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. Last Updated: 07/27/2016

DEFENSE DOSSIER: Sanctions Sure to Backfire




U.S.-Russian relations reached a new low last week when President Bill Clinton's National Security Adviser Sandy Berger announced economic sanctions against three Russian scientific institutions for allegedly leaking nuclear and missile technology to Iran. The announcement of sanctions was followed by a more serious threat - to cancel the launches of American satellites by Russian space rockets.


Similar sanctions were announced last summer against several other Russian institutions, but that time public reaction was muted, most likely because those institutions were obscure scientific outlets nobody knew anything much about. This time, two well-known public universities have been blacklisted - the Moscow Aviation Institute and the Mendeleyev Chemical Technical University. Thousands of students and professors will be affected and many Moscow families may be punished by the United States for no good reason. Russia's public universities have never been seriously involved in designing Russian weapons of mass destruction and could not have possibly passed any forbidden technology to Iran.


Of course, sanctions against institutions cannot in themselves cause a major shift in Russian foreign policy. But if the threat to cancel launches is made true, irreversible damage may be done.


Military and high-tech cooperation with Iran has for some time been a hot issue behind the scenes in Moscow. In the '80s, during the Iraq-Iran war, the Soviet Union sold arms to Iraq on a huge scale, but not to Iran. But after the cease-fire that ended the war in 1988, the Soviet Union swiftly moved in to supply modern arms that Iran desperately wanted, including MiG-29 fighters, new jet bombers and Kilo class submarines. Russia helped build a modern tank factory in Iran that is today busy making T-72 tanks under license. The license agreement envisages the production of 2,000 T-72 tanks in Iran, and Iranian crack tank divisions are now equipped with these Russian-designed weapons.


Iran has purchased more than $5 billion worth of Russian arms and military technology since 1989. However, in 1995 this trade was curtailed when U.S. Vice President Al Gore and then Russian Prime Minister Viktor Chernomyrdin signed a memorandum that pledged that Russia will not sign new arms contracts with Iran, but will honor old ones.


Immediately after the signing of the memorandum, Russia's defense industry began clamoring for it to be scrapped. Russian arms production chiefs told me bitter stories of how much time and money they put into preparing new deals with Iran, only to suddenly learn that the Americans had left them out in the cold. The pro-Iran lobby in Russia is strongly supported by influential regional governors and by many State Duma deputies. Iranian orders could create thousands of jobs in depressed regions. The Russian government and the Kremlin are under constant pressure to renege on the Gore-Chernomyrdin agreement and resume full military-technical cooperation with Iran, while Iranian officials constantly signal that they have a long shopping list for Russian arms and technology.


The pro-Iranian lobby in Russia is not particularly afraid of sanctions since the United States is not buying their weapons. On the contrary, sanctions promote anti-American feelings and so help the pro-Iranian cause. Nor is the lobby overly eager for Russia to obtain further loans from the IMF. A constantly falling ruble only makes arms exports more profitable, and if consumer goods imported from the West dry up in the future, all the better for the defense industry since it will be able to market offset goods supplied to Russia in exchange for weapons by Iran and other countries.


Still, pro-Iranian pressure has so far been unable to change official government policy because of strong anti-Iranian lobbying. Powerful financial institutions (the pro-Western oligarchies) and the space-rocket industry want to make money with the West - not against it. The allocation of satellite launches to Russia was, in effect, an unofficial part of the Gore-Chernomyrdin agreement.


However, the pro-Western oligarchies have lost sway while Washington is threatening sanctions against the space industry, its last serious ally in Russia. Kremlin officials say that they hope the United States is bluffing, that negotiations on allocating new launch quotas are continuing and that there is still time to clinch an agreement. But those officials will only remain in office until elections, most likely dominated by anti-American rhetoric, bring new people into the Kremlin.


Pavel Felgenhauer is the chief defense correspondent for Segodnya.