Business & Economics:
RUSSIAN-IRANIAN OVERTURES HIGHLIGHT US ANXIETY
Sergei Blagov: 4/11/02

A recent meeting between Iranian Foreign Minister Kamal Kharrazi and Russian President Vladimir Putin reinforced growing Russian-Iranian economic cooperation. The meeting, coming just months after US President George W. Bush included Iran in an international "axis of evil" with nuclear potential, reaffirmed Putin's intentions to sell Iran a Russian-built nuclear reactor that has nettled US-Russian relations.

Earlier this year, relations between Moscow and Tehran appeared tenuous. Many observers viewed the postponement of Kharrazi's visit, originally slated for mid-February, as a sign of friction between the countries. [For more information, see the EurasiaNet Business and Economics archive]. Some speculated that Putin had privately declined to receive the Iranian foreign minister. This stalled progress that Putin had begun in March 2001, when he and Iranian President Mohammed Khatami signed the countries' first cooperation treaty since Iran's 1979 Islamic revolution. On April 5, 2002, as the treaty took effect, Putin buried the February impasse by promising to receive Kharrazi in the Kremlin and telling the RIA-Novosti news agency that Russia affirms "traditional ties" with Iran.

These ties can produce economic as well as strategic payoffs. Iran reportedly has shown interest in buying spare parts for their Russian-made arms and systems, such as MiG-29 and Su-24 bombers. Iran also seems curious about Russian-made anti-ship missiles and air defense systems, such as the S-300 surface-to-air missile system. Some have argued that Iran could become Russia's third-largest arms importer, after China and India, representing $250 million to $400 million in annual inflows. (Russia sold about $4 billion worth of arms in 2000, according to Congressional testimony by Celeste Wallander of the Center for Strategic and International Studies.)

Russia seems more willing to openly sell Iran nuclear technology than it did during Boris Yeltsin's presidency. A secret memorandum signed in 1995 by then-US Vice President Al Gore and then-Prime Minister Viktor Chernomyrdin obliged Russia to stop deliveries of weaponry systems under existing agreements by Dec. 31, 2001, and to refrain from signing new arms deals. Prior to the signing of this memorandum, Russia had delivered three Project 877 diesel submarines and eight MiG-29 fighters to Iran and sold a T-72 tank production license as part of a series of deals dating back to Soviet times. Yet the Kremlin warned Washington in November 2000 that it was abandoning its agreement.

Since then, Moscow has defined its economic relationship with Tehran narrowly. Russia is unlikely to agree to sell Iran long-range missiles, which could be used to block oil shipments across the Persian Gulf. Three years ago, the United States threatened to bar Russian rockets from launching American satellites to punish Russia for alleged exports of missile and nuclear know-how to Iran. In 1998, Azerbaijan stopped a 22-ton shipment of Russian nuclear ballistic missile parts allegedly bound for Iran. Subsequently, the United States imposed sanctions on seven Russian research and manufacturing companies for alleged sales of sensitive missile technology to Iran. The Kremlin has repeatedly argued that it honors international agreements banning the proliferation of nuclear and missile technologies.

In recent months, Bush and his advisors have grown more alarmed about Iranian nuclear potential. In prepared testimony to Congress on March 19, Central Intelligence Agency director George Tenet cited Russian-Iranian arms deals as a threat to American security. "Russia continues to supply significant assistance on nearly all aspects of Tehran's nuclear program. It is also providing Iran assistance on long-range ballistic missile programs," Tenet's testimony said.

Russian and Iranian officials have emphatically dismissed allegations of proliferation. During his visit to Moscow, Kharrazi declared areas of bilateral cooperation, including military ties and commercial nuclear power, to be transparent. Russian Foreign Minister Igor Ivanov also dismissed rumors that Moscow had leaked missile technology information to Tehran.

Still, Russia remains committed to helping build a 1,000-megawatt light-water nuclear reactor in Bushehr, on Iran's Persian Gulf coast. Moscow has brushed off repeated US entreaties to cancel the $800 million project. Moscow and Tehran argue that the plant can be used only for civilian purposes and will remain under international control. The United States, on the other hand, worries that it could serve military aims.

Moscow has a contract to build one reactor for Bushehr by December 2003 and may get to build three more. On April 5, Kharrazi indicated that Tehran might order a fourth reactor; later in the same press conference, Ivanov described "axis of evil" rhetoric as a "Cold War relic."

In the issues that dominate the region today - division of the Caspian Sea and military spheres in Central Asia - Russia and Iran seem fairly congruent. In talks with Russian officials, Kharrazi called the contested Caspian a sea of "friendship and peace," according to RIA.

Speaking to reporters on April 4, Kharrazi declared that foreign troops in the region "always" lead to destabilization, and that American troops would be no different. Putin did not voice agreement, but he did praise Iran during Kharrazi's trip for playing a "very important role" in holding the region together. With divisions between Uzbekistan and Russia deepening - and instability growing throughout the region - Putin may be warming to Iran to deepen his own political clout in the region. Russia limited its presence at the World Economic Forum's Eurasia Economic Summit 2002 in Almaty, Kazakhstan, on April 8-9, sending only Deputy Prime Minister Viktor Khristenko.

Editor’s Note: Sergei Blagov is a Moscow-based specialist in CIS political affairs.