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. Last Updated: 07/27/2016

How Iran Outplayed Russia

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Last fall Moscow scrapped a secret memorandum signed in 1995 by then-Prime Minister Viktor Chernomyrdin and U.S. Vice President Al Gore and announced that it was resuming unrestricted arms sales to Iran. Since then Washington has been trying to force Moscow to reconsider and not sell modern equipment to a regime that the United States considers to be a "state of concern."

For the last several months U.S. diplomats have been passing the same message: Do not sell weapons to Iran if you want friendly relations with us. Period.

But all this pressure seems to have come to nothing: During a visit to Moscow by Iranian President Mohammad Khatami this week, President Vladimir Putin publicly iterated Moscow's determination to proceed with sales.

Iran's ambassador to Moscow, Mehdi Safari, told reporters last month that Iran may purchase up to $7 billion worth of Russian arms over the next few years. At first glance, this figure may seem extravagant, but in fact it is close to the actual value of Russian weapons sales to Iran in the early 1990s.

According to official Russian reports, Russia sold Iran over $5 billion worth of defense hardware Ч including 1000 T-72C tanks and 1,500 BMP-2 armored vehicles (most of the armor was assembled in Iran under license using Russian parts) Ч between 1990 and 1996. Iran also acquired 24 MiG-29 fighters as part of a program to assemble an additional 126 MiG-29 in Iran. The MiG-29 license contract was agreed by both sides, but was never signed because of pressure from Washington.

In the 1990s, Iran also got the long-range (over 300-kilometer) S-200 strategic air-defense system, three Kilo-class submarines and other weapons. Now Iran wants to supplement this equipment with S-300 air-defense missiles and modern naval weapons.

Iran wants to buy advanced propelled-warhead naval mines, including those equipped with a Shkval high-speed underwater rocket. It is also seeking new torpedoes for its Kilo subs, including the Shkval, and advanced anti-ship missiles. Furthermore, Iran wants to re-equip its air force with new fighters and bombers, but it is not clear whether Tehran will resurrect the MiG-29 deal or opt to buy Su-27/Su-30 airplanes as China did.

During the 1990s, Iran paid only $1 billion in cash for the arms and military technology it purchased. 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. Today Iran could certainly buy $7 billion worth of Russian weapons if Moscow is willing to accept barter deals or other surrogates. If Russia insists on cash, the Iranian arms buy will be much smaller. In any case, Tehran has already Ч without even spending a penny Ч achieved a major strategic goal: Its offer to buy has given it leverage that could effectively shift Russian foreign policy.

Since the demise of the Soviet Union, Iran has opposed the division of the Caspian Sea shelf since its share would be only 13 percent in the southern, deep-water part of the sea Ч a region with no major proven gas or oil deposits. Initially Moscow agreed with Iran, but after oil was discovered in the Russian sector, Moscow began to favor a division.

But this week Putin and Khatami agreed that Iran and Russia would not recognize any national borders in the Caspian until all Caspian nations sign an agreement. This Russian foreign-policy U-turn means that the legal status of all drilling concessions granted to oil companies in the Caspian is now dubious, and investments into oil/gas production are highly risky Ч including those made by Russia's LUKoil.

Military-industrial lobbyists are obviously more powerful in the Kremlin now than in the 1990s. Acting in tandem with these lobbyists helped the Iranians put Russia on a collision course with Washington and, at the same time, slow the production of Caspian oil that would compete on the world market with Iranian crude.

The Kremlin apparently believes that arms sales to Iran, China and India not only bring revenues and support Russia's defense industry, but also help create a "multi-polar world" in which American influence is diminished. In fact, the Kremlin is only giving a pretext to impose sanctions on Russia that will block any effort to truly reform this nation.

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