Iran and the Fate of Russian S-300 Missiles

These days, the issue of delivering S-300 missile defense systems to Iran has once again attracted media attention. Recently, Kuwaiti and Israeli media reported on Russia's decision to cancel this contract. Iranian officials emphasize that there is no problem with the delivery of these systems. While Russian officials have not publicly reacted to this matter, the widely circulated Russian newspaper Kommersant, which has always followed this issue, reported, citing its sources, that claims about the suspension of S-300 deliveries to Iran are not true, but it is also not the case that this contract is being executed without problems. Ivan Safronov, a journalist from Kommersant and the author of this report, explains the current status of this contract in an interview with Radio Farda: Ivan Safronov: The situation is not critical, but it is not simple either. The parties have agreed on technical specifications, the number of systems, and methods of delivery, but there are disagreements over financial issues. According to a contract signed last autumn between Russia and Iran, four S-300 PMU-2 systems are to be delivered to Iran. These systems were produced at Syria's request, but Moscow refrained from sending them due to Israeli requests and concerns over the ongoing war in Syria, and now it will sell them to Iran with some modifications. The value of this contract is nearly $1 billion, and Iran was supposed to pay this amount in four to five installments. As far as I know, the first installment has been paid, and the Almaz-Antey factory, which is executing this order, has begun its work. However, now Iran wants to change the financial terms of the contract and increase the number of installments—apparently on the pretext that if this contract is canceled again, less money will remain in Russia's hands. This issue has faced objections from the Russian side because five years ago, when the previous contract was canceled, the advance payment was immediately returned to Iran. Our sources say they understand that the fall in oil prices and reduced revenues may have compelled Iran to reconsider the financial conditions of the contract, but Russian negotiators insist that all agreed terms of the contract must be fully executed. Overall, you see that there are technical problems, and our sources emphasize that there is absolutely no discussion of canceling or suspending this contract. However, the execution date is still not clear. If negotiators can resolve financial disputes within a month or two, these systems may be delivered to Iran in early 2017 / late 1395. The saga of selling S-300 to Iran has been ongoing for years, and we continue to count the obstacles to executing this contract. Based on the information you have from your sources in the defense industries and the Russian Ministry of Defense, do you think this contract will ever be executed? In my opinion, yes. Because the delivery of these systems is very important for Russia. The arms market is a field of heavy competition. Losing a potential customer, especially when arms sales are one of the main sources of national income in Russia, would be very shortsighted. In 2010, Russia's refusal to sell S-300 to Iran severely damaged its credibility as an arms exporter. Another blow would be catastrophic. Also, do not forget that ten years ago, Vladimir Putin decided on the sale of S-300 to Iran, and it was Dmitry Medvedev who ordered the non-delivery of these systems. It is no secret that although Putin did not intervene in this process, he was strongly opposed to this decision and considered it a weakness in Russia's foreign policy. For this reason, as soon as he returned to the Kremlin, he pursued this issue and canceled Medvedev's order last spring, giving the green light for the delivery of S-300 to Iran. This issue is principled for him, and the non-delivery of these systems to Iran would not only damage Russia's credibility but also Putin's personal credibility, and this development is very unlikely because Putin always presents himself as a statesman who stands by his word. Russia and Iran's negotiations are not limited to S-300, and according to your newspaper's reports, Iran wants to buy various weapons worth $8 billion from Russia, including weapons that, according to the JCPOA, can only be sold to this country with the permission of the Security Council for five years. In your new report, you write that this is just one of the obstacles that challenges the expansion of military cooperation between Russia and Iran. Please elaborate on this. Certainly, Russia will not go to the Security Council because of arms contracts with Iran, especially since the U.S. has said it will veto these transactions. If new military agreements with Iran are reached, Russia can arrange their implementation so that by the time the existing restrictions are lifted in four to five years, the weapons produced at Iran's request will be ready for delivery. However, it is still too early to talk about this. Because Iran is seeking a loan from Russia for the purchase of $8 billion worth of weapons. This country is currently negotiating a $5 billion loan from the government plus €2 billion from the state bank VEB for infrastructure projects. This means Tehran is seeking a total of $15 billion credit line from Moscow. Russia has not offered such loans even under the best conditions; with the current oil prices and financial sanctions, this is completely out of the question. Putin may personally decide to grant a loan to Iran, but it is very unlikely that the volume of this financial assistance will match Iran's demand.