Moscow has banned supply of S-300 air-defence systems to Tehran even though they do not fall under the category of offensive weapons banned by the U.N. resolution. But the ban will have dire consequences for Russia, critics say.

Russia has thrown its defence ties with Iran on the altar of its “reset” with the United States. President Dmitry Medvedev last week imposed a sweeping ban on defence sales that goes beyond even the international sanctions on Iran and is likely to have a long-term negative impact on Moscow-Tehran relations.

The decree “On Measures to Implement the U.N. Security Council Resolution 1929 of June 9, 2010” Mr. Medvedev signed bans supplies of Russian tanks, fighter jets, helicopters, ships, heavy artillery systems and missiles, including the S-300 air defence systems, to Iran. Russia will also stop supplying spares and components for the weapons sold earlier, and ban the transit of arms bound for Iran through its territory. The decree contains a list of Iranian officials involved in the country's nuclear programme, who will henceforth be prohibited from entering Russia.

By and large, the Russian sanctions are in line with the United Nations Security Council Resolution 1929, which Moscow backed, except for one crucial point: the S-300 missiles do not fall under the category of offensive weapons banned by the U.N. resolution. The move added another puzzling zigzag to Moscow's back-and-forth policy on Iran.

Resolution 1929 states: “All states shall prevent the direct or indirect supply, sale or transfer to Iran […] of any […] missiles or missile systems as defined for the purpose of the United Nations Register of Conventional Arms.” Meanwhile, the Register clearly states that its definition of missiles or missile systems “does not include ground-to-air missiles” (emphasis added.)

In justifying Mr. Medvedev's cancellation of the S-300 deal, Russian officials refer to the U.N. resolution's call on all states “to exercise vigilance and restraint over the supply, sale, transfer, provision, manufacture and use of all other arms and related materiel.”

That said, Resolution 1929 contained no explicit ban on air defence systems and Mr. Medvedev's decree went a step too far. Ironically, defending Moscow's ban on S-300, Foreign Minister Sergei Lavrov, in the same breath, lambasted unilateral U.S. sanctions on Iran as being “ethically and morally wrong” and a “violation” of the U.N. resolution.

The $800-million contract for supply of five batteries of S-300 air-defence complexes to Iran was signed in 2007. (A typical S-300 battery contains 48 missiles on 12 mobile launchers.) If delivered to Iran, the S-300 would change the rules of the game in the region. In combination with Tor-M1 short-range air-defence missiles Russia supplied to Iran in 2008, the long-range S-300s would have deterred any aerial attack on Iran.

In December 2008, the Russian government news agency, RIA-Novosti, quoting defence sources, reported that Moscow had begun “implementing” the S-300 contract. The report was later denied but Moscow continued to affirm its commitment to supply S-300 missile systems to Iran. “We have a contract to deliver these systems and we will honour it. Delays have been caused by technical problems in tuning up the systems,” Deputy Foreign Minister Sergei Ryabkov stated as recently as February. Even after Resolution 1929 was approved, Russian lawmakers and arms exporters maintained that the new sanctions would not affect the delivery of S-300.

“The S-300 systems are not covered by the sanctions and work on the contract is going forward,” Mikhail Dmitriyev, Director, Federal Service for Military-Technical Cooperation, said in June. U.S. State Department spokesman P.J. Crowley also conceded at the time that Washington had failed to secure a clear-cut ban on the supply of S-300.

However, Russian diplomats' valiant efforts to save the S-300 deal from being axed under the U.N. resolution were in vain. The Kremlin used it as a bargaining chip with the White House. The fate of the S-300 contract was apparently sealed when Mr. Medvedev paid an official visit to the U.S. in June and secured President Obama's promise to help Russia modernise its economy. On his return, Mr. Medvedev called for allying Russia with the West. “We need to build modernisation alliances with our main foreign partners … above all with Germany, Italy, the European Union and the United States of America,” he said in a keynote speech to Russian diplomats in July.

The formal ban on Russian arms exports to Iran came three months later, timed for the U.S. Congress debate on the New START, a Russian-American nuclear arms pact Mr. Medvedev and Mr. Obama signed in April.

