Before Russian President Vladimir Putin even left for his visit to Austria, sources close to the Kremlin were saying that his main aim was to convince the Austrian government to accept MiG-29 SMT fighter planes as payment for Moscow's debts.

At a meeting with Austrian journalists on the eve of his visit, Putin was every bit the salesman, singing the praises of the advantageous conditions the Russian side proposed. A bargain, indeed – the MiGs were going at virtually half-price.

It's not common practice to refuse a guest's offer during a visit. The usual diplomatic procedure is to say the question needs more time for consideration. But Putin was obviously so pushy that officials in Vienna were forced to take a blunter line.

In an interview with the newspaper Presse, Austrian Defense Minister Herbert Scheibner said, "There can be no question of our acquiring Russian MiGs." This looked highly humiliating for Putin.

Many analysts think Putin's mistake was that he tried to take on something that wasn't part of his job. But this looks like a flimsy assertion, given that other presidents like Francois Mitterrand and Bill Clinton never missed an opportunity to help their arms producers.

The difference is that in the West, presidents would only step in when a contract looked as if it had a very good chance of being signed. Putin, on the other hand, got himself mixed up in an obviously dubious deal – Moscow never had the slightest hope of supplying MiGs to Austria.

The MiG-29 is a tactical fighter plane that went into mass production in 1982. Mass production stopped in the early 1990s. The only major contract the aviation corporation that makes the MiGs has had since then was a notorious deal in 1994 under which Russia delivered 18 fighter planes to Malaysia and was paid in palm oil.

Since then, the corporation has gone from one risky deal to another in its attempts to earn some money. In 1998, it sold planes to Eritrea, which was at war with Ethiopia, which, in turn, bought its fighters from another Russian aircraft maker, Sukhoi.

The aviation corporation recently sold four MiGs to Bangladesh. And if Austrian newspapers are to be believed, ultra-right-wing Austrian politician Jorg Haider was even invited to the top-secret MiG plant in Lukhovitsy near Moscow.

But it seems clear that a corporation that hasn't managed to design any promising new fighters and is assailed by numerous internal conflicts won't be able to sell its MiGs to anyone but clients with nowhere else to go. Specialists say the corporation would be better off concentrating on repair and modernization of existing MiGs. After all, dozens of countries have them, from Germany to Angola.

But the Russian company proved unable to organize repair and maintenance services on its own and set up a joint Russian-German company to do it. The German involvement is no accident – Germany inherited two squadrons of MiG-29s after unification. After several years of problems getting spare parts from Russia, the Germans decided to set up a specialized firm for the job.

Putin promised the Austrians that this firm would service their planes, but not even the promise of Germany's quality work was enough to lure the potential buyers in Vienna. What's more, Moscow took a double blow as not only did Austria refuse to take the planes, but Hungary decided it wasn't going to modernize its old MiGs.

The explanation, Moscow says, is the pressure the United States is putting on the other NATO members. But in reality, things are much simpler – prospective buyers know full well that there is no mass production of MiGs in Russia. This is why the Austrian defense minister rightly observed that maintenance costs would end up canceling out the savings made on the cheap purchase of the planes.

This whole story illustrates perfectly the problems with the state management of the military industrial complex. Moscow has stubbornly continued to pump money into the MiG corporation. It was MiG that got the contract to build planes for the aircraft carrier Admiral Gorshkov, which Russia wants to sell to India. One of the reasons why India took so long thinking about the contract was that it meant having to purchase MiGs.

But this is not all. State arms-sales company Rosvooruzheniye for some unknown reason put money into modifying MiG-29 planes, without first bothering to find out which countries might be interested in buying them.

But the Kremlin remains convinced that Russia can solve its economic problems by selling arms abroad. The key is to be a good salesman. Vladimir Putin decided to set the example on how to do it.