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The maker of Kalashnikov rifles says it is losing millions of dollars because the rouble is too strong, a sign that Russia's defence industry is unhappy with the central bank's currency policy.
The bank allows the rouble to appreciate to curb inflation, but this is leading to what economists call Dutch disease, when a strong currency results in a flood of cheap imports and hinders domestic industry, especially exporters.
"For us exporters, the strong rouble policy is causing massive losses. We are losing millions of dollars," said Vladimir Grodetsky, director general of the Izhmash plant in the city of Izhevsk, east of Moscow.
"We are trying to argue against it, and I hope someone will listen. I mentioned this to [Finance Minister Alexei] Kudrin and to [First Deputy Prime Minister Sergei] Ivanov," he added.
Izhmash, founded in 1807, makes 95 per cent of all Russian rifles. Its flagship product is the 100th series AK rifle, a more advanced version of the AK-47, the weapon of choice for many armies and guerilla groups.
"When the Izhmash director complains about the exchange rate it means we have already caught the Dutch disease," Kudrin said in Izhevsk.
About 90 per cent of Izhmash production is exported. Venezuela, for example, recently bought 100,000 Kalashnikovs. Most contracts are priced in dollars.
Last year, a powerful industrial lobby asked Putin to stop the rouble appreciation policy to help domestic producers, but after a short break the rouble has resumed its upward march.
- Reuters
