[A-List] Russia-Iran relations potentially difficult?

["Michael Keaney" <michael.keaney@xxxxxx>]

Russia, Iran set collision course
By Sergei Blagov
Asia Times, May 27 2004

MOSCOW - Despite differences between Russia and the United States over
Tehran's nuclear ambitions, Moscow is still moving toward forging a
"partnership" with Iran, which has been labeled by US President George W
Bush as part of an "axis of evil".

This month Russian President Vladimir Putin met with visiting Iranian
Foreign Minister Kamal Kharrazi in Moscow and accepted an invitation to
visit Tehran this year. Putin assured the Iranian chief diplomat that Iran
remained Russia's "old and stable partner".

When US Under Secretary of State for Arms Control John Bolton traveled to
Moscow shortly afterward, he urged Russia not to supply nuclear fuel to
Iran's Bushehr reactor until Tehran addressed international concerns that
Iran might develop a nuclear-weapons program. Bolton told journalists in
Moscow that "tactical" differences between the US and Russia remained over
Iran's nuclear ambitions.

In response, after a meeting with Bolton, the head of Russia's Nuclear Power
Agency, Alexander Rumyantsev, reiterated that Russia abided by international
agreements banning the proliferation of nuclear technology.

Russia has long been under fire for its help in building the Bushehr nuclear
plant on Iran's Persian Gulf coast. The US has insisted that the Russian
technology could be used to develop nuclear weapons, but Moscow and Tehran
argue that the plant will only be used for civilian purposes. Moscow has
brushed off repeated US demands that it cancel Bushehr's 1,000-megawatt
light-water nuclear-reactor project.

Russia has said it would freeze construction on the US$1 billion Bushehr
plant and would not begin delivering fuel for the reactor until Iran signed
an agreement that would oblige it to return all of the spent fuel to Russia
for reprocessing and storage. This agreement was reported as close to being
signed last September, but so far an agreement has failed to materialize
fully.

This month Russian Foreign Minister Sergei Lavrov announced in Moscow that
the issue of the return of the spent fuel to Russia had been solved.
However, he conceded that "commercial" differences with Iran over the issue
remained.

Last October, Russia announced a delay for the launch of the Bushehr nuclear
reactor until 2005 and urged Tehran to improve disclosure of its nuclear
plans. However, there has been no talk in Moscow about dropping the Bushehr
project. Last week, Russia's Nuclear Power Agency reportedly indicated it
would finish a nuclear reactor in Iran regardless.

For years, the Kremlin has resisted US pressure and declined to limit ties
with Iran. In March 2001, Putin and Iranian President Mohammad Khatami
signed a cooperation treaty. Subsequently, in October of that year, Moscow
and Tehran signed framework agreements for $300 million to $400 million a
year of Russian military supplies to Iran, including spare parts for
Russian-made weapons, new fighter jets and possibly air-defense,
ground-to-ground and anti-ship systems.

Apart from attempts to discourage Russia from fueling Iran's nuclear
ambitions, the US has pursued its efforts to persuade Russia to join the
US-backed non-proliferation initiative. The hawkish Bolton regularly visits
Russia for non-proliferation talks. However, last week Russian Deputy
Foreign Minister Sergei Kislyak announced after a meeting with Bolton that
no agreement had been reached on Russia joining the Proliferation Security
Initiative (PSI).

Moscow has so far refrained from a clear commitment to join the PSI. Russia
is the only Group of Eight member that is yet to join the PSI, which was
announced by Bush last May.

Apart from the Bushehr project, Russia has other interests in Iran. Last
Thursday, top railway executives of Russia, Iran and Azerbaijan met in
Moscow and agreed to build a Kazvin-Resht-Astara rail link connecting the
three nations. Gennady Fadeyev, head of the state-run Russian Railways Co
(RZD), pledged to build a $100 million, 340-kilometer link connecting Russia
to the Persian Gulf via Azerbaijan and Iran. Fadeyev claimed that the link
could funnel up to 20 million tons of freight to India and Pakistan.

Russia and Iran have long discussed the restoration of a rail link between
the two countries as a viable alternative to Red Sea routes. This
alternative transport link from Asia to Europe - from Mumbai to the Caspian
port of Olya in the Astrakhan region via Bandar Abbas in Iran - is expected
to bring Russia billions of dollars in revenues.

Russia, India and Iran signed an agreement on the development of this
so-called North-South Corridor in September 2000. Russia estimates that the
link could become a rival of the Suez Canal. Russia estimates that annual
trade turnover through the corridor could reach $10 billion per year, with
Russia and Iran becoming the main beneficiaries.

Meanwhile, Moscow's "partnership" with Tehran could prove double-edged,
notably after Iran clinched a controversial gas deal with Russia's sole ally
in the volatile Trans-Caucasus region, Armenia. In mid-May, Iran's minister
of oil, Bijan Namdar Zanganeh, traveled to Armenia and signed an agreement
on the construction of a 114km Iran-Armenia gas pipeline that would cost
$120 million. Iran reportedly agreed to supply 1.27 trillion cubic feet (36
billion cubic meters) to Armenia from 2007-27.

The Iran-Armenia pipeline could also be extended through Georgia to Ukraine
and on to the European Union. The Iran-Armenia-Georgia-Ukraine-Europe gas
pipeline, with a 550km underwater section from the Georgian port of Supsa to
the Crimean town of Feodosia, has been estimated to cost $5 billion. The
planned gas supply would amount to 2.12 trillion cubic feet (60 billion
cubic meters) per annum, including 353 billion cubic feet (10 billion cubic
meters) for Ukraine.

Russia has been wary that the extended pipeline could be used to funnel
Iranian gas to European markets. It could also allow Turkmenistan to
circumvent Russia's gas-pipeline network. However, Armenia is yet to make a
decision on the extended pipeline.

Armenia is traditionally Russia's closest partner in the Caucasus.
Sandwiched among hostile Azerbaijan and Turkey and volatile Georgia, Armenia
has little option but to remain a supporter of Russia's geopolitical moves
in the Caucasus. However, some divergent interests have emerged recently,
notably Armenia's aspirations to limit its dependence on Russian energy
supplies by building a gas pipeline from Iran to Europe. Therefore, Russia's
"partnership" with Iran could have its limits after all, and not because of
the United States.