It was a report that sounded bizarre on its face: A secret Taiwan navy delegation visits Russia under the cover of a commercial delegation, ostensibly to buy icebreakers but actually to try to acquire diesel submarines.

The story, in the Chinese-language Next Magazine, was immediately denied by the Taiwanese military with two successive press conferences, and the odds are very long that the Russians would antagonize Beijing by selling its breakaway island province submarines or the technology to make them.

But Taiwan’s navy has long been trying to get its hands on diesel submarines, and in fact the story may not be so far-fetched, defense specialists say. Although the Bush administration in 2001 announced an arms sales package that included eight boats, procurement of the weapon of choice against trade-crippling Chinese naval blockades has proved difficult. The US ceased building diesel subs in the 1950s, and the remaining manufacturing countries have little interest in putting their lucrative relations with Beijing into jeopardy for coming to Taiwan's help.

Washington all along has opposed the solution that suggests itself. It doesn’t want to assist Taiwan in producing subs locally, fearing technology that could be detrimental to its own military. Taipei has routinely - at least twice in 2010 - called on the US to honor Bush's 2001 arms package pledge, a promise that at the time was at best aspirational and at worst ill-informed as it would have had to depend on third countries providing Taiwan with the basic boats at the obvious risk of compromising their relations with China.

Despite the US's stance, in the first half of the last decade the Taiwanese shipbuilder CSBC stepped forward and claimed it was capable of taking on the task of building eight underwater warships, saving money and creating job opportunities in the island's own shipbuilding industry as long as Washington provided the weaponry and communication equipment.

But as the US and even the Taiwanese military itself turned up its nose at what was titled "Project Diving Dragon," the plan was eventually abandoned.

Last week, CSBC's ambitions were suddenly back in the limelight with Next’s report that agents belonging to the Taiwanese navy had used a CSBC delegation as cover for a trip to Russia. According to the report, the team's mission didn't have much to do with acquiring Russian expertise in building ice-breaking ships as CSBC said but instead was seeking support to build and acquire the submarines.

The only two subs Taiwan currently has at hand which could be deployed in the event of war were both acquired from the Netherlands in the 1980s. Even then, China put tremendous pressure on The Hague over the deal. As Moscow-Beijing relations are at their best in a long time, the likelihood that Russia would consider playing a role in Taiwan's quest for submarines seems hardly likely.

Wendell Minnick, a senior observer of Taiwan military affairs and Asia Bureau Chief of Defense News told Asia Sentinel in an interview: "Because Beijing's influence over Moscow is very powerful, Russia would never cooperate on a sub deal for Taiwan."

Minnick accepts CSBC's explanation according to which the Taiwanese shipbuilders' officials traveled to Russia for a commercial venture, not a military one.

Unlike Minnick, however, to Taiwanese experts, there could be a grain of truth in the speculation. Wang Jhy-perng, a reserve Navy captain, told Asia Sentinel that shortly after Next's report was published, he talked to Zhu Ming, the journalist responsible for the story, about his source of information regarding the CSBC trip to Russia.

Because of this conversation, Wang came to believe that it is very likely that Taiwan is actively seeking to get into business with Russia over subs. It's important to understand President Ma Ying-jeou's mindset, Wang says.

"Within the last 10 years, Taiwan hasn't come any further acquiring subs through the US," Wang says. "Defense think tanks working for Ma are against spending big on subs, and a scenario in which Taiwan cheaply builds its own fits perfectly well into Ma's way of thinking."

"From Taiwan's perspective, routine reminders to the US over its undelivered arms package serve other purposes," said Gavin Greenwood, a consultant with the Hong Kong-based security risk management consultancy firm Allan & Associates. "It gives Taipei some leverage on the more ‘doable’ deals - upgrades of the F-16 fleet and Patriot systems and delivery of the Blackhawk helicopters for example. It also fends off domestic opponents by seeming to strive for greater defenses against China with little risk of actually having to acquire - and pay - for the actual kit."

While Wang acknowledges that Moscow is certain to be aware of the experience the Dutch had and dismisses the possibility that Russia would directly provide Taiwan with brand new subs, he assesses that there still could be three alternative scenarios.

First, Taiwan buys retired Russian subs through a third country, which has less of a stake than Russia in relations with China. Second, Russia sells the blueprints and Taiwan sends engineers to Russia for training, or third, Russia sends retired or decommissioned personnel to Taiwan. The latter two possibilities would indicate a planned resurrection of Project Diving Dragon.

Russia, Greenwood says, doesn’t like to be taken for granted and is in an assertive mode as Putin and Medvedev arm-wrestle ahead for the next presidency - and this could easily include sending a warning shot in the general direction of Beijing as a reminder to show some respect to Moscow. It also fits with Moscow's renewed interest in the region through its overtures to Vietnam – with yet more subs and an apparent effort to renew its naval presence in Cam Ranh Bay, which Hanoi has publicly denied.

As China by developing its naval power is shifting the military balance in the Pacific, Australia, India and other countries in the region have responded by boosting their own naval armament programs. Australia, India, South Korea, Indonesia, Vietnam, Malaysia and, just recently, Japan, are all planning to expand -- or are in midst of expanding -- their submarine fleets, which are regarded as crucial for asymmetric warfare preparedness.

Because the weapon deals of the European manufacturers the Southeast Asian countries on their buying spree mainly rely on were in the past often tainted by high-profile scandals over kickbacks and bribes, Taiwan has apart from political reasons a further rationale for seeking domestic construction. The Taiwanese have certainly not forgotten the nightmare that surrounded the 1992 procurement of six La Fayette class "stealth" frigates built by the French firm DCN. Taiwan was forced to pay huge kickbacks which later allegedly ended up as political campaign funds in the French 1995 elections.

At least six people connected with the case died under suspicious circumstances, including a Taiwan naval captain who was found floating in the sea. Concerning submarines, DCN's subsidiary Armaris, the manufacturer of the Scorpene-class diesel submarines sold to India, Pakistan and Malaysia among other countries is also certainly deeply suspect to the Taiwanese.

The reason many observers believe Taiwan wouldn't attempt the hurdle of domestically producing submarines could be a misunderstanding about the size and sophistication of the boats Taiwan seeks.

According to Wang Jhy-perng, the two Dutch-built Hai Lung 793 (Sea Dragon) and Hai Hu 794 (Sea Tiger) the Taiwan Navy currently operates are too big with their 3,200 tons and therefore inappropriate for the waters surrounding Taiwan. Wang says: "With a Chinese sea blockade it's the same as with Chinese missiles. There's no way Taiwan could defend itself without help of the US or Japan. But what Taiwan can do is stopping a large scale amphibious landing and subsequent occupation, and for that, Taiwan needs a sufficient number of small subs that can operate very near to its coast."

Most new subs available on the international market, such as Russia's Kilo, France's Scorpene, Japan's SS501, Australia's Collins and the Netherland's Walrus, are all diesel-electric subs over 3,000 tons, and can't therefore be a real solution.

"Given the limited founding and the strategic purpose, 500-1000 tons would best suit Taiwan", he says.

Two other countries that like Taiwan are confronted with militarily immensely superior opponents have already bolstered their capabilities with somewhat tiny subs. Iran domestically built 120-tonne Ghadir-class vessels, which according to the Iranian press boost "excellent shallow depth performance, and can carry out long-term coastal missions", whereas North Korea coldly demonstrated the clout of its fleet of midget submarines by torpedoing South Korea's Cheonan.