Deal on Caspian Resources – or No Nuclear Ties

No one is admitting this in public, but Russian president Vladimir Putin‘s hyped-up visit to Tehran Oct. 16 ended in crisis.

Nine days later, a cover statement was issued by First Deputy Prime Minister Sergei Ivanov in Moscow Thursday, Oct. 25:

“The Bushehr nuclear power plant Russia is building for Iran will operate under the strict control of the United Nations nuclear watchdog,” he declared. “After the fuel is delivered to Iran, it will come instantly under the full and total control of the IAEA.”

Ivanov said the timetable for Russia to deliver the first consignment of nuclear fuel to Bushehr depends on “resolving disputes” with Iran about payment for the plant.

DEBKA-Net-Weekly‘s Moscow and Tehran sources disclose, however, that no timetable has been fixed for the delivery of nuclear fuel for a more compelling reason than the usual bickering over payment between Russia and Iran.

During his talks with Iranian leaders, which took place alongside the Caspian Summit of Russian, Iranian, Azerbaijan, Turkmenistan and Kazakh rulers, Putin laid down his terms: Either Tehran accepts the accord drafted in Moscow for the exploitation and distribution of Caspian Sea resources, or Russia discontinues its work on the Bushehr nuclear reactor and withholds the fuel for its activation.

One of the terms obliges Iran to agree in advance that the oil and gas extracted from the Caspian be moved out through Russian-owned pipelines.

The president further stipulated that Russia would lay down the international benchmarks for the distribution of these natural resources. Tehran must pledge not to interfere in the secret contracts Moscow signed in the past with Azerbaijan and Kazakhstan for dividing the Caspian region and its riches amongst themselves.

The only issue on which the Caspian rulers agreed was to refrain from further exploration or drilling in the sea bed. By bottling up the underwater resources, Moscow, Tehran and the other three Caspian partners made sure to keep world oil prices jacked high.

Our Moscow sources reveal that Putin felt safe in turning the screw on Iran in view of its deep economic crisis and acute shortage of cash for catching up on its arrears for work the Russians have already performed on the reactor.

High expectations of a thaw are premature

Both Bush officials and Israeli prime minister Ehud Olmert jumped in fast, in the hope of capitalizing on the Moscow-Tehran impasse.

Washington put forward a compromise proposal for a joint US-Russian mechanism to determine the point at which Iran’s long-range missiles become a menace to Europe and warrant the activation of the US-led missile defenses to be based in Poland and the Czech Republic, and possibly also in Azerbaijan. Russian teams would also be present in these bases.

These concessions were offered to allay Putin’s firm objections to the missile shield Bush planned to deploy in Europe. The eventual outcome of such a deal, it was hoped in Washington, would be for Moscow to turn a blind eye to a possible American attack on Iran if it stood by its refusal to give up uranium enrichment.

Olmert made an unannounced trip to Moscow on Oct. 18 and spoke for three hours with the Russian president. On Oct. 25, he described Putin to a group of American Jewish leaders as “one of the most important friends Israel has today.”

However, DEBKA-Net-Weekly’s Moscow sources report that the expectations of an imminent thaw may have been premature in Washington and Jerusalem.

The Russian ruler has not burned all his bridges to Tehran. And whether the Bushehr reactor is finished or not will not hold up Iran’s military program. With regard to the Caspian issue, Putin will be as tough with the Americans as he was with Tehran.

He will drive a hard bargain with Washington for accepting a compromise on the European missile deployment and maybe other issues: No less than US acceptance of Russian control of Caspian natural resources and at least a partial abandonment of the planned US military bases in that region.

If the Bush administration fails to come around, relations between Moscow and Washington will remain at sub-Cold War temperatures.