English
Reporter: What is your opinion on the current situation of the Romanian defense industry?
Aurel Cazacu: I wouldn't want to talk about the past. We need to look to the future, given the international context (ed. note: the tense situation in Ukraine).
At this time, what we need is to relaunch the domestic state-owned and private defense industry.
Starting from the assignments that the institutions of our national defense system are expected to carry out, the authorities need to conduct a strategy to find out what their needs are. We need to find a strategy and ways of financing to restart the Romanian defense and security industry.
Given that we are a member of NATO and given the missions that the institutions which are part of the national defense and security system have to carry out, they can not be required to buy what the Romanian industry is currently making, because it does not meet the standards stemming from those missions.
Romanian and private companies in the defense and security sector must strive to get to the point where they can produce on their own or in partnership the equipments and services which the institutions which are part of our defense and security system need.
For this, an almost perfect cooperation is necessary between the beneficiary institutions and the manufacturers.
The defense and security industry, together with the aviation sector are currently having problems, because the needs have changed, the technology has changed, and requirements have changed. The state-owned factories, for instance, urgently need funding for retooling and a plan of cooperation with the European industry needs to be initiated, for state-owned as well as private companies.
It is very important to mention that last year in December, the European authorities have decided to create a European defense industry, under the direct coordination of Manuel Barroso (ed. note: the president of the European Commission).
As a result, Romania must get involved itself in this program intended to create a European defense and security industry, and European equipment projects.
Another important decision made on a European level is that of having the products meet both the civilian and military requirements, as they are expected to have a dual use.
Reporter: How would you envision this relaunch of the defense industry?
Aurel Cazacu: As I've said on the occasion of the Black Sea Defense&Aerospace (BSDA) exhibition, which was held recently, state and private companies must cooperate with their beneficiary institutions, meaning that the latter should issue technical requirements which should be adequate for the present and future missions and, based on adequate financing programs, to retool the Romanian industry, to start research and development projects, and as a target we are considering an integration that is as complete as possible with the European defense industry and NATO, as well as a volume of exports that is as high as possible.
Romania must play a part in the creation of the future systems of customized and intelligent weapons.
Weapons systems have seen a fantastic evolution. I often say that whoever wants to see where the world has gotten from a technological point of view should get to visit an American nuclear carrier.
When you see how far American technology has come, you change your opinion on life as well.
Reporter: Can we implement private management in the state owned defense companies?
Aurel Cazacu: At the present time, the Romanian defense industry is both state owned and privately owned. The defense industry needs management that is guided by private principles, and those who manage the property of the state should also be good professionals, and act as true owners.
It needs to be understood that it is one thing to own a business and another to manage it.
It is necessary for the institutions that manage the assets of the state to establish clear performance criteria, by which the managers selected using tests would be required to achieve results just as good as the ones they got when working for private companies. So my answer is "yes" when it comes to private management in state-owned companies.
I would also add that as long as we demand performance from the managers of state owned companies, we should compensate them appropriately.
Reporter: What can you tell us about the collaboration of the aviation industry with the East or the West?
Aurel Cazacu: The opportunities in the aviation industry are very high currently, globally speaking.
In February this year, there was a fair in Singapore, and on that occasion Boeing as well as Airbus have said that for the next ten years, they have orders for over 15,000 aircraft, which means a titanic volume of work and a need for new partners to help them build them.
We have a private company, Aerostar Bacău, which is profitable and operates based on principles of private management. It would be a good thing to build a partnership between the three companies in the industry - Aerostar Bacău, Romaero Bucureşti and Avioane Craiova, which, based on the principles of private management, would allow the two state owned companies to become competitive again. In this particular case we would not be talking about a monopoly, but rather about serving Romania;s interest.
Perhaps Romania will not produce aircraft, but it can get involved in the production of parts. There are private companies in Romania that work for the European aircraft industry, for Airbus, for instance.
