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. Last Updated: 07/27/2016

The Lure of Arms for Iran

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The Russian-Iranian arms trade has been a bone of contention between Moscow and Washington for many years now. In June 1995, the issue seemed to have been settled by U.S. Vice President Al Gore and then-Russian Prime Minister Viktor Chernomyrdin, when they signed a secret memorandum stating that Russia will not sign any new arms contracts with Iran, but will honor all existing ones until 1999.

However, in Moscow the Gore-Chernomyrdin memorandum was opposed by the arms lobby as an unjust punishment; in Washington many thought it too lenient. Over time, these differences grew: In 1999 Russia failed to stop supplying arms to Iran as it had agreed, and this month Moscow is reported to have scrapped the deal entirely.

The Gore-Chernomyrdin accord was not, of course, a legally binding treaty, but merely a letter of understanding that was never ratified. By disavowing this letter, Moscow is not breaking any international obligations.

On the contrary, Russia’s previously signed bilateral arms-trade agreements with Iran demand that Russia continues to service and supply the Iranian military until 2011. Legally speaking, the contracts with Iran are more binding than the Gore-Chernomyrdin memorandum, and Russia believes it is entitled to sell conventional weapons to Tehran.

In the early 1990s, Russia sold Iran 24 Mig-29 fighters, 12 Su-24 jet bombers, 120 T-72C tanks, three Kilo class submarines, an S-200 long-range air-defense system and other weapons worth more than $4 billion. These purchases were only the first part of a long-term arms agreement.

With Russian help, Iran has built a modern tank factory and produced more than a thousand T-72C tanks as well as 1,500 BMP-2 armored vehicles.

A further agreement for Iran to build 126 Mig-29 fighters under license was finalized, but not signed because of American pressure. Still, year after year Iranian officials constantly probed Russia’s attitudes and signaled that they are ready to sign additional deals worth $1.5 billion immediately, with others to follow if Russia defies the United States. Tehran is still interested in acquiring the know-how to make Mig-29s and Kilo subs. It wants Su-25K attack planes, S-300PMU1 air-defense systems, modern naval mines, torpedoes and so on.

Such massive purchases could produce not only revenue, but also jobs for the depressed Russian arms industry. However, in the past there were many problems getting real money out of deals with Iran. Of almost $5 billion worth of Russian arms and technology purchased by Iran in the 1990s, only just over $1 billion was paid in cash. The rest was settled in write-offs of outstanding Soviet debts to Iran and in various barter deals, mostly Iranian oil handed over to Russia for resale.

In the late 1990s, the price of crude was fairly low and many in Moscow argued that there was no rationale for resuming arms deals with Iran. Today, though, Iran is awash in oil money and ready to pay cash. The temptation is too great, and it seems the Kremlin has decided to defy Washington.

The U.S. part of the Gore-Chernomyrdin deal was a decision to allocate Russia a quota for launches of U.S. communications satellites. Since all modern communication satellites use U.S. technology, the Russian commercial space-launch industry may be wiped out if Washington decides to repudiate its section of the Gore-Chernomyrdin memorandum and impose a full ban.

Russian space launch rockets are cheap compared with similar U.S. and French vehicles, but they are also relatively old-fashioned. If, as a result of arms exports to Iran, Russia loses the segment of the space market that it managed to occupy during the 1990s, it may never be able to recover.

Apparently, the Kremlin hopes that Washington will not retaliate in full. Russia is heavily involved in the international space station project and serious sanctions would gravely delay ISS construction and greatly increase the cost. Russian officials also believe that a future Republican administration in Washington would be less influenced by "Zionists" and so less inclined to punish Russia for closer ties with Iran.

In any event, Russia’s military-industrial lobby does not seem to fear sanctions since the United States is not buying their products anyway. On the contrary, sanctions will simply promote more anti-American feelings among the Russian public — a development that much of Russia’s ruling elite would only applaud.

Pavel Felgenhauer is an independent, Moscow-based defense analyst.