Russia: Perils in disarming the arms industry: The Congress of People's Deputies today is billed as a showdown between 'Westernisers' and conservatives. Our Moscow staff consider life after Communism

IT WAS a bold gesture, reminiscent of Mikhail Gorbachev's bewitching flourishes of diplomatic daring. President Boris Yeltsin was in South Korea, Russia's erstwhile Cold War enemy. Speaking before parliament in Seoul, he made a dramatic promise: Russia, he said, would cut and then, within two or three years, halt production of all military submarines.

That was Thursday. On Friday, the deputy prime minister, Valary Makharadze, popped up alongside Russian submarine makers in the northern port of Severodvinsk to offer a different version of Moscow's plans. Mr Yeltsin, he insisted, had got things muddled: submarines will be phased out only in the Far East; at Severodvinsk, Russia's largest nuclear submarine shipyard, it is full steam ahead.

The episode, just over a week ago, illustrates not merely the confusion that surrounds Kremlin policy-making these days but also what has become perhaps Boris Yeltsin's biggest headache - how to balance bold intentions with the interests of Russia's vast military- industrial complex.

The issue is no longer whether Russia needs to cut its military - and with it a sprawling network of plants - but what to do with the millions of people whose jobs depended on Cold War rivalry. Thus the central dilemma facing Russia's free-market reforms: how not merely to destroy the old system, but to build an alternative without inflicting intolerable pain. 'The success of economic reform,' warned presidential adviser Mikhail Malei, 'hinges on the successful conversion of Russia's military-industrial complex. Its collapse would bury reform.'

The Russian economy is still the most militarised in the world. The breakup of the Soviet Union has only compounded the problem. While Ukraine and other republics contributed to the Soviet military build-up, its industrial powerhouse lay in Russia, where at least 24 per cent of all industrial employees worked in factories controlled by the Soviet Union's Military Industrial Commission (VPK). The number is even higher when factories outside the VPK sector but still military-related are included. According to Mr Malei, 36 million people - a quarter of the entire population - live off arms production.

Such numbers translate into formidable political, as well as economic, clout. The most public spokesman of this influence is Arkady Volsky, leader of the Russian Union of Industrialists and Entrepreneurs, a body stacked with representatives of Russia's disgruntled military sector. Mr Volsky is also a key figure in the Civic Union centre-right opposition, whose support President Yeltsin must win if he is to survive this week's Congress of People's Deputies with his reform programme intact.

Within the government, too, the military sector has influential allies. The most important is Yuri Skokov, the secretary of Russia's Security Council, democratic Russia's equivalent of a politburo. A former radio engineer who spent nearly three decades in military research, Mr Skokov and others with strong military ties are not hawks bent on restoring the Soviet empire but merely pragmatists who recognise the risks of pushing the defence sector to the wall.

To ease the impact of 'shock therapy', the government backed off from tight monetary policy and has bailed out military factories with an extra 13.2bn roubles. It has also slowed a programme of military conversion - originally given four years, but now expected to last at least 15. Even this far more modest target depends on massive foreign assistance: Russia needs pounds 102bn before it can turn swords into ploughshares.

Most military factories still do what they always did - make weapons. According to Izvestia, only 12 out of 5,000 arms plants have stopped producing arms.