THIS WEEK THE MOSCOW daily Nezavismaya Gazeta (The Independent Newspaper) reported what Russian defense industry officials have been saying for some time now about the steep decline in orders from the People's Republic of China (PRC). Beijing has been one of--if not the--biggest cash cow for Russia's weapons makers. A large portion of Moscow's defense industrial complex might have gone under in the early to mid-1990s without the massive orders from Beijing for fighter aircraft, naval vessels, air defense systems, and air-launched weapons.

But all this Chinese business is coming to a halt, according to some well-placed but unnamed sources that spoke to NG's Viktor Litovkin for an article entitled "Military Export Dead End: Moscow Is Losing A Major Buyer of Weapons."

"The time has past when China was in top number of the heavy buyers of Russian defense products," he writes. "At present, exports to the PRC of domestically developed military technology and weaponry are close to zero." A "well-informed source" tells the Moscow paper that there is now "serious concern" in Moscow over losing their Chinese market and that this has become the "central issue of attention in the preparations for an upcoming visit by the Russian Defense Minister to China."

But, even though this is a burning issue that has some rather weighty implications for Russia's future as a maker of high-tech weaponry--which in turn determines whether the country will continue to be a world power--there is no rush by the Russian side to push this meeting to the forefront of the current government's agenda. NG's anonymous source tells the daily that there is so far no set date for this visit to take place or for the two nations' defense ministers to participate in a session of the Russia-PRC bilateral commission on military-technical cooperation.

The delay in setting a date for the meeting between Russian Defense Minister Anatoliy Serdyukov and his Chinese counterpart, Cao Gangchuan--and possibly turning the tap back on for Chinese orders--appears to be part of the maneuvering now taking place in Moscow as Russian President Vladimir Putin's heir-apparent, First Deputy PM Dmitri Medvedev, prepares to run almost unopposed for the Russian presidency. NG's source tells the paper that "the meeting between the two ministers of defense will take place not earlier than the next Russian presidential election, but not later than when he officially takes office."

This is a clear signal, say some observers, that Medvedev wants to make sure that any restoration takes place under his presidency. This is consistent with two other major events that have taken place this week in Moscow.

Earlier in the week the local Moscow police arrested reputed mobster Semyon Mogilevich in an operation that is seen as an attempt by Medvedev's to fire a shot across the bow of the siloviki (the circle of former intelligence and security services personnel) within the Putin Kremlin. Local city police units were used in the arrest as the Federal Security Service or other law enforcement bodies (all controlled by the siloviki) would likely have tipped Mogilevich. His arrest is part of a power struggle between them and Medvedev's faction over control of the Russian natural gas monopoly Gazprom.

Currently Medvedev is the chairman of Gazprom, but later in the week the proverbial other shoe dropped when it was announced that the present Prime Minister, Viktor Zubkov, will take this position after the election. (Medvedev has already said that if or when he is elected president he will appoint Putin to be the next PM in Zubkov's place.) Zubkov is also Serdyukov's father-in-law, keeping control of Russia's gas empire and its weapons sales in the same family.

One official reason given in the article for this long delay in the two defense ministers meeting is the personnel changes at the MoD--chiefly the promotion of the former Defense Minister Sergei Ivanov, who originally proposed the bilateral discussions, to the post of First Deputy PM. The unfamiliarity of his successor, Serdyuov, with many of the issues that must be addressed at these talks is another. Serdyukov is a former St. Petersburg furniture store manager turned tax administration official. He has no background or experience in military matters. His appointment has been met with some disbelief given the need for a competent manager to reform and revive the Russian military.

This has all caused the bilateral meeting to be postponed from the fall of 2007 until sometime next year, but independent experts consulted by NG state that the change in ministerial personnel or lack of experience by Serdyukov is not the main reason for the delay. "The chief reason is the serious pause that has arisen in the military-technical cooperation between the two nations. Today in Moscow there is not one large-scale defense contract with Beijing as there was several years ago. Russia at one point earned US $1.8-2 billion dollars per year in contracts in sales to China of weaponry and military technology, which was 40 per cent or more of the total in foreign currency export earnings."

The chief cause of this drop off in orders is China's unhappiness with Russian defense export policy. The major sticking point is Russia's decision to sell some of its most advanced weaponry to China's regional adversary, India, while at the same time "there is no consensus among the military leadership [in Russia] as to what should be sold to Beijing . . . thus far Moscow has not given a positive answer to the majority of the requests or inquiries from Beijing."

Interestingly, China is referred to in the article as "Podnebesnaya," which is an abbreviation of a common name used by Russians when they refer to China. It means "the subheavenly empire." This is almost a Russian variant on the English-language nickname for China, "The Middle Kingdom," but the complete Russian phrase for China of Podnebesnaya Imperia is closer to the Chinese term Tianxia, which means "under heaven." This phrase has long been used in political writing dating back to when the country was ruled by an emperor. According to this line of thought, the emperor was looked upon as the political leader of the entire world and not just China itself.

Russians use the term to telegraph their increasing apprehension about the breakneck speed at which China is expanding its military might and economic clout. Military leaders in Moscow are afraid that China could very well end up ruling the entire world in everything but name, and, as Beijing's neighbor, Russia could be the first domino to fall--hence the hesitation to sell the Chinese military the most advanced systems in Russia's arsenal.

Meanwhile, Russia's defense industry is taking a bit of a gamble that they can hold the Chinese at bay until the planned post-election meeting of the Russian and Chinese defense ministers. Their one singular advantage at present is that China really has nowhere else that it can go to buy its next-generation weaponry and defense technology.

"What saves the Russian arms exporters thus far," says the paper, "is that the EU still maintains its moratorium on military cooperation with China. If this should be changed, then we cannot forget about the billions [in export sales] that are badly needed by the Russian defense-industrial complex."

This leaves a difficult decision in the hands of Russia's next president. Does he allow China access to the most sophisticated and latest defense technology available and gamble that it will never be used against Moscow, or does he bar any such orders from China in the interests of national security.

Political considerations, such as the Russian-Chinese military cooperation that is part of the Shanghai Cooperation Organisation, weigh in here. So far, Russia has successfully used this military alliance as a counter to U.S. influence in Asia, but this active partnership could evaporate should Russia cut its defense industrial links with China.

Most likely the political leadership's desire to keep making money for itself will see orders to China rising again very soon. The Russian arms exporting monopoly's umbrella company, Russian Technologies, is also run by longtime Putin friend and KGB comrade Sergei Chemezov, who in the last few years has pushed Russian weapons into new markets like Venezuela.

Neither he nor any of the others who personally profit from defense exports want to see the Chinese market become a permanent dead end. Which is why this current situation is likely little more than a temporary pause. Before too long the next Russian president will start the deliveries to Beijing back up again and it will be back to business as usual.

Reuben F. Johnson is a regular contributor to THE DAILY STANDARD.

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