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Marine Log

November 2, 2006

Putin calls for "sound protectionism" for shipbuilding

The Itar-Tass news agency reports that Russian President Vladimir Putin has urged the Cabinet to use "sound protectionism" to support the national shipbuilding industry.

He was speaking at a special conference devoted to the industry's development problems.

Putin suggested identifying "structural measures of state support for shipbuilding--tax procedures and patterns, as well as certain measures still being used by some countries of the world, such as subsidies and credits."

"What I have in mind is this. Sound protectionism will not undermine the free market economy environment in which the industry operates, or competition, but would let them take the first necessary steps to strengthen their positions," Putin said.

"Action must be taken to win more market niches for Russia," Putin reportedly told a conference devoted to the industry's development problems. "Competition in the world market is tough and there is no time left for decision-making," he said.

According to other Russian sources, Russia's Minister of Industry, Victor Khistenko, has been pushing for a shipbuilding strategy he calls “state protectionism.” It involves such things as steering shipbuilding orders from state owned companies to Russian shipyards, providing state matching funds for private investments in the industry and various subsidies. The aim is to increase the industry's current annual sales from around $2 billion to $4.5- $5 billion by 2011. Other aims are to cut the industry's dependence on military work from a current 77% to under 48%.

The strategy has been greeted with considerable skepticism in the Ministry of Finance.

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