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. Last Updated: 07/27/2016

The Geopolitics of Accounts Receivable



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On Sunday, the 15 members of the United Nations Security Council, including Russia, unanimously passed Resolution 1747, which provides for the imposition of sanctions against Iran in response to its nuclear development program. On Monday -- the very next working day -- Russia announced that Iran had finally made overdue payments for Russian construction work on the Bushehr atomic energy plant in Iran.

Looking at this from a commercial rather than a diplomatic standpoint, Moscow appears to have pried the money from Tehran using the Security Council in much the same way it uses the Prosecutor General's Office for the same purpose at home.

When trying to explain why Russia is assisting Iran in its atomic energy program, analysts usually opt for complex geopolitical explanations, like portraying it as Moscow's answer to a U.S. White House trying to create a unipolar world.

A simpler explanation is that Russia has become a very active economic actor and pragmatically minded people in President Vladimir Putin's circle are prepared, in the best tradition of Adam Smith, to sell just about anything to anyone.

There are two chief Russian parties to the Bushehr contract with Iran. One is Atomstroiexport, which used to be a private company and belonged to United Heavy Machinery head Kakha Bendukidze. After Bendukidze was named Georgia's minister for reforms, his business interests in Russia came under attack. Atomstroiexport was hit with back tax bills (the case was like a small, low-profile and very quiet Yukos), and Bendukidze sold the company to Gazprombank for $26 million.

It turned out then that if Atomstroiexport didn't continue work on the Bushehr project, it was in danger of going bankrupt. After Gazprombank took control, therefore, construction at Bushehr was resumed.

The other main Russian party to the contract is Techsnabexport, also known as Tenex. Its current general director, Vladimir Smirnov, was one of the co-founders of the Ozero dacha co-op in 1996, along with President Vladimir Putin, Russian Railways CEO Vladimir Yakunin and Yury Kovalchuk, the former chairman of St. Peterburg's Bank Rossiya. Prior to arriving at Tenex, Smirnov was head of the St. Petersburg Fuel Company, reputedly tied to the Tambov crime group. He later was in charge of the state company responsible for supplying the presidential administration.

It is hard to say exactly what happened between Russia and Iran two weeks ago, when Russia suddenly announced that Iran had not transferred payment due in January for work on the Bushehr project while Iran answered that the money had, indeed, been handed over.

What is clear is that not being able to agree on whether money had been transferred is not the type of thing that should cause problem for major countries or companies of this stature. Try to imagine, for example, Microsoft and IBM arguing over whether or not the other had made a scheduled payment of $100 million. But conflicts like these regularly flare up between less savory groups: One side says it paid for the cocaine, while the other says it hasn't seen a cent. It's tough for outsiders to determine who is telling the truth, but the character of the two parties to the deal is never in doubt.

Moscow has more than uranium to sell to Tehran. The Russian veto in the Security Council is of great value to Iranian President Mahmoud Ahmadinejad. In this sense, the Security Council veto has the same value as Moscow's Basmanny District Court, in the sense that it can be used to coax the other side into showing more economic flexibility.

On Saturday, Russia punished Iran for not handing over the money, unreservedly voting in favor of the Security Council resolution. Iran got the hint, and the money was handed over immediately.

It looks like Atomstroiexport has come out victorious in a difficult geopolitical battle.

Yulia Latynina hosts a political talk show on Ekho Moskvy radio.