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Russian Air Force stalls tailspin

Russia wheels out its best jets for foreign buyers, hoping to bolster its ailing aviation industry.

If the ability to perform airborne ballet were the only criterion, then its dramatic leaps and twirls might make Russia's experimental Su-37 "Berkut" jet fighter the industry standard. "This plane is designed to solve the contradictory problems of the air," the announcer at the Moscow Air Show last week told a gasping crowd of thousands.

Russia's beleaguered aviation industry also hopes to mimic such acrobatic feats on the ground, as it tries to pull its Air Force out of a tailspin even while selling off its best planes.

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Reversing the downward spiral will not be easy, despite the spit and polish on display at the Moscow Air Show. Most planes there were well-known, freshly dusted Soviet models.

When he opened the show last week, President Vladimir Putin promised top-level attention to a military industry forced to rely solely on exports in the decade since the collapse of the Soviet Union.

Defense Minister Sergei Ivanov is optimistic. Noting a combination of fresh sales abroad, diversification to civilian planes, and a new joint program with European firms to upgrade East European MIG jets to NATO standards, he says "military aviation is at last standing up off its knees."

Recent contracts with China and India have pushed Russian arms exports to a post-Soviet high of $3.2 billion this year. China agreed last month to buy 38 Su-30 ground attack aircraft for $2 billion, and, in June, India made a decade-long, $10 billion deal with a large air component.

But, with no other large foreign prospects on the horizon, the industry is looking anew at domestic sales. A revival could one day enable Russia to modernize its own air force, and create a new fighter to compete with the West.

High oil prices - Russia is one of Europe's main suppliers - now mean the ministry of defense has more money to spend. The new 2002 budget approved by the cabinet on Tuesday allots an extra $1.5 billion in defense spending.

Russia's 2001 defense budget is currently $7.3 billion, and Air Force chiefs want to earmark enough to modernize 80 percent of the fleet by 2005. Meanwhile, Russia's heaviest hitters, Sukhoi and MiG, are presenting competing designs for a fifth-generation fighter to begin production in 2010.

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"The aircraft are aging before our very eyes," Russia's Air Force commander Anatoly Kornukov said last Friday. "For the past 10 years, not a single new aircraft has been added to our front-line air force." Only 5 percent of Russia's planes are the "most modern," he noted. There is no fuel at 49 of the nation's 115 military airports.

"They are taking graduates from air defense colleges and putting them in the infantry because they have no planes and no fuel," says Dale Herrspring, a former diplomat and Russian military expert at Kansas State University. Mr. Herrspring visited several military installations earlier this year. "These guys are in deep, deep hurt."

Cut adrift from the Soviet cash cow in 1991, military design teams have also been searching for ways to streamline the military as part of a sweeping, five-year overhaul announced last month. The plan halves Russia's 1,700 military enterprises and consolidates its aviation companies into two main groups.

"Putin has made up his mind that the old military-industrial complex was inefficient and corrupt, and this is a way to beat it into submission while making it more efficient," Herrspring says.

"The government should take steps to support this industry, or we won't be able to produce any new generation aircraft," says Maxim Pyadushkin, deputy director of the Center for Analysis of Strategies and Technologies in Moscow. "We are losing our scientific potential, our researchers and designers."

But some counter that the brain drain is exaggerated. "There have been rumors in the media and our factory that MIG is dead, that all the engineers have left, and that we can't build planes," says Lev Bolshakov, a senior MIG salesman, after showing off the cockpit of a MIG-29 to a prospective buyer from Southern Africa.

On the open market, MIG fighters are competitive, because of their low price. "If this were the only criteria, we would have won the world," Mr. Bolshakov says. "But there are also politics."

Political decisions are being made by several East European nations - who want to join NATO - about Soviet MIG fleets they inherited a decade ago. They have two choices: either upgrade MIG-29s to NATO standard (the cheaper option), or buy new or used American or Swedish planes at a steep price.

Most nations seem to be choosing the more expensive Western planes, despite a joint-upgrade business formed by MIG and the West European Airbus-maker, EADS. Germany, which has dealt with Russian MIG upgrades since taking over former East German aircraft, is leading the way. "We tell [the Russians] that the only possibility to move forward is partnership with Western companies," says Wolfgang Aldag, a Germany-based EADS sales director.

While experts say there are 1,500 MIGs worldwide - 400 or so of which can be upgraded this way - aspiring NATO candidates, such as Hungary, Bulgaria, and Poland, seem to be reluctant. Hungary's prime minister said its MIG-29s make it the "lame duck" of NATO.

"Of course it's cheaper to upgrade the existing fleet, but with Western aircraft, they will have some kind of Western support," says Mr. Pyadushkin. "It's not a commercial choice, but rather a political one."

Sukhoi, which last year accounted for half of Russia's overall arms sales, is pursuing a different tack. At the air show, it wheeled out agricultural planes, and talked up a planned $70 million supersonic business jet. It also signed a large deal last week with American airplane giant Boeing and Moscow-based Ilyushin to build civilian planes for Russia's domestic market.

"We are ready to build civilian planes," says Yuri Cherbakov, chief spokesman for Sukhoi. "There are no prospects ...in the military sector."