If we develop this industry, we would bring capital to Romania, we would generate economic growth, we would be creating jobs, and the professionals would stay here and pay taxes.
It is obvious that our factories can work for the aviation industry, and the orders can come from the areas where there are very big markets.
One particular case is the helicopter plant in Braşov and I am referring here to the Romanian section, as well as the French and German ones and I think that over there, thanks to its cooperation with Europe, the aviation industry of Braşov is on the right path.
Reporter: How do we finance the turnaround of the defense industry?
Aurel Cazacu: I think that the cooperation with the European industry and with NATO needs to be encouraged and supported, and that also applies to exporting to third party markets, and all the taxes paid by the manufacturers operating in the military and security industry should be used to create a special fund made available to the institutions which are part of the national defense system to be spent on equipment acquisitions.
As an example, had we had weapons exports worth 1 billion Euros, the taxes paid on those sales should have gone to a fund made available to the Government or the Ministry of Defense for purchases.
Reporter: The government recently decided to cancel the tax liabilities of 15 defense companies that manufacture or sell arms, ammunition and warfare equipment, claiming that the current regional geopolitical context "requires the strengthening of Romania's defense capability". Can this decision be part of a strategy for a turnaround?
Aurel Cazacu: In the Government, under the coordination of Mr. Sorin Encuţescu, several committees have been created and important steps have been taken towards reinvigorating the Romanian defense industry.
There is a plan of measures to be taken, a strategy will follow as well and a new law of the defense industry is being worked on. I think that this measure of canceling the debts is normal. It remains to see the guidelines for its implementation.
It is a first step and the first proof given by the current government that something is being done. I think that the measures that would encourage the development of the Romanian defense and security industry should not be abandoned.
We must bring together the executives of the companies and the ones who coordinate, who draft the policy in the defense sector. And that policy is made by the government.
Given the importance of this industry, it is implied that the companies need to talk to the military, because they are the ones who make the requirements. The defense industry has one mission, to ensure the needs of the institutions that are in charge of the national defense. It is very important for that to be understood.
And then one second task is to create exports which would generate cash inflows.
Reporter: The Ponta government has some redoubtable consultants when it comes to the defense industry. American general Wesley Clark, for instance.
Aurel Cazacu: I think that it is very important that, at the level of the Romanian government and of the activities carried out by our teams in NATO or in the European entities, we attract or identify personalities such as Mr. Wesley Clark, both to help Romania in the process of transferring technology, as well as to uncover business opportunities that would have a positive effect on the revenues of the Romanian state budget, thanks to the taxes paid.
Reporter: We may cancel the debts, but those companies will probably be stuck in the 80s, technology-wise.
Aurel Cazacu: We need to make the efforts to make them competitive again. Those government commissions include people that must implement measures for an immediate turnaround, for adapting both the old technologies and the human training to keep up with the new technological requirements.
For that, those plants need investments. I can offer private investments to a state owned factory using the principles of private management, the principles of managing property, the making of profits.
There are currently situations where many people are interested how much scrap metal can be made from shutting down a military plant. It is a big mistake.
Investors who visit us are amazed when they find out that the market has demand for our products, and we aren't doing anything, we are not lowering our prices, not increasing output etc.
Reporter: How are we doing when it comes to the exports of the arms made in Romania?
Aurel Cazacu: In that regard, we have a very good traditional relationship with markets in Asia, the Middle East and Africa.
The authorities need to find solutions to stimulate the exports, both for state owned producers, as well as for the private owners.
For example, when a foreign military chief of staff comes to Romania to buy military products it is a good thing for them to have meetings with their domestic peer. It shouldn't be necessary for someone to beg our official to meet with a foreign general who is coming in to buy weapons.
We need a strategy for that, it needs to become the normal thing to do - that is the only way to support the Romanian defense industry.
