Missiles for milk: how Russia offered NZ military hardware to settle dairy bill

Former PM Jim Bolger ‘absolutely stunned’ to be offered a nuclear sub and two MiGs in lieu of money, new book reveals.

Russia made the unusual offer of two MiG fighters in 1993, when it was struggling to pay its debts after the collapse of the Soviet Union. Photograph: AAP/MiG Jet Adventures.

How do you settle a rather sizeable bill for your milk delivery? If you are a cash-strapped superpower the answer is, apparently, to offer up a pair of fighter jets and a nuclear submarine as payment.

The extraordinary offer was made by Russia to New Zealand in 1993, a new book reveals.

After the collapse of the Soviet Union, Russia was struggling to pay the $100m it owed New Zealand for a range of imported dairy products.

In a meeting with Russian officials to thrash out payment terms, Jim Bolger, then New Zealand prime minister, was “absolutely stunned” to be offered the military hardware in lieu of money, according to author Clive Lind.

Lind, who interviewed Bolger and former New Zealand Dairy Board chairman Dryden Spring, who was also present at the meeting, said the offer had been made by Alexander Shokhin, then deputy prime minister of Russia.

“The Russians were trying to come up with lines of credit before Shokhin mentioned there were other funding arrangements,” Lind told Guardian Australia. “He pointed out that MiG jets were highly desirable and that they also had surplus tanks to offer. Jim Bolger had to explain that he wasn’t in the market for second-hand tanks.”

Perhaps most remarkably, Shokhin then offered a nuclear submarine to wipe out Russia’s buttery debt. Noting that New Zealand was a staunchly non-nuclear-powered country, he suggested hooking the vessel up to the national grid and using it as a power plant for a coastal city.

“Bolger recalled the reaction he would have got if he returned to a nuclear-free New Zealand and told people that he hadn’t got any money for them but had secured a nuclear submarine instead,” Lind said. “It simply wasn’t going to fly.”

After politely declining the offer of the military equipment, New Zealand managed to secure a number of periodic payments from Russia, totalling about $US30m – less than a third of the total debt.

But this outcome wasn’t entirely without merit. As Lind explains: “The world was awash with butter at the time and we needed Russia to take ours. While we needed the money to pay our farmers, we also needed to secure a market for our butter, which Russia agreed to.

“Plus, you can buy MiG jets for a lot less than $30m. There was a guy who bought one in New Zealand for just $15,000 not so long ago.”

Lind’s book, Till the Cows Came Home, will be out next month.


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