The Moscow business newspaper Vedomosti gave an important reason for the Kremlin's significant policy shift on the issue Tuesday when it said that some Russian analysts thought it was preferable to let the Chinese make Russian helicopters in the framework of a Russo-Chinese licensing agreement instead of just doing nothing while Chinese companies pushed ahead and eventually produced their own helicopters copying Russian models anyway.

Viewed from this perspective, the decision carries the marks of the unflinching realism and shrewd diplomacy that have been the mark of Russian foreign policy under two-term President Vladimir Putin, who took over last week as prime minister under new President Dmitry Medvedev.

Putin has devoted great efforts and has achieved major success in wooing China, while at the same time maintaining and strengthening Russia's traditional close alliance with India. But in recent years Russian-Chinese relations have been strained by the refusal of the Kremlin to sell China the high-tech advanced ground warfare and close ground support aircraft systems that China craves.

Russia over the past 20 years also has refused to sell China the actual designs, technology and machine tools to allow Beijing to easily set up its own production lines to copy and mass-produce Russian weapons systems.

Vedomosti, however, indicated another possible reason why Putin changed his mind and gave the go-ahead for the helicopter assembly kits to be sent to China for assembly by the Lantian Helicopter Co. in Sichuan province.

The newspaper said in its Tuesday report that Russia's own production of Mi-171 transport helicopters at two plants in Ulan-Ude and Kazan fell short of its target by 20 percent in 2006. Some 150 Mi-171s were planned to be built, but only 120 actually were. The paper said the reason for the shortfall was "a shortage of transmissions and rotors," and it said that particular bottleneck was likely to continue.

That problem is typical of the delays and production bottlenecks that continue to plague Russia's rapidly expanding, but also severely troubled defense industrial sector.

The country's military-industrial complex is still only a shadow of its former self under the Soviet Union, having lost direct and integrated access to the coal mines, steel mines and major industrial factories of the Don basin, or Donbass, in eastern Ukraine. Last year Putin authorized the most radical restructuring of Russian military industrial corporations since the disintegration of the Soviet Union and the collapse of communism at the end of 1991. But so far, there has been little discernible improvement.

Although Russia has retained its contract to rebuild the old Soviet-era aircraft carrier Admiral Gorshkov for the Indian navy, it has had to renegotiate the contract following long delays and cost overruns in the project. The problems cost the director general of the Sevmash company his job.

Undertaking new licensing agreements with China would continue to give Russia's armaments plants and corporations major income from arms exports while freeing their own facilities for expanding production for the Russian armed forces, which has a desperate hunger for new equipment and weapons systems in every area.

Co-production also would remove or reduce the repeated embarrassments Russia has suffered from either failing to provide advanced weapons systems on schedule -- a failing that cost Moscow a lucrative combat fighter contract with Algeria -- and in providing spare parts and reliable maintenance for advanced weapons systems, something the Indian air force has complained about for years in operating its own fleet of Sukhoi combat aircraft.

But the new helicopter assembly kit deal has far larger strategic implications for Russian-Chinese relations and for the modernization of Russia's own armed forces.

Next: Building weapons for Russia in China

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