For example, we are producing some equipment that does not meet NATO's requirements, but that equipment is perfectly adequate for exporting to countries that are not part of the alliance. Using adequate financing solutions, the Romanian army, for instance, can have these equipments and use them for training, when the foreign partners come in to discuss the potential contracts.
For that, there are solutions which would not strain or affect the army's budget.
For example, the money made from the dismantling of some products of the Ministry of Defense, should go towards the domestic manufacturing of equipment that would outfit the ministry, and when the foreign partners came they would that they would see the army actually using them.
Then, the taxes paid on those exports would go to the army's budget, for the acquisition of the products required by NATO.
At the present time, we have the conflict on the edge of our border and we have to buy weapons, but in order to do so we need money.
Solutions for finding money exist, but we need to work for them a little, to find them, to implement them and to put them to work.
Reporter: What can you tell us about the 2% increase of the budget for defense?
Aurel Cazacu: That is a matter which concerns the Ministry of Defense and the Romanian government.
The agreed increase is better than nothing, but I still think that the funding needed for military equipment expenditures is a lot higher.
Those additional amounts allocated from the state budget will help Romania buy military equipment, for at least ten years, if they are spent according to a cohesive strategy, in line with the missions of the Ministry of National Defense.
Reporter: How much money would the defense industry in Romania need?
Aurel Cazacu: I don't know right now. I don't think the money is the main issue. First of all, we need to create the foundation for securing the funding.
A few months ago, I said that the demand for Romanian arms and ammunition is ten times higher than our production capacity.
We should begin producing not ten times, but five times more in the next six months and create that fund out of the taxes levied on the profits from the sale of weapons.
Furthermore, it would be an idea to have some of the profit of this industry go towards that special fund intended for the purchases of military equipment.
Reporter: Would the privatization of companies in the defense industry be a good idea?
Aurel Cazacu: The market must be allowed to decide. The Romanian industry needs investors, be they private or state owned, small or big.
The old privatizations are a distinct matter, those plants are part of the Romanian defense industry, on the private side. They have an infrastructure that can be recommissioned, and the machinery needs to be upgraded or replaced.
They have the advantage that, since they are in the private sector, they can be very easy to make operational again with private investments and managers.
The state owned plants however must go through the difficult procedures that we are already familiar with.
We can identify partners which, by investing money, in the viable areas of the defense industry, would relaunch the production of certain equipments that are competitive.
You can't have competitive products and profits to match if you don't have modern technology and adequate financing, because the market exists.
For example, in our neighboring countries (Bulgaria, Serbia, Turkey - more than half of the plants in Turkey) almost all of the weapons industry is private and they have orders lined up for the next 2-3 years.
We could have the same. If we only wanted to.
Reporter: What is your company Criabo Defense&Security making at the Cugir Military Unit?
Aurel Cazacu: Currently, in partnership with Romarm, at the plant of UM Cugir, we make the GM6 Lynx weapon, which is intended both for civilian and military use. I've wanted very badly to bring a new product to Romania.
This weapon is in line with the times, meaning that it can fire two types of bullets with a 12.7 caliber, namely the NATO version (12.7x99), as well as the Russian cartridge version (12.7x108).
We have proved that the plant can make this product and I can tell you that according to the latest studies, we can manufacture large orders.
I won't hide it, I've said it before and I am saying it now again, I very much want the next step on the weapons side would be to create a Romanian firearm. We have the expertise and specialists with whom to make it.
My concern at the moment is also to relaunch the manufacturing of guns and hunting weapons that would match the ideas discussed earlier, in other words to operate according to the principles of customized weapons and, in the future, of intelligent weapons.
I will certainly succeed in this approach, with all the problems that will occur. I can tell you that the United States have a head start in that regard.
I will use the know-how of specialists in the field. I want very much for the people who work in the security and defense systems, who retire, to continue to be used, because they have vast knowledge which we shouldn't miss out on.
Weapon systems get created based on what the users want or require.
