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. Last Updated: 07/27/2016

U.S. Talking to Wrong Guy

In the 1980s, the Soviet Union was the main supplier of arms and military technology to Iraq, providing Saddam Hussein's military with some 80 percent of all its equipment. While we were Iraq's best friends, we could not sell arms to Hussein's arch rival -- Iran. Only after 1991, when Russia supported UN sanctions on Iraq and lost its major money-paying client in the Gulf, did our arms traders begin active business with Iran.

From 1991 until 1996, Russia supplied Iran with more than $5 billion worth of military equipment, including jet fighters, modern submarines and some 2,000 T-72 tanks. Moscow also agreed to build a nuclear power station in Bushehr for more than $800 million.

In 1995, under pressure from Washington, Moscow agreed to terminate its military cooperation with Iran in exchange for the United States allowing Russia to net a number of lucrative contracts to launch into space Western communication satellites that use American technology. But the construction at Bushehr continued.

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After 1995, Russian arms traders actively participated in illegal sanction breaking in Iraq, supplying Hussein with some new weapons and spare parts for those he already had. But this illicit trade was too small to compensate for the loss of the Iranian market. The satellite launch business -- brisk in the 1990s -- began to dry up, as the IT industry "new economy" crashed in 2000.

The same year Russia officially scrapped a secret 1995 memorandum with the United States that ended its arms trade with Iran and resumed full cooperation. Today, after the U.S.-led occupation of Iraq, relations between Washington and Tehran are worsening day by day, and Russia has found itself in the middle of the fray.

The Shiite theocracy that rules Iran did not like Hussein's secular regime and was glad to see it go. But Tehran also does not want the U.S. to rebuild Iraq into a secular pro-Western democracy with a market economy: Successes in Iraq could strengthen desire for regime change within the Iranian population.

The Iranians want the American military to leave at once, leaving Iraq in the hands of the Shiite clerics who would build a repressive Islamic republic, like the one in Iran. Pro-Iranian agents are actively promoting anti-American unrest in Iraq, and a full-blown insurgency may follow.

The United States in turn has forged an alliance with an anti-clerical Iranian opposition group based in Iraq: the People's Mujahedin. The group was financed and armed with tanks and armor by Hussein and based on the border with Iran, in all respects integrated into the Iraqi military machine. The U.S. State Department officially lists the People's Mujahedin as a terrorist organization, and indeed in the past it has carried out terrorist bombing attacks against Iranian government buildings.

While the Americans fully disbanded the Iraqi military, the Mujahedin, who stayed neutral during the invasion, were not attacked, not disarmed or disbanded. U.S. forces did not even go close to their military bases or camps. It's obvious that Washington is retaining the Mujahedin as a hit force to spearhead a future anti-government insurgency in Iran -- a possible counter act to the Iranian-led anti-American insurgency in Iraq.

The agents of the Mujahedin have produced information about an Iranian project to enrich uranium for possible military use. It turned out that a large gas centrifuge facility was almost completed in Natanz in central Iran and two smaller secret uranium enrichment laboratories may have been built west of Tehran.

Natanz may provide Iran with material to make usable nuclear uranium bombs within two years. It also turned out that Natanz can also provide Bushehr with nuclear fuel and that it was built in secret from the Russians, who have a contract to provide the fuel to Bushehr themselves.

Russia is today under growing U.S. pressure to stop military and nuclear cooperation with Iran. At the same time the fact that Iran (unlike Iraq) indeed may go nuclear soon is scaring the Kremlin, but not the people who are making money in Iran.

In the last year the building of the Bushehr reactor has been legally taken over by one of Russia's oligarchs, and the Nuclear Power Ministry is not in charge anymore. The Iranians are paying very generously, in cash, for work done.

If the U.S. wants to stop the nuclear cooperation promptly, it should talk compensation with the real people in charge, not irrelevant government officials, including President Vladimir Putin.

Pavel Felgenhauer is an independent defense analyst.