalent of US$400 million, the workers had not been paid for six months, only one contract for the export of military technology had been concluded and paid for in the previous four years, and our own government had not ordered a single new aircraft from our firm for six years.
Moreover, for approximately three years, the defence ministry had not paid us even for work on modernising equipment that was already in the hands of the armed forces.
The firm, as such, scarcely existed — the top management structure was, for practical purposes, a holding company that concentrated the foreign trade functions in its hands. Almost nothing trickled down from them to the factories and, as a result, the people on the production side weren't in any special hurry to make export deliveries.
As well as that, the former chiefs of the construction bureau that was part of the firm, as well as various generals from the defence ministry who had been involved in making arms purchases, had set up an affiliated firm, a joint-stock company called Russian Avionics. It was this firm that was formally engaged in modernising the MiG fighters, and in practice it acted as the main intermediary between the defence ministry and the production wing.
As a result, the state orders went to this Russian Avionics, to which the world-famous construction bureau became a contractor. Meanwhile, both the joint-stock company and the state enterprise were headed by the same person!
Naturally, in such a condition the firm was completely ready for privatisation, and it was listed in the privatisation plan. For MiG, privatisation would unquestionably have meant the end of the road.
Question: What could be done in such a situation?
In the initial period, until May 1999, we relied on the support of the Primakov cabinet. They helped us restructure our debts to the budget, postponing repayment. They also allowed us to reorganise the whole complex so that, from a number of corporate entities, there remained only one, a unified state enterprise that combined management, marketing, servicing and, most important, the Mikoyan construction bureau and three serial production plants.
We'd mainly completed these processes when the Primakov cabinet was sacked. It's absurd that this happened at a time when there was a noticeable economic recovery and, more important, industrial revival. However, the logic of the oligarchs was understandable; they were reconciled to the existence of a left-wing administration only so long as things in the system were thoroughly bad. As soon as the situation began to improve — the Moor has done his job, let the Moor depart.
Question: Critics of Primakov and Maslyukov are now saying that there simply was no industrial policy, that the cabinet just made use of the effect of the devaluation of the ruble and of a certain accompanying increase in the competitiveness of Russian goods on export markets.
I've already explained that the debt to our enterprise wasn't cancelled, it was only restructured; it still had to be repaid, in just the same way as wages had to be paid to the workers and engineers. We, of course, acted in classic left-wing fashion, starting by explaining the situation to the personnel.
Every month, Nikitin, as general director, meets with the plant workers. Anyone can come to these meetings and ask any question. We devote a lot of time to developing our corporate ideology: we publish plant newspapers and we're starting up plant radio broadcasts again. But without real successes, who's going to believe us?
The facts are that the wage debt was paid off in the middle of last summer and, since autumn, wages have been paid on time. On top of that, we twice raised wages during 1999, we paid small bonuses, and we plan to raise wages again. Plus, we're already paying back the debt to the treasury bit by bit.
All this has become possible because thievery has been stopped. In the past year we've concluded five contracts for the export of our products, and these aren't only military machines but also civilian ones. The workers have felt the difference.
Question: It's argued that the plans for conversion to civilian production, under Gorbachev and subsequently, have merely been a cover for plans to destroy the Russian military-industrial complex. And here you are talking about your own plans for conversion.
We design and produce the world's best fighter aircraft, the MiG-29, but foreign markets' interest in this aircraft is now less. The geopolitical defeat which Russia suffered, in voluntarily changing its social system from socialist to bourgeois, has been catastrophic. We've simply been forcibly driven out of various markets.
Our new project, a fifth-generation fighter which is now ready for flight testing, is being delayed by foreign pressures. Only the US has such a machine, the well-known Raptor, which is now undergoing testing. It seems to me that the development of such a machine in Russia is a blow to clan interests in the US, since they've already spent around US$8 billion on the Raptor, a sum quite unthinkable for modern-day Russia.
But with expenditures an order of magnitude, even two orders of magnitude, less than the Americans, we've created an experimental machine not worse than the US one. I don't think that's going to go down well with US taxpayers, with the opposition in Congress, and so on. A scandal is brewing, and circles in the US that have a stake in this are exerting all their efforts to make sure that the "Russian Raptor" doesn't fly before the presidential elections in the US.
It's possible that pressure has been placed on Kremlin figures who fear for their investments in the US and Western Europe after the change of regime in Moscow. So, when circumstances are like this, is there any better proposition than a sizeable civilian project?
Question: A lot of people take the view that a military firm should make military aircraft, and that civilian aircraft made by a defence enterprise won't be of the same quality as those built by an enterprise that specialises in this area.
It's strange that Boeing produces both civilian and military aircraft, while we're supposed to have trouble doing the same. During the Soviet period, a construction plant that was part of our firm produced the Il-18 airliner, the best Soviet machine in its class. If you upgraded the avionics, it'd be competitive on cost grounds even today.
So when the government assigned us the production of the middle-range Tu-334 aircraft, which is analogous to some of the newest products of Airbus and Boeing, it was taking into account our quality plus our clear ability to get the job done. We have colossal excess capacity, and we can accommodate any reasonable number of orders.
Not long ago, Nikitin even announced that after making personnel cuts in previous years, we were ready to take on new workers! After this, who's going to throw stones at the defenders of the new industrial policies?
Question: You said that the sacking of Primakov was an unpleasant surprise for you. Does this mean that your relations with the new cabinet aren't going smoothly?
Everyone, from the Communists to the liberals, is trying to win favour with the Vladimir Putin government. Putin's presidential prospects are a special question.
But we're a state corporation, and we have to work with the government. We're managing to do this. For the first time we've seen the appointment of a vice-premier responsible for defence industries — that's Ilya Klebanov, who for many years was head of the giant LOMO production combine in St Petersburg. It was Klebanov who, at the celebration of the 60th anniversary of the Mikoyan construction bureau, announced publicly that the plans to privatise the MiG corporation had been dropped, saying "The national estate is not for sale".
It was this government that made the decision to assign us the production of the Tu-334, a decision that will breathe new life into us. It's true that all these decisions are the result of a shift that took place when the government was headed by Primakov and Maslyukov.
Question: You give the impression that there are no major clouds on your horizon, but not long ago a whole scandal burst out around your firm.
The scandal didn't burst out on its own — it was prepared over a long period. Back in September, a certain young man who headed a small "research centre" supported by structures close to the well-known oligarch Boris Berezovsky, tried to blackmail me with confidential information that was prejudicial to us.
Some time later, a member of the Communist Party, whom we had implanted in this research centre, gave us a detailed description of a provocation that was aimed at preparing public opinion, by mid-January, for a change of management at MiG. Then, before the 60th anniversary, when public attention was already concentrated on our firm, the "scandal" burst — six senior constructors announced their resignation or, more precisely, that they were transferring to the private firm Russian Avionics. According to information we have, some of them were already shareholders in that firm. That is, even earlier they'd been helping it to rob their workmates.
This all coincided with the height of the Duma election campaign. On the first TV channel, belonging to Berezovsky, there were two whole stories designed to compromise our firm and embarrass Yury Maslyukov, who was running for the Duma.
At the same time, a series of articles came out in quick succession in the newspaper Kommersant, which Berezovsky had recently purchased. However, we were warned and managed to organise media reports putting our point of view.
The culmination was that vice-premier Klebanov declared on the state television channel that the government was satisfied with the situation in the MiG corporation, that the information campaign against us had been artificially inspired and that, through this affair, a number of people were trying to escape responsibility, perhaps even criminal responsibility, for their misdeeds in the past.
So we think we've been able to stand up to an adversary who has considerably more resources than we do, and to answer him effectively.