The Bear and the Dragon

The conventional wisdom regarding SCO is that Russia and China are natural allies. Conventional wisdom, as usual, is misguided and mostly uninformed. Russia and China do not have recent history, or even not so recent history of friendly relations. If you recall, one of the popular theories of the K-129 incident involved Russia pretending to be a Chinese ballistic submarine in launching, specifically to start a war between China and the US.

While Russia has been saber rattling the United States with its new found revenues and resurgent economy, China has been kicking Russia to the curb on a number of levels.

What started as an unexpected and unwelcome intrusion by China into areas where Gazprom has held a monopoly has quietly turned into absence at the procurement table.

Due to the recent reshuffle in Russian corridors of power, it appears that the defense minister will have to put off his visit to China, planned for this September, until spring.

This is the second delay of such visit. The first one happened in late March 2007, after Sergei Ivanov stepped down as defense minister and was appointed first deputy prime minister. His successor, Anatoly Serdyukov, who previously headed the Federal Taxation Service, needed time to gain an insight into Defense Ministry affairs.

However, experts believe that the decision to call off the defense minister's visits to China has more far-reaching implications.

Although the world's two largest countries maintain close military ties (including the August international counter-terrorist exercise Peace Mission 2007, which involved the Shanghai Cooperation Organization, or SCO, as well as 2,000 and 1,700 Russian and Chinese servicemen), bilateral military-technical cooperation has slowed down in the last few years.

The Russian-Chinese intergovernmental commission, which had previously discussed this issue once or twice a year in Beijing and Moscow, has not met even once in the last two years.

Moreover, the Russian defense industry is not fulfilling any major Chinese contracts at present.

These aren't just chinks in the armor, this is the stuff wedges are made of. China has told Russia "thanks but no thanks" to Russian tech, believing they have accumulated enough technology from Russia to go forward without Russian help.

When you think about the military sales over the last several years, China found a way to keep the Russian military industry alive at a time when buyers were few and far between. With India starting to look west for military equipment, expect Russia to apply intimidation towards India on some of their major upcoming purchases, including fighters and warships.

Unfortunately, the side effect will be a Russian military sales push to other places, including what many have speculated will be a major push in Tehran on October 16th when Putin holds bilateral meetings with Iranian leadership.