MoD Sutanovac’s interview to Ekonom:east Magazine
Exploring new horizons for the Serbian defense industry
04. January 2010. | 08:38
Author: Vojislav Stevanović, Zoran Preradović
Photo: Dušan Đorđević
It is not often that a “soldier becomes awarded as one of the leading men in industry and one of the leading entrepreneurs in Serbia. This year Minister of Defence Dragan Sutanovac was presented with the special award of the Serbian Chamber of Commerce for his personal contribution to Serbian industry.
It is not often that a “soldier" becomes awarded as one of the leading men in industry and one of the leading entrepreneurs in Serbia.
This year Minister of Defence Dragan Sutanovac was presented with the special award of the Serbian Chamber of Commerce for his personal contribution to Serbian industry.
The defense industry made a more than 300 million USD worth of exports this year and that it has already made arrangements for new export deals.
The defense industry is slowly making its comeback to the world market. It is necessary to improve the conditions of these factories, as Sutanovac says adding that this come back has been a grueling one.
“These factories were destroyed in 1999 bombardment, thus becoming eradicated from the map of weapon exporters. In the last two year we returned to the markets where we were known before, and the leading world magazines on weapons and military equipment are again writing about our defense industry.
Since the state owns these factories, the representatives expected us to buy the surplus of goods, unfortunately we did not have money for this, not to mention that this was not a good way to rehabilitate these factories. My main goal was to find new markets.
I visited mostly Arabic countries, and I have had similar discussions with the European countries as well. The main purpose besides strengthening cooperation was to seek new markets for our defense products.
The practice to educate foreign officers in our academies resulted in having ambassadors of sorts in these officers educated in Serbia, they advocate and support our cause in their homelands. What is more, they even speak Serbian, as the minister adds.
€:What is the worth of these arrangements?
D. Sutanovac: We are talking big deals here. The total worth is some 8 million USD, which is a huge result for Serbia. We are in search of deals which could get our industry working in the next five years or so. The last contracts to have been signed entails engagement of our defense industry in the next five years, and then supplying with repro-materials in the next 15 years. This means that some factories would have to expand their capacities and to employ new work force in order to realize their contracts. We even believe that this branch of industry could support our agriculture by placing our products on that market.
€:This is African market we are talking about?
D. Sutanovac: These are the markets of traditionally close and friendly countries. However, Serbia is exporting to USA and Far East too. There is an increased interest in the ammunition, predominantly in the ammunition of Uzice based “Prvi partizan” ammunition factory. Unfortunately, this factory does not have the capacities to supply the markets in quantities demanded. The quality of the good sis such that we can export them to USA which have the highest standards.
€:You announced the modernization of our defense industry. What do you think this industry should look like?
D. Sutanovac: The best advice I heard from a business man was “ Find me a market and I will make a factory”. We had projects that never saw the light of the day because they were futile or megalomaniac. Our idea is to base the market on what we can sell, that is, to suit it to the customers’ needs. SDPR developed “poga” howitzer, as one of the moist advanced and serious artillery projects along with the “lazar” combat vehicle. The key is to analyze the market carefully and to make a product that can sell.
€: What can the Serbian defense industry sell?
D. Sutanovac: We can sell ammunition of all calibers, ballistic vests. I am deeply convinced that such heavy artillery products developed by SDPR can find their buyers. When we se4ll something that is made according to the best NATO standard, then we have a pass for other defense markets in the world. We started selling “Lasta” training air crafts last year. Zastava has excellent infantry and hunting equipment.
€: Is there a possibility to start cooperation with Mile Dragic again?
D. Sutanovac: No one is excluded, anyone with a good product and a good price that is, anyone who winds the public bid is welcome. There is no possibility for anyone to pull a few strings and make a few phone calls and to win the bid for quipping, and then to sell the same equipment to MoD as was the case in previous years.
€:The fate of the military property has been under consideration for a very long time now. Will military compounds be privatized?
D. Sutanovac: .
If I were to make such speculationsit would be most provisional and not a smart thing to do. There is a list of property which has not been updated properly. The army was so powerful before, that some of its property was not registered in land books. Things are slowly changing now, and we are taking big steps towards alienating this property which is considered as not very valuable. Part of this has been sold, such as army domes, training grounds and so forth. It is important to say that this is not Belgrade compounds we are talking about, but rather storage facilitiesin Cacak, Sabac and Subotica. We cannot sell property in small town as we cannot find buyers so this mean we just have to find new forms of alienation.
€:What is the destiny of Karadjordjevo?
D. Sutanovac: There is a residence and a military institution as a separate firm. This military firm has several thousand acres of land generating 400-700 million USD of loss. We are currently implementing rationalization of such firms including Karadjordjevo. Some 450 workers will be made redundant with a social resettlement program. We are currently considering the best model of sale for this property. Someone could cultivate this land better than the army. Then we have such institutions which at best do not generate losses, and this is the heritage from the period when we did not take care of our property and managed it poorly. Each year we have to compensate for the loss these firms make. I do not support this form of work in the future.
€: How much money can we make from the sales?
D. Sutanovac: MoD had its assessment which I considered to be wrong from day one in office. For example, if anyone can tell me the exact value of buildings in Kneza Milosa Street, then I can believe that there is a way to truly assess the property. Any kind of speculation is wrong, I even refused to take the assessment of the IRS as I thought they were too low. The only way is to go to the market in order to establish the value of the property. I will not support the idea of selling the property for pittance as it is a sort of a family heirloom that has to be traded for certain value.
€: You announced professionalization to be finished by the end of 2010. how may members will there be in the army and in peace missions?
D. Sutanovac: I want to finish this process by the deadline set by President Tadic back in 2003 when he was the minister of defense. There was no progress in 2004, 2005 and 2006 but 2009 saw crucial steps forward. Unless we encounter dramatic setbacks in the field of finance we expect to finish this process. I believe this to be one of the greatest reforms of the Serbian society.
€:Why all this hurry as many believe that we should prolong the deadline?
D. Sutanovac: If we behaved as those before us then this professionalization would not be finished by 2015. I believe that the deadlines should be met but not when it costs us quality. It is not our goal to make professionalization a marketing trick, but rather to make some true reform. The military profession’s repute has been restored, and the shadow of corruption following us has finally vanished due to many scandals.
€: How may soldiers will be deployed in peace corps?
D. Sutanovac: The total defense system is planned to have 36 000 people, 114 of whom will be civil servants. The reduction in MoD will be from 11600 down to 6500. This will result in an ideal officer pyramid. The plan is to have 10600 professional soldiers and 2000 for those who wish to serve voluntarily. We want to make the military calling very attractive and anyone serving the army will have benefits. Our participation in peace missions is our primary foreign political goal, as this is the way to raise the credibility of our army and also to train our army. The experiences our army will get come from the real life experience in the theatre. There is not a single developed country in the world that does not participate in peace missions. We hope to take part in Lebanon besides our engagement in Chad, Liberia, Cote d Ivoire.