At present - in government circles at least - the restructuring of the industry appears to have some momentum, with the authorities continuing to discuss the creation of two large aerospace structures centred on Sukhoi/Ilyushin and MiG/Tupolev, supplemented by similar supplier structures. This would reflect, in theory, the model set by the consolidation of the industry in the west.

Most would concede that the initial steps towards reform in May were a positive effort to streamline the becalmed industry, allowing it to come to terms with post Soviet realities and begin the painful process of re-inventing itself in the context of the current world markets.

Now the initial fanfare has died away, there is little tangible evidence of direct action on the physical structure of the industry, beyond the discussion level. Recent evidence supplied to the Duma revealed that the industry continues to operate at very low levels of utilisation and capacity that was utilised is often taken up with activities remote from the aerospace industry.

The primary reason for the slow progress appears to lie in a general lack of enthusiasm for the plan since its announcement, with most industry figures preferring it to see it as a discussion paper, rather than a blueprint. The differing views between the authorities and the industry was well illustrated by the recent tour of aerospace facilities in Kazan by Deputy Prime Minister Klebanov, when it was clear that few of the major aerospace enterprises had undertaken any moves towards integrating businesses and, in some cases, demonstrated open hostility to the idea. The General Director of KVZ particularly appeared to be anticipating an independent future as opposed to one as part of an MVZ-led helicopter entity. So what is actually going on?

There is a theory among certain industry sources that the Putin administration has decided to take what could be described as two-speed approach to the industry's ongoing development. The first speed is best represented by Klebanov, whose deputy, former Yakolev General Director, Alexander Dondukov, has slipped from public view, leaving the minister with the laborious task of persuading the industry of the merits of a restructuring plan that few believe in and which is under funded. This view was borne out by numerous speakers on 24th September at the latest Duma hearing on the industry, when industry speaker after speaker made it plain that the budget allocation simply did not give the industry sufficient resources to get its house in order. Klebanov, however, continues the process of mollifying the enterprises and reassuring the major plants that the government remains committed to their continued existence, regardless of the size of sums being offered in the 2002 budget.

To date, the first speed restructuring has achieved little. Politically, however, the regions have been kept relatively sweet and allowed President Putin to move through his ambitious legislative programme with relatively little opposition. They have not been forced to make painful decisions about plants, and have continued to foster the spurious hope that movement in certain areas such as aircraft leasing and in orders for aircraft from China will represent a point of recovery of the whole industry, instead of a few favoured enterprises.

The second speed restructuring, on the other hand, seems a great deal more active and has one basic advantage over the first: money.

The prime mover of this process is Yury Koptev, Director General of the Russian Aerospace Agency (RAKA), assuming the role of the Svengali of the Russian aerospace industry, as intermediary and director for much of the western money that is in the process of finding its way into the Russian industry. The primary sources of this are EADS and its army of suppliers and the significant commitment from Boeing to develop, with Sukhoi, a new family of regional aircraft, after a number of years testing Russian capabilities.

The relationships with western producers carry with them, in principle, hard cash. Consequently, the Russian industry will increasingly be shaped by that flow of money. This could end up splitting the industry, under Koptev's direction, into winners and losers, in a manner not entirely dissimilar to that orchestrated by Koptev within the space industry. In effect, this restructured through the flow of western capital provided to suppliers or through collaborations with western producers, when little was available from domestic sources.

Given a similar scenario in the aerospace industry, for those entities remaining outside the favoured circle, the future remains bleak despite noises of interest from politicians. For, as the recent Duma hearings have shown, fine words and high level visits mean nothing, if the government continues to spend its scant resources in its present manner. Indeed, there seems to be little salvation for anyone, never mind the deserving few, and those who do prosper will have to look to the west or other sources of capital other than the state for future support.