Is Putin's policy the right one?

Implications: Putin started to consolidate Russia's aerospace firms some years back.  He also insisted in interfering with the fleet decisions at Aeroflot. Most people were of the opinion that this was typical of Russia's political leadership - was he right to do it?

Analysis: Russia has always been an enigma for western analysts. The babushka doll has been the best illustration for them  -what you see was not really what it is, there were always layers within.

Western analysts don't like obfuscation and subtlety. We like things transparent. We are always in a hurry to offer insight - and hate it when there is not enough data, because this means we have to be patient.

Russia is a great example of how and why analysts need to be patient. The country is capable of producing aerospace products that are nearly as good as anything in the West, but at a fraction of the price. Sure they don't have an F-22 (yet), but their SU-35 in good hands could spoil an F-22's day if its pilot is not as superb as the plane. Another example, when NASA went and paid for a ballpoint pen that could write upside down in zero gravity, the Russians did not waste their money on such foolery - their cosmonauts used a pencil.

The collapse of the Soviet Union exposed that economy's glaring weaknesses.  But look at how they have come back - sure they were lucky to have all that oil. Putin's decision to merge his country's aerospace interests may have been a smart move. This has created a firm that is more attractive to work with for both Airbus and Boeing.  The latter is playing a role assisting with the new Russian SuperJet.

This latest news about the likelihood that half of Russia's airlines may go bankrupt is not bad news. It means that there is some capitalism at work. Yes, its likely that consolidation will occur - whether inspired by the Kremlin or not.  The Russian oil refineries need to improve efficiencies to be the equivalent of Western ones. Of course few western oil firms want to get in too deep for fear of those nasty Kremlin folks.

That said, Russia remains a work in progress. Its economy is adapting - in fits and starts - and the mess that its commercial airlines are in are all part of maturing.  We analysts should not put them down harshly or poke fun.  Give that country time and its airline sector will self correct.

Unfortunately we need no extra time to understand that the Kremlin will remain inscrutable and we can be certain its moves are always driven by self interest.