Moscow attaches paramount importance to START ratification, seeing it as a turning point in its relations with Washington that would pave the way for other deals — U.S. endorsement of a long-pending civil nuclear cooperation agreement between the two countries and Washington's support for Moscow's bid to join the World Trade Organisation.

The S-300 ban was designed to facilitate the START's passage through the U.S. Senate. The Senate Foreign Relations Committee in mid-September approved the U.S.-Russian treaty and sent it to the Senate floor, but its ratification is still hanging in the balance. The administration would like the Senate to vote on the treaty before it breaks for the November elections on October 8 because the Democrats may see their majority reduced in the new Senate. Mr. Medvedev clearly sought to impress the American public opinion and sway hesitant U.S. Senators in favour of backing the START.

The White House “strongly” welcomed the “faithful and robust implementation” by Moscow of the U.N. sanctions resolution. “We believe President Medvedev has demonstrated leadership on holding Iran accountable to its international obligations from start to finish,” said National Security Council spokesman Mike Hammer.

Mr. Medvedev's Iran arms ban is a big gift to the embattled Obama, who can now argue that his policy of “reset” with Russia is bringing tangible dividends. Moscow hopes a grateful Obama will lift the ban on high technology transfers to Russia. Time will tell whether these hopes are justified.

Sceptics point out that Russia halted its defence ties with Iran once in the past also, in the vain hope of getting U.S. aid and investments. Under a secret agreement brokered in 1995 by the then Prime Minister, Viktor Chernomyrdin, and U.S. Vice-President Albert Gore, Russia agreed to stop selling weapons to Iran. The deal dealt a hard blow to Russia's struggling defence industry, depriving it of what was emerging as the third largest market for Russian arms after India and China. The U.S. “thanked” Russia by pushing NATO to its doorstep and bombing out its traditional ally, Yugoslavia. In 2000, Russia pulled out of the Gore-Chernomyrdin deal and resumed arms supplies to Iran.

The new ban on weapon sales to Iran will have dire consequences for Russia, critics say. Direct financial losses from the scrapping of the S-300 contract could exceed $1 billion. According to the Russian Centre for Analysis of World Arms Trade, Russia will lose at least $11 billion in weapon supplies to Iran through 2025. “Iran will never forgive Russia for this second sell-out in the past 15 years,” says defence expert Konstantin Makienko of the Moscow-based Centre for Analysis of Strategies and Technologies (CAST). “Russia may lose forever the Iranian market of not only defence but also civilian technologies.”

Aviation industry sources said Iran had already stopped negotiations to acquire Russia's Tu-204SM passenger aircraft. Russia's refusal to supply S-300 systems has put a big question mark on a wide-ranging energy cooperation road map Moscow signed with Tehran just a couple of months ago.

Geopolitical costs for Russia could be even higher. “The cancellation of the S-300 contract undermines its reputation as a reliable defence partner among its current and potential customers,” Mr. Makienko said. “China will only be too happy to fill the vacuum left by Russia.”

Tehran's recent announcement that it had begun work on its own missile system, analogue of the Russian S-300, Russian experts said, was an indication that the Chinese came to Iranians' help, offering expertise gained in cloning the S-300 Russia had earlier sold to China.

As for rewards from Washington, U.S. officials warn Moscow not to expect too many. “The objective is not actually to develop a good relationship with Russia. The goal here is to advance our national security and economic interests and to promote universal values,” a senior White House official said commenting on the Russian arms ban to Iran. In fact, the Russian concession has encouraged U.S. strategists to put higher demands on Moscow. “Some Russia sceptics aren't so sure that Moscow has yet made the strategic decision to turn away from Iran and towards the United States,” Josh Rogin wrote in his blog on The Foreign Policy website.

To convince these sceptics, Russia should stop cooperation with Iran on the Bushehr nuclear reactor, tear up energy deals and support tougher economic sanctions on Tehran. To quote a relevant Russian saying: “Put a finger in his mouth and he will bite your arm off.”

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