The requirements which the authorities are expected to meet will help me perfect the weapons systems. Nothing is impossible.
I am saying this and I am encouraged by the fact that I was a part of the circle of acquaintances of the great inventor Kalashnikov.
Reporter: What other activities is Criabo Defense&Security involved in?
Aurel Cazacu: Aside from manufacturing the weapon at Cugir, we are looking for investors for the Romanian defense industry.
I am also looking to find partners for a bid abroad for the rebuilding of the military, police and firefighter structures in the Arab countries and northern Africa.
The spearhead for such an initiative must be a cooperation between the private sector, Romtehnica and Romarm.
At the present time, Romania can't produce that type of competitive armament compatible with the NATO requirements, without the relaunch of the defense industry, which will take a few years, but in turn, can only take care of the rebuilding of the military, police and firefighter infrastructures in the countries affected by military conflicts.
We are also thinking about creating an international military training center, which would turn out a profit and taxes that would be allocated towards new military purchases.
Reporter: Do you intend to run for the private management in this industry, for instance at Romarm?
Aurel Cazacu: If a contest is held in one of the state institutions and I have the ability to participate, obviously by meeting the requirements, then I will gladly participate, because I have a strategy in that regard.
I would very much want to have things come to the point where the political factors would ask for the right things from the industry, in line with the international military as well as economic requirements. The managers must be allowed to do their job. It's not the politicians that depend on the managers, it's the other way around.
When you're a manager, it is very important that the people who request things know what to ask for.
Reporter: What can you tell us about the conflict in Ukraine?
Aurel Cazacu: I would like not to answer because it is a geostrategic matter.
People think that when they hold a position, history stops. In actuality it doesn't, and it never did. What is happening now in Ukraine is proof of that.
Russian president Vladimir Putin had been preparing this conflict for a long time, and his opponents are now worried about what is happening.
One needs to follow the thread of the events.
Did anyone see any terrible outrage in Europe or in the US concerning Russia's actions? No, because there wasn't any. Just lots of talk and that was it.
On the other hand, Russia has China's support, and in addition to that it has the support of India, which it has had traditional relations with. If we count the population of India, Russia and China I think that they account for half the population of the globe, and we have the huge potential of those countries to add to that.
I think that even though we are a European country and we are part of NATO, we are still Romanians and the territory of Romania belongs to us, these are things that no one can take away from us.
No one is going to take away our Romanian language, even if Europe became a federation and it were to have a European language.
We will remain Romanians and regardless of what happens in history, we must live here, according to our traditions, and show that we are no worse than others. We need to have the pride of being Romanians.
Reporter: Will NATO protect us if the conflict in Ukraine escalates?
Aurel Cazacu: It's true that we are NATO members and we will benefit from that, but lately, there have been debates over the soldiers that are dying abroad.
In the future, Europe will become a federal state and I think that Romania will be part of that federation. However, in any federal state, regardless of whether it is Germany or the US, the ethnic entities in certain areas have their pride and that is reflected in development.
Romania is a country that has riches, with people who are good at their jobs in all areas. We can develop and have an exceptional army too.
Before thinking about defending Europe, we are first of all defending Romania against any aggression. We are on the edge of Europe. In Romania, there have been wars before and there will be others from now on, and the threats and the attacks have reached our borders.
I don't know if there will be a war, perhaps it won't be a conventional one, because the nature of modern war has changed.
But like I said once, I don't export weapons, I export democracy. To make sure that I am protected, I need to have weapons; If I don't, then I am inducing a positive state in the of mind of the enemies, which can come and attack me on all fronts.
To Romanians, the army is a very powerful symbol.
Think of what would happen if an aggression were to occur and due to being inadequately equipped, the Romanian army lost or of we had a disaster in terms of casualties.
It would be a disaster if it were revealed that we are incapable of defending ourselves and that we need outsiders to come in and defend us. Someone shouldn't necessarily die, but the way the army would be perceived by our people, that we are incapable of defending ourselves because of the inadequate equipment, would be shameful.
Reporter: How do you see the future of the Russian-Ukrainian conflict?
Aurel Cazacu: The conflict in Ukraine will be resolved, the major powers will find a solution eventually and life will go on.
Let's take Yugoslavia's example - no one speaks about it anymore, even though many people died over there. On the Adriatic Sea, people now sunbathe, there are resorts, but they need weapons to defend themselves, because there is a need for security.
There will always be a need for weapons and bullets, for clothing for the special troops, for guards, for surveillance systems etc, etc, etc.
The world keeps spinning, history investigates and it evolves a lot and very quickly.
In once held a lecture called "The arms trade - an act of culture". If you want to make the behind the times fighters to learn how to read and write, you give them a sophisticated weapon and you explain to them, for instance, that they can't use it unless they learn how to do it.
I am telling you, even the biggest haters of the English language will learn it simply to be able to fight their enemies on equal footing.
Reporter: Where in the world are there still ongoing armed conflicts ?
Aurel Cazacu: To be honest such conflicts exist everywhere, in northern Africa, the Middle East, Asia etc. From there, they have come towards our region. We will see how the problem in Ukraine will end. One thing is certain. The crises and the conflicts will not disappear, because they are the foundation that allows the powerful to rule the world. Unfortunately, or luckily, weapons are the basic element of that process and I think it would be a big mistake for us "to out-Herod Herod" and to destroy the domestic security and defense industry, waiting for NATO to defend us.
Reporter: In other words these conflicts create the opportunity to purchase weapons.
Aurel Cazacu: Yes. But I am not referring to actual purchases, but rather to the need to buy weapons. For example, the conflict in Syria did not result into a true war, but every country in the area has bought weapons. And also, the countries in the conflict areas that had older weapons now have serious programs for buying new weapons.
The world is ruled by creating crises. Following these conflicts, you rebuild the countries' critical infrastructures, you sell them weapons, you help them spend the money and resources that they have and that is how life goes on.
Nowadays, the slogan "divide and conquer" is more actual than ever and it would be a big mistake for the Romanian military industry to be unable to participate in the "deal" that will follow the implementation of this fact.
Reporter: What is your opinion on the acquisition of F16 jets?
Aurel Cazacu: It's natural.
Some time ago, I was saying that we should have bought two or four squadrons of F16s and one or two squadrons of Eurofighter jets. It's the only way Romania could enter a path to normalcy.
We can finance that kind of acquisition using an offset program. Let's not forget that Poland bought planes worth 3 billion dollars and has made an offset of 5 billion dollars. And by that, I want to say that our partners across the ocean appreciate it a lot when they see national pride and fighting for the welfare of your people.
Reporter: What is your opinion on the visit of Joe Biden in Romania and Cyprus?
Aurel Cazacu: From my point of view, from an economic point of view, it is a positive action.
It's just that, following this visit, we have a team of military and civilian specialists and lobby-ists that would go to the US, to find cooperation opportunities for industries such as defense, aeronautical, naval etc.
All of these investment partnerships can currently be done based on some offset programs. This activity has become something negotiable, like on the stock market, on a global level.
With the help of the government and of some private entities, I want to initiate an "advance offset" program for identifying opportunities that would satisfy and cover the needs that Romania will have from a financial point of view, to acquire the F35 jet ten years from now. Similarly to this program, other projects can be created to cover the needs for other equipment for the next ten years. This problem of the offset -compensatory operations, are in fact deals by which we create financial added value needed for the purchase of military equipment. This activity is connected to the military sector, but it is in fact a business that is connected to the private sector, with government support.
It is normal for the seller to help me find a solution by which to pay for his products in the end. They win, I win as well.
I hope that in the coming period, the relaunch of the defense and security industry will become the foundation for the relaunch of the Romanian industry.
Reporter: Thank